SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
BLAIR CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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BLAIR CORPORATION
Warren, Pennsylvania
------------------------
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS OF
BLAIR CORPORATION
to be held on Thursday, April 29, 2004
------------------------
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of Blair
Corporation (the "Company"), a Delaware corporation, will be held in the Library
Theatre, 302 Third Avenue West, Warren, Pennsylvania, on Thursday, April 29,
2004, at 11:00 a.m., for the following purposes:
1. To elect twelve directors to serve for a term of one year and until
their successors are elected and qualified;
2. To ratify the appointment of Ernst & Young LLP as independent public
accountants of the Company for the year 2004; and
3. To transact such other business as may lawfully come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on March 12, 2004 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting, or any postponements or adjournments thereof.
To assure that your shares are represented at the meeting, please date,
sign and return the enclosed proxy. A postage-paid, self addressed envelope is
enclosed for your convenience in returning the proxy. If you decide to attend
the meeting, you may revoke the proxy at any time before it is voted.
DANIEL R. BLAIR
Secretary
Dated: March 29, 2004
Warren, Pennsylvania
BLAIR CORPORATION
Warren, Pennsylvania
March 29, 2004
PROXY STATEMENT
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement solicits proxies on behalf of the management of Blair
Corporation (the "Company") for use at the Annual Meeting of Stockholders of the
Company, to be held at 11:00 a.m. on Thursday, April 29, 2004, at the Library
Theatre, 302 Third Avenue West, Warren, Pennsylvania. The Company's principal
executive offices are located at 220 Hickory Street, Warren, Pennsylvania 16366.
Under Delaware law, any person giving a proxy pursuant to this solicitation
may revoke it at any time before it is voted by filing a written notice of
revocation with the Secretary of the Company, by delivering to the Company a
duly executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person.
The shares represented by proxies received by the Company's management will
be voted at the meeting, or at any adjournment thereof, in accordance with the
specifications made therein. If no specification is made on a proxy card, it
will be voted FOR the nominees listed on the proxy card and FOR the other
matters specified on the proxy card. All proxies not voted will not be counted
toward establishing a quorum. Stockholders should note that while broker
non-votes and votes for ABSTAIN will count toward establishing a quorum, passage
of any proposal considered at the Annual Meeting will occur only if a sufficient
number of votes are cast FOR the proposal. Accordingly, votes to ABSTAIN and
votes AGAINST will have the same effect in determining whether the proposal is
approved.
Other than the matters listed on the attached Notice of Annual Meeting of
Stockholders, the Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of the proxy card,
however, confers on the designated proxy holders' discretionary authority to
vote the shares of Common Stock in accordance with their best judgment on such
other business, if any, that may properly come before the Annual Meeting or any
adjournments thereof.
A copy of the 2003 Annual Report of the Company, including financial
statements and a description of the Company's operations for 2003, accompanies
this Proxy Statement, but is not incorporated in this Proxy Statement by this
reference. This Proxy Statement, Notice of Meeting and the enclosed proxy card
are first being mailed to stockholders on or about March 29, 2004.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of shares
of common stock of the Company ("Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Annual Meeting. There is
no cumulative voting for the election of directors.
The close of business on March 12, 2004 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. As reported by the transfer agent, there were
8,129,968 shares of the Company's Common Stock outstanding as of the Record
Date.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of the Company's Common Stock outstanding on March
12, 2004 will constitute a quorum. In the event there are not sufficient votes
for a quorum or to approve or ratify any proposal at the time of the Annual
Meeting, the Annual Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, the enclosed proxy card enables a
stockholder to vote FOR the election of the nominees proposed by the Board, or
to WITHHOLD AUTHORITY to vote for one or more of the nominees being proposed.
Under Delaware law and the Company's bylaws, directors are elected by a majority
of votes cast, without regard to either (i) broker non-votes, or (ii) proxies as
to which authority to vote for one or more of the nominees being proposed is
withheld.
As to the ratification of Ernst & Young LLP as independent auditors of the
Company and all other matters that may properly come before the Annual Meeting,
by checking the appropriate box, a stockholder may: (i) vote FOR the item; (ii)
vote AGAINST the item; or (iii) ABSTAIN from voting on such item. Under the
Company's bylaws, all such matters shall be determined by a majority of the
votes cast without regard to either (a) broker non-votes, or (b) proxies marked
ABSTAIN as to that matter.
Proxies solicited hereby will be returned to the Company's transfer agent
and will be tabulated by inspectors of election designated by the Company, who
will not be employed by, or be directors of, the Company or any of its
affiliates. After the final adjournment of the Annual Meeting, the proxies will
be returned to the Company for safekeeping.
PRINCIPAL HOLDERS OF COMMON STOCK
(a) Security Ownership of Certain Beneficial Owners. The table below sets
forth information as of March 12, 2004 with respect to each person and
institution known to the Company's management to be the beneficial owner of more
than five percent (5%) of the outstanding shares of the Company's Common Stock.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS*
------------------- -------------------- ---------
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401.............................. 554,800(1) 6.82%
The PNC Financial Services Group, Inc.
249 5th Avenue
Pittsburgh, PA 15222................................ 521,046(2) 6.41%
FMR Corp.
82 Devonshire Street
Boston, MA 02109.................................... 496,400(3) 6.11%
---------------
* For purposes of calculating the percent of class ownership, the figure used
for the amount of outstanding Common Stock is 8,129,968 which amount
represents the figure reported as outstanding by the transfer agent as of
the Record Date.
(1) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 554,800 shares of the
Company's Common Stock as of December 31, 2003, all of which shares are held
in portfolios of four registered investment companies, for which Dimensional
serves as investment advisor, and certain other investment vehicles,
including co-mingled group trusts and separate accounts, for which
Dimensional serves as investment manager. All of the shares are owned by the
portfolios and Dimensional disclaims beneficial ownership of all such
shares.
The above information was provided to the U.S. Securities and Exchange
Commission in a Schedule 13G filed on February 6, 2004 by Dimensional Fund
Advisors, Inc.
(2) PNC Bank, N.A., a wholly-owned subsidiary of PNC Bancorp, Inc. which is
itself a wholly-owned subsidiary of PNC Financial Services Group, Inc., is
deemed to have beneficial ownership of 521,046 shares of the Company's
Common Stock as of December 31, 2003.
The above information was provided to the U.S. Securities and Exchange
Commission in a Schedule 13G filed on February 10, 2004 by PNC Financial
Services Group.
2
(3) Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp. and a registered investment adviser, is the
beneficial owner of 496,400 shares of the Company's Common Stock as of
December 31, 2003, as a result of acting as investment adviser to various
investment companies registered under Section 8 of the Investment Company
Act of 1940. The ownership of one investment company, Fidelity Low-Priced
Stock Fund, amounted to 496,400 shares of the Common Stock outstanding of
the Company as of December 31, 2003. The Fidelity Low-Priced Stock Fund has
its principal business office at 82 Devonshire Street, Boston, Massachusetts
02109.
The above information was provided to the U.S. Securities and Exchange
Commission in a Schedule 13G filed on February 16, 2004 by FMR Corp.
(b) Security Ownership of Management. The following table sets forth, as
of March 12, 2004, certain information with respect to the Company's Common
Stock owned beneficially by each director and nominee for election as a
director, the named executive officers included below under "Executive
Compensation," and by all current directors and executive officers of the
Company as a group.
NUMBER OF SHARES
NAME OF AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS**
---------------- ------------------------ ----------
Steven M. Blair................................. 33,687(2)(3)(4) *
Robert D. Crowley............................... 28,785(2)(3) *
Harriet Edelman................................. 2,075(5) *
Cynthia A. Fields............................... 575 *
Bryan J. Flanagan............................... 11,584 *
John O. Hanna................................... 11,350(2) *
Craig N. Johnson................................ 5,400 *
John A. Lasher.................................. 28,328(2)(3) *
Murray K. McComas............................... 59,075(2)(5) *
Thomas P. McKeever.............................. 40,351(3) *
Ronald L. Ramseyer.............................. 1,825 *
Michael A. Schuler.............................. 750 *
John E. Zawacki................................. 81,003(2)(3) *
All directors and executive officers as a group
(includes 27 persons)......................... 505,968(2)(3)(6)(7) 6.22%
---------------
* Does not exceed 1%
** For purposes of calculating the percent of class ownership, the figure used
for the amount of outstanding Common Stock is the number of shares of Common
Stock reported as outstanding by the transfer agent as of the Record Date.
(1) Unless otherwise indicated, each person has sole voting and investment power
with respect to the shares beneficially owned.
(2) The share totals include the following shares of Common Stock held by and
for the benefit of members of the immediate families of certain nominees and
executive officers, as to which the indicated nominees and executive
officers have no voting or investment power, beneficial interest in which is
disclaimed by such nominees and executive officers: Steven M. Blair (7,500
shares), Robert D. Crowley (13,034 shares), John O. Hanna (2,100 shares),
Murray K. McComas (980 shares), John A. Lasher (2,250 shares), and John E.
Zawacki (22,500 shares).
(3) The share totals include the following shares of Common Stock underlying
stock options granted by the Company, which are exercisable now or within 60
days of the Record Date: Steven M. Blair (4,967 shares), Robert D. Crowley
(8,401 shares), Thomas P. McKeever (16,401 shares), John A.
3
Lasher (10,203 shares), John E. Zawacki (43,503 shares), and all directors
and executive officers listed as a group (156,987).
(4) Steven M. Blair is not related to Daniel R. Blair, the Company Secretary.
(5) The share totals include the following shares which were deferred pursuant
to the Company's Stock Accumulation and Deferred Compensation Plan for
non-management directors: Harriet Edelman (1,325 shares) and Murray K.
McComas (1,500 shares).
(6) The share totals include 5,400 shares of Common Stock which are held by or
for the benefit of members of the immediate families of executive officers
of the Company not identified individually in this chart, as to which such
executive officers have no voting or investment power, beneficial interest
in which is disclaimed by such executive officers.
(7) Such share totals include an aggregate of 7,225 shares of Common Stock
jointly owned by certain of the directors and executive officers with their
spouses.
4
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
One of the purposes of the meeting is to elect twelve directors to serve
until the next Annual Meeting of Stockholders and until their successors have
been elected and qualified. The persons named in the proxy intend to vote the
proxy for the election as directors of the nominees named below. If, however,
any nominee is unwilling or unable to serve as a director, which is not now
expected, the persons named in the proxy reserve the right to vote for such
other person as may be nominated by management. Directors will be elected by a
majority of the votes cast at the Annual Meeting.
The table below sets forth the name of each nominee for election as a
director and the nominee's age, position with the Company, business experience
and principal occupation during the past five years, and family relationships
with other directors. With the exception of Cynthia A. Fields, who was appointed
as a director on July 15, 2003, all of the nominees were elected as directors at
the Company's 2003 Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF EACH NOMINEE FOR DIRECTOR
LISTED BELOW.
BUSINESS
POSITION WITH DIRECTOR EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- --------------------- -------- ---------------------------
Steven M. Blair....... 60 Director and 1986 Vice President (Customer
Vice President Services) for the past five
(Customer Services) years.
Robert D. Crowley..... 54 Director and 1994 Senior Vice President
Senior Vice President (Menswear, Home, and
(Menswear, Home, and Marketing Services), July,
Marketing Services) 2002 - present; Manager and
Vice President, Blair
Payroll LLC, April 2003,
2002 - present; Vice
President (Menswear), June,
1981 - July, 2002.
Harriet Edelman....... 48 Director 2001 Director, Hershey Foods
Corp., April,
2003 - present; Senior Vice
President and Chief
Information Officer, Avon
Products, Inc., New York,
NY, January, 2000 -
present; Group Vice
President (Global
Operations), Avon Products,
Inc., New York, NY, June,
1998 - January, 2000.
Cynthia A. Fields..... 54 Director 2003 President, Cynthia Fields &
Company, New York, NY, June
2001 - present; President
and Chief Executive
Officer, Victoria's Secret,
June 1984 - June 2000.
5
BUSINESS
POSITION WITH DIRECTOR EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- --------------------- -------- ---------------------------
Bryan J. Director, 2002 Chief Financial Officer,
Flanagan(1)......... 51 Senior Vice June, 2002 - present;
President, Senior Vice President,
and Chief Financial July, 2002 - present;
Officer Manager and Treasurer,
Blair Payroll LLC, April,
2003 - present. Chief
Financial Officer and Chief
Operating Officer, Mattress
Discounters Corporation,
Upper Marlboro, MD, July,
2000 - November, 2001;
Senior Vice President
(Financial Operations),
Security Capital Group
Inc., El Paso, TX, June,
1995 - June, 2000.
John O. Hanna......... 72 Director and 1992 Member of Executive
Member of Committee, January, 2000 -
Executive Committee present; Director, JLB
Service Bank, August,
2003 - Present; Chairman of
the Board of Directors,
Northwest Bancorp, Inc.,
Warren, PA, July, 2001 -
July, 2003; Director,
President and Chief
Executive Officer,
Northwest Bancorp, Inc.,
Warren, PA, November,
1994 - July, 2001;
Chairman, Northwest Savings
Bank, Warren, PA, July,
1998 - July, 2003;
Director, Jamestown Savings
Bank, Jamestown, NY,
November, 1995 - present;
President and Chief
Executive Officer,
Jamestown Savings Bank,
Jamestown, NY, July,
1998 - July, 2003.
Craig N. Johnson...... 62 Chairman of the Board 1997 Chairman of the Board,
and Member of April, 2003 - present;
Executive Committee Member of Executive
Committee, January,
2000 - present; Managing
Director and Partner,
Glenthorne Capital, Inc.,
Philadelphia, PA, February,
1994 - February, 2002.
Murray K. McComas..... 67 Director and Member 1977 Member of Executive
of Executive Committee for the past five
Committee years; Chairman of the
Board April, 1987 - April,
2003; President and Chief
Executive Officer, October,
1987 - December, 1999.
6
BUSINESS
POSITION WITH DIRECTOR EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- --------------------- -------- ---------------------------
Thomas P. McKeever.... 55 Director and 1994 Senior Vice President
Senior Vice President (Operations and
(Operations and Administration), July,
Administration) 2002 - present; Vice
President (Corporate
Affairs and Human
Resources) January,
1997 - July, 2002; Member
of Executive Committee,
October, 1996 - January,
2000; Director, Blair
Holdings, Inc., September,
1996 - September, 2001;
Manager and Vice President,
Blair Payroll LLC, May,
2000 - present.
Ronald L. Ramseyer.... 61 Director 2001 Consultant - strategic
planning & multi-channel
marketing, December, 2002 -
present; President of
Direct Marketing, Bass Pro
Shops, Springfield, MO,
April, 2001 - November,
2002; President and Chief
Executive Officer, Macy's
By Mail, Inc., September,
1997 - March, 2001.
Michael A. Schuler.... 54 Director 2003 President and CEO Westny
Building Products Co.,
December, 2003 - present;
President and Chief
Executive Officer, Donerail
Investments, Ltd.,
Bradford, PA, March,
2001 - December, 2003;
Chairman of Audit
Committee, National City
Corporation, Cleveland, OH,
2000 - 2002; Board Member,
Audit Committee Member,
Public Policy Committee
Member, National City
Corporation, Cleveland, OH,
1996 - 2002; Chairman,
President and CEO, Zippo
Manufacturing Co.,
Bradford, PA, September,
1986 - March, 2001.
John E. Zawacki....... 55 Director, President, 1988 President and Chief
Chief Executive Officer,
Executive Officer, December, 1999 - present;
and Member of Member of Executive
Executive Committee Committee for the past five
years; Manager and
President, Blair Payroll
LLC, May, 2000 - present;
Vice President
(Womenswear), January,
1988 - December, 1999.
7
---------------
(1) Bryan J. Flanagan's previous employer, Mattress Discounters Corporation,
filed for Chapter 11 bankruptcy protection in October, 2002, approximately
one year after his departure from the company.
The table below sets forth the name of each executive officer of the
Company not listed above, his or her name, age, position with the Company,
present principal occupation and business experience during the past five years.
BUSINESS
POSITION WITH DIRECTOR EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- --------------------- -------- ---------------------------
Daniel R. Blair....... 35 Secretary 2003 Secretary, April, 2003 -
present; Corporate
Personnel Representative
for the past five years.
Timothy J. Baker...... 57 Vice President 1990 Vice President (Marketing)
(Marketing) for the past five years;
Director, JLB Service Bank,
August, 2003 - Present.
Mark J. Espin......... 48 Vice President 1999 Vice President
(Womenswear) (Womenswear), December,
1999 - present; Assistant
Vice President
(Womenswear), January, 1991
- December, 1999.
Patrick J. Kennedy.... 54 Vice President (Home) 1996 Vice President (Home) for
the past five years.
John A. Lasher........ 52 Vice President 1987 Vice President
(Advertising) (Advertising) for the past
five years; Director, Blair
Holdings, Inc., September,
1993 - present; President,
Blair Holdings, Inc.,
September, 2001 - present.
Marsha D. Maier....... 54 Vice President 2002 Vice President (Menswear),
(Menswear) July, 2002 - present;
Assistant Vice President
(Menswear), April,
1995 - July, 2002.
Jeffrey H. Parnell.... 42 Vice President 2000 Vice President (E-
(E-commerce) commerce), September,
2000 - present; Chief
Executive Officer,
Eximious, Inc. and
Eximious, Ltd., Northfield,
IL and London, U.K.,
November, 1998 - August,
2000.
Michael A. Rowe....... 49 Vice President 2000 Chief Information Officer,
(Information Services July, 2002 - present; Vice
and Chief President (Information
Information Officer) Services), January, 2000 -
present; Assistant Vice
President (Information
Services) July, 1998 -
December, 1999.
Randall A. Scalise.... 49 Vice President 1993 Vice President
(Fulfillment) (Fulfillment) for the past
five years.
8
BUSINESS
POSITION WITH DIRECTOR EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- --------------------- -------- ---------------------------
Lewis Shapiro......... 58 Vice President 2000 Vice President (Crossing
(Crossing Pointe) Pointe), January, 2000 -
present; Assistant Vice
President and Senior
Director (Womenswear),
June, 1999 - December,
1999; Executive Director
Retail, Military Channel,
Louisville, KY, October,
1998 - May, 1999.
James H. Smith........ 57 Vice President 1995 Vice President (Corporate
(Corporate Facilities Facilities Planning),
Planning) August, 2000 - present;
Vice President (Corporate
Development and
Facilities), April, 1997 -
August, 2000.
Lawrence R. Vicini.... 55 Vice President 1992 Vice President
(International Trade) (International Trade) for
the past five years;
Director and President,
Blair International
Holdings, Inc., December,
2000 - present; Director,
Blair International, Ltd.,
January, 2001 - present;
Director, Blair
International Singapore
Pte. Ltd., January,
2001 - present.
Stephen P. Vice President 1998 Vice President (Credit
Wiedmaier........... 52 (Credit Management) Management) December,
1998 - present; President
and Chief Executive
Officer, JLB Service Bank,
August, 2003-Present;
President and Director,
Blair Credit Services
Corporation, December,
2000 - present; President
and Director, Blair
Factoring Company,
December, 2000 - present.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers (as defined in regulations promulgated by
the Securities and Exchange Commission ("SEC") thereunder) and directors, and
persons who own more than ten percent (10%) of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than ten percent (10%)
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on a review of copies of such reports of ownership furnished
to the Company, or written representations that no forms were necessary, the
Company believes that during the past fiscal year its officers and directors
complied with all filing requirements with the exception of Marsha D. Maier who
inadvertently filed a timely yet incomplete filing (which was subsequently
corrected), and Robert D. Crowley and Jeffrey H. Parnell who inadvertently did
not report one transaction each on a timely basis. The Company does not have any
greater than ten percent (10%) beneficial owners.
9
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about the Company's Common Stock that
may be issued upon the exercise of options, warrants and rights under all
existing equity compensation plans as of December 31, 2003.
EQUITY COMPENSATION PLAN INFORMATION
(C)
(A) (B) NUMBER OF SECURITIES
NUMBER OF SECURITIES WEIGHTED AVERAGE REMAINING AVAILABLE
TO BE ISSUED UPON EXERCISE PRICE OF FOR FUTURE ISSUANCE
EXERCISE OF OUTSTANDING UNDER EQUITY COMPENSATION
OUTSTANDING OPTIONS, OPTIONS, WARRANTS PLANS (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- -------------------- ----------------- -----------------------------
Equity Compensation Plans Approved
by Stockholders................. 356,993 $21.05 599,852
Equity Compensation Plans Not
Approved by Stockholders........ -0- -- -0-
------- -------
Total............................. 356,993 599,852
EXECUTIVE COMPENSATION
The following table summarizes the compensation earned by and awarded to
the Company's chief executive officer, John E. Zawacki, and its four most highly
compensated executive officers other than Mr. Zawacki, for all services rendered
to the Company during 2003 and for each of the previous two years.
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------
-------------------------------------- RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) AWARDS(4) OPTIONS(5) COMPENSATION(6)
------------------ ---- --------- -------- --------------- ---------- ---------- ---------------
John E. Zawacki.......... 2003 $461,499 $108,194 $ 5,155 $69,225 $26,502 $34,339
President and CEO 2002 424,684 158,391 72,779 96,525 26,502 39,367
2001 427,280 -- 3,822 -- 17,001 43,061
Bryan J. Flanagan........ 2003 287,067 65,311 17,830 34,613 15,000 40,640
Senior Vice President 2002 142,790 60,840 67,892 94,116 -- 4,217
and CFO(7) 2001 -- -- -- -- -- --
Thomas P. McKeever....... 2003 273,505 62,255 4,977 34,613 15,000 18,814
Senior Vice President 2002 246,573 80,641 36,046 48,263 9,600 26,519
(Operations and 2001 235,986 -- 2,940 -- 5,001 21,128
Administration)
Robert D. Crowley........ 2003 273,505 56,755 38,540 34,613 15,000 23,781
Senior Vice President 2002 245,526 79,970 22,888 32,191 6,201 30,897
(Menswear, Home and 2001 233,478 -- 2,054 -- 4,002 25,513
Marketing Services)
John A. Lasher........... 2003 235,331 44,866 1,703 10,725 6,201 17,885
Vice President 2002 233,158 62,876 8,398 8,625 6,201 29,136
(Advertising) 2001 233,478 -- 1,878 -- 4,002 24,195
---------------
(1) No directors' fees are paid to any management member of the Board of
Directors.
(2) On January 20, 2003, the Compensation Committee (formerly the Executive
Officer Compensation Committee) approved an incentive award schedule for
fiscal year 2003. Executive officers were eligible to receive awards equal
to a percentage of their salary income for 2003. The base payout goal for
2003 was $21,000,000 such that no incentive awards would be received unless
the Company's income before income taxes equaled or exceeded this threshold
figure. The income before income taxes in 2003 was $23,163,183.
Consequently, the incentive compensation was paid by the Company to its
executive officers in 2004 for fiscal year 2003. Incentive compensation was
10
paid by the Company to its executive officers in 2003 for 2002; however,
incentive compensation was not paid by the Company to its executive officers
in 2002 for 2001. In addition, the Company periodically awards
performance-based spot bonuses to specific individuals; the amount for John
A. Lasher includes such a spot bonus.
Previously, the amounts in the bonus column had been presented on an "as
paid" basis. All of the amounts in the Bonus column have been represented on
the "as earned" basis such that there is full and consistent disclosure of
all bonuses during the years presented.
(3) The figure for 2003 includes the sum of (i) amounts reimbursed to the named
executive officers for the payment of taxes on restricted stock awards and
the exercise of stock options, (ii) interest imputed on the deferred payment
for restricted stock not yet fully paid for by the named executive officers,
and (iii) with respect to shares purchased by the named executive officers
through the exercise of nonqualified stock options, the dollar value of the
difference between the price paid by the named executive officers and the
fair market value of such security at the date of purchase.
(4) Restricted stock awards were made in 2000 under the Company's Employee Stock
Purchase Plan ("ESPP") and in 2002 under the Company's 2000 Omnibus Stock
Plan (the "Omnibus Plan"). On April 17, 2001, in light of the adoption of
the Omnibus Plan, the Company's Board of Directors terminated the ESPP and
returned the remaining shares reserved under the ESPP to Treasury. No
restricted stock awards were made in 2001.
The figures for restricted stock awards made prior to July 2002 under the
Omnibus Plan, include the dollar value of the difference between the
purchase price to be paid by the named executive officer for stock and the
fair market value of the stock on the date of grant. The purchase price for
shares purchased prior to July 2002 under the Omnibus Plan is paid over
time out of cash dividends, when and if declared and paid by the Company.
No cash is received by the Company at the time the shares are purchased,
although the participant receives the rights to receive dividends and vote
the shares at that time. Awarded shares are subject to repurchase by the
Company for the dividends which have been paid toward the purchase price,
if the participant's employment with the Company terminates for reasons
other than death, retirement or disability. For stock received under the
ESPP or the Omnibus Plan prior to July 2002, there is no vesting schedule
and vesting occurs when the stock received is fully paid. Full payment will
vary, therefore, depending upon changes to the Company's dividend policy
from year to year. Dividends are paid on all shares of restricted stock
received pursuant to the ESPP or the Omnibus Plan prior to July 2002 as and
when dividends are declared by the Company with respect to all of its
outstanding Common Stock.
Aggregate restricted stock award holdings at the end of 2003 for each of
the named executive officers were:
NUMBER OF SHARES DOLLAR VALUE
---------------- -------------
(ON 12/31/03)
John E. Zawacki............................ 15,000 $78,300
Bryan J. Flanagan.......................... 5,000 35,500
Thomas P. McKeever......................... 9,750 50,100
Robert D. Crowley.......................... 6,100 31,640
John A. Lasher............................. 4,500 22,550
After July 2002, the Company no longer issues stock subject to
deferred payment for employee stock purchases by named executive officers
at less than the fair market value of the stock pursuant to the Omnibus
Plan. Accordingly, the figure for 2002 includes the full value of the stock
grants received pursuant to restricted stock awards made to the named
executive officers after July 2002 under the Omnibus Plan.
Restricted stock awards were made in 2003 under the Company's Omnibus
Plan. In addition, in October of 2003, the Company entered a restricted
stock award agreement with certain of the executive officers whereby awards
made under the Omnibus Plan are subject to matching grants to
11
the extent an executive officer purchases shares during the vesting period
at fair market value. The awards and the matching grant each vest over a
five year period, commencing in 2004. The 2003 issuance is described more
fully below under "Report of the Compensation Committee."
Aggregate restricted stock awards and matching grants awarded in 2003
for each of the named executive officers were:
NUMBER OF AMOUNT OF
SHARES AWARDED MATCHING AWARD
-------------- --------------
John E. Zawacki............................ 1,500 1,500
Bryan J. Flanagan.......................... 750 750
Thomas P. McKeever......................... 750 750
Robert D. Crowley.......................... 750 750
John A. Lasher............................. 500 0
(5) Pursuant to the 2000 Omnibus Stock Plan, in 2003, 2002 and 2001 the Company
issued nonqualified stock options to certain eligible Participants. The 2003
issuance of the nonqualified stock options is described more fully below
under "2003 Stock Option Grants" and "Report of the Compensation Committee."
(6) Includes the Company's contributions made for the benefit and on behalf of
the named executive officer under the following:
A. Life Insurance -- The dollar value of premiums for term life insurance
paid by the Company for the benefit of each of the named executive
officers is:
2001 2002 2003
------ ------ ------
John E. Zawacki....................... $1,043 $1,060 $1,139
Bryan J. Flanagan..................... 0 364 657
Thomas P. McKeever.................... 515 545 1,157
Robert D. Crowley..................... 509 544 619
John A. Lasher........................ 509 513 513
B. The Company's Profit Sharing and 401(k) Plan --
The Company's Profit Sharing and 401(k) Plan has two components, a
savings component and a profit sharing component. Under the savings
component, which is available to all eligible employees of the Company
with six months of service, the Company matches employees' 401(k)
contributions to the Plan of 1% to 5% of their salary. After January 1,
2002, Employee Contributions and the Matching Employer Contributions are
always 100% vested. Amounts allocated to the named executive officers
are $8,500 in 2001 and $10,000 in each of 2002 and 2003 for each of John
E. Zawacki, Robert D. Crowley, John A. Lasher and Thomas P. McKeever;
and $10,000 in 2003 for Bryan J. Flanagan. The amounts for 2001 and 2002
do not include the amounts of overpayments that were subsequently
refunded to each person after the year end. The amounts of the
overpayments are as follows: John E. Zawacki ($12,206 in 2001 and $2,243
in 2002), Robert D. Crowley ($3,206 in 2001 and $2,280 in 2002), John A.
Lasher ($3,206 in 2001 and $1,661 in 2002), and Thomas P. McKeever
($3,320 in 2001 and $2,334 in 2002).
Under the 2003 profit sharing component of the Company's Profit
Sharing and 401(k) Plan, which covers all eligible employees of the
Company with one or more years of service, the Company contributed 10%
of its "adjusted net income," as defined in the Plan, to the Plan's
trust fund. Amounts contributed by the Company to the trust fund are
allocated among participating employees based on salary and years of
service to the Company, but allocations to the executive officers listed
in this table are limited to $35,000 for 2001 and $40,000 for 2002 and
2003 (adjusted to take into account cost-of-living adjustments provided
for under Sec-
12
tion 415(d) of the Internal Revenue Code since 1986). The amounts
allocated are invested in accordance with the instructions of the
individual Plan participants in investments approved by the Plan
trustees. Amounts allocated to the named executive officers are:
2001 2002 2003
------ ------ ------
John E. Zawacki....................... $3,207 $7,620 $4,868
Bryan J. Flanagan..................... 0 0 4,796
Thomas P. McKeever.................... 3,189 7,583 4,844
Robert D. Crowley..................... 3,207 7,620 4,868
John A. Lasher........................ 3,200 7,605 4,858
C. Benefit Restoration Plans -- The following amounts were earned under the
Company's benefit restoration plans to compensate the named executive
officers for benefits not otherwise paid under the savings component of
the Company's Profit Sharing and 401(k) Plan due to limitations imposed
by tax law:
2001 2002 2003
------- ------- -------
John E. Zawacki.................... $14,598 $11,234 $13,075
Bryan J. Flanagan.................. 0 0 4,353
Thomas P. McKeever................. 4,920 2,334 3,675
Robert D. Crowley.................. 4,836 2,280 3,675
John A. Lasher..................... 5,097 1,661 1,767
The following amounts were earned under the Company's benefit
restoration plans to compensate the named executive officers for
benefits not otherwise paid under the profit sharing component of the
Company's Profit Sharing and 401(k) Plan due to limitations impacted by
tax law:
2001 2002 2003
------ ------ ------
John E. Zawacki....................... $4,613 $8,237 $6,144
Bryan J. Flanagan..................... 0 0 2,012
Thomas P. McKeever.................... 1,137 1,636 1,689
Robert D. Crowley..................... 1,091 1,595 1,689
John A. Lasher........................ 1,091 1,139 784
The above-stated amounts under the Company's benefit restoration plans
to compensate the named executive officers for benefits not otherwise
paid under both the profit sharing and savings components of the
Company's Profit Sharing and 401(k) Plan were paid by the Company to the
named executive officers in 2004 for 2003, in 2003 for 2002 and in 2002
for 2001.
D. Temporary Housing and Transportation Expenses -- The amount for Mr.
Flanagan includes amounts related to temporary housing and
transportation expenses provided as a condition of his employment in the
amount of $23,729 for 2003 and $3,853 for 2002.
E. Severance -- Mr. Flanagan has a severance arrangement with the company
that provides for eighteen months of his then current salary in the
event of his involuntary separation with the company for other than
material cause, retirement or death. Based on Mr. Flanagan's current
compensation, his severance payment would be $437,268.
(7) Mr. Flanagan was not an executive officer of the Company prior to 2002.
13
2003 STOCK OPTION GRANTS
The 2000 Omnibus Stock Plan, (the "Omnibus Plan"), which is administered by
the Compensation Committee (the "Committee"), permits the grant of awards to
officers, directors, employees and consultants of the Company or of any of the
Company's affiliates (each, a "Participant"). The Committee may grant to
eligible Participants awards of incentive stock options or nonqualified stock
options; provided, however, that awards of incentive stock options shall be
limited to employees of the Company or of any parent or subsidiary of the
Company. No incentive stock options were granted by the Company during the
Company's last fiscal year.
The following table summarizes the individual grants of nonqualified stock
options made by the Company to the named executive officers during the Company's
last fiscal year, the percent of the total options granted to employees in 2003
that such options represented, the exercise price, expiration date, and grant
date present value of such options.
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE GRANT
OPTIONS GRANTED TO PRICE EXPIRATION DATE PRESENT
NAME GRANTED(1) EMPLOYEES(2) ($/SHARE)(3) DATE VALUE(4)
---- ---------- ------------ ------------ ---------- ------------
John E. Zawacki............... 26,502 15.6% $23.60 4-15-13 $281,716
Bryan J. Flanagan............. 15,000 8.8% $23.60 4-15-13 $159,450
Thomas P. McKeever............ 15,000 8.8% $23.60 4-15-13 $159,450
Robert D. Crowley............. 15,000 8.8% $23.60 4-15-13 $159,450
John A. Lasher................ 6,201 3.6% $23.60 4-15-13 $ 65,917
---------------
(1) The nonqualified stock options granted in 2003 vest in three equal annual
installments, beginning on April 15, 2004.
(2) The total number of nonqualified stock options granted to employees in 2003
was 170,427. This figure was used to calculate the percent of total options
granted to the named executive officers.
(3) The exercise price of the nonqualified stock options granted in 2003 is
equal to the fair market value of the Common Stock of the Company at the
time of the grant (April 15, 2003). No options granted pursuant to the
Omnibus Plan may be repriced, except in the context of a stock dividend,
split-up, recapitalization, merger, consolidation, business combination or
exchange of shares or the like, which event affects similarly all of the
Company's outstanding shares of Common Stock.
(4) The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rate of 3.49%; dividend yield of 2.54%;
volatility factor of the expected market price of the Company's common stock
of .540; and a weighted-average expected life of the option of 7 years. The
per share fair value of the options granted in 2003, which has been used to
calculate the grant date present value of the total options granted, was
$10.63.
14
The following table provides certain information with respect to the number
of shares of Common Stock represented by outstanding options held by the named
executive officers as of December 31, 2003. Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year-end price of the Common
Stock.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS ON IN THE MONEY OPTIONS ON
DECEMBER 31, 2003 DECEMBER 31, 2003
--------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE(2)
---- ----------- ------------- -------------- ----------------
John E. Zawacki..................... 20,168 49,837 $126,582 $149,687
Bryan J. Flanagan................... -0- 15,000 $ -0- $ 11,100
Thomas P. McKeever.................. 6,534 23,067 $ 40,266 $ 55,425
Robert D. Crowley................... -0- 20,468 $ -0- $ 41,594
John A. Lasher...................... 4,735 11,669 $ 29,734 $ 35,082
---------------
(1) Based on the market value of the underlying Common Stock at December 31,
2003 ($24.34) minus the exercise price ($17.10 or $19.30).
(2) Based on the market value of the underlying Common Stock at December 31,
2003 ($24.34) minus the relevant exercise price (either $17.10, $19.30, or
$23.60).
COMMITTEES OF THE BOARD OF DIRECTORS
During 2003, the Board of Directors held ten meetings. Each nominee for
election to the Board of Directors attended more than 75 percent of the total
number of meetings of the Board of Directors and the total number of meetings of
all committees of the Board on which he or she served. All the members of the
Board of Directors attended the prior year's annual meeting. While the Company
does not have a policy with regard to board members' attendance at annual
meetings, the Company encourages such attendance.
The Board of Directors has the following standing committees which met
during fiscal year 2003: Executive Committee, Subsidiary Oversight Committee,
Nominating and Corporate Governance Committee, Audit Committee, and Compensation
Committee.
EXECUTIVE COMMITTEE
The Company has a standing Executive Committee of the Board of Directors
which held four meetings during 2003. The Executive Committee of the Board of
Directors consists of Murray K. McComas, John O. Hanna, Craig N. Johnson and
John E. Zawacki.
SUBSIDIARY OVERSIGHT COMMITTEE
The Company has a standing Subsidiary Oversight Committee which was
established in 2004 and held no meetings in 2003. The Subsidiary Oversight
Committee serves as an overseer of the Company's subsidiaries by monitoring the
propriety of transactions, accounting entries, and ongoing operations of each
subsidiary through regular reports from representatives of each subsidiary. The
Subsidiary Oversight Committee consists of John E. Zawacki, Bryan J. Flanagan,
Thomas P. McKeever, Robert D. Crowley and Michael A. Schuler.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee, which consists of Murray
K. McComas, John O. Hanna, and Craig N. Johnson, held three meetings during
2003. All members of the Nominating and Corporate Governance Committee are
"independent" as that term is defined by the American Stock Exchange. The
Nominating and Corporate Governance Committee is responsible for
15
considering and recommending the nominees for director to stand for election at
the Company's Annual Meeting of Stockholders, as well as recommending director
candidates in the interim and recommending nominees for executive officer
positions. In addition, the Nominating and Corporate Governance Committee is
responsible for developing, recommending, reviewing and evaluating various
corporate governance principles and practices.
Effective March 23, 2004, the Nominating and Corporate Governance Committee
adopted a Nominating and Corporate Governance Committee charter. A copy of the
Nominating and Corporate Governance Committee charter is included as Appendix B
to this proxy statement.
The Company does not have a policy with regard to the consideration of any
director candidates recommended by security holders. The Board of Directors
believes a policy specific to candidates recommended by security holders is not
necessary because the Board follows the same evaluation procedures whether a
candidate is recommended by directors or stockholders.
In identifying and evaluating nominees for director, the Nominating and
Corporate Governance Committee considers whether the candidate has the highest
ethical standards and integrity and sufficient education, experience and skills
necessary to understand and wisely act upon the complex issues that arise in
managing a publicly-held company. The Nominating and Corporate Governance
Committee will annually assess the qualifications, expertise, performance and
willingness to serve of existing directors. If at this time or at any other time
during the year the Nominating and Corporate Governance Committee determines a
need to add a new director with specific qualifications or to fill a vacancy on
the Board, an "independent director," within the meaning of the American Stock
Exchange and SEC rules, designated by the Nominating and Corporate Governance
Committee, will then initiate the search, working with staff support and seeking
input from other directors and senior management, and considering any nominees
previously submitted by stockholders. An initial slate of candidates satisfying
the qualifications set forth above will then be identified and presented to the
Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee will then determine if other directors or senior management
have relationships with the candidates and can initiate contacts. To the extent
feasible, all of the members of the Nominating and Corporate Governance
Committee will evaluate the prospective candidates. Evaluations and
recommendations of the Nominating and Corporate Governance Committee will be
submitted to the whole Board for final evaluation. The Board will meet to
consider such information and to select candidates for election or appointment
to the Board.
AUDIT COMMITTEE
The Audit Committee consists of Harriet Edelman, John O. Hanna, Craig N.
Johnson, and Michael A. Schuler. All members of the Audit Committee are
"independent" as that term is defined by the American Stock Exchange. The Audit
Committee assists the Board of Directors in fulfilling its responsibilities
concerning corporate accounting, the reporting practices of the Company and the
integrity and quality of financial reports of the Company. Michael A. Schuler is
the "Audit Committee Financial Expert" as that term is defined in Item 401(h) of
Regulation S-K. The Audit Committee met six times during 2003. The Board of
Directors adopted a revised written charter for the Audit Committee on February
25, 2004, a copy of which is included as Appendix A to this proxy statement.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors (the "Committee") adopted a
revised written charter on February 25, 2004. The Committee will reassess the
adequacy of the Audit Committee charter on a periodic basis.
In accordance with its written charter the Committee assists the Board of
Directors by fulfilling its responsibility for oversight of the quality and
integrity of the accounting, auditing and financial reporting practices of the
Company.
16
In discharging its oversight responsibility as to the audit process, the
Committee obtained from the Company's independent auditors a formal written
statement describing all relationships between the auditors and the Company that
might bear on the auditors' independence consistent with Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees,"
discussed with the auditors any relationships that may impact their objectivity
and independence, and satisfied itself as to the auditors' independence.
The Committee reviewed and satisfied itself with the Company's internal
auditors and independent auditors, the overall scope and plans for their
respective audits, and the results of internal audit examinations. The Committee
also discussed with management, the internal auditors and the independent
auditors, the quality and adequacy of the Company's internal controls and the
overall quality of the Company's financial reporting process.
The Committee discussed, reviewed, and satisfied itself with the
independent auditors' communications required by generally accepted auditing
standards, including those described in Statement on Auditing Standards No. 61,
as amended, "Communication with Audit Committees" and discussed and reviewed the
results of the independent auditors' examination of the Company's financial
statements. In addition, the Committee considered the compatibility of non-audit
services with the auditors' independence.
The Committee, or its Chairman on behalf of the Committee, discussed the
interim financial information the Company contained in each quarterly earnings
announcement with management and the independent auditors prior to public
release. The Committee reviewed the audited financial statements of the Company
as of and for the fiscal year ended December 31, 2003, with management and the
independent auditors. Management has the responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for the examination of those statements.
Based on the above mentioned reviews and discussions with management and
the independent auditors, the Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-K for the fiscal year ended December 31, 2003, and filed with the Securities
and Exchange Commission. The Committee also recommended the reappointment,
subject to shareholder approval, of Ernst & Young LLP as independent public
accountants of the Company for the year 2004 and the Board of Directors
concurred in such recommendation.
MEMBERS OF THE AUDIT COMMITTEE
John O. Hanna (Chairman)
Harriet Edelman
Craig N. Johnson
Michael A. Schuler
COMPENSATION COMMITTEE
The Compensation Committee, consisting of Murray K. McComas, Ronald L.
Ramseyer, John O. Hanna, and Craig N. Johnson, recommends policies for and
levels of executive officer compensation and administers the Company's 2000
Omnibus Stock Plan. All members of the Compensation Committee are "independent"
as that term is defined by the American Stock Exchange. The Compensation
Committee held ten meetings during 2003.
COMPENSATION OF DIRECTORS
In 2003, non-management members of the Board of Directors each received an
annual retainer consisting of a stock grant of 750 shares (with the exception of
Cynthia A. Fields who joined the Board on July 15, 2003 and received 550 shares)
of the Company's Common Stock issued on April 15, 2003
17
and a cash grant equal to the value of 750 shares of the Company's Common Stock
calculated as of the close of business on April 15, 2003. The value of this cash
grant for each director was $17,730.
Non-management members also received compensation in 2003 in the amount of
$1,500 for each meeting of the Board of Directors attended and $1,000 for each
meeting attended of each of the Committees of the Board of Directors. Craig N.
Johnson also earned $10,000 per month for serving as the Company's Chairman of
the Board. Previously, Murray K. McComas was the Chairman of the Board up until
April 2003. Beginning in April 2003, Committee chairs began receiving retainers
for the following amounts: Audit Committee ($7,500), Compensation Committee
($3,500), and Nominating and Corporate Governance Committee ($3,500). In 2003,
Harriet Edelman and John O. Hanna deferred their fees and cash grant directors'
compensation.
Management members of the Board of Directors are not compensated for
attending meetings of the Board of Directors or its Committees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Murray K. McComas, Ronald
L. Ramseyer, John O. Hanna and Craig N. Johnson. Although not an appointed
member of the Compensation Committee, John E. Zawacki, President and CEO of the
Company, participated, at the request of the Committee, in the evaluation and
discussion of appropriate salary levels for all executive officers.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE OFFICER COMPENSATION
For fiscal year 2003, decisions on compensation for executive officers of
the Company were made by the Compensation Committee (a responsibility previously
shared with the Omnibus Stock Plan Committee). In accordance with the rules of
the SEC designed to enhance disclosure of policies concerning executive
compensation, set forth below is the report submitted by this committee
addressing the Company's compensation policies with respect to executive
officers for fiscal year 2003.
REPORT OF THE COMPENSATION COMMITTEE
General. The Compensation Committee of the Board of Directors is
responsible for salary levels, bonuses and other compensation components for all
officers of the Company deemed by the Board of Directors to be within the SEC's
definition of "executive officer," i.e., a company's president, any vice
president in charge of a principal business unit, division or function or any
other officer or person who performs similar policymaking functions for the
Company. All listed officers of the Company are considered executive officers.
The Compensation Committee's decisions on compensation levels for executive
officers ultimately were subjective, based on consideration of a number of
factors. No one factor was determinative of the compensation level of any of the
executive officers. Moreover, the Compensation Committee did not weigh any one
factor against any other in a way that makes it possible to assign a numerical
value to the weight of any factor in the determination of the salaries of the
executive officers.
John E. Zawacki, President and CEO of the Company, participated, at the
request of the Compensation Committee, in the evaluation and discussion of
appropriate salary levels for all executive officers.
Executive Salaries and Bonuses. The Compensation Committee annually
reviews and evaluates base salaries and annual bonuses for its executive
officers pursuant to a compensation schedule (the "Schedule") which is based
both upon the recommendations of an internal Company Salary Review Task Force
and upon those of Towers Perrin, an outside compensation consultant. The
Schedule was most recently updated in 2003 when a review was conducted of the
compensation paid to the Company's exempt employees, inclusive of all executive
officers. The Schedule includes compensation ranges for differing position
grades and levels based upon a review process that includes both a proxy
analysis and
18
compensation surveys of related position responsibilities among similar
industries, as well as the regional market, provided by Towers Perrin.
Individual salaries of executive officers are determined on the basis of
the executive officer's job grade, experience, and individual performance.
Executive officers' salary ranges are reviewed annually, with assistance from
Towers Perrin, to provide for as-needed and market-based adjustments. Ongoing
market benchmarking relative to the placement of individual executive officer
positions within the compensation structure is performed commensurate with
changes in assigned duties and responsibilities. With the assistance of Towers
Perrin, a comprehensive and market-based assessment of the executive officer
compensation structure is performed every three to four years.
In 2003, the Compensation Committee reviewed all base salary ranges at
executive officer levels in comparison with documented market ranges provided by
Towers Perrin. All executive officer merit increases fell within the market
ranges for their respective salary levels.
Incentive Awards. On January 20, 2003, the Compensation Committee reviewed
and approved the incentive award schedule for fiscal year 2003. Under this
incentive award schedule, executive officers were eligible to receive awards
equal to a percentage of their base salary income for the year. The percentage
is dependent upon the range of the Company's income before income taxes for the
year. The threshold payout goal for 2003 was $21,000,000. No incentive awards
are received unless the Company's income before income taxes equals or exceeds
this threshold figure. If the company's income before income taxes falls higher,
within a graduated range, incentive awards are increased. The Company's income
before income taxes in 2003 was $23,163,183; consequently, the incentive
compensation was paid by the Company to its executive officers in 2004 for
fiscal year 2003.
Stock Option Grants. The Omnibus Plan, a comprehensive benefits plan
adopted at the Company's April 18, 2000 Annual Meeting of Stockholders, gives
the Company the ability to offer a variety of equity-based incentives to persons
who are key to the Company's growth, development, and financial success.
On April 15, 2003, nonqualified stock option grants were awarded to
eighteen executive officers. The number of stock options granted to each
executive officer was based upon compensation ranges established for each
executive officer grade level. The stock option compensation ranges were based
upon market-based data provided by Towers Perrin. In each case, the number of
stock options granted to the executive officer fell in the lower portion of the
established range for his respective grade level. A total of 170,427
nonqualified stock options were granted to employees in 2003. Of this total,
153,414 were granted to executive officers. The options vest in three equal
annual installments, beginning on April 15, 2004. The exercise price of the
nonqualified stock options granted in 2003 is equal to the fair market value of
the Common Stock of the Company at the time of the grant ($23.60).
Restricted Stock Awards. Restricted stock awards under the Omnibus Plan
are designed to recognize the contributions of individual employees key to the
Company's performance and to align the interests of management and stockholders.
For many years, the Company has endorsed the view that management and key
employees of the Company should be stockholders of the Company, so that they
will be motivated to increase stockholder value. This policy is implemented
through the award of rights to purchase shares of the Company's Common Stock
under the Omnibus Plan to selected employees of the Company. In 2003, awards
were made three times (see further discussion below).
The Compensation Committee selects employees to receive base awards under
the Omnibus Plan (determined, in part, on recommendations of the Company's
executive officers for employees who are not executive officers), determines the
number of shares subject to the award and establishes the price at which shares
will be made available for purchase under the Omnibus Plan. Following July 2002,
and in light of the requirements of the Sarbanes-Oxley Act of 2002, the Company
no longer grants deferred purchase awards to executive officers.
Many factors, both objective and subjective, were considered by the
Compensation Committee before making base grants in 2003, including, but not
limited to, the Company's financial performance,
19
the historic responsibilities and performance of individual employees, the
future potential value of the employees to the Company, prior grants to each
employee, and the employee's current vested and unvested ownership of the
Company's Common Stock. There is no direct correlation between regular salary
and awards under the Plan. No award was specifically tied to any one measure of
performance or factor, and the Compensation Committee did not assign relative
weights to the factors it considered in a way that would make it possible to
assign a numerical value to the weight of any factor. For grants made prior to
July 2002, full ownership of the shares ordinarily does not vest, however, until
they are fully paid for out of corporate dividends. The Company's dividend level
can thus affect the full vesting of the shares, and the market price of the
shares in large part determines the value of the grant to an individual
employee. For grants made to executive officers after July 2002, restricted
share awards were granted as fully paid at the then applicable market price per
share.
On November 7, 2003, base restricted share awards as outlined above, were
made to 33 employees, totaling 13,350 shares in awards ranging from 350 shares
to 500 shares.
Additionally, on November 7, 2003, base restricted stock awards were made
to eighteen executive officers totaling 10,650 ranging from 400 to 1500 shares.
All awards made to executive officers in 2003, including the matching award
described below, were subject to a five year vesting schedule, whereby shares
vest 20% each year. Executive officers were also able to qualify for matching
share awards based on their purchases of Company stock on the open market, or
through their personal DRIP accounts, during the period from February 27, 2003
to December 15, 2003. These awards were granted on December 16, 2003, to seven
qualifying participants. Accordingly, 4,848 restricted share awards were granted
as fully paid at the closing price on December 16, 2003 ($24.70).
The Compensation Committee is composed entirely of independent directors.
Decisions of the Committee are final and binding on the Company, subject to
ratification by the Board of Directors.
MEMBERS OF THE COMPENSATION COMMITTEE
Craig N. Johnson (Chairman)
Murray K. McComas
Ronald L. Ramseyer
John O. Hanna
20
STOCK PERFORMANCE GRAPH
The following graph compares the yearly change in the cumulative total
stockholder return on the Company's Common Stock with the cumulative total
return of the AMEX Market Value Index and an industry peer group index selected
by the Company ("Peer Group Index"). The Peer Group Index consists of Coldwater
Creek, Inc., Concepts Direct, Inc., Hanover Direct, Inc., J Jill Group, Inc.,
Sharper Image Corp., Spiegel, Inc. and Williams-Sonoma, Incorporated. Companies
selected for the Peer Group Index market their products through alternative
channels, such as the mail and e-commerce. The graph below assumes $100 invested
on January 1, 1999 in Blair Corporation Stock, AMEX Market Value Index and Peer
Group Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Among Blair Corporation Common Stock, AMEX Market Value Index and Peer Group
Index**
BLAIR CORPORATION AMEX MARKET VALUE INDEX PEER GROUP INDEX***
----------------- ----------------------- -------------------
1/1/99 100.00 100.00 100.00
1999 65.00 127.00 109.00
2000 90.00 130.00 54.00
2001 112.00 123.00 88.00
2002 119.00 120.00 103.00
2003 128.00 170.00 133.00
1/1/1999 1999 2000 2001 2002 2003
Blair Corporation 100 65 90 112 119 128
AMEX Market Value Index 100 127 130 123 120 170
Peer Group Index*** 100 109 54 88 103 133
* Total return assumes reinvestment of dividends.
** Fiscal year ending December 31.
*** Lillian Vernon Corp. and dELiA*s Corp., which were included in the Peer
Group Index for the Company's 2003 Proxy Statement, have not been included
in the 2004 Peer Group Index because they are no longer publicly traded
companies.
The closing price of the Company's Common Stock on the American Stock
Exchange on March 12, 2004, was $26.15.
The Report of the Compensation Committee and the Stock Performance Graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into
21
any filing under the Securities Act of 1933 (the "Securities Act") or the
Exchange Act, except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
SECURITY HOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Company has established procedures for security holders to communicate
directly with the Board of Directors on a confidential basis. Security holders
who wish to communicate with the Board or with a particular director may send a
letter to the Secretary of Blair Corporation at 220 Hickory Street, Warren, PA
16366. The mailing envelope must contain a clear notation indicating that the
enclosed letter is a "Security Holder-Board Communication" or "Security
Holder-Director Communication." All such letters must identify the author as a
security holder and clearly state whether the intended recipients are all
members of the Board or just certain specified individual directors. If a
security holder wishes the communication to be confidential, such security
holder must clearly indicate on the envelope that the communication is
"confidential."
PROPOSAL 2. APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Company's independent accountants for the year ended December 31, 2003
were Ernst & Young LLP. The Audit Committee of the Company's Board of Directors
has reappointed Ernst & Young LLP to continue as independent accountants for the
Company for the year ending December 31, 2004, subject to the ratification of
such appointment by the stockholders. Fees for the last two fiscal years were:
2003 2002
-------- --------
Audit Fees(1).............................................. $212,966 $211,232
Audit-Related Fees(2)...................................... 21,000 20,050
Tax Fees(3)................................................ 168,043 85,989
All Other Fees(4).......................................... 20,966 7,927
---------------
(1) Fees billed for professional services such as annual audit and quarterly
statement review.
(2) Fees billed for assurance and related services relating to audit and
financial statements.
(3) Fees billed for professional services rendered for tax compliance, tax
advice, and tax planning.
(4) Services, other than audit fees, audit related fees or tax services.
All audit related services, tax services and other services were pre-approved by
the Audit Committee, which concluded that the provision of such services by
Ernst & Young LLP was compatible with the maintenance of that firm's
independence in the conduct of its auditing functions.
The Audit Committee has adopted a policy that requires advance approval of
all audit, audit-related, tax services, and other services performed by the
independent auditor. The policy provides for pre-approval by the Audit Committee
of specifically defined audit and non-audit services. Unless the specific
service has been previously pre-approved with respect to that year, the Audit
Committee must approve the permitted service before the independent auditor is
engaged to perform it. The Audit Committee has delegated to the Chair of the
Audit Committee authority to approve permitted services provided that the Chair
reports any decisions to the Committee at its next scheduled meeting.
A resolution calling for the ratification of the appointment of Ernst &
Young LLP will be presented at the Annual Meeting. Representatives of Ernst &
Young LLP will be present at the Annual Meeting to make a statement if they
desire to do so and to respond to appropriate questions.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS RECOMMENDS RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG LLP.
22
OTHER MATTERS
Management does not know of any matters to be brought before the meeting
other than the matters that are set forth in the Notice of the Annual Meeting of
Stockholders that accompanies this Proxy Statement and are described herein. In
the event that any such matters do come properly before the meeting, it is
intended that the persons named in the form of proxy solicited by management
will vote all proxies in accordance with their best judgment.
RECEIPT OF STOCKHOLDER PROPOSALS
Any stockholder proposals which are to be presented for inclusion in the
Company's proxy materials for the 2005 Annual Meeting of Stockholders in
reliance on Rule 14a-8 of the Securities Exchange Act of 1934 must be received
by the Secretary of Blair Corporation, 220 Hickory Street, Warren, Pennsylvania
16366, no later than November 29, 2004. The proxy to be solicited on behalf of
the Company for the 2005 Annual Meeting of Stockholders may confer discretionary
authority to vote on any such proposal not considered to have been timely
received that nonetheless properly comes before the 2005 Annual Meeting of
Stockholders.
EXPENSE OF SOLICITATION OF PROXIES
The cost of solicitation of proxies on behalf of management will be borne
by the Company. Proxies may also be solicited personally or by telephone by
directors, officers and other employees of the Company without additional
compensation therefor. The Company will also request persons, firms and
companies holding shares in their names, or in the name of their nominees, which
are beneficially owned by others, to send proxy material to and obtain proxies
from such beneficial owners, and will reimburse such holders for their
reasonable expenses in doing so.
DANIEL R. BLAIR
Secretary
March 29, 2004
23
APPENDIX A
BLAIR CORPORATION
AUDIT COMMITTEE CHARTER
Resolved, that effective February 25, 2004, the Charter of the Audit
Committee of the Board of Directors of Blair Corporation, as revised, will be as
follows:
There shall be a committee of the Board of Directors to be known as the
Audit Committee (the "Committee"). The Audit Committee shall assist the Board of
Directors in fulfilling its fiduciary responsibility by serving as an informed
and effective overseer of the Company's financial reporting process. The Audit
Committee shall be comprised of at least three directors. All members of the
Committee shall be independent of management and the Company and its
subsidiaries (collectively, the "Company"). Members of the Audit Committee shall
be considered independent if they have no relationship to the Company that may
interfere with the exercise of their independence from management and the
Company. In addition, to be considered independent, a member of the Audit
Committee may not, other than in his or her capacity as a member of the Audit
Committee, the board of directors, or any other board committee:
1. Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the Company or any subsidiary, provided that,
compensatory fees do not include the receipt of fixed amounts of
compensation under a retirement plan (including deferred compensation)
for prior service with the Company (provided that such compensation is
not contingent in any way on continued service); or
2. Be an affiliated person of the Company or any subsidiary thereof.
All Audit Committee members will be financially literate, and at least one
member will have accounting or related financial management expertise in
compliance with SEC and Exchange regulations and be designated the "Audit
Committee Financial Expert" as that term is defined in Item 401(h) of Regulation
S-K.
The Audit Committee shall fulfill its oversight responsibility to
shareholders, potential shareholders, the investment community and others
relating to corporate accounting, reporting practices of the Company, the
quality and integrity of the financial reports of the Company, the internal
audit function, the annual independent audit of the Company's financial
statements, and the legal compliance and ethics programs as established by
management and the board. It is the responsibility of the Audit Committee to
maintain free and open communication between the Directors, the independent
auditors, the internal auditors and the financial management of the Company.
The Audit Committee shall have the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it shall have direct access
to all books and records, facilities, and the Company's independent auditors as
well as anyone in the organization. The Audit Committee shall have the ability
to retain, at the Company's expense, special legal, accounting, or other
consultants or experts it deems necessary in the performance of its duties.
The primary responsibility of the Audit Committee is to oversee the
Company's accounting and financial reporting process. Management is responsible
for preparing the Company's financial statements, the independent auditors are
responsible for auditing those financial statements and the Audit Committee is
responsible for overseeing the audits of the financial statements. The Committee
in carrying out its responsibilities shall review its policies and procedures
periodically in order to ensure they address current conditions and
circumstances. The Committee should take the appropriate actions to set the
overall corporate "tone" for quality financial reporting to include sound
business risk practices and ethical behavior as it pertains to financial
reporting.
A-1
In carrying out these responsibilities, the Audit Committee will:
1. Obtain the board of directors' approval of this charter and, at least
annually, review and reassess the adequacy of this charter, and amend
and update it as conditions dictate. In addition, a copy of this
Charter shall be included in the annual report to shareholders or the
proxy statement at least triennially or the year after any significant
amendment to the Charter.
2. Appoint the independent auditors to be selected, subject to shareholder
approval, to audit the financial statements of the Company.
3. Pre-approve all audit and non-audit services by the independent
auditors and set the compensation of the independent auditors.
4. Have a clear understanding with management and the independent auditors
that the independent auditors are ultimately accountable to the Audit
Committee, as the shareholders' representatives; further the Audit
Committee shall have the ultimate authority in deciding to engage,
evaluate, and if appropriate, terminate independent auditor services.
5. Review and reach mutual agreement with management prior to the
appointment, termination, or replacement of the chief internal auditor.
6. Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit and fees for the
current year and the audit procedures to be utilized. Submit to
management the audit, non-audit, administrative and other fees to be
paid by management on behalf of the Audit Committee.
7. Review the audit including any comments or recommendations of the
independent auditors.
8. Review with the independent auditors, internal auditors, and with the
Company's financial and accounting personnel the adequacy and
effectiveness of the internal auditing, accounting and financial
controls of the Company, and elicit any recommendations that they may
have for the improvement of such internal control procedures or
particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions or procedures
that might be deemed illegal or otherwise improper. Further, the Audit
Committee should periodically review Company policy statements in terms
of their adequately representing an ethical code of conduct.
9. Review reports received from regulators and also review other legal and
regulatory matters that may have a material affect on the financial
statements or related Company compliance policies.
10. Periodically review the effectiveness of the internal audit function
and make appropriate recommendations. This includes the independence of
the internal audit function's reporting obligations, the proposed
internal audit plans for the coming year, and the coordination of such
plans with the independent auditors.
11. Inquire of management, internal auditor and the independent auditors
about significant risks or exposures and assess the steps management
has taken to minimize such risks to the Company.
12. Prior to each Audit Committee meeting, the Audit Committee should
receive a summary of findings from completed internal audits and a
progress report on the proposed internal audit plan with explanations
for any deviations from the original plan.
13. Review the quarterly financial statements with financial management and
the independent auditors prior to the filing of each Form 10-Q (or
prior to the press release of results, if possible) to determine that
the independent auditors do not take exception to the disclosure and
content of the financial statements, and discuss any other matters
required to be communicated to the Committee by the auditors. The chair
of the Committee may represent the entire Committee for purposes of
this review.
A-2
14. At all meetings of the Audit Committee, sufficient opportunity should
be made available for the independent and internal auditors to meet
with members of the Audit Committee without members of management
present. Among items to be discussed in these meetings are the
independent auditor's evaluation of the Company's financial, accounting
and auditing personnel, and the cooperation which the independent
auditors received during the course of their audit. The Committee shall
inquire about significant accruals, reserves, estimates, contingencies,
or any areas of dispute between management and the independent
auditors.
15. Review, process and retain any complaints received by the Compliance
Officer, an employee of the Company or the independent auditor
regarding accounting, internal accounting controls or auditing matters.
Review, process and retain confidential, anonymous submissions by
employees of the Company regarding questionable accounting or auditing
matters.
16. The Audit Committee shall cause an investigation to be made into any
matter brought to its attention that is within the scope of its duties,
with the power to retain independent outside counsel or other
professionals for this purpose if, in its judgment, that is
appropriate.
17. Review the Company's accounting/financial human resources and
succession planning.
18. Report the results of the annual audit to the board of directors. If
requested by the board, the Audit Committee should invite the
independent auditors to attend a full board of directors meeting to
assist in reporting the results of the annual audit or to answer other
directors' questions (alternatively, the other directors, particularly
the other independent directors, may be invited to attend the Audit
Committee meeting during which the results of the annual audit are
reviewed).
19. On an annual basis, ensure receipt from the independent auditors of a
formal written communication delineating all their relationships with,
and professional services provided to, the Company as required by the
Independence Standards Board under Standard No. 1, Independence
Discussions with Audit Committees. In addition, the Audit Committee
shall actively engage in a dialogue with the independent auditors with
respect to the nature and scope of any disclosed relationships or
professional services and take, or recommend that the board of
directors take, appropriate action to ensure the continuing
independence of the auditors.
20. Review the report of the Audit Committee which shall appear in the
Annual Report to Shareholders and in the Annual Report on Form 10-K
disclosing whether or not the Committee had reviewed and discussed with
management and the independent auditors, as well as discussed within
the Committee (without management or the independent auditors present),
the financial statements and the quality of accounting principles and
significant judgments affecting the financial statements. In addition,
the Committee should indicate whether, based on its discussions with
management and the auditors, its members became aware of material
misstatements or omissions in the financial statements.
21. The Audit Committee shall meet on at least a quarterly basis. Minutes
of all meetings of the Audit Committee shall be submitted to the Board
of Directors of the Company.
22. Review and approve the disclosure that is to appear in the Company's
proxy statement for its annual meeting of shareholders that denotes the
Committee has satisfied its responsibilities under this Charter for the
prior year.
23. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations, and inquiries received from regulators
or governmental agencies.
24. Review annually management's policies and procedures for insuring high
standards of ethical conduct by the Company and its employees and
ensure such policies and procedures are actively and consistently
enforced.
A-3
25. Periodically perform self-assessment of Audit Committee performance.
26. Annually review policies and procedures as well as audit results
associated with directors' and officers' expense accounts and
perquisites, and annually review a summary of directors' and officers'
related party transactions and potential conflicts of interest.
27. Review and approve requests for any consulting engagement to be
performed by the independent auditors and be advised of any other
study/work undertaken that is beyond the scope of the audit engagement
letter.
The Audit Committee believes that this charter properly defines its
responsibilities in accordance with applicable regulations. Further, the intent
of this charter is to ensure the financial reporting of the Company is of the
highest quality.
A-4
APPENDIX B
BLAIR CORPORATION
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
EFFECTIVE MARCH 23, 2004
The Nominating and Governance Committee is appointed by the Board of
Directors to discharge the Board's duties and responsibilities relating to (1)
assisting the Board by identifying individuals qualified to become Board
members; (2) recommending to the Board the candidates for directorships to be
filled by the Board and the director nominees to be proposed for election at the
annual meeting of shareholders; (3) developing and recommending to the Board a
set of corporate governance principles applicable to the Company; (4) monitoring
developments in corporate governance and making recommendations to the Board
regarding changes in governance policies and practices; (5) reviewing the
Company's management succession plans, including the succession plans for the
Chief Executive Officer and other senior officers; and (6) conducting an annual
evaluation of the performance of the Board and Board committees.
The Committee shall be comprised of at least three members of the Board of
Directors, each of whom shall (a) meet the independence requirements of the
American Stock Exchange listing standards and any other applicable laws, rules
and regulations governing independence, as determined by the Board of Directors;
(b) qualify as "non-employee directors" within the meaning of Rule 16b-3 under
the Securities and Exchange Act of 1934, as amended, and must meet the "outside
director" requirements of Section 162(m) of the Internal Revenue Code of 1986,
as amended, and the regulations thereunder.
The members of the Committee shall be appointed annually by the Board at
its April organizational meeting and shall serve until the member's successor is
duly appointed or until the member's earlier resignation or removal. A Chair
shall be appointed annually by the Board Chairman and shall be responsible for
reporting to the full Board activities and decisions of the Committee. The
Board, with or without cause, may remove a member at any time.
The Committee shall meet at least three times each year and more frequently
if circumstances warrant. The Committee may ask members of management or others
whose advice and counsel are relevant to the issues then being considered by the
Committee to attend any meetings and to provide such pertinent information as
the Committee may request. The Committee may at any time retain and/or remove
such outside advisors as the Committee deems appropriate to fulfill its
responsibilities with the authority to approve their fees and retention terms.
The Committee shall review and evaluate annually the compliance by the
Committee with this Charter.
The Committee shall also review and assess annually the adequacy of this
Charter and recommend to the Board any changes to the Charter deemed advisable
by the Committee.
The Committee shall have the authority to delegate power and operations to
subcommittees as deemed appropriate by the Committee.
In carrying out these responsibilities, the Nominating and Governance
Committee will:
1. Review and recommend to the Board policies regarding the size and
composition of the Board and qualifications and criteria for Board
membership.
2. In consultation with the Chairman and Chief Executive Officer,
periodically review the type and amount of Board compensation for
non-employee directors and committee members and, as appropriate, make
recommendations to the full Board of Directors regarding such
compensation. This review should encompass market survey data on
director compensation and be consistent with market practice.
3. Identify individuals qualified to become Board members and recommend to
the Board prospective candidates for Board membership. In identifying
candidates for membership on the
B-1
Board, the Committee shall take into account all factors it considers
appropriate, which may include professional experience, knowledge,
integrity, independence, diversity of backgrounds and the extent to
which the candidate would fill a present need on the Board.
4. In consultation with the Chairman and Chief Executive Officer, review
and recommend to the Board the slate of director nominees to be
proposed for election at annual meetings of shareholders and candidates
to fill positions on the Board that develop between annual meetings of
shareholders.
5. Monitor the orientation of new directors and make recommendations for
continuing education of all directors as appropriate.
6. Investigate any potential conflict of interest by a director as
assigned to it by the Board.
7. Review the structure and operations of the various Board committees and
qualifications for Board committee membership, giving consideration to
the criteria for service on each committee as set forth in the charter
for such committee, as well as any other factors that the Committee
deems relevant.
8. Should the positions of Chairman of the Board and CEO be held jointly,
recommend to the Board the appointment of a Presiding Director to
preside at all non-management Director meetings of the Board, review
this appointment at least annually and establish procedures for
interested persons to contact the Presiding Director or the
non-management Directors as a group.
9. In consultation with the Chairman of the Board, or a designated
Presiding Director, recommend Board members to serve on committees of
the Board and, where appropriate, make recommendations regarding
removal of any member of any committee.
10. Develop and recommend to the Board a set of corporate governance
principles and practices. With the assistance of corporate counsel,
keep abreast of developments and requirements with regard to corporate
governance and review the adequacy of the Company's corporate
governance principles and practices on at least an annual basis.
11. Review, at least annually, the Company's compliance with the listing
requirements of the American Stock Exchange, and report to the Board of
Directors regarding the same.
12. Review and evaluate the Company's management development and succession
plans on at least an annual basis and make recommendations to the Board
regarding the succession plans for the Chief Executive Officer and
other senior officer positions.
13. Establish and periodically review the criteria for selection of the
Chief Executive Officer, as well as steps for Chief Executive Officer
succession in the event of an emergency or the retirement of the Chief
Executive Officer.
14. Review recommendations of the CEO as to the appointment or election of
executive officers and/or proposed changes in executive officer roles
and responsibilities.
15. Review and make recommendations to the Board regarding the appropriate
response to shareholder proposals relating to nominations and/or
corporate governance.
16. Subject to Delaware Incorporation Law, review and approve, prior to
publication, the Corporation's proxy statement and form of proxy;
subject to concurrent review by the applicable committees of the
Compensation, Audit and Auditor's sections.
17. Review and approve, prior to publication and filing, the non-financial
portions of the annual report to stockholders and the Annual Report on
Form 10-K.
18. Oversee, at least annually, the evaluation of the performance of the
Board and each Board Committee.
B-2
[BLAIR CORPORATION LOGO]
DETACH CARD
--------------------------------------------------------------------------------
[BLAIR CORPORATION LOGO]
The undersigned hereby appoints Craig N. Johnson, Daniel R.
Blair, and Bryan J. Flanagan, and each of them with power of
substitution in each, as proxies to represent the undersigned
at the annual meeting of the stockholders of Blair Corporation,
to be held at the Library Theatre, 302 Third Avenue West,
Warren, Pennsylvania on Thursday, April 29, 2004 at 11:00 A.M.
and at any adjournments thereof, to vote the same number of
shares and as fully as the undersigned would be entitled to
vote if then personally present in the manner directed by the
undersigned.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
LISTED IN ITEM 1.
1. THE ELECTION OF DIRECTORS
FOR all nominees listed below [ ] WITHHOLD
AUTHORITY [ ]
(except as shown below to the contrary) to vote for
all nominees listed below
Steven M. Blair, Robert D. Crowley, Harriet Edelman,
Cynthia A. Fields, Bryan J. Flanagan, John O. Hanna,
Craig N. Johnson, Murray K. McComas, Thomas P. McKeever,
Ronald L. Ramseyer, Michael A. Schuler, John E. Zawacki
(Instructions: to withhold authority to vote for any
individual nominee, strike a line through that nominee's
name.)
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF ERNST &
YOUNG LLP AS AUDITORS IN ITEM 2.
2. RATIFICATION OF ERNST & YOUNG LLP AS AUDITORS:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed, on the reverse side)
P
R
O
X
Y
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF BLAIR
CORPORATION
Blair Building Picture
BLAIR CORPORATION HEADQUARTERS
220 Hickory Street
Warren, Pennsylvania
DETACH CARD
--------------------------------------------------------------------------------
(Continued from reverse side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES IN ITEM 1, AND FOR THE
RATIFICATION OF AUDITORS IN ITEM 2; AND THE PROXIES ARE
AUTHORIZED, IN ACCORDANCE WITH THEIR JUDGMENT, TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENTS THEREOF.
DATE: , 2004
--------------------------
--------------------------
(Sign here)
INSTRUCTIONS: The signer
hereby revokes all proxies
heretofore given by the
signer to vote at said
meeting or any
adjournments thereof.
NOTE: Please sign exactly
as name appears hereon.
Joint owners should each
sign. When signing as
attorney, executor,
trustee, administrator or
guardian, please give full
title as such.
PLEASE SIGN, DATE, AND RETURN YOUR PROXY
PROMPTLY IN THE
ENCLOSED ENVELOPE TO NATIONAL CITY BANK,
P.O. BOX 94509,
CLEVELAND, OHIO 44101-9854.