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-12
Genesco Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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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(3) Filing Party:
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(4) Date Filed:
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[LOGO]GENESCO INC
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Genesco Inc. will be held at the Company's
executive offices, Genesco Park, 1415 Murfreesboro Road, Nashville, Tennessee,
on Thursday, June 26, 2003, at 10:00 a.m. Central Time. The agenda will include
the following items:
1. electing ten directors;
2. acting on certain amendments to the Company's 1996 Stock Incentive
Plan; and
3. transacting any other business that properly comes before the meeting.
Shareholders of record at the close of business on April 24, 2003, will be
entitled to vote at the meeting and any adjournment or postponement thereof.
By order of the board of directors,
/s/ Roger G. Sisson
Roger G. Sisson
Secretary May 23, 2003
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IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY PROMPTLY SO THAT YOUR SHARES WILL BE VOTED. A
RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS
ENCLOSED FOR YOUR CONVENIENCE.
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[LOGO]GENESCO INC
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, JUNE 26, 2003
The board of directors of Genesco Inc. ("Genesco" or the "Company") is
furnishing this proxy statement in connection with its request for proxies to be
voted at the annual meeting of shareholders. The meeting will be held at the
Company's executive offices at 10:00 a.m., Central Time, on Thursday, June 26,
2003. The notice that accompanies this statement describes the items on the
meeting agenda. This proxy material was first mailed to shareholders on or about
May 23, 2003.
The Company will pay the cost of the proxy solicitation. In addition to this
request, officers, directors and regular employees of the Company may solicit
proxies personally and by mail, facsimile or telephone. They will receive no
extra compensation for any solicitation activities. The Company has retained
Georgeson Shareholder Communications, Inc. to assist in the proxy solicitation.
It will pay Georgeson a fee of $8,500, plus $6.00 per completed telephone call
to shareholders in the event that active solicitation is required, and reimburse
its expenses. The Company will request brokers, nominees, fiduciaries and other
custodians to forward soliciting material to the beneficial owners of shares and
will reimburse the expenses they incur in doing so.
All valid proxies will be voted as the board of directors recommends, unless the
proxy card specifies otherwise. A shareholder may revoke a proxy before the
proxy is voted at the annual meeting by giving written notice of revocation to
the secretary of the Company, by executing and delivering a later-dated proxy or
by attending the annual meeting and voting in person the shares the proxy
represents.
The board of directors does not know of any matter that will be considered at
the annual meeting other than those the accompanying notice describes. If any
other matter properly comes before the meeting, persons named as proxies will
use their best judgment to decide how to vote on it.
The Company's executive offices are located at Genesco Park, 1415 Murfreesboro
Road, Nashville, Tennessee 37217.
3
VOTING SECURITIES
The various classes of voting preferred stock and the common stock will vote
together as a single group at the annual meeting.
April 24, 2003 was the record date for determining who is entitled to receive
notice of and to vote at the annual meeting. On that date, the number of voting
shares outstanding and the number of votes entitled to be cast were as follows:
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CLASS OF NO. OF VOTES PER TOTAL
STOCK SHARES SHARE VOTES
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Subordinated Serial Preferred Stock:
$2.30 Series 1 36,932 1 36,932
$4.75 Series 3 18,163 2 36,326
$4.75 Series 4 16,412 1 16,412
$1.50 Subordinated Cumulative
Preferred Stock 30,017 1 30,017
Employees' Subordinated Convertible
Preferred Stock 68,326 1 68,326
Common Stock 21,744,285 1 21,744,285
======================================================================================
A majority of the votes entitled to be cast on a matter constitutes a quorum for
action on that matter. Once a share is represented at the meeting, it is
considered present for quorum purposes for the rest of the meeting. Abstentions
and shares represented at the meeting but not voted on a particular matter due
to a broker's lack of discretionary voting power ("broker non-votes") will be
counted for quorum purposes but not as votes cast for or against the election of
directors. The proposed 1996 Stock Incentive Plan amendment requires approval by
a majority of the Company's issued and outstanding common stock, because of a
provision in the Plan. Consequently, abstentions and broker non-votes will
effectively count as votes against approval. All the matters on the agenda for
the meeting are routine matters as to which, under applicable New York Stock
Exchange rules, a broker will have discretionary authority to vote if
instructions are not received from the client at least 10 days prior to the
annual meeting.
4
ELECTION OF DIRECTORS
Ten directors are to be elected at the meeting. They will hold office until the
next annual meeting of shareholders and until their successors are elected and
qualify. A plurality of the votes cast by the shares entitled to vote in the
election is required to elect a director. All the nominees are presently serving
as directors and all have agreed to serve if elected. The shares represented by
valid proxies will be voted FOR the election of the following nominees, unless
the proxies specify otherwise. If any nominee becomes unable or unwilling to
serve prior to the annual meeting, the board of directors will reduce the number
of directors comprising the board, pursuant to the Company's Bylaws, or the
proxies will be voted for a substitute nominee recommended by the board of
directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR ALL OF THE
DIRECTOR NOMINEES.
INFORMATION CONCERNING NOMINEES
The names, ages and principal occupations of the nominees and certain
information regarding their business experience are set forth below:
LEONARD L. BERRY, PH.D., 60, DISTINGUISHED PROFESSOR OF MARKETING, TEXAS A&M
University. Dr. Berry has been a professor of marketing at Texas A&M University
since 1982. He is the founder of the Center for Retailing Studies, holds the
M.B. Zale Chair in Retailing and Marketing Leadership at Texas A&M and is the
author of several books. He is a director of Lowe's Companies, Inc., Grocery
Outlet, Inc. and Darden Restaurants Inc. and became a Genesco director in 1999.
ROBERT V. DALE, 66, CONSULTANT. Mr. Dale, who became a director of the Company
in 2000, has been a business consultant since 1998. He was president of Windy
Hill Pet Food Company, a pet food manufacturer, from 1995 until 1998.
Previously, he served as president of Martha White Foods for approximately six
years during the 1970s and again from 1985 to 1994. He was also president of
Beatrice Specialty Products division and a vice president of Beatrice Companies,
Inc., the owner of Martha White Foods. He is a director of SunTrust Bank
Nashville, N.A., CBRL Group, Inc., Nashville Wire Products and Zatarain's of New
Orleans.
W. LIPSCOMB DAVIS, JR., 71, PARTNER, HILLSBORO ENTERPRISES. Mr. Davis has been a
principal of Hillsboro Enterprises, an investment partnership, and of its
corporate predecessor since 1960. He has been a director of Genesco since 1988.
He is also a director of Thomas Nelson, Inc.
MATTHEW C. DIAMOND, 34, CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF ALLOY, INC. Mr.
Diamond served as the director of marketing and planning of Alloy, Inc., a
direct
5
marketing and media company targeting "Generation Y" consumers, until he was
appointed chief executive officer in 1999. He has served as a director of Alloy
since 1996, and was elected chairman of the board in 1999. He has been a
director of Genesco since 2001.
BEN T. HARRIS, 59, CHAIRMAN OF GENESCO. Mr. Harris joined Genesco in 1967 and
was named manager of the leased department division of Genesco's Jarman Shoe
Company in 1980. In 1991, he became president of the Jarman Shoe Company and in
1994, president of Genesco's retail division. In 1996, he was named executive
vice president -- operations and subsequently president and chief operating
officer and a director of the Company. He served as chief executive officer from
1997 until April 2002 and became chairman of the Company in 1999.
KATHLEEN MASON, 54, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF TUESDAY MORNING
CORPORATION. Ms. Mason, who joined Genesco's board in 1996, became president and
chief executive officer of Tuesday Morning Corporation, an operator of
first-quality discount and closeout home furnishing and gift stores, in 2000.
She was president and chief merchandising officer of Filene's Basement, Inc. in
1999. She was president of the HomeGoods division of The TJX Companies, Inc., an
apparel and home fashion retailer, from 1997 to 1999. She was employed by Cherry
& Webb, a women's apparel specialty chain, from 1987 until 1992, as executive
vice president, then, until 1997, as chairman, president and chief executive
officer. Her previous business experience includes senior management positions
with retailers May Company, The Limited Inc. and the Mervyn's Stores division of
Dayton-Hudson Corp. Ms. Mason is also a director of The Men's Wearhouse, Inc.
HAL N. PENNINGTON, 65, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF GENESCO. Mr.
Pennington became a member of the Company's board in November 1999, when he was
named executive vice president and chief operating officer. He became president
of the Company in 2000 and was named chief executive officer in April 2002. A
Genesco employee since 1961, he was appointed president of the Johnston & Murphy
division in 1997 and became a senior vice president of the Company in 1998. He
was president of the Dockers Footwear division from 1995 until 1997 and vice
president --wholesale of Johnston & Murphy from 1990 until 1995.
LINDA H. POTTER, 50, SENIOR VICE PRESIDENT OF SUNTRUST BANKS, INC. AND SENIOR
FINANCIAL OFFICER FOR SUNTRUST BANK, CENTRAL GROUP. Ms. Potter served as the
senior financial officer for SunTrust Bank, Tennessee until 2002, when she was
appointed senior financial officer for Suntrust Bank, Central Group. She has
also been the chief financial officer for SunTrust Bank, Nashville and has held
other positions in the finance and accounting and information systems areas of
the Nashville bank. She has been employed at SunTrust since 1980. She also
served on the Board of Directors
6
of Belmont University's Center for Entrepreneurship and the Board of Advisors
for the Center for Entrepreneurship Women's Programs from 1999 to 2002. Ms.
Potter has been a director of Genesco since 2001.
WILLIAM A. WILLIAMSON, JR., 67, PRIVATE INVESTOR. Mr. Williamson was employed
from 1958 to 1992 by Durr-Fillauer Medical, Inc., a distributor of
pharmaceuticals, drug store sundries and medical, surgical and veterinary
products, and became chief executive officer of that company in 1974 and
chairman in 1981. He has been a director of Genesco since 1989. Mr. Williamson
is also a director of Dunn Investment Company.
WILLIAM S. WIRE II, 71, RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF GENESCO.
Mr. Wire joined the Company in 1962, was elected a vice president in 1971,
senior vice president -- finance in 1984 and vice chairman and a director in
1985. He was elected president and chairman in 1986, served as chief executive
officer from 1986 until 1993 and retired as chairman in 1994. Mr. Wire is also a
director of Dollar General Corporation.
BOARD COMMITTEES AND MEETINGS
The board of directors met six times during the fiscal year ended February 1,
2003 ("Fiscal 2003"). No director was present at fewer than 75% of the total
number of meetings of the board of directors and the committees of the board on
which he or she served during Fiscal 2003. A description of each board committee
and its membership follows.
AUDIT COMMITTEE
Members: Robert V. Dale (chairman), Kathleen Mason, Linda H. Potter and
William A. Williamson, Jr.
The audit committee is composed of four independent directors (as defined under
the applicable rules of the New York Stock Exchange) and operates under a
written charter adopted by the board of directors, a copy of which is attached
to this proxy statement as Appendix A. The audit committee met seven times in
Fiscal 2003. The functions of the audit committee are to assist the board of
directors in monitoring the processes used by the Company to produce financial
statements, the Company's systems of internal accounting and financial controls
and independence of the Company's outside auditors.
7
NOMINATING AND GOVERNANCE COMMITTEE
Members: W. Lipscomb Davis, Jr. (chairman), Leonard L. Berry, Robert V.
Dale and William S. Wire II
The nominating and governance committee met three times in Fiscal 2003. The
function of the nominating and governance committee is to make recommendations
to the board of directors with respect to (i) the size of the board of
directors, (ii) candidates for election to the board of directors, (iii) the
designation of committees of the board of directors, their functions and
members, (iv) the succession of the executive officers of the Company and (v)
board policies and procedures and other matters of corporate governance.
COMPENSATION COMMITTEE
Members: Kathleen Mason (chairman through December 31, 2002), W. Lipscomb
Davis, Jr. (chairman since January 1, 2003), Leonard L. Berry and
Robert V. Dale (until June 26, 2002)
The compensation committee met three times in Fiscal 2003. The functions of the
compensation committee are (i) to approve the compensation of the officers of
the Company and other management employees reporting directly to the chief
executive officer, (ii) to make recommendations to the board of directors with
respect to the compensation of directors, (iii) to review and provide assistance
and recommendations to the board of directors with respect to (a) management
incentive compensation plans and (b) the establishment, modification or
amendment of any employee benefit plan (as that term is defined in the Employee
Retirement Income Security Act of 1974) to the extent that action by the board
of directors is required, (iv) to serve as the primary means of communication
between the administrator of the Company's employee benefit plans and the board
of directors and (v) to administer the Company's 1996 Stock Incentive Plan and
the Employee Stock Purchase Plan.
FINANCE COMMITTEE
Members: William S. Wire II (chairman), Matthew C. Diamond, Hal N.
Pennington and William A. Williamson, Jr.
The finance committee met four times in Fiscal 2003. The functions of the
finance committee are (i) to review and make recommendations to the board with
respect to (a) the establishment of bank lines of credit and other short-term
borrowing arrangements, (b) the investment of excess working capital funds on a
short-term basis, (c) significant changes in the capital structure of the
Company, including the incurrence of long-term indebtedness and the issuance of
equity securities and (d) the declaration or omission of dividends; (ii) to
approve the annual capital expenditure
8
and charitable contribution budgets; (iii) to serve as the primary means of
communication between the board of directors and the investment committee of the
Company's employee benefits trusts, the trustees of the Genesco Restricted
Investments Pension Trust and the chief financial officer of the Company
regarding the activities of such committee, trustees and officers with respect
to certain of the Company's employee benefit plans (as that term is defined in
the Employee Retirement Income Security Act of 1974) and (iv) to appoint, remove
and approve the compensation of the trustees under any employee benefit plan.
DIRECTOR NOMINATIONS
The nominating and governance committee and board of directors will consider
nominees for the board of directors recommended by shareholders if shareholders
comply with the Company's advance notice requirements. The Company's Bylaws
provide that a shareholder who wishes to nominate a person for election as a
director at a meeting of shareholders must deliver written notice to the
secretary of the Company. This notice must contain, as to each nominee, all of
the information relating to such person as would be required to be disclosed in
a proxy statement meeting the requirements of Regulation 14A under the
Securities Exchange Act of 1934 if such person had been nominated by the board
of directors, the written consent of such person to being named as a nominee in
soliciting material and to serving as a director, if elected, and the name and
address of the shareholder delivering the notice as it appears on the stock
records of the Company, along with the number and class of shares held of record
by such shareholder. In the case of an annual meeting to be held on the third
Tuesday in the month of June or within thirty days thereafter, the notice must
be delivered not less than sixty nor more than ninety days prior to the third
Tuesday in June. In the case of an annual meeting which is being held on any
other date (or in the case of any special meeting), the notice must be delivered
within ten days after the earlier of the date on which notice of the meeting is
first mailed to shareholders or the date on which public disclosure is first
made of the date of such meeting.
DIRECTOR COMPENSATION
For Fiscal 2003, directors who were not employees of the Company received a
retainer of $15,000 per year and a fee of $750 for each board or committee
meeting they attended in person and $500 for each meeting they attended by
telephone. Committee chairmen received a supplementary retainer of $2,000 per
year. The Company also pays the premiums for non-employee directors on $50,000
of coverage under the Company's group term life insurance policy plus additional
cash compensation to offset taxes on their imputed income from such premiums.
Directors
9
who are full-time Company employees do not receive any extra compensation for
serving as directors.
Directors elected at the annual meeting who are not employees of the Company
will receive a retainer of $20,000 per year and a fee of $1,000 for each board
or committee meeting they attend in person and $750 for each meeting they attend
by telephone. Each committee chairman will receive an additional $4,000 per
year.
The 1996 Stock Incentive Plan (the "Plan") provides for the issuance to
directors who are not employees of the Company of up to 200,000 shares of common
stock, subject to adjustment in certain circumstances. The proposed amendment to
the Plan to be voted on at the annual meeting would consolidate the shares
available for issuance to directors under the Plan with those available for
issuance to employees, removing the 200,000 share limit on total director grants
under the Plan. The Plan provides for the automatic issuance of shares of common
stock valued at $15,000 to a newly elected non-employee director on the date of
the first annual meeting at which he or she is elected a director. The shares
are subject to restrictions on transfer for five years after they are granted
unless the director leaves the board earlier and, with certain exceptions, to
forfeiture if the director's service terminates during the three years following
the date of grant. The Plan also presently provides for an annual grant of
options to purchase 4,000 shares of common stock at the stock's closing price on
the New York Stock Exchange on the grant date. The proposed amendment to the
Plan to be voted on at the annual meeting would end the annual option grants to
directors and provide for annual grants of restricted stock, vesting in three
equal annual increments and subject to the same transfer restrictions described
above. See "Amendments to 1996 Stock Incentive Plan." The Plan also permits
non-employee directors to elect to exchange all or part of their annual
retainers for shares of restricted stock at 75% of the shares' fair market
value. Such shares are subject to the same restrictions on transfer and to
forfeiture if the director's service terminates before the retainer represented
by such shares is earned. As of April 30, 2003, 176,912 shares of common stock
had been issued to non-employee directors pursuant to the Plan, of which 9,012
had been forfeited, leaving 23,088 shares available for future grants under the
existing provisions of the Plan.
10
SECURITY OWNERSHIP OF OFFICERS,
DIRECTORS AND PRINCIPAL SHAREHOLDERS
PRINCIPAL SHAREHOLDERS
The following table sets forth the ownership of the entities which, according to
the most recent filings of Schedules 13G and amendments thereto, as applicable,
by the beneficial owners as of the record date for this meeting, own
beneficially more than 5% of the Company's common stock and the entities which,
according to the Company's stock transfer records, own more than 5% of any of
the other classes of voting securities described on page 4. Percentage data is
calculated on outstanding shares at April 24, 2003.
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NAME AND ADDRESS CLASS OF NO. OF PERCENT OF
OF BENEFICIAL OWNER STOCK SHARES CLASS
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Deutsche Bank AG (1) Common 1,730,515 8.0%
Taunusanlage 12, D-60325
Frankfurt am Main
Federal Republic of Germany
Lord, Abbett & Co. (2) Common 1,791,220 8.2%
90 Hudson Street
Jersey City, New Jersey 07302
Wellington Management Common 1,830,455 8.4%
Company, LLP (3)
75 State Street
Boston, Massachusetts 02109
Jeannie Bussetti Subordinated 3,000 8.1%
12 Carteret Drive Serial Preferred,
Pomona, New York 10970 Series 1
Joseph Bussetti Subordinated 2,000 5.4%
52 South Lilburn Drive Serial Preferred,
Garnerville, New York 10923 Series 1
Ronald R. Bussetti Subordinated 2,000 5.4%
12 Carteret Drive Serial Preferred,
Pomona, New York 10970 Series 1
S. Robert Weltz, Jr. Subordinated 2,308 6.2%
415 Hot Springs Road Serial Preferred,
Santa Barbara California 93108 Series 1
Empire & Co. Subordinated 5,889 15.9%
P. O. Box 426 Serial Preferred,
Exchange Place Station Series 1
69 Montgomery Street
Jersey City, New Jersey 07303
11
NAME AND ADDRESS CLASS OF NO. OF PERCENT OF
OF BENEFICIAL OWNER STOCK SHARES CLASS
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Empire & Co. Subordinated 4,226 23.3%
P. O. Box 426 Serial Preferred,
Exchange Place Station Series 3
69 Montgomery Street
Jersey City, New Jersey 07303
Hazel Grossman Subordinated 1,074 5.9%
355 Blackstone Boulevard, Apt. 552 Serial Preferred,
Providence, Rhode Island 02906 Series 3
Jack Rubens Subordinated 1,514 8.3%
5114 Windsor Parke Drive Serial Preferred,
Boca Raton, Florida 33496 Series 3
Barbara F. Grossman Wasserspring Subordinated 933 5.1%
75 Cooper Drive Serial Preferred,
Great Neck, New York 11023 Series 3
Melissa Evins Subordinated 2,893 17.6%
417 East 57th Street Serial Preferred,
New York, New York 10022 Series 4
Reed Evins Subordinated 2,418 14.7%
417 East 57th Street, Apt. 32B Serial Preferred,
New York, New York 10022 Series 4
James H. Cheek, Jr. Subordinated 2,413 8.0%
11 Burton Hills Boulevard, Apt. 407 Cumulative
Nashville, Tennessee 37215 Preferred
========================================================================================
(1) Includes 1,477,379 shares with sole voting power, 1,336,915 shares with
sole dispositive power and 393,600 shares with shared dispositive power.
Number of shares from Schedule 13G filed on February 11, 2003. (Includes
1,222,725 shares of common stock (5.6% of such shares outstanding)
beneficially owned by Deutsche Bank Trust Company Americas, an affiliate of
Deutsche Bank AG; 396,390 shares of common stock (1.8% of such shares
outstanding) beneficially owned by Deutsche Investment Management Americas
Inc., an affiliate of Deutsche Bank AG and 111,400 shares of common stock
(0.5% of such shares outstanding) beneficially owned by Deutsche Asset
Management Group Ltd, London, an affiliate of Deutsche Bank AG.)
(2) Number of shares from Schedule 13G filed on January 30, 2003.
(3) Includes 1,291,455 shares with shared voting power and 1,830,455 shares
with shared dispositive power. Number of shares from Schedule 13G filed on
February 12, 2003.
12
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth information as of May 15, 2003, regarding the
beneficial ownership of the Company's common stock by each of the Company's
current directors, the persons required to be named in the Company's summary
compensation table appearing elsewhere in the proxy statement and the current
directors and executive officers as a group. None of such persons owns any
equity securities of the Company other than common stock.
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NAME NO. OF SHARES (1)
--------------------------------------------------------------------------------
Leonard L. Berry 20,139(2)
Robert V. Dale 14,003(2)
W. Lipscomb Davis, Jr. 86,081(2)(3)
Matthew C. Diamond 9,672(2)
Ben T. Harris 421,038(2)
Kathleen Mason 30,526(2)
Hal N. Pennington 142,862(2)
Linda H. Potter 10,484(2)
William A. Williamson, Jr. 87,874(2)
William S. Wire II 38,532(2)
James C. Estepa 54,250(2)
James S. Gulmi 194,854(2)
Roger G. Sisson 37,750(2)
Current Directors and Executive Officers as a Group (17 Persons) 1,187,997(2)(4)
================================================================================
(1) Each director and officer owns less than 1% of the outstanding shares of
the Company's common stock, except for Mr. Harris, who owns approximately
1.9% of the Company's common stock.
(2) Includes shares that may be purchased within 60 days upon the exercise of
options granted under the Company's common stock option plans, as follows:
Mr. Pennington - 62,808; Mr. Harris - 228,711; Mr. Gulmi - 121,106; Mr.
Estepa - 34,250; Mr. Sisson - 37,750; Ms. Potter and Mr. Diamond - 8,000
each; Mr. Dale - 12,000; Ms. Mason and Messrs. Berry, Davis, Williamson and
Wire - 16,000 each; current executive officers and directors as a group -
627,375.
(3) Includes 16,000 shares of common stock owned by Mr. Davis's mother, for
whom he holds power of attorney. Mr. Davis disclaims beneficial ownership
of his mother's shares.
(4) Constitutes approximately 5.5% of the outstanding shares of the Company's
common stock.
13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than 10% of a registered class
of the Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Such officers,
directors and shareholders are required by SEC regulations to furnish the
Company with copies of all such reports that they file. Based solely on a review
of copies of reports filed with the SEC and of written representations by
officers and directors, the Company believes that during Fiscal 2003 all persons
subject to the reporting requirements of Section 16(a) filed the required
reports on a timely basis.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation earned by or
awarded or paid to the chief executive officer and each of the other four most
highly compensated executive officers employed by the Company at February 1,
2003 (together, the "named executive officers") for each of Fiscal 2001, 2002
and 2003.
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LONG-TERM COMPENSATION
---------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------- -------------------------- -------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
AT FEBRUARY 1, 2003 YEAR ($) ($) ($) ($)(1) (#) ($)(2) ($)(3)
-----------------------------------------------------------------------------------------------------------------------------
Hal N. Pennington 2003 464,372 226,250 -- 999,981 130,000 -- 5,310
President and 2002 326,872 -- -- -- 65,000 -- 4,250
Chief Executive Officer 2001 293,122 381,548 -- -- 25,000 -- 4,250
Ben T. Harris 2003 254,223 157,060 -- -- -- -- 4,190
Chairman 2002 540,890 -- -- -- 105,000 -- 4,250
2001 426,890 746,045 -- 470,000 -- 3,753,779 4,250
James C. Estepa 2003 325,377 286,094 -- -- 50,000 -- 5,064
Senior Vice President 2002 289,953 507,156 -- 623,000 50,000 -- 4,250
2001 225,870 315,311 -- -- 35,000 -- 4,250
James S. Gulmi 2003 293,500 99,300 -- -- 20,000 -- 5,014
Senior Vice 2002 277,000 -- -- -- 20,000 -- 4,250
President-Finance and 2001 265,000 227,678 -- -- 6,000 -- 4,250
Chief Financial Officer
Roger G. Sisson 2003 194,971 47,400 -- -- 20,000 -- 3,281
Secretary and 2002 176,638 -- -- -- 15,000 -- 4,265
General Counsel 2001 168,638 104,800 -- -- 6,000 -- 4,229
=============================================================================================================================
(1) At the end of Fiscal 2003, Mr. Pennington held 36,764 shares valued at
$611,385, Mr. Harris held 28,262 shares of restricted stock valued at
$470,000 based on the closing price of the Company's unrestricted common
stock on the New York Stock
14
Exchange on January 31, 2003 and Mr. Estepa held 20,000 shares valued at
$332,600. In each case, the restricted stock grant was to vest in its
entirety on the third anniversary of its grant date. The restricted stock
would receive dividends if any were paid on the common stock.
(2) The value, based on the closing price of the Company's common stock on the
grant date, of a grant of 147,207 shares of stock in 2001.
(3) In all cases, the Company's matching contribution to the named executive
officer's 401(k) Plan account.
OPTION GRANTS IN FISCAL 2003
The following table sets forth information regarding stock options granted to
the named executive officers in Fiscal 2003. All the grants will become
exercisable in four equal annual installments beginning on the first anniversary
of the grant date. They expire on the tenth anniversary of the grant date,
except that they are subject to earlier termination upon termination of the
grantee's employment. No stock appreciation rights were granted by the Company
in Fiscal 2003. The potential realizable values shown in the table are
hypothetical, have not been discounted to reflect their present value and are
not intended as a forecast of future stock price appreciation. Any gains which
may be realized upon exercise of such options will depend upon the actual market
price of the Company's common stock on the date the option is actually
exercised.
-----------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS/SARS AT ASSUMED ANNUAL RATES
UNDERLYING GRANTED TO EXERCISE OR OF STOCK PRICE APPRECIATION
OPTION/SARS EMPLOYEES IN BASE PRICE EXPIRATION FOR OPTION TERM
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
-----------------------------------------------------------------------------------------------------
Hal N. Pennington 130,000 31.55% $16.76 11/13/2012 $1,370,236 $3,472,446
Ben T. Harris -- -- -- -- -- --
James C. Estepa 50,000 12.14% $16.76 11/13/2012 $527,014 $1,335,556
James S. Gulmi 20,000 4.85% $16.76 11/13/2012 $210,805 $534,222
Roger G. Sisson 20,000 4.85% $16.76 11/13/2012 $210,805 $534,222
======================================================================================================
The stock option grants were made under the Company's 1996 Stock Incentive Plan.
The option price per share under the Plan may not be less than the fair market
value of the Company's common stock (the closing price of the stock on the New
York Stock Exchange) on the date the option is granted or the most recent
previous trading date. Plan options may not be exercised during the first twelve
months after the date of grant. Thereafter, options may be exercised as
determined by the compensation committee of the board of directors. All the
options will vest and become exercisable upon a change of control as described
under "Change of Control Arrangements" below.
15
AGGREGATED OPTION EXERCISES IN FISCAL 2003 AND FISCAL YEAR END OPTION VALUES
The following table sets forth information concerning (i) stock options
exercised during Fiscal 2003 by the named executive officers, (ii) the number of
shares subject to unexercised options held by such persons at February 1, 2003,
indicating those currently exercisable and those not yet exercisable and (iii)
the value of such unexercised options on February 1, 2003. The values of
unexercised options are calculated by subtracting the exercise price from the
closing market price of the common stock on the New York Stock Exchange on
January 31, 2003 ($16.63). In-the-money options are those whose exercise price
is below market value.
---------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED SHARES
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
ACQUIRED ON VALUE AT FISCAL YEAR END(#) AT FISCAL YEAR END ($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------------------------------------------------------------------------------------------------------------
Hal N. Pennington 3,750 $38,100 62,808 210,000 $117,160 $64,500
Ben T. Harris 0 $0 228,711 78,750 $1,681,058 $0
James C. Estepa 21,000 $277,733 31,750 120,000 $36,023 $26,450
James S. Gulmi 0 $0 121,106 41,000 $996,968 $10,320
Roger G. Sisson 0 $0 37,750 36,250 $354,968 $6,880
=====================================================================================================================
PENSION PLAN
The Genesco Retirement Plan is a noncontributory, qualified pension plan. Prior
to December 31, 1995, it provided retirement benefits to eligible participants
based on a formula taking into consideration the average of the 10 highest
consecutive years' earnings of the participant, years of benefit service and
other factors.
Effective January 1, 1996, the Retirement Plan was amended to establish a cash
balance formula. Benefits earned prior to that date under the 10-year average
formula were preserved as of that date. Under the new formula, each eligible
participant's account is credited with an amount equal to 4% of his or her
annual compensation plus an additional 4% of such compensation in excess of the
Social Security taxable wage base ($84,900 in 2002). The Internal Revenue Code
limits to $200,000 the amount of salary which may be taken into account in
calculating Retirement Plan benefits in 2003. Taking into account the preserved
benefit under the Retirement Plan prior to amendment and the projected total
benefit under the amended Retirement Plan, and assuming that the participant's
accrued benefits at normal retirement are taken in the form of a single life
annuity, the estimated annual benefit payable for each named executive officer
at retirement is as follows: Hal N. Pennington - $60,652; Ben T. Harris -
$53,889; James C. Estepa - $51,866; James S. Gulmi - $72,195; and Roger G.
Sisson - $112,241.
16
The years of benefit service of the persons named in the Summary Compensation
Table are: Hal N. Pennington - 41 years, Ben T. Harris - 35 years, James C.
Estepa - 18 years, James S. Gulmi - 31 years, and Roger G. Sisson - 9 years. The
earnings of such persons for purposes of computing benefits under the Retirement
Plan are substantially the same as set forth in the Summary Compensation Table
in the salary and annual bonus columns, except that the Internal Revenue Code
limits to $200,000 the amount of a person's annual earnings which may be taken
into account in calculating benefits under the Retirement Plan during the
calendar year 2003. A participant has no vested benefits under the Retirement
Plan until he or she has five years' service with the Company.
CHANGE OF CONTROL ARRANGEMENTS
All the named executive officers are parties to employment protection
agreements. The agreements become effective only in the event of a change of
control, which will be deemed to have occurred if a person or group acquires
securities representing 20% or more of the voting power of the Company's
outstanding securities or if there is a change in the majority of directors in a
contested election. Each agreement provides for employment by the Company for a
term of three years following a change of control. The executive is to exercise
authority and perform duties commensurate with his authority and duties
immediately prior to the effective date of the agreement. He is also to receive
compensation (including incentive compensation) during the term in an amount not
less than that which he was receiving immediately prior to the effective date.
If the executive's employment is actually or constructively terminated by the
Company without cause during the term of the agreement, the executive will be
entitled to receive a lump-sum severance allowance equal in Mr. Harris' and Mr.
Pennington's cases to three times and in the case of the other named executive
officers to twice the compensation and benefits he would otherwise receive under
the agreement for the remainder of the term, plus reimbursement for any excise
tax owed thereon and for taxes payable by reason of the reimbursement.
All stock options granted by the Company under the Company's stock option plans
become immediately vested and exercisable upon a change of control as defined in
the stock option agreements entered into with each optionee, provided that at
least one year has elapsed since the date the option was granted. The definition
of change of control in the stock option agreements is substantially the same as
in the employment protection agreements described above.
17
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The compensation committee of Genesco's board of directors has general oversight
responsibility for the compensation of the Company's executive officers. See
"Election of Directors - Compensation Committee" for a detailed description of
the functions of the committee. The committee is currently composed of the three
directors named at the end of this report, none of whom are employees of the
Company.
The compensation policies of the committee are designed to attract and retain
qualified key management personnel and to provide motivation and reward for
achievement of the operating and strategic goals and objectives of the Company.
The committee also seeks to increase key management's ownership of the Company's
common stock, with the goal of better aligning management's interests with those
of the Company's shareholders. It is the committee's policy to pay competitive
base salaries and to provide executive officers with the opportunity, through
annual cash incentive compensation, to earn above-average total cash
compensation based on the achievement of outstanding results. The principal
components of Genesco's executive compensation program currently are base
salary, annual cash incentive compensation and stock options.
BASE SALARY
It is the committee's general policy to approve competitive base salaries for
its executive officers. Salary ranges are established for each executive
officer's position, the mid-points of which are intended to approximate the
median base salary ranges for positions of similar scope, complexity and
responsibility in companies with comparable sales volume. The committee annually
reviews and, if appropriate, adjusts executive officers' salary ranges after
considering the advice of senior management and compensation consultants who are
not affiliated with the Company. The principal comparative data underlying the
consultants' advice to the committee are limited neither to companies in the
specific industries in which the Company competes nor to the companies included
in the S&P weighted average industry index included in the stock performance
graph. The committee believes that the Company competes with employers outside
the specific industry in which it does business to hire and retain qualified
executives. In making individual base salary decisions, the committee may
consider, in addition to relevant market survey data, a mix of factors,
including (i) the executive's experience, management and leadership ability and
technical skills; (ii) the executive's compensation history; (iii) corporate or,
if appropriate, operating unit performance; (iv) individual performance; and (v)
such other factors as the committee deems appropriate in its subjective
judgment. While the committee typically gives greater weight to the objective,
market survey data, the weight to be given to the more subjective factors in
particular cases is within the committee's discretion.
18
INCENTIVE COMPENSATION
Executive officers participate in Genesco's management incentive compensation
plan, which is designed to retain and motivate management and to focus its
attention on the achievement of the Company's annual operating plan and
identified, strategic objectives. The committee reviews and adopts the plan
after consultation with senior management.
Plan participants are selected by the chief executive officer, who is not
eligible to participate in the plan. Approximately 460 employees including all
executive officers except the chief executive officer participated in the plan
for Fiscal 2003; 445 employees are participants in Fiscal 2004.
Under the Fiscal 2003 plan, executive officers (including the named executive
officers other than the chief executive officer) were eligible to receive a
fraction or multiple of a target award equal to as much as 50% of their base
salaries. Participants who were presidents of the Company's operating divisions
were eligible to earn cash awards in amounts determined 50% on the basis of
changes in Economic Value Added (EVA*) for their respective divisions set by the
chief executive officer during the first quarter of the fiscal year, 25% on the
basis of EVA changes for the entire Company and 25% on the basis of individual
strategic goals agreed upon by the participant and the chief executive officer
during the first quarter of the fiscal year. Other executive officers' awards
were determined 75% on the basis of corporate EVA changes and 25% on the basis
of individual strategic goals similarly agreed upon with their supervisors.
Participants' achievement of EVA change goals is objectively measurable. EVA is
determined by subtracting a charge for the capital used to generate profit from
a business unit's net operating profit after taxes. Each business unit's
expected year-to-year change in EVA is determined in advance, as is the
relationship between the magnitude of changes in EVA relative to expected levels
and the bonus award. Achievement of individual strategic goals is somewhat
subjective, although some goals include objective criteria. The participant's
supervisor, generally in consultation with the participant, determines whether
the goals have been met.
No portion of the award for achievement of individual strategic goals was
ordinarily to be paid unless some portion of the applicable award for operating
results was earned, although the plan authorized the committee to consider
exceptions for extraordinary strategic successes upon the recommendation of the
chief executive officer. No exceptions of this nature were made under the Fiscal
2003 plan. An operating division president could not earn a greater percentage
of the maximum
-----------------------------
* EVA is a trademark of Stern Stewart & Co.
19
award for corporate EVA changes than for his business unit's operating results.
The plan includes the following "bonus bank" feature: awards for better than
expected EVA are uncapped and a "negative award" for worse than expected results
is possible. Any award in excess of three times the target bonus and any
negative award is credited to the participant's account in the bonus bank. Each
year, a participant will receive a payout equal to (i) the current year's award,
up to three times the target, plus (ii) one third of the positive balance, if
any, in the participant's account. If the participant's bonus bank balance is
negative, 60% of any positive award will be applied toward "repaying" the
negative balance; 40% will be paid out to the participant. Any positive balance
is forfeited if the participant voluntarily resigns from employment by the
Company or is terminated for cause during the applicable fiscal year. The
committee believes that the "bonus bank" feature of the plan offers improved
incentives for management to focus on building long-term value in the Company,
and that the forfeiture provisions will aid the retention of key employees.
STOCK OPTIONS
The committee believes that granting stock options to selected key executives of
the Company provides them with a strong incentive to make decisions which are in
the long-term best interests of the Company and thus serves to balance the
short-term annual cash incentive component of executive compensation. The
committee further believes that options tend to align the financial interests of
management with those of the Company's shareholders, since the value of an
option is dependent upon improvement in the Company's performance and the
recognition of that improved performance in the market for the Company's common
stock. Options are granted with an exercise price equal to or greater than the
fair market value of the stock on the date of grant. Options are typically
granted to executive officers and other key employees on an annual basis and
typically become exercisable in installments of 25% of the total number of
shares subject to the options.
In Fiscal 2003, the committee granted a total of 412,000 options to 29 employees
based on factors described above and such other matters as the committee deemed
appropriate in its subjective judgment, including individual performance.
Options granted under the plan expire ten years after the date of grant. Options
granted in Fiscal 2003 vest in four equal installments. Annual vesting requires
the executive to remain employed by the Company for the entire vesting period to
realize fully the gain on the total number of shares covered by the option. A
total of 64 employees of the Company held options to purchase shares of the
Company's common stock as of April 24, 2003.
20
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Pennington received a base salary of $462,500 and a bonus of $226,250 for
Fiscal 2003. The bonus decision by the committee was based on the same factors
as those applicable to corporate staff participants in the management incentive
compensation plan for the year. Mr. Pennington's base salary for Fiscal 2004 is
$575,000; his bonus target is $315,000. The increases in Mr. Pennington's base
salary and bonus target reflect the committee's policy of paying competitive
compensation, as implemented in October 2002 at the first annual compensation
review following his election as chief executive officer in April 2002.
Upon his election as chief executive officer, Mr. Pennington received a
restricted stock grant of 36,764 shares based on his increased responsibilities
and other factors described above which will vest on April 24, 2005, if Mr.
Pennington is still employed at that date. Vesting would occur pro rata in case
of Mr. Pennington's death, disability or involuntary termination without cause
prior to that date.
TAX DEDUCTIBILITY LIMIT
Section 162(m) of the Internal Revenue Code generally provides that certain
compensation in excess of $1 million per year paid to a company's chief
executive officer and any of its four other highest paid executive officers is
not deductible by a company unless the compensation qualifies for an exception.
This deduction limit generally applies only to compensation that could otherwise
be deducted by a company in a taxable year. The committee believes that no
executive officer of the Company is likely to be paid compensation not exempt
from Section 162(m) limits exceeding $1 million in Fiscal 2004, unless because
of better than planned operating results for the year, Mr. Pennington's bonus
payout exceeds the target. The committee considered that possibility in setting
Mr. Pennington's base salary and bonus opportunity. The committee determined
that, in its subjective judgment, the benefits to the Company of the incentive
outweigh the potential loss of a tax deduction for any payout that results in
Mr. Pennington's compensation's exceeding the Section 162(m) limit. The
committee will consider the requirements of Section 162(m) in authorizing or
recommending future executive compensation arrangements.
BY THE COMMITTEE:
W. Lipscomb Davis, Jr., Chairman
Leonard L. Berry
Kathleen Mason
21
The foregoing report of the compensation committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 2003, the compensation committee of the board of directors was
composed of Messrs. Berry, Dale (a member of the committee until June 26, 2002)
and Davis (a member of the committee since June 26, 2002) and Ms. Mason. None of
these persons has at any time been an officer or employee of the Company or any
of its subsidiaries. In addition, there are no relationships among the Company's
executive officers, members of the compensation committee or entities whose
executives serve on the board of directors or the compensation committee that
require disclosure under applicable Securities and Exchange Commission
regulations.
22
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Company's common stock for the last five fiscal years with the cumulative total
return of (i) the S&P 500 Index and (ii) the S&P 500 Footwear Index. The graph
assumes the investment of $100 in the Company's common stock, the S&P 500 Index
and the S&P 500 Footwear Index at the market close on January 31, 1998 and the
reinvestment monthly of all dividends.
TOTAL SHAREHOLDER RETURNS
[PERFORMANCE GRAPH]
Jan98 Jan99 Jan00 Jan01 Jan02 Jan03
--------------------------------------------------------------------------------------
GENESCO INC 100 61.34 76.80 210.31 204.21 137.15
S&P 500 INDEX 100 132.49 143.88 143.62 121.06 93.86
S&P 500 FOOTWEAR 100 108.62 112.02 142.07 155.30 121.03
23
AUDIT MATTERS
Ernst & Young LLP served as external auditors to the Company in the fiscal year
ended February 1, 2003, and have been retained in the same capacity for the
current fiscal year. Representatives of the firm are expected to be present at
the annual meeting, will have the opportunity to make a statement if they desire
to do so, and will be available to respond to appropriate questions.
AUDIT COMMITTEE REPORT
The audit committee is composed of four independent directors as defined under
the current rules of the New York Stock Exchange. The audit committee oversees
the Company's financial reporting process on behalf of the board of directors.
The committee's charter is included as Appendix A to this proxy statement.
Management has the primary responsibility for the financial statements and the
reporting process, including the system of internal controls.
The committee has met and held discussions with management and the Company's
independent auditors. Management represented to the committee that the Company's
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the committee has reviewed and discussed the
consolidated quarterly and annual financial statements with management and the
independent auditors. The committee discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communications With Audit Committees), as amended by Statement on Auditing
Standards No. 90 (Audit Committee Communications).
In addition, the committee has discussed with the independent auditors the
factors which might be deemed to bear upon auditors' independence from the
Company and its management, including the matters in the written disclosures
required by the Independence Standards Board Standard No. 1 (Independence
Discussions With Audit Committees), which were reviewed by the Committee. The
committee considered, among other factors, the distribution of fees among those
for audit services, those for audit-related services, those for tax services and
all other fees, as described below, and considered whether the provision of
services other than the audit and audit-related services is compatible with the
external auditors' independence.
The committee discussed with the Company's internal and independent auditors the
overall scope and plan for their respective activities. The committee meets with
the internal and independent auditors, with and without management present, to
discuss the results of their examinations, the evaluations of the Company's
internal controls, and the overall quality of the Company's financial statements
and reporting process.
24
In reliance on the reviews and discussions referred to above, the committee
recommended to the board of directors, and the board of directors has approved,
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for the year ended February 1, 2003, for filing with the Securities
and Exchange Commission.
BY THE COMMITTEE:
Robert V. Dale, Chairman
Kathleen Mason
Linda H. Potter
William A. Williamson, Jr.
The foregoing report of the audit committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such acts.
AUDIT FEES
Audit fees include fees paid by the Company to Ernst & Young and
PricewaterhouseCoopers LLP in connection with annual audits of the Company's
consolidated financial statements and their respective review of the Company's
interim financial statements. Audit fees also include fees for services
performed by the independent auditor that are closely related to the audit and
in many cases could be provided only by the Company's independent auditors. Such
services include comfort letters and consents related to SEC registration
statements and other capital-raising activities and certain reports relating to
the Company's regulatory filings. The aggregate fees Ernst & Young billed to the
Company for audit services rendered to the Company and its subsidiaries for
Fiscal 2003 and Fiscal 2002 totaled $264,000 and $200,462, respectively.
PricewaterhouseCoopers did not bill the Company for any audit fees during Fiscal
2003. The aggregate fees PricewaterhouseCoopers billed to the Company for audit
services rendered to the Company and its subsidiaries for Fiscal 2002 totaled
$96,000.
AUDIT-RELATED FEES
Audit-related services include due diligence and audit services related to
mergers and acquisitions, accounting consultations, internal control reviews,
employee benefit plan audits and certain attest services. The aggregate fees
billed to the Company by
25
Ernst & Young for audit-related services rendered to the Company and its
subsidiaries for Fiscal 2003 and Fiscal 2002 totaled $203,468 and $20,000,
respectively.
PricewaterhouseCoopers did not bill the Company for audit-related services for
Fiscal 2003.
TAX FEES
Tax fees include fees paid by the Company for corporate tax compliance and
counsel and advisory services. The aggregate fees billed to the Company by Ernst
& Young for the tax related services rendered to the Company and its
subsidiaries for Fiscal 2003 and Fiscal 2002 totaled $580,392 and $105,832,
respectively. Of these, approximately 61% in Fiscal 2003 and 100% in 2002 were
for compliance-related services.
PricewaterhouseCoopers did not bill the Company for tax services provided to the
Company and its subsidiaries during Fiscal 2003. During Fiscal 2002, the total
amount of fees PricewaterhouseCoopers billed the Company for tax services
rendered to the Company and its subsidiaries was $258,332.
ALL OTHER FEES
In Fiscal 2003 and 2002, the Company did not pay other fees to Ernst & Young. In
Fiscal 2002, the Company paid other fees totaling $137,829 to
PricewaterhouseCoopers for support services relating to the Company's internal
audit function.
PRE-APPROVAL POLICY
The full audit committee pre-approved all fees paid to the Company's independent
auditors in Fiscal 2003.
CHANGE OF INDEPENDENT AUDITORS
On October 24, 2001, in connection with a decision to close its Nashville,
Tennessee office, the Company's former independent auditors,
PricewaterhouseCoopers, resigned and the Company engaged Ernst & Young LLP as
independent auditors to the Company.
The reports of PricewaterhouseCoopers for Fiscal 2001 did not contain an adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles. The decision to change
independent auditors was approved by the audit committee of the board of
directors.
During the Company's most recent fiscal years and the interim period preceding
the resignation, there were no disagreements between the Company and
PricewaterhouseCoopers on any matter of accounting principles or practices,
financial
26
statement disclosure or auditing scope or procedure specifically including any
disagreement which, if not resolved to the satisfaction of
PricewaterhouseCoopers, would have caused it to make reference to the subject
matter of a disagreement in connection with its report.
AMENDMENTS TO 1996 STOCK INCENTIVE PLAN
The compensation committee and the board of directors believe that a key element
of officer, key employee and outside director compensation is stock-based
incentive compensation. Stock-based compensation advances the interests of the
Company by encouraging, and providing for, the acquisition of equity interests
in the Company by officers, key employees and non-employee directors, thereby
providing substantial motivation for superior performance and aligning their
interests with those of the shareholders. In 1996, to provide the Company with
an appropriate vehicle for such compensation, the board of directors adopted and
shareholders approved the 1996 Stock Incentive Plan (the "Plan").
The board of directors has amended the Plan, subject to shareholder approval (i)
to consolidate the shares of common stock reserved for issuance to non-employee
directors with those reserved for issuance to employees; (ii) to substitute an
annual grant of restricted stock for stock option grants to non-employee
directors previously provided under the Plan; and (iii) to raise the maximum
number of shares that may be granted to any individual participant over the term
of the Plan from 500,000 to 750,000. The text of the proposed amendment is
included in this proxy statement as Appendix B.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED AMENDMENTS
TO THE PLAN AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
SUMMARY OF MATERIAL PROVISIONS OF THE PLAN
The following is a summary of the material provisions of the Plan.
SHARES. The Plan provides for net aggregate awards of up to 4,400,000 shares of
common stock. Of these shares, 200,000 shares were reserved for issuance to
non-employee directors, as described below. If shares subject to an option under
the Plan cease to be subject to such option, are forfeited, or otherwise
terminate without a payment being made to the participant in the form of common
stock, such shares will again be available for future distribution under the
Plan.
The proposed amendment would not increase the total number of shares issuable
under the Plan. It would, however, remove the distinction between shares
issuable to
27
employees and those issuable to non-employee directors. The board of directors
believes the proposed amendment will simplify administration of the Plan and
avoid the need for future authorizations of additional shares to fulfill the
annual requirement of shares granted to non-employee directors under a formula
prescribed in the Plan.
PARTICIPATION. Awards under the Plan may be made to key employees, including
officers, of the Company, its subsidiaries and affiliates, but (except for the
grants of restricted stock and options to outside directors described below) may
not be granted to any director who is not also a regular employee of the
Company, its subsidiaries or affiliates. All the named executive officers, seven
other officers and key management employees, as identified by the compensation
committee, are eligible to receive awards under the Plan. Approximately 64
current officers and other key employees have received grants under the Plan.
Prior to the proposed amendment, the Plan provides that no individual
participant may receive grants totaling more than 500,000 shares during the term
of the Plan. The proposed amendment raises the maximum to 750,000 shares. The
board of directors believes the 500,000 share limit unduly restricts the ability
of the compensation committee to use stock-based incentives to compensate senior
executives who have been participants in the Plan since its inception.
NON-EMPLOYEE DIRECTOR AWARDS. Each non-employee director receives shares of
common stock valued at $15,000 at the date of the first annual meeting of
shareholders at which he or she is elected to the board of directors. The awards
vest in three equal annual increments, contingent upon the director's continued
service on the board of directors. The Plan also permits outside directors to
elect, six months in advance of the beginning of a fiscal year, to exchange part
or all of their retainers for common stock at 75% of its fair market value
immediately prior to the beginning of the fiscal year. Restricted stock received
as automatic grants or in lieu of retainer may not be transferred (except
pursuant to the laws of descent and distribution) until the earlier of the fifth
anniversary of their grant or the director's retirement from the board.
Prior to the proposed amendment, outside directors also receive automatic annual
grants of 4,000 options to purchase shares of common stock at the stock's
closing price on the New York Stock Exchange on the grant date. The options vest
six months after the grant date and expire in ten years. The proposed amendment
would eliminate the annual option grant and provide for an annual award to each
non-employee director of shares of restricted stock valued at $44,000 on the
date of each annual meeting of shareholders. The awards would vest in three
equal annual increments, contingent on the director's continued service on the
board of directors. They would also be subject to the same transfer restrictions
as the other awards of restricted stock to non-employee directors under the
Plan, as described above. The
28
board of directors believes that substituting restricted stock with transfer
restrictions for options better links the interests of directors with those of
the shareholders and provides an incentive better related to the Company's
long-term interests.
ADMINISTRATION. The Plan is to be administered by a committee of no less than
two disinterested individuals appointed by the board of directors, which
committee is currently the compensation committee.
The compensation committee has no authority to determine the terms or conditions
of awards to outside directors.
AWARDS TO EMPLOYEES UNDER THE PLAN. The compensation committee has the authority
to grant the following type of awards to officers and key employees under the
Plan: (1) Stock Options, (2) Stock Appreciation Rights, (3) Restricted Stock and
(4) Other Stock-Based Awards.
1. STOCK OPTIONS. Incentive stock options ("ISOs") and non-qualified
stock options may be granted for such number of shares of common stock
as the committee determines and may be granted alone, in conjunction
with, or in tandem with, other awards under the Plan, but subject to
the per person limitation on awards. A stock option will be
exercisable at such times and subject to such terms and conditions as
the committee may determine and over a term to be determined by the
committee, which term will be no more than ten years after the date of
grant. The option price for any ISO will not be less than 100% (110%
in the case of certain 10% shareholders) of the fair market value of
the common stock as of the date of grant. Payment of the option price
may be in cash, or, as determined by the committee, by unrestricted
common stock having a fair market value equal to the option price. For
non-qualified stock options, payment if permitted by the committee may
also be made in the form of restricted stock.
2. STOCK APPRECIATION RIGHTS. Stock appreciation rights ("SARs") may be
granted in conjunction with all or part of a stock option and will be
exercisable only when the underlying stock option is exercisable. Once
an SAR has been exercised, the related portion of the stock option
underlying the SAR will terminate.
Upon exercise of an SAR, the committee will pay to the employee in
cash, or common stock (the method of payment to be at the discretion
of the committee), an amount of money equal to the excess between the
fair market value of the stock on the exercise date and the price of
the option multiplied by the number of SARs being exercised.
In addition to the foregoing SARs, the committee may grant limited
SARs which will be exercisable only in the event of a change in
control or potential
29
change in control of the Company as defined in the Plan. In awarding
SARs or limited SARs, the committee may provide that in the event of a
change in control or potential change in control, SARs or limited SARs
may be cashed out on the basis of the change in control price, as
defined in the Plan.
3. RESTRICTED STOCK. Restricted stock may be granted alone, in
conjunction with, or in tandem with, other awards under the Plan and
may be conditioned upon the attainment of specific performance goals
or such other factors as the committee may determine. The provisions
attendant to a grant of restricted stock may vary from participant to
participant.
In making an award of restricted stock, the committee will determine
the periods during which the stock is subject to forfeiture and may
grant such stock at a purchase price equal to or less than the par
value of the common stock.
During the restriction period, the employee may not sell, transfer,
pledge or assign the restricted stock. The certificate evidencing the
restricted stock will remain in the possession of the Company until
the restrictions have lapsed.
4. OTHER STOCK-BASED AWARDS. The committee may also grant other types of
awards that are valued, in whole or in part, by reference to or
otherwise based on common stock. These awards may be granted alone, in
addition to, or in tandem with, stock options, SARs and restricted
stock. Such awards will be made upon terms and conditions as the
committee may in its discretion provide.
CHANGE IN CONTROL PROVISIONS. If there is a change in control or a potential
change in control, any SARs and stock options which are not then exercisable
will become fully exercisable and vested. Similarly, the restrictions applicable
to restricted stock and other stock-based awards will lapse and such shares and
awards will be deemed fully vested. Stock options, SARs, limited SARs,
restricted stock and other stock-based awards will, unless otherwise determined
by the committee in its sole discretion, be cashed out on the basis of the
change in control price described below. Options granted to outside directors
will vest, but will not be cashed out, upon a change in control.
The change in control price is the highest price per share paid in any
transaction reported on the New York Stock Exchange composite index, or paid or
offered to be paid in any bona fide transaction relating to a potential or
actual change in control of the Company, at any time during the immediately
preceding 60 day period as defined by the committee. A change in control occurs
if (i) any person becomes a beneficial owner directly or indirectly of 25% or
more of the total voting stock of the Company (subject to certain exceptions),
(ii) as a result of, or in connection with, any cash
30
tender or exchange offer, merger or other business combination or similar
transaction less than a majority of the combined voting power of the then
outstanding securities entitled to vote generally in the election of directors
immediately prior to such transaction or (iii) during any period of two
consecutive years, individuals which at the beginning of such period constitute
the board of directors cease for any reason to constitute at least a majority
thereof. A potential change in control means (i) approval by the shareholders of
an agreement which, if completed, would constitute a change in control or (ii)
the acquisition by a person of 5% or more of the total voting stock of the
Company and the adoption by the board of directors of a resolution that a
potential change in control, as defined in the Plan, has occurred.
AMENDMENT. The Plan may be amended by the board of directors, except that the
board may not, without the approval of the Company's shareholders, increase the
number of shares available for distribution, change the pricing rule applicable
to stock options, change the class of employees eligible to receive awards under
the Plan, or extend the term of any option award. The provisions of the Plan
relating to grants to outside directors may not be amended more than once every
six months except to comply with changes in the Internal Revenue Code of 1986,
as amended (the "Code"), and the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
ADJUSTMENT. In the case of a stock split, stock dividend, reclassification,
recapitalization, merger, reorganization or other changes in the Company's
structure affecting the common stock, appropriate adjustments will be made by
the committee, in its sole discretion, in the number of shares reserved under
the Plan, in the maximum number of shares issuable to any single employee, in
the number of shares covered by options and other awards then outstanding under
the Plan and, where applicable, the exercise price for awards under the Plan.
FEDERAL INCOME TAX ASPECTS. The following is a brief summary of the federal
income tax aspects of awards made under the Plan based upon the federal income
tax laws in effect on the date hereof. This summary is not intended to be
exhaustive, and does not describe state or local tax consequences:
1. INCENTIVE STOCK OPTIONS. No taxable income is realized by the
participant upon the grant or exercise of an ISO. If common stock is
issued to a participant pursuant to the exercise of an ISO, and if no
disqualifying disposition of the shares is made by the participant
within two years of the date of grant or within one year after the
transfer of the shares to the participant, then: (a) upon the sale of
the shares, any amount realized in excess of the option price paid
will be capital gain to the participant, and any loss sustained will
be a capital loss and (b) no deduction will be allowed to
31
the Company for federal income tax purposes. The exercise of an ISO
will give rise to an item of tax preference that may result in an
alternative minimum tax liability for the participant.
If common stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of the holding periods described above, then
generally: (a) the participant will realize ordinary income in the
year of disposition in an amount equal to the excess, if any, of the
fair market value of the shares at exercise (or, if less, the amount
realized on the disposition of the shares) over the option price paid
for such shares and (b) the Company will be entitled to deduct any
such recognized amount. Any further gain or loss realized by the
participant will be taxed as short-term or long-term capital gain or
loss, as the case may be, and will not result in any deduction by the
Company.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following the termination of the
participant's employment, the option will generally be taxed as a
non-qualified stock option.
2. NON-QUALIFIED STOCK OPTIONS. Except as noted below, with respect to
non-qualified stock options: (a) no income is realized by the
participant at the time the option is granted; (b) generally upon
exercise of the option, the participant realizes ordinary income in an
amount equal to the difference between the option price paid for the
shares and the fair market value of the shares on the date of exercise
and the Company will be entitled to a tax deduction in the same amount
and (c) at disposition, any appreciation (or depreciation) after date
of exercise is treated either as short-term or long-term capital gain
or loss, depending upon the length of time that the participant has
held the shares.
3. STOCK APPRECIATION RIGHTS. No income will be realized by a participant
in connection with the grant of an SAR. When the SAR is exercised, the
participant will generally be required to include as taxable ordinary
income in the year of exercise, an amount equal to the amount of cash
and the fair market value of any shares received. The Company will be
entitled to a deduction at the time and in the amount included in the
participant's income by reason of the exercise. If the participant
receives common stock upon exercise of an SAR, the post-exercise
appreciation or depreciation will be treated in the same manner
discussed above under "Non-Qualified Stock Options."
32
4. RESTRICTED STOCK. A participant receiving restricted stock generally
will recognize ordinary income in the amount of the fair market value
of the restricted stock at the time the stock is no longer subject to
forfeiture, less the consideration paid for the stock. However, a
participant may elect, under Section 83(b) of the Code within 30 days
of the grant of the stock, to recognize taxable ordinary income on the
date of grant equal to the excess of the fair market value of the
shares of restricted stock (determined without regard to the
restrictions) over the purchase price of the restricted stock.
Thereafter, if the shares are forfeited, the participant will be
entitled to a deduction, refund or loss, for tax purposes only, in an
amount equal to the purchase price of the forfeited shares regardless
of whether he made a Section 83(b) election. With respect to the sale
of shares after the forfeiture period has expired, the holding period
to determine whether the participant has long-term or short-term
capital gain or loss generally begins when the restriction period
expires and the tax basis for such shares will generally be based on
the fair market value of such shares on such date. However, if the
participant makes an election under Section 83(b), the holding period
will commence on the date of grant and the tax basis will be equal to
the fair market value of shares on such date (determined without
regard to restrictions). The Company generally will be entitled to a
deduction equal to the amount that is taxable as ordinary income to
the participant in the year that such income is taxable.
5. DIVIDENDS AND DIVIDEND EQUIVALENTS. Dividends paid on restricted stock
generally will be treated as compensation that is taxable as ordinary
income to the participant, and will be deductible by the Company. If,
however, the participant makes a Section 83(b) election, the dividends
will be taxable as ordinary income to the participant but will not be
deductible by the Company.
6. OTHER STOCK-BASED AWARDS. The federal income tax treatment of other
stock-based awards will depend on the nature of any such award and the
restrictions applicable to such award. Such an award may, depending on
the conditions applicable to the award, be taxable as an option, an
award of restricted stock, or in a manner not described herein.
33
NEW PLAN BENEFITS
PROPOSED AMENDMENT TO 1996 STOCK INCENTIVE PLAN
------------------------------------------------------------------------------------
NAME AND POSITION DOLLAR VALUE NO. OF SHARES (1)
------------------------------------------------------------------------------------
Hal N. Pennington (1) (1)
President and Chief Executive Officer
Ben T. Harris (1) (1)
Chairman
James C. Estepa (1) (1)
Senior Vice President
James S. Gulmi (1) (1)
Senior Vice President - Finance
and Chief Financial Officer
Roger G. Sisson (1) (1)
Secretary and General Counsel
Executive Group (1) (1)
Non-Executive Director Group (2) (3)
Non-Executive Officer Employee Group (1) (1)
====================================================================================
(1) Not presently determinable. All participants theoretically benefit from the
proposed increase in the maximum number of shares that may be awarded to
any individual participant.
(2) $44,000 annually at fair market value in grants of restricted stock.
Non-executive directors would not receive annual grants of options
presently awarded under the Plan.
(3) Not presently determinable.
34
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of February 1, 2003 with respect to
the Company's equity compensation plans:
--------------------------------------------------------------------------------------------------------------
(A) (B) (C)
NUMBER OF SECURITIES
REMAINING AVAILABLE
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FOR FUTURE ISSUANCE
BE ISSUED UPON EXERCISE EXERCISE PRICE OF UNDER EQUITY COMPENSATION
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, PLANS (EXCLUDING SECURITIES
WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
--------------------------------------------------------------------------------------------------------------
Equity compensation 1,649,060 $14.71 2,042,170
plans approved by
security holders
Equity compensation -- -- --
plans not approved by
security holders
Total 1,649,060 $14.71 2,042,170
==============================================================================================================
PROPOSALS FOR THE 2004 ANNUAL MEETING
Proposals of shareholders intended for inclusion in the proxy material for the
2004 annual meeting of shareholders must be received at the Company's offices at
Genesco Park, P.O. Box 731, Nashville, Tennessee 37202-0731, attention of the
secretary, no later than January 23, 2004.
In addition, the Company's Bylaws contain an advance notice provision which
provides that for a shareholder proposal to be brought before and considered at
the next annual meeting of shareholders, such shareholder must provide timely
written notice thereof to the secretary of the Company. In order to be timely,
the notice must be delivered to or mailed to the secretary of the Company and
received at the principal executive offices of the Company not less than sixty
days nor more than ninety days prior to the meeting (or, if less than seventy
days' notice or prior public disclosure of the date of the meeting is given or
made to shareholders, notice must be so received not later than the close of
business on the tenth day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made). In the event
that a shareholder proposal intended to be presented for action at the next
annual meeting is not received timely, then the persons designated as proxies in
the proxies solicited by the board of directors in connection with the annual
meeting will be permitted to use their discretionary voting authority with
respect to the proposal, whether or not the proposal is discussed in the proxy
statement for the annual meeting.
35
FINANCIAL STATEMENTS AVAILABLE
A copy of the Company's annual report to shareholders containing audited
financial statements accompanies this proxy statement. The annual report does
not constitute a part of the proxy solicitation material.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
FEBRUARY 1, 2003, EXCLUDING CERTAIN OF THE EXHIBITS THERETO, MAY BE OBTAINED,
WITHOUT CHARGE, BY ANY SHAREHOLDER TO WHOM THIS PROXY STATEMENT IS SENT, UPON
WRITTEN REQUEST TO ROGER G. SISSON, SECRETARY, GENESCO INC., GENESCO PARK, 1415
MURFREESBORO ROAD, NASHVILLE, TENNESSEE 37217.
36
APPENDIX A
GENESCO INC.
CHARTER
OF
AUDIT COMMITTEE
PURPOSE
The primary purpose of the Audit Committee (the "Committee") is to assist the
Board of Directors (the "Board") in fulfilling its responsibility to oversee the
integrity of the Company's financial statements, the Company's compliance with
legal and regulatory requirements, the independent auditor's qualifications and
independence, and the performance of the Company's internal audit function and
independent auditor. The Committee shall provide a forum for communication among
the independent auditor, management, the internal auditing department, and the
Board. The Committee shall make regular reports to the Board and shall prepare
the report required by the rules and regulations of the Securities and Exchange
Commission ("SEC Rules") to be included in the Company's annual proxy statement.
In discharging its duties and responsibilities, the Committee is authorized to
investigate any matter within the scope of its duties and responsibilities or as
otherwise delegated by the Board, with full access to all books, records,
facilities and personnel of the Company.
MEMBERSHIP
The Committee shall be comprised of not less than three members of the Board,
and the Committee's members will meet the independence, experience and other
requirements of the New York Stock Exchange ("NYSE"), Section 10A(m)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and the SEC Rules. A
Committee member other than in his or her capacity as a Committee, Board member
or member of any other Board Committee shall not accept directly or indirectly
any consulting, advisory or other compensatory fee from the Company or be an
"affiliated person" of the Company or any subsidiary thereof in violation of
NYSE or SEC Rules. If a Committee member simultaneously serves on the audit
committee of more than three public companies, the Board shall determine that
such simultaneous service will not impair the ability of such member to serve
effectively on the Committee and disclose such determination in the Company's
annual proxy statement.
The Board acting on the recommendation of the Nominating and Governance
Committee will appoint annually the members of the Committee and shall determine
whether the Committee has an audit committee financial expert as defined by SEC
Rules and whether such expert is "independent" from management as defined in
Schedule 14A of the SEC Rules.
A-1
MEETINGS AND PROCEDURES
The Committee shall meet as often as it determines, but not less frequently than
quarterly. The Committee shall meet not less frequently than four times annually
with management, the internal auditors and the independent auditor in separate
executive sessions. The Committee may request any officer or employee of the
Company or the Company's outside counsel or independent auditor, or any other
persons whose presence the Committee believes to be necessary or appropriate, to
attend a meeting of the Committee or to meet with any members of, or advisors
to, the Committee.
The Committee may retain any independent counsel, experts or advisors
(accounting, financial or otherwise) that the Committee believes to be necessary
or appropriate. The Committee may also utilize the services of the Company's
regular counsel or other advisors to the Company. The Company shall provide for
appropriate funding, as determined by the Committee, for payment of compensation
to the independent auditor for the purpose of rendering or issuing an audit
report and to any advisors employed by the Committee.
DUTIES AND RESPONSIBILITIES
While the Committee has the duties and responsibilities set forth in this
Charter, it is not the duty or responsibility of the Committee to prepare the
Company's financial statements or to plan or conduct audits of those financial
statements. These are the responsibilities of management and the independent
auditor. Additionally, the Committee recognizes that the Company's financial
management, including the internal audit department, as well as its independent
auditor, have more knowledge and more detailed information regarding the Company
and its financial reports than do Committee members; consequently, in carrying
out its duties and responsibilities, the Committee, including any person
designated as an audit committee financial expert, is not providing any expert
or special assurance as to accuracy or completeness of the Company's financial
statements or any professional certification as to the independent auditor's
work, and is not conducting an audit or investigation of the financial
statements nor determining that the financial statements are true and complete
or have been prepared in accordance with generally accepted accounting
principles ("GAAP") and applicable SEC Rules.
The following shall be the common recurring activities of the Committee in
carrying out its duties and responsibilities. These functions are set forth with
the understanding that the Committee may engage in additional activities as
appropriate given the circumstances.
A-2
o The Committee shall have the sole authority to appoint or replace the
independent auditor (subject, if applicable, to shareholder ratification).
The Committee shall be directly responsible for the compensation and
oversight of the work of the independent auditor (including resolution of
disagreements between management and the independent auditor regarding
financial reporting) for the purpose of preparing or issuing an audit
report or related work or performing other audit, review or attest services
for the Company. The independent auditor shall report directly to the
Committee.
o The Committee shall preapprove all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed
for the Company by its independent auditor, subject to the de minimus
exceptions for non-audit services in accordance with Section 10A(i)(1)(B)
of the Exchange Act which are approved by the Committee prior to the
completion of the audit. Approval by the Committee of a non-audit service
shall be disclosed in the reports filed by the Company with the SEC or
otherwise as required by law and SEC Rules. Committee pre-approval of audit
and non-audit services will not be required if the engagement for the
services is entered into pursuant to pre-approval policies and procedures
established by the Committee regarding the Company's engagement of the
independent auditor, provided the policies and procedures are detailed as
to the particular services, the Committee is informed of each service
provided and such policies and procedures do not include delegation of the
Committee's responsibilities under the Exchange Act to the Company's
management. The Committee may delegate to one or more designated Committee
members the authority to grant preapprovals of audit and permitted
non-audit services, provided that any decisions to preapprove shall be
presented to the full Committee at its next scheduled meeting.
o The Committee shall review and discuss with management and the independent
auditor the annual audited and quarterly unaudited financial statements,
and the Company's disclosures under "Management's Discussion and Analysis
of Financial Condition and Results of Operation" provided on Form 10-Q and
Form 10-K. The review and discussion of the financial statements and the
matters covered in the independent auditor's report, if applicable, shall
occur prior to the public release of such financial statements and the
review and discussion of the related disclosure, including the
"Management's Discussion and Analysis of Financial Condition and Results of
Operation," shall occur prior to the filing of the Form 10-Q or Form 10-K.
The Committee shall review and discuss with management and the independent
auditor material related party transactions as defined in the Statement of
Financial Accounting Standards No. 57 and other accounting and regulatory
pronouncements. The Committee also shall review
A-3
and discuss with the independent auditor the matters required to be
discussed by Statement of Auditing Standards No. 61, as may be modified or
supplemented. Based on such review and discussion, and based on the
disclosures received from, and discussions with, the independent auditor
regarding its independence as provided for below, the Committee shall
consider whether to recommend to the Board that the audited financial
statements be included in the Company's Annual Report on Form 10-K.
o The Committee shall review and discuss with the independent auditor prior
to the filing of the Annual Report on Form 10-K the report that such
auditor is required to make to the Committee regarding: (A) all accounting
policies and practices to be used that the independent auditor identifies
as critical; (B) all alternative treatments within GAAP for policies and
practices related to material items that have been discussed among
management and the independent auditor, including the ramifications of the
use of such alternative disclosures and treatments, and the treatment
preferred by the independent auditor; and (C) all other material written
communications between the independent auditor and management of the
Company, such as any management letter, management representation letter,
reports on observations and recommendations on internal controls,
independent auditor's engagement letter, independent auditor's independence
letter and schedule of unadjusted audit differences, if any.
o The Committee shall discuss with management and the independent auditor:
(A) major issues regarding accounting principles and financial statement
presentations, including any significant changes in the Company's selection
or application of accounting principles, any major issues as to the
adequacy of the Company's internal controls and any special steps adopted
in light of material control deficiencies; and (B) analyses prepared by
management and/or the independent auditor setting forth significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements. The Committee shall
discuss with management and the independent auditor the effect of
regulatory and accounting initiatives, as well as off-balance sheet
structures, on the Company's financial statements.
o The Committee shall discuss earnings press releases, including the use of
"pro forma" or "adjusted" non-GAAP information. The Committee shall also
discuss generally the financial information and earnings guidance which has
been or will be provided to analysts and rating agencies.
o The Committee shall discuss with management, the senior internal audit
executive officer and the independent auditor the Company's major financial
risk exposures and its policies with respect to risk assessment and risk
management. The
A-4
Committee shall review the internal audit plan and functions at least
annually and review with the independent auditor the responsibilities,
budget and staffing of the Company's internal audit functions. The senior
internal audit executive officer shall report directly to the Chair of the
Committee and to the General Counsel.
o The Committee shall regularly review with the independent auditor any
difficulties the independent auditor encountered during the course of the
audit work, including any restrictions on the scope of activities or access
to requested information or any significant disagreements with management
and management's responses to such matters. In this connection, among the
items that the Committee may review with the independent auditor are: (A)
any accounting adjustments that were noted or proposed by the auditor but
were "passed" (as immaterial or otherwise); (B) any communications between
the audit team and the independent auditor's national office respecting
auditing or accounting issues presented by the engagement; and (C) any
"management" or "internal control" letter issued, or proposed to be issued,
by the independent auditor to the Company.
o The Committee shall:
o evaluate the independent auditor's qualifications, performance and
independence, including the review and evaluation of the lead partner
of the audit engagement team;
o ensure the rotation of the lead audit partner of the independent
auditor and audit engagement team partners as required by NYSE and SEC
Rules;
o establish hiring policies for employees or former employees of the
independent auditor who participate in any capacity in the audit of
the Company's financial statements;
o obtain and review, at least annually, a report by the independent
auditor describing the auditing firm's internal quality control
procedures and any material issues raised by its most recent internal
quality control review or peer review, or by any inquiry or
investigation by governmental or professional authorities, within the
preceding five years respecting one or more independent audits carried
out by the auditing firm and any steps taken to deal with any such
issues;
o receive from the independent auditor annually a formal written
statement delineating all relationships between the independent
auditor and the Company consistent with Independence Standards Board
Standard No. 1, as may be modified or supplemented by such other
standards as may be set by law or regulation or NYSE Rules; and
A-5
o discuss with the independent auditor in an active dialogue any such
disclosed relationships or services and their impact on the
independent auditor's objectivity and independence and present to the
Board its conclusion with respect to the independence of the
independent auditor.
o The Committee shall receive reports from the principal executive and
financial officers of the Company regarding their evaluation of the
effectiveness of the Company's disclosure controls and procedures and the
Company's internal controls and procedures for financial reporting;
regarding all significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's ability to
record, process, summarize and report financial data and whether they have
identified for the independent auditor any material weaknesses in internal
controls; regarding any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls; and regarding whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
o The Committee shall establish procedures for the receipt, retention and
treatment of complaints regarding accounting, internal accounting controls,
or auditing matters and for the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing
matters.
o The Committee shall discuss with the Company's General Counsel any legal or
regulatory matters that could reasonably be expected to have a material
impact on the Company's business or financial statements.
o The Committee shall meet at least annually with the Senior Officer with
oversight of the Company's ethics and compliance programs for a report on
the Company's ethics and compliance programs, including a review of any
issues that may affect in any material way the financial reporting process,
the financial risks of the Company and internal control systems of the
Company.
o The Committee at least annually shall (A) perform an evaluation of the
performance of the Committee, including a review of the Committee's
compliance with this Charter; and (B) review and reassess this Charter and
submit any recommended changes to the Board for its consideration.
A-6
APPENDIX B
AMENDMENTS TO
GENESCO INC. 1996 STOCK INCENTIVE PLAN
By order of the board of directors of Genesco Inc. on April 23, 2003, the
following amendments to the Genesco Inc. 1996 Stock Incentive Plan (the "Plan")
are hereby approved and submitted to the shareholders of the Company with a
recommendation of approval at the annual meeting of shareholders on June 26,
2003, to be effective immediately upon shareholder approval:
1. ELIMINATION OF RESERVATION OF SHARES FOR OUTSIDE DIRECTORS.
The first sentence of Section 3 of the Plan shall be amended by deleting
the clause, "which includes 200,000 shares reserved for issuance pursuant
to Section 9 hereof." Such sentence, as amended, shall read in its
entirety:
"The aggregate number of shares of Stock reserved and authorized for
distribution under the Plan shall not exceed 4,400,000 shares."
2. REVISION OF LIMIT ON INDIVIDUAL GRANTS.
The final sentence of Section 4 of the Plan shall be amended by changing
the reference to 500,000 shares to 750,000 shares. Such sentence, as
amended, shall read in its entirety:
"No individual employee, officer or consultant shall receive aggregate
awards hereunder amounting to more than 750,000 shares, subject to
adjustment as provided in Section 3."
3. SUBSTITUTION OF RESTRICTED STOCK FOR FUTURE GRANTS OF OUTSIDE DIRECTOR
STOCK OPTIONS.
Section 9 of the Plan shall be amended to read in its entirety as follows:
"SECTION 9. AWARDS TO OUTSIDE DIRECTORS.
(a) The provisions of this Section 9 shall apply only to awards to Outside
Directors in accordance with this Section 9. The Committee shall have no
authority to determine the timing, terms or conditions of any award under
this Section 9.
(b) On the date of the Annual Meeting of Shareholders at which an Outside
Director is elected as an Outside Director for the first time, such Outside
Director will receive and on the date of the 1997 Annual Meeting of
Shareholders, each
B-1
Outside Director will receive an automatic grant of restricted stock
pursuant to this Section 9 in a number of shares of stock which will be
determined by dividing:
(i) $15,000 by
(ii) the average of the daily closing prices of the Stock for the
first five (5) trading days of the month in which the Annual Meeting
is held (as reported in THE WALL STREET JOURNAL), rounding up or down
any fractional share of Stock to the nearest whole share.
On the date of each Annual Meeting of Shareholders beginning in 2003, each
Outside Director elected as an Outside Director at such Annual Meeting will
receive an automatic grant of restricted stock pursuant to this Section 9
in a number of shares which will be determined by dividing:
(i) $44,000 by
(ii) the average of the daily closing prices of the Stock for the
first five (5) trading days of the month in which the Annual Meeting
is held (as reported in THE WALL STREET JOURNAL), rounding up or down
any fractional share of Stock to the nearest whole share.
The shares of stock granted pursuant to this Section 9(b) are referred to
hereinafter as "Outside Director Restricted Stock."
(c) The Outside Director Restricted Stock shall vest as follows:
(i) At the first Annual Meeting of Shareholders following the Annual
Meeting at which the Outside Director Restricted Stock was granted, if
the grantee is still serving as a director of the Corporation, the
Outside Director Restricted Stock shall vest with respect to one-third
of the shares of the Outside Director Restricted Stock;
(ii) At the second Annual Meeting of Shareholders following the Annual
Meeting at which the Outside Director Restricted Stock was granted, if
the director is still serving as a director of the Corporation, the
Outside Director Restricted Stock shall vest with respect to one-half
of the remaining shares of the Outside Director Restricted Stock; and
(iii) At the third Annual Meeting of Shareholders following the Annual
Meeting at which the Outside Director Restricted Stock was granted, if
the director is still serving as a director of the Corporation, the
Outside Director Restricted Stock shall vest with respect to the
remaining shares of Outside Director Restricted Stock.
B-2
(d) By written notice to the Secretary of the Corporation given at least
six months prior to the end of a fiscal year, an Outside Director may elect
irrevocably to receive all or a specified portion of his annual retainers
for board membership and any committee chairmanship for the following
fiscal year in a number of shares of restricted stock (the "Retainer
Stock") determined by dividing the total amount of retainer specified in
the election by 75% of the average of the daily closing prices of the Stock
on the New York Stock Exchange (as reported in THE WALL STREET JOURNAL) for
the last five trading days of the fiscal year in which the election was
made. Shares of the Retainer Stock shall be granted as of the first
business day of the fiscal year as to which the election is effective,
subject to forfeiture to the extent not earned upon the Outside Director's
ceasing to serve as a director or committee chairman during such fiscal
year.
(e) Until the earlier of (i) five years from the date of grant and (ii) the
date on which the Outside Director ceases to serve as a director of the
Corporation (the "Outside Director Period of Restriction"), no Outside
Director Restricted Stock or Retainer Stock may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, otherwise than
by will or by the laws of descent and distribution.
Each certificate representing Outside Director Restricted Stock and
Retainer Stock granted pursuant to this Section 9 shall bear the following
legend:
"The sale or other transfer of the shares represented by this
certificate, whether voluntary, involuntary, or by operation of law,
is subject to certain restrictions on transfer set forth in the
Genesco Inc. 1996 Stock Incentive Plan (the "Plan"), and rules of
administration adopted pursuant to such Plan. A copy of the Plan and
the rules of such Plan may be obtained from the Secretary of Genesco
Inc."
Once the Outside Director Period of Restriction has lapsed, the grantee
shall be entitled to have the legend required by this Section 9 removed
from such stock certificate(s); provided however, that such certificate
shall be subject to any legend required by applicable state or federal law.
(f) From the date on which the Outside Director Restricted Stock and
Retainer Stock is granted, grantees awarded such Stock may exercise full
voting rights with respect to the Outside Director Restricted Stock and
Retainer Stock.
(g) Grantees holding Outside Director Restricted Stock or Retainer Stock
that has vested in accordance with Section 9(c) or (d) hereof shall be
entitled to receive all dividends and other distributions paid with respect
to such shares of Stock while they are so held. If any such dividends, or
distributions are paid in Stock, such shares of Stock shall be subject to
the same restrictions on transferability as the shares of Outside Director
Restricted Stock or Retainer Stock with respect to which they were paid.
B-3
(h) Annually on the date of the Annual Meeting of Shareholders of the
Corporation beginning with the Annual Meeting of Shareholders in 1999 and
ending with the Annual Meeting of Shareholders in 2002, each Outside
Director shall receive the automatic grant of options (the "Outside
Director Stock Options") to purchase 4,000 shares of Common Stock at an
exercise price equal to the Fair Market Value of the Common Stock on the
date of grant. The Outside Director Stock Options shall become exercisable
six months after their respective dates of grant, and shall expire at 11:59
p.m. Nashville, Tennessee, time on the tenth anniversary of their
respective dates of grant. They may be exercised by giving written notice
of exercise, accompanied by payment in full of the exercise price, either
by check or by wire transfer of funds. The Outside Director Stock Options
shall not be transferable except by will or by the laws of descent and
distribution. In the event of death of an Outside Director holding Outside
Director Stock Options, they may thereafter be exercised, to the extent
they were exercisable at the time of death, by the legal representative of
the estate or by the legatee under the will of the Outside Director, for a
period of one year after the date of death or until their earlier
expiration, whichever period is shorter. If an Outside Director ceases to
serve on the Board of Directors for any reason other than death, the
Outside Director's Outside Director Stock Options may thereafter be
exercised, to the extent they were exercisable at the date on which the
holder's service terminated, for a period of three months after such date
or until their earlier expiration, whichever period is shorter.
(i) All restrictions imposed on the Outside Director Restricted Stock and
Retainer Stock shall expire and all Outside Director Stock Options shall
vest automatically upon a Change in Control, but the Outside Director
Restricted Stock, the Retainer Stock and the Outside Director Stock Options
shall not otherwise be subject to Section 10 hereof.
(j) All shares of Outside Director Restricted Stock and Retainer Stock and
all Outside Director Stock Options which have not vested in accordance with
Section 9(c), (d) or (h), as applicable, at the time of a grantee's
resignation, removal or failure to be elected as a member of the Board of
Directors shall be forfeited and such forfeited shares shall again be
available for award hereunder.
(k) The Board may not amend or alter this Section 9, except as provided in
Section 11, without the approval of the holders of a majority of the issued
and outstanding shares of Common Stock, and in no event shall this Section
9 be amended more than once every six months, other than to comply with
changes in the Code or the Employee Retirement Income Security Act of 1974,
as amended, or the regulations thereunder."
B-4
TABLE OF CONTENTS
PAGE [ LOGO ]GENESCO INC
----
Notice. . . . . . . . . . . . . 1
Voting Securities . . . . . . . 4
Election of Directors . . . . . 5 NOTICE OF
ANNUAL MEETING
Security Ownership of AND
Officers, Directors and PROXY STATEMENT
Principal Shareholders. . . . 11
Executive Compensation. . . . . 14
Stock Performance Graph . . . . 23 ANNUAL MEETING
OF SHAREHOLDERS
Audit Matters . . . . . . . . . 24
Amendements to 1996 Stock
Incentive Plan. . . . . . . . 27
Proposals for the
2004 Annual Meeting . . . . . 35
Financial Statements available. 36
Charter of Audit Committee . . . A-1
Text of Amendments to
1996 Stock Incentive Plan. . . B-1
JUNE 26, 2003
P GENESCO INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
R THE COMPANY FOR ANNUAL MEETING JUNE 26, 2003
O The undersigned hereby constitutes and appoints Ben T. Harris and W.
Lipscomb Davis, Jr., and each of them, his true and lawful agents and
X proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Shareholders of GENESCO INC. to be
Y held on June 26, 2003, and at any adjournments thereof, on all matters
coming before said meeting.
CHANGE OF ADDRESS: (Comments)
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(If you have written in the above space, please mark in the corresponding
box on the reverse side of this card)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE. YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS, THOUGH YOU MUST
SIGN AND RETURN THIS CARD IF YOU WISH YOUR SHARES TO BE VOTED.
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SEE REVERSE
SIDE
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PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE.
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 PROPOSALS
REFERRED TO BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS.
FOR WITHHELD
1. Election of [ ] [ ] Nominees:
Directors: L.L. Berry, R.V. Dale, W.L. Davis, Jr.,
M.C. Diamond, B.T. Harris, K. Mason, H.N.
Pennington, L.H. Potter, W.A. Williamson, Jr.
and W.S. Wire II
For, except vote withheld from
the nominee(s) indicated below:
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FOR AGAINST ABSTAIN
2. Approval of proposed amendements [ ] [ ] [ ]
to 1996 Stock Incentive Plan:
Change of
Address/ [ ]
Comments on
Reverse Side
By signing, you revoke all proxies heretofore given.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
SIGNATURE(S) DATE
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NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, administrator, trustee or guardian, please give
full title as such. If signer is a corporation, please sign full corporate
name by duly authorized officer.
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