UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 Rule 14a-12
G-III APPAREL CORPORATION, LTD
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(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:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
G-III APPAREL GROUP, LTD.
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held on Wednesday, June 12, 2002 at 10:00 a.m., New York
time, at the offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, 24th
Floor, New York, New York 10103.
The formal Notice of Meeting and the accompanying Proxy Statement set
forth proposals for your consideration this year. You are being asked to elect
directors and to ratify the appointment of Ernst & Young LLP as the independent
certified public accountants of the Company.
At the meeting, the Board of Directors will also report on the affairs of
the Company, and a discussion period will be provided for questions and
comments of general interest to stockholders.
We look forward to greeting personally those of you who are able to be
present at the meeting. However, whether or not you are able to be with us at
the meeting, it is important that your shares be represented. Accordingly, you
are requested to sign, date and mail, at your earliest convenience, the
enclosed proxy in the envelope provided for your use.
Thank you for your cooperation.
Very truly yours,
/s/ Morris Goldfarb
-----------------------------------
MORRIS GOLDFARB
Chief Executive Officer
May 10, 2002
G-III APPAREL GROUP, LTD.
512 SEVENTH AVENUE
NEW YORK, NEW YORK 10018
-----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 12, 2002
-----------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of G-III
Apparel Group, Ltd. (the "Company") will be held on Wednesday, June 12, 2002 at
10:00 a.m., New York time, at the offices of Fulbright & Jaworski L.L.P., 666
Fifth Avenue, 24th Floor, New York, New York 10103, for the following purposes:
(1) To elect eight directors to serve for the ensuing year.
(2) To consider and act upon a proposal to ratify the appointment of Ernst
& Young LLP as the Company's independent certified public accountants for the
fiscal year ending January 31, 2003.
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only stockholders of record at the close of business on May 6, 2002 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON, EACH STOCKHOLDER IS URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM
OF PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. No postage is
required if the proxy is mailed in the United States. Stockholders who attend
the Annual Meeting may revoke their proxy and vote their shares in person.
By Order of the Board of Directors
/s/ Wayne Miller
-------------------------------------
WAYNE S. MILLER
Secretary
New York, New York
May 10, 2002
G-III APPAREL GROUP, LTD.
512 SEVENTH AVENUE
NEW YORK, NEW YORK 10018
----------------------
P R O X Y S T A T E M E N T
----------------------
GENERAL INFORMATION
GENERAL
This Proxy Statement (first mailed to stockholders on or about May 10,
2002) is furnished to the holders of Common Stock, par value $.01 per share
(the "Common Stock"), of G-III Apparel Group, Ltd. (the "Company") in
connection with the solicitation by the Board of Directors of the Company of
proxies for use at the Annual Meeting of Stockholders (the "Annual Meeting"),
or at any adjournment thereof, pursuant to the accompanying Notice of Annual
Meeting of Stockholders. The Annual Meeting will be held on Wednesday, June 12,
2002, at 10:00 a.m., New York time, at the offices of Fulbright & Jaworski
L.L.P., 666 Fifth Avenue, 24th Floor, New York, New York 10103.
It is proposed that at the Annual Meeting: (i) eight directors will be
elected and (ii) the appointment of Ernst & Young LLP as the independent
certified public accountants of the Company for the fiscal year ending January
31, 2003 will be ratified.
Management currently is not aware of any other matters that will come
before the Annual Meeting. If any other matters properly come before the Annual
Meeting, the persons designated as proxies intend to vote in accordance with
their best judgment on such matters.
Proxies for use at the Annual Meeting are being solicited by the Board of
Directors of the Company. Proxies will be solicited chiefly by mail; however,
certain officers, directors, employees and agents of the Company, none of whom
will receive additional compensation therefor, may solicit proxies by
telephone, telegram or other personal contact. The Company will bear the cost
of the solicitation of the proxies, including postage, printing and handling,
and will reimburse the reasonable expenses of brokerage firms and others for
forwarding material to beneficial owners of shares of Common Stock.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting and a return envelope for
the proxy are enclosed. Unless otherwise indicated on the form of proxy, shares
of Common Stock represented by any proxy in the enclosed form, assuming the
proxy is properly executed and received by the Company prior to the Annual
Meeting, will be voted with respect to the following items on the agenda: (i)
the election of each of the nominees for director as shown on the form of proxy
and (ii) the appointment of Ernst & Young LLP as the independent certified
public accountants of the Company.
Stockholders may revoke the authority granted by their execution of a
proxy at any time prior to the effective exercise of the powers conferred by
that proxy, by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in
person at the meeting. Shares of Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the instructions specified
in such proxies. If no specifications are given, the proxies
intend to vote the shares represented thereby "for" the election of each of the
nominees for director as shown on the form of proxy and "for" the ratification
of the appointment of Ernst & Young LLP as the independent certified public
accountants of the Company, and in accordance with their best judgment on any
other matters which may properly come before the meeting.
RECORD DATE AND VOTING RIGHTS
On May 6, 2002, there were 6,710,679 shares of Common Stock outstanding
excluding those held in treasury by the Company). Each of these shares is
entitled to one vote upon each of the matters to be presented at the Annual
Meeting. Only stockholders of record at the close of business on May 6, 2002
are entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. The holders of a majority of the outstanding shares of Common Stock,
present in person or by proxy and entitled to vote, will constitute a quorum at
the Annual Meeting. Abstentions and broker non-votes will be counted for
purposes of determining the presence or absence of a quorum, but will not be
counted with respect to the specific matter being voted upon. "Broker
non-votes" are shares held by brokers or nominees which are present in person
or represented by proxy, but which are not voted on a particular matter because
instructions have not been received from the beneficial owner.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting is required for the election of directors. The affirmative vote
of the holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting is required for
the ratification of the appointment of Ernst & Young LLP.
2
BENEFICIAL OWNERSHIP OF COMMON STOCK BY
CERTAIN STOCKHOLDERS AND MANAGEMENT
The following table sets forth information as of March 28, 2002 (except as
otherwise noted in the footnotes) regarding the beneficial ownership of the
Company's Common Stock of: (i) each person known by the Company to own
beneficially more than five percent of the outstanding Common Stock; (ii) each
director of the Company; (iii) each executive officer named in the Summary
Compensation Table (see "Executive Compensation" below); and (iv) all directors
and executive officers of the Company as a group. Except as otherwise
specified, the named beneficial owner has the sole voting and investment power
over the shares listed.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
------------------------------------ ------------ ------------
Aron Goldfarb(1) ................................... 1,081,305(2) 15.9%
Morris Goldfarb(1) ................................. 2,901,265(3) 40.9%
Lyle Berman ........................................ 129,900(4) 1.9%
433 Bushaway Road
Wayzata, MN 55391
Thomas J. Brosig ................................... 1,000(5) *
1174 Glendale Place
Gulfport, MS 39507
Alan Feller(1) ..................................... 10,875(6) *
Carl Katz(1) ....................................... 96,868(7) 1.4%
Willem van Bokhorst ................................ 13,150(8) *
Julianaplein 5
Curacao, Netherlands Antilles
George J. Winchell ................................. 8,150(9) *
c/o Sea Oaks
8785 Lakeside Boulevard
Vero Beach, FL 32963
Dimensional Fund Advisors Inc. ..................... 532,965(10) 8.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Buckingham Capital Management Incorporated ......... 612,500(11) 9.1%
630 Third Avenue, Sixth Floor
New York, NY 10017
Jeanette Nostra-Katz(1) ............................ 96,868(12) 1.4%
Keith S. Jones(1) .................................. 125,975(13) 1.9%
Wayne S. Miller(1) ................................. 85,000(5) 1.3%
Deborah Gaertner(1) ................................ 24,775(14) *
All directors and executive officers as a group
(14 persons) ...................................... 4,517,463(15) 60.2%
----------
* Less than one percent
(footnotes continued on next page)
3
(footnotes continued from previous page)
(1) The address of such individual is c/o G-III Apparel Group, Ltd., 512
Seventh Avenue, New York, New York 10018.
(2) Includes 107,500 shares of Common Stock which may be acquired within 60
days upon the exercise of options.
(3) Includes (i) 398,000 shares of Common Stock which may be acquired within
60 days upon the exercise of options; (ii) 130,000 shares of Common Stock
held in a trust, of which Mr. Goldfarb's wife is one of two trustees with
shared voting and dispositive power, for the benefit of Mr. Goldfarb's
daughter; (iii) 130,000 shares of Common Stock held in a trust, of which
Mr. Goldfarb's wife is one of two trustees with shared voting power, for
the benefit of Mr. Goldfarb's son; (iv) 19,889 shares of Common Stock
owned by Mr. Goldfarb's son; (v) 9,889 shares of Common Stock owned by Mr.
Goldfarb's wife; (vi) 6,400 shares of Common Stock held by Morris and
Arlene Goldfarb as joint tenants; and (vii) 6,400 shares of Common Stock
held by the Morris Goldfarb Family Trust.
(4) Includes 15,250 shares of Common Stock which may be acquired within 60
days upon the exercise of options.
(5) Shares may be acquired within 60 days upon the exercise of options.
(6) Includes 200 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(7) Consists of 10,600 shares of Common Stock which may be acquired within 60
days upon the exercise of options, and 15,768 shares which are held
jointly by Mr. Katz and his wife, Jeanette Nostra-Katz, an executive
officer of the Company, and 70,500 shares of Common Stock which may be
acquired within 60 days upon exercise of options held by Ms. Nostra-Katz.
(8) Includes 6,050 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(9) Includes 6,050 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(10) Information is derived from the Schedule 13G, dated January 30, 2002 (the
"DFA Schedule 13G"), filed by Dimensional Fund Advisors Inc. ("DFA"), a
registered investment advisor, with the Securities and Exchange
Commission. The DFA Schedule 13G states that DFA is deemed to have
beneficial ownership as of December 31, 2001 of 532,965 shares of Common
Stock, all of which shares are owned by advisory clients of DFA, no one
of which, to the knowledge of DFA, owns more than 5% of the outstanding
Common Stock. In the DFA Schedule 13G, DFA disclaims beneficial ownership
of such shares.
(11) Information is derived from the Schedule 13G, dated January 30, 2002 (the
"BCM Schedule 13G"), filed by Buckingham Capital Management Incorporated
("BCM"), a registered investment advisor with the Securities and Exchange
Commission. The BCM Schedule 13G states that BCM is deemed to have
beneficial ownership as of December 31, 2001 of 612,500 shares of Common
Stock.
(12) Consists of 70,500 shares of Common Stock which may be acquired within 60
days upon the exercise of options, 15,768 shares which are held jointly
by Ms. Nostra-Katz and her husband, Carl Katz, a director and executive
officer of the Company, and 10,600 shares of Common Stock which may be
acquired within 60 days upon exercise of options held by Mr. Katz.
(13) Includes 47,500 shares of Common Stock which may be immediately
exercisable within 60 days upon the exercise of options.
(14) Includes 22,775 shares of Common Stock which may be acquired within 60
days upon the exercise of options and 2,000 shares owned by Ms.
Gaertner's husband.
(15) Includes an aggregate of 804,125 shares which may be acquired within 60
days upon the exercise of options.
4
PROPOSAL NO. 1-ELECTION OF DIRECTORS
Eight directors are to be elected at the Annual Meeting. Unless otherwise
specified, the enclosed proxy will be voted in favor of the persons named below
(all of whom are currently directors of the Company) to serve until the next
annual meeting of stockholders and until their respective successors shall have
been duly elected and qualified. If any of these nominees becomes unavailable
for any reason, or if a vacancy should occur before the election, the shares
represented by the proxy will be voted for the person, if any, who is
designated by the Board of Directors to replace the nominee or to fill the
vacancy on the Board. All nominees have consented to be named and have
indicated their intent to serve if elected. The Board of Directors has no
reason to believe that any of the nominees will be unable to serve or that any
vacancy on the Board of Directors will occur.
The nominees, their respective ages, the year in which each first became a
director of the Company and their principal occupations or employment during
the past five years are as follows:
YEAR FIRST
BECAME PRINCIPAL OCCUPATION
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
------- --- -------- --------------------------
Morris Goldfarb .......... 51 1974 Co-Chairman of the Board and Chief Executive Officer of
the Company. Until April 1997, served as either President
or Vice President of the Company and its predecessors
since its formation in 1974. Director of Lakes Gaming,
Inc. and Wilsons The Leather Experts Inc.
Aron Goldfarb ............ 79 1974 Director of the Company and former Co-Chairman of the
Board. Until December 1994, served as either President
or Vice President of the Company and its predecessors
since its formation in 1974. As of January 1, 1995, Mr.
Goldfarb became a consultant to the Company.
Lyle Berman .............. 60 1989 Since October 1991, Chairman and Chief Executive Officer
of Lakes Gaming, Inc. or its predecessor, Grand Casinos,
Inc. Currently serves as a Director of Lakes Gaming,
Inc., New Horizon Kids Quest, Inc. and Wilsons The
Leather Experts Inc.
Thomas J. Brosig ......... 52 1992 Mr. Brosig is currently retired. From January, 1999 through
February, 2002, he served as President, Mid-South
Region, Park Place Entertainment. For more than five
years prior to 1999, he served its predecessor, Grand
Casinos, Inc., in various executive capacities including
its President from September, 1996 to January, 1999.
From January, 1999 to October 1999, he served as
President and was a Director of Lakes Gaming, Inc.
Additionally, he is a Director of Wilson's The Leather
Experts, Inc. and Famous Dave's of America.
Alan Feller .............. 60 1995 Mr. Feller was the Company's Chief Financial Officer from
December 1989 to April 1998, and served as the
Company's Executive Vice President, Treasurer and
Secretary of the Company from January 1990 through
July of 1995. Mr. Feller served as a consultant to the
Company from November 1998 through October 1999.
5
YEAR FIRST
BECAME PRINCIPAL OCCUPATION
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
------- --- -------- --------------------------
Carl Katz ................... 62 1989 Executive Vice President of the Siena Leather division
("Siena") of the Company. Mr. Katz has been an
executive of Siena Leather since 1981.
Willem van Bokhorst ......... 56 1989 Managing Partner in the Netherlands Antilles law firm of
Smeets Thesseling van Bokhorst for more than the past
five years.
George J. Winchell .......... 75 1990 Retired as Senior Vice President of W.R. Grace & Co. in
1994. Joined W.R. Grace & Co. in 1949 and held
positions with the controller's office, the Specialty
Chemicals Group, the Office of the President and the
Retail Group.
Aron Goldfarb and Morris Goldfarb are father and son, respectively. Carl
Katz and Jeanette Nostra-Katz, President of the Company, are married to each
other.
The Board of Directors of the Company has several committees, including an
Executive Committee, Audit Committee, Option Committee and Compensation
Committee. The Board of Directors held four meetings and acted by unanimous
written consent once during the fiscal year ended January 31, 2002. During the
fiscal year ended January 31, 2002, each director in office during such fiscal
year attended not less than 75% of the aggregate number of meetings of the
Board of Directors and of meetings of committees of the Board on which he
served.
The Executive Committee is composed of Morris Goldfarb, Aron Goldfarb and
Carl Katz, is vested with the powers of the Board of Directors, to the fullest
extent permitted by law, between meetings of the Board. The Executive Committee
did not act during the fiscal year ended January 31, 2002.
Until April 30, 2002, the Audit Committee was composed of Thomas Brosig,
Sigmund Weiss and Willem van Bokhorst. Mr. Feller became a member of the Audit
Committee on May 1, 2002. Mr. Weiss, who is not standing for re-election, will
no longer be a member of the Audit Committee after the Annual Meeting. The
Audit Committee is responsible for, among other things, (i) reviewing and
discussing the annual audited financial statements with management, (ii)
discussing with management and the auditors information relating to the
financial reporting issues and judgments in connection with the preparation of
the Company's financial statements, (iii) reviewing with management and the
auditors the Company's interim financial reports prior to filing with the
Securities and Exchange Commission, (iv) meeting with management to review the
Company's major financial risk exposures, (v) reviewing major changes to the
Company's accounting principles, (vi) reviewing the adequacy of the Company's
internal controls and (vii) overseeing compliance with the Securities and
Exchange Commission. The Audit Committee met seven times during the fiscal year
ended January 31, 2002.
The Option Committee, composed of George Winchell and Willem van Bokhorst,
is empowered to oversee and make all decisions regarding the Company's 1989
Stock Option Plan (the "1989 Plan") and its 1997 Stock Option Plan, functioning
as the "Committee" under both plans. The Option Committee acted by unanimous
written consent once during the fiscal year ended January 31, 2002. The G-III
Apparel Group, Ltd. 1999 Stock Option Plan For Non-Employee Directors (the
"1999 Non-Employee Directors Plan"), which provides for annual option grants to
non-employee directors of the Company, is administered by the Board of
Directors.
6
Until April 30, 2002, the Compensation Committee was composed of Thomas J.
Brosig and Sigmund Weiss. Mr. Feller became a member of the Compensation
Committee on May 1, 2002. Mr. Weiss will no longer be a member of the
Compensation Committee after the Annual Meeting. The Compensation Committee is
empowered to establish and review compensation practices and policies of the
Company. The Compensation Committee is empowered to recommend and/or set the
compensation for the executive officers and key employees of the Company as
well as authorize and approve employment agreements. The Compensation Committee
did not meet during the fiscal year ended January 31, 2002.
VOTE REQUIRED
The eight nominees receiving the highest number of affirmative votes of
the shares present in person or represented by proxy and entitled to vote for
them shall be elected as directors. Only votes cast for a nominee will be
counted, except that the accompanying proxy will be voted for all nominees in
the absence of instructions to the contrary. Abstentions, broker non-votes and
instructions on the accompanying proxy card to withhold authority to vote for
one or more nominees will not be counted as a vote for any such nominee.
THE BOARD OF DIRECTORS DEEMS THE ELECTION AS DIRECTORS OF THE EIGHT
NOMINEES LISTED ABOVE TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" THEIR ELECTION.
7
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and
non-cash compensation awarded to, earned by or paid to the Company's chief
executive officer and each of the four other most highly compensated executive
officers for the fiscal year ended January 31, 2002 for services in all
capacities to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
------------------------------------------------------ ------------
ALL OTHER
OTHER ANNUAL OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR(2) SALARY ($) BONUS ($) COMPENSATION (#) ($)
--------------------------- ------- ---------- --------- ------------ --- ---
Morris Goldfarb .............. 2002 $650,000 $ 184,082 $ 50,000(3) -- $53,617(4)
Chief Executive Officer 2001 $650,000 $ 1,058,419 $ 50,000(3) -- $36,378(4)
2000 $650,000 $ 494,355 $ 50,000(3) 100,000 $36,214(4)
Jeanette Nostra-Katz ......... 2002 $325,000 $ 75,000 $ -- -- $ 1,080(5)
President 2001 $325,000 $ 300,000 $ -- -- $ --
2000 $325,000 $ 150,000 $ -- 50,000 $ --
Wayne S. Miller .............. 2002 $262,000 $ 50,000 $ -- -- $11,747(5)
Senior Vice President, 2001 $262,000 $ 200,000 $ -- -- $11,681(5)
Treasurer and 2000 $262,000 $ 100,000 $ -- 25,000 $12,844(5)
Secretary
Deborah Gaertner ............. 2002 $225,600 $ 20,829 $ -- -- $ --
Vice President -- 2001 $210,600 $ 28,975 $ -- 3,000 $ --
Women's Sales Division 2000 $210,600 $ 35,000 $ -- 2,500 $ --
of G-III Leather Fashions,
Inc.
Keith Sutton Jones ........... 2002 $205,000 $ 15,000 $ -- -- $ --
Vice President of 2001 $205,000 $ 25,000 $ -- -- $ --
Foreign Manufacturing 2000 $205,000 $ 25,000 $ -- -- $ --
G-III Leather Fashions,
Inc.
----------
(1) Amounts reflected do not include perquisites and other personal benefits
received by any named executive, which, in all instances, were less than
the lesser of $50,000 or 10% of the total of annual salary and bonus
reported for the named executive.
(2) Represents the fiscal year ended January 31 of that year.
(3) Represents a contribution to a supplemental pension trust pursuant to the
terms of Mr. Goldfarb's employment agreement. See "Employment Agreement."
(4) Amounts represent insurance premiums paid by the Company for life
insurance for the benefit of Mr. Goldfarb's wife and tax services
provided in 2002.
(5) Amounts represent insurance premiums paid by the Company for life and
long-term disability insurance.
8
The Company did not grant any stock options to the persons named in the
Summary Compensation Table in the fiscal year ended January 31, 2002.
The following table sets forth information with respect to (i) stock
options exercised in the fiscal year ended January 31, 2002 by the persons
named in the Summary Compensation Table and (ii) unexercised stock options held
by such individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR END FISCAL YEAR END(1)
ACQUIRED VALUE ----------------------------- ----------------------------
NAME ON EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
Morris Goldfarb ................. 0 0 398,000 60,000 $1,651,150 $288,000
Jeanette Nostra-Katz(2) ......... 0 0 70,500 40,000 $ 206,025 $160,125
Wayne S. Miller ................. 0 0 70,000 55,000 $ 189,910 $160,490
Deborah Gaertner ................ 3,600 $17,300 22,775 3,900 $ 106,351 $ 8,013
Keith Sutton Jones .............. 7,875 $45,360 47,500 15,000 $ 233,625 $ 72,000
----------
(1) Computed based on the difference between the last sale price per share of
the Common Stock of $7.05 on January 31, 2002 and the exercise price of
each option.
(2) Excludes 16,000 options held by Ms. Nostra-Katz' husband, Carl Katz, a
director of the Company.
EMPLOYMENT AGREEMENT
The Company has an employment agreement with Morris Goldfarb effective
through January 31, 2005. Two years prior to the end of the agreement, it will
automatically be extended for an additional year unless prior to that time
either the Company or Mr. Goldfarb provides a written notice that the term
should not be extended any further. The agreement provides for a base annual
salary of $650,000, with increases at the discretion of the Board of Directors.
The agreement also provides for a $2,000,000 life insurance policy which names
Mr. Goldfarb's wife as beneficiary and an annual incentive bonus equal to
varying percentages of pre-tax income (as defined in the employment agreement)
if pre-tax income exceeds $2,000,000. The percentages vary from 3% of pre-tax
income in excess of $2,000,000 up to 6% of pre-tax income in excess of
$2,000,000 if pre-tax income exceeds $4,000,000. Pursuant to the agreement, the
Company will contribute $50,000 per year to a supplemental pension trust for
Mr. Goldfarb's benefit for each year in which net after-tax income (as defined
in the employment agreement) exceeds $1,500,000. In addition, pursuant to the
agreement, in the event that Morris Goldfarb's employment is terminated (i) by
the Company without cause or (ii) by Morris Goldfarb because of a material
breach by the Company of the agreement, in either case at any time after a
"Change in Control" (as defined in the agreement), then Mr. Goldfarb will be
entitled to receive from the Company, in general, (a) an amount equal to 2.99
times his base salary and bonus, as well as (b) certain employment-related
benefits for a period of three years from the date of his termination.
9
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive $5,000 per year, in
addition to $500 for each meeting of the Board attended and $500 for each
meeting of each Committee of the Board attended, plus reimbursement of
reasonable out-of-pocket expenses incurred in connection with attendance at
Board of Directors' meetings.
Aron Goldfarb, a director of the Company, acts as a consultant to the
Company and is paid at the rate of $1,000 per month for services rendered in
such capacity. The Company also provides medical insurance for Mr. Goldfarb and
his wife.
G-III Apparel Group, Ltd. Stock Option Plan for Non-Employee Directors
Pursuant to the G-III Apparel Group, Ltd. 1999 Stock Option Plan for
Non-Employee Directors (the "1999 Non-Employee Directors Plan"), the Company
automatically grants options to purchase shares of Common Stock on an annual
basis to members of its Board of Directors who are not also employees of, or
consultants to, the Company (a "Non-Employee Director"). Subject to adjustment
to reflect stock splits and other capital changes, a maximum of 50,000 shares
are issuable under the 1999 Non-Employee Directors Plan.
Under the 1999 Non-Employee Directors Plan, each Non-Employee Director is
automatically granted an option to purchase 1,000 shares of Common Stock on the
day after each annual meeting of the Company's stockholders (each, a "Grant
Date"). All options issued under the 1999 Non-Employee Directors Plan are
exercisable at a per share exercise price equal to the closing sales price of a
share of Common Stock on the Grant Date.
In general, each option granted under the 1999 Non-Employee Directors Plan
becomes exercisable in equal increments of 200 shares on each of the first
through fifth anniversaries of the date the option is granted, and subject to
the foregoing, may be exercised during the ten year period from the date the
option is granted. However, a Non-Employee Director who ceases to perform
services for the Company will have three months (one year in the case of
termination by reason of death or total disability) to exercise his or her
outstanding options, but only to the extent otherwise exercisable under the
vesting schedule.
Under the 1999 Non-Employee Directors Plan, the Board of Directors, acting
in its discretion, may (i) make a one-time grant of an option to purchase up to
10,000 shares of Common Stock to an individual when he or she first becomes a
Non-Employee Director and (ii) increase the number of shares covered by the
automatic annual option grant to Non-Employee Directors to as many as 2,000
shares.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General. The Compensation Committee for the fiscal year ended January 31,
2002 consisted of Thomas J. Brosig and Sigmund Weiss. The Company's
compensation policies have evolved over the years since the Company's initial
public stock offering in December 1989. At the time of the public offering and
periodically since then, the compensation levels of the Company's executive
officers were reviewed and compared to officers of other publicly held apparel
companies.
The Company adopted the 1989 Plan in 1989 and increased the number of
shares subject to the 1989 Plan in January 1992 and June 1994. In 1997, the
Company adopted the 1997 Plan and in 2000 the Company increased the number of
shares subject to the 1997 Plan. The 1989 Plan and 1997 Plan are administered
by the Option Committee, which is currently composed of Willem van Bokhorst and
George J. Winchell.
10
One of the Company's strengths is a strong management team. The
compensation program is designed to enable the Company to attract, retain and
reward capable employees who contribute to the Company's success. Equity
participation and a strong alignment to stockholders' interests are key
elements of the Company's compensation philosophy. The Company's executive
compensation policies are intended to (i) attract and retain the most highly
qualified managerial and executive talent; (ii) afford appropriate incentives
to produce superior performance; (iii) emphasize sustained performance by
aligning rewards with stockholder interests; (iv) motivate executives and
employees to achieve the Company's annual and long-term business goals; and (v)
reward executives for superior individual contributions to the Company. To
implement these policies, the Board of Directors designed an executive
compensation program consisting, in general, of base salary, annual bonus plan
and stock options.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") publicly held companies may be prohibited from deducting as an expense
for federal income tax purposes total remuneration in excess of $1 million paid
to certain executive officers in a single year. However, Section 162(m) of the
Code provides an exception for "performance-based" remuneration, including
remuneration attributable to certain stock options. The Company expects to keep
"non-performance-based" remuneration within the $1 million limit to ensure that
all executive compensation will be fully deductible. Nevertheless, although the
Committee considers the net cost to the Company in making all compensation
decisions (including, for this purpose, the potential limitation on
deductibility of executive compensation), there is no assurance that
compensation realized with respect to any particular award will qualify as
"performance-based" remuneration.
Base Salary. Base salaries reflect individual responsibilities,
experience, leadership and contribution to the success of the Company. Annual
salary adjustments are generally determined by evaluating the performance of
the executive and any increased responsibilities assumed by the executive, the
performance of the Company and the competitive marketplace. During the fiscal
year ended January 31, 2000 ("fiscal 2000") the fiscal year ended January 31,
2001 ("fiscal 2001"), and the fiscal year ended January 31, 2002 ("fiscal
2002") the Company granted certain salary increases based on performance and
the competitive marketplace.
Annual Bonuses. The Company implemented a discretionary bonus program in
1997. Under the discretionary program, if the Company's overall profit target
is met, management personnel are entitled to receive bonuses, determined by
Morris Goldfarb, the Chief Executive Officer of the Company, based on an
evaluation of the executive's individual performance and contribution to the
Company's results of operations. The Company's range of profit targets for
fiscal 2000 and 2001 were met and the bonuses awarded to Ms. Nostra-Katz, Mr.
Miller and Mr. Sutton Jones are set forth in the Summary Compensation Table.
Although the Company did not achieve its fiscal 2002 profit target, Ms.
Nostra-Katz, Mr. Miller and Mr. Sutton Jones were awarded bonuses because their
significant efforts helped the Company achieve profitable operations in spite
of the challenges presented by the economic slowdown in the United States, the
events of September 11 and one of the warmest fall/winter seasons on record.
The Company has an incentive compensation program for division Vice-Presidents,
including Ms. Gaertner. The incentive compensation program is based on targeted
division and overall company performance. The bonuses paid to Ms. Gaertner in
fiscal 2000, 2001 and 2002 reflect her division and the Company's performance
relative to the targets set.
Mr. Goldfarb has a performance-based incentive bonus provision in his
employment agreement. This incentive provision is intended to recognize Mr.
Goldfarb's unique role in overall management and corporate strategy and provide
incentive compensation based on overall performance by the Company.
11
Pursuant to the terms of his employment agreement, Mr. Goldfarb was paid a
bonus of $497,355 with respect to fiscal 2000, a bonus of $1,058,419 with
respect to fiscal 2001 and a bonus of $126,900 with respect to fiscal 2002. In
addition, Mr. Goldfarb was paid an additional bonus of $57,182 in fiscal 2002
which was due him from a prior fiscal year.
Stock Options. The Compensation Committee endorses the position that
equity ownership by management is beneficial in aligning management's and
stockholders' interests in the enhancement of stockholder value. Stock option
awards provide a long-term view and incentives tied to growth in stockholder
values. The Committee strongly believes that the compensation program should
provide employees with an opportunity to increase their ownership and
potentially gain financially from Company stock price increases. By this
approach, the best interests of stockholders, executives and employees will be
closely aligned.
The Committee believes that the use of stock options as the basis for
long-term incentive compensation meets the Company's compensation strategy and
business needs of the Company by achieving increased value for stockholders and
retaining key employees. The Committee intends to work closely with the Option
Committee to achieve these goals.
COMPENSATION COMMITTEE OPTION COMMITTEE
Thomas J. Brosig Willem van Bokhorst
Sigmund Weiss George J. Winchell
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Morris Goldfarb, Chief Executive Officer and a director of the Company, is
a director of Wilsons The Leather Experts, Inc. ("Wilsons"). Thomas J. Brosig,
a director of the Company, is also a director of Wilsons.
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors,
the Audit Committee of the Board of Directors is responsible for, among other
things, reviewing and discussing the audited financial statements with
management, discussing with the Company's auditors information relating to the
auditors' judgments about the quality of the Company's accounting principles.
Each of the members of the Audit Committee is an "independent director" as that
term is defined in the listing standards of Nasdaq.
Management is responsible for the Company's financial reporting process
including its system of internal control and for the preparation of
consolidated financial statements in accordance with generally accepted
accounting principles. The Company's independent auditors are responsible for
auditing those financial statements. The responsibility of the Audit Committee
is to monitor and review these processes. Members of the Audit Committee are
not employees of the Company and may not be accountants or auditors by
profession. Therefore, the Audit Committee has relied, without independent
verification, on management's representation that the financial statements have
been prepared with integrity and objectivity and in conformity with generally
accepted accounting principles and on the representations of the independent
auditors included in their report of the Company's financial statements. The
oversight by the Audit Committee does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws
12
and regulations. Furthermore, the Audit Committee cannot give assurance that
the Company's financial statements are presented in accordance with generally
accepted accounting principles, that the audit of the Company's financial
statements has been carried out in accordance with generally accepted auditing
standards or that the Company's independent accountants are in fact
"independent."
Review of Audited Financial Statements. The Audit Committee has reviewed
the Company's audited financial statements for the fiscal year ending January
31, 2001 as prepared by Ernst & Young LLP, the Company's independent auditors,
and has discussed these financial statements with management. In addition, the
Audit Committee has discussed with Ernst & Young LLP the matters required to be
discussed by Statement of Auditing Standards No. 61 (Communication with Audit
Committees) regarding the codification of statements on auditing standards.
Furthermore, the Audit Committee has received the written disclosures and the
letter from Ernst & Young LLP required by the Independence Standards Board
Standard No. 1 and has discussed with Ernst & Young LLP its independence.
Recommendation. In reliance on the reviews and discussions referenced
above, the Audit Committee recommended to the Board of Directors that the
audited financial statements for the fiscal year ended January 31, 2002 be
included in the Company's Annual Report on Form 10-K for that fiscal year.
Membership. The Audit Committee for the fiscal year ended January 31, 2002
consisted of Messrs. Brosig, Weiss and van Bokhorst.
AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
Thomas Brosig
Sigmund Weiss
Willem van Bokhorst
INDEPENDENT PUBLIC ACCOUNTANTS
On July 20, 2000, the Company dismissed Grant Thornton LLP as its
principal accountants and engaged Ernst & Young LLP. The decision to change
accountants was approved by the Company's Audit Committee.
Neither of the reports of Grant Thornton LLP on the financial statements
for the Company's fiscal years ended January 31, 1999 and January 31, 2000,
contained an adverse opinion or disclaimer of opinion, nor was either qualified
or modified as to uncertainty, audit scope, or accounting principles. During
the fiscal years ended January 31, 1999 and January 31, 2000, the three months
ended April 30, 2000, and through July 20, 2000, there were no disagreements
with Grant Thornton LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Grant Thornton LLP, would
have caused it to make reference to the subject matter of the disagreements in
connection with its report.
During the fiscal years ended January 31, 1999 and January 31, 2000, the
three months ended April 30, 2000, and through July 20, 2000, the Company had
not consulted Ernst & Young LLP regarding any matter requiring disclosure under
Item 304(a)(2) of Regulation S-K.
The Company provided Grant Thornton LLP with a copy of this disclosure and
requested that Grant Thornton LLP furnish it with a letter addressed to the
SEC, stating whether it agrees with the above statements. In a letter to the
SEC dated July 27, 2000, Grant Thornton LLP stated that it agreed with the
statements in the prior three paragraphs as such statements pertained to Grant
Thornton LLP.
13
AUDIT FEES
Ernst & Young LLP billed the Company an aggregate of $200,875 in fees, for
professional services rendered in connection with the audit of the Company's
financial statements for the fiscal year ended January 31, 2002 and the reviews
of the financial statements included in the Company's Quarterly Reports on Form
10-Q for the quarters ended April 31, 2001, July 31, 2001 and October 31, 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young LLP did not provide any professional services to the Company
for the fiscal year ended January 31, 2002 in connection with the design or
implementation of any financial information systems.
ALL OTHER FEES
Ernst & Young LLP billed the Company an aggregate of $235,250 in fees for
services rendered to the Company other than the services described above under
"Audit Fees," for the fiscal year ended January 31, 2002. These fees relate to
tax and other services.
The Audit Committee has considered whether the provision of the above
services is compatible with maintaining Ernst & Young LLP's independence.
PROPOSAL NO. 2-RATIFICATION OF APPOINTMENT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The stockholders will be asked to ratify the appointment of Ernst & Young
LLP as the independent certified public accountants of the Company for the
fiscal year ending January 31, 2002. Ernst & Young LLP audited the financial
statements of the Company for the fiscal year ended January 31, 2002. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting, and will have an opportunity to make a statement if such person
desires to do so, and is expected to be available to respond to appropriate
questions from stockholders.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
14
COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total stockholder return on its Common Stock
with the cumulative total stockholder return of (i) a broad equity market index
and (ii) a published industry index or peer group. This chart compares the
Common Stock with (i) the S&P 500 Composite Index and (ii) the S&P Textiles
Index, and assumes an investment of $100 on January 31, 1997 in each of the
Common Stock, the stocks comprising the S&P 500 Composite Index and the stocks
comprising the S&P Textile Index.
G-III APPAREL GROUP, LTD.
COMPARISON OF CUMULATIVE TOTAL RETURN
(JANUARY 31, 1997--JANUARY 31, 2002)
[GRAPHIC OMITTED]
1/31/97 100 100 100
1/31/98 161 125 99
1/31/99 84 163 88
1/31/00 99 177 58
1/31/01 198 174 79
1/31/02 201 144 60
G-III S&P 500 S&P TEXTILE (APPAREL)
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
To the Company's knowledge, the Company's directors, executive officers
and beneficial owners of more than ten percent of the Company's Common Stock
are in compliance with the reporting requirements of Section 16(a) under the
Securities Exchange Act of 1934, as amended.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1986, the New York City Industrial Development Agency ("IDA")
issued $1,442,000 of floating rate Industrial Development Revenue Bonds to a
commercial bank for the purpose of acquiring and renovating real property
located at 345 West 37th Street in New York City (the "345 Property").
Simultaneously, the IDA leased the 345 Property for a term of 15 years to 345
West 37th Corp. ("345 Corp."), a company owned and managed by Morris Goldfarb
and Aron Goldfarb, for sublease to a subsidiary of the Company as its
headquarters. Monthly rental payments were due under the sublease
15
in an amount equal to the aggregate of all amounts due under the bonds
(including principal, redemption premium, if any, and interest), plus real
estate taxes and building operating expenses. Two of the Company's subsidiaries
and Morris Goldfarb and Aron Goldfarb (collectively, the "Guarantors") jointly
and severally guaranteed the payments and obligations under the lease and the
payment of principal and interest on the bonds. In accordance with their terms,
the IDA Bonds were paid in full as of October 2001.
In April 1988, 345 Corp. received a loan in the principal amount of
$1,153,000 from the New York Job Development Authority (the "Authority"), to
assist 345 Corp. in its renovation of the 345 Property. The loan, which is
financed by long-term bonds issued by the Authority, is for a period of 15
years and is repayable in principal installments of $10,689 monthly, plus
interest at a variable rate, not to exceed 12% above the Authority's cost of
the funds loaned. At January 31, 2002, the interest rate on and the outstanding
principal amount of the loan were 8.25% and approximately $159,000,
respectively. Each of the Guarantors has guaranteed the loan.
Each of Morris Goldfarb and Lyle Berman and/or related family partnerships
or trusts for the benefit of their children are beneficial owners of an
aggregate of more than 10% of the fully diluted common equity of Wilsons The
Leather Experts Inc. ("Wilsons"), a retail leather apparel chain. Each of Mr.
Goldfarb and Mr. Berman is also a director of Wilsons. During the year ended
January 31, 2002, sales by the Company to Wilsons accounted for approximately
$11.6 million of the Company's net sales.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the Annual
Meeting of Stockholders of the Company to be held in 2003 must be received by
the Company no later than January 15, 2003 for inclusion in the Board of
Directors' proxy statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend
the Annual Meeting, please sign the proxy and return it in the enclosed
envelope.
By Order of the Board of Directors
/s/ Wayne Miller
---------------------------------------
WAYNE S. MILLER
Secretary
Dated: May 10, 2002
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: G-III APPAREL GROUP,
LTD., ATTENTION: CORPORATE SECRETARY, 512 SEVENTH AVENUE, NEW YORK, NEW YORK
10018.
16
G-III APPAREL GROUP, LTD.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 12, 2002
The undersigned, a stockholder of G-III Apparel Group, Ltd. (the
"Corporation"), hereby constitutes and appoints Morris Goldfarb, Aron Goldfarb
and Wayne S. Miller and each of them, the true and lawful proxies and
attorneys-in-fact of the undersigned, with full power of substitution in each
of them, to vote all shares of Common Stock of the Corporation which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Corporation to be held on Wednesday, June 12, 2002, and at any and all
adjournments or postponements thereof, as follows:
(1) ELECTION OF DIRECTORS
[ ] FOR the nominees listed below (except as marked to the contrary below)
[ ] WITHHOLDING AUTHORITY to vote for all the nominees listed below
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.)
Nominees: Morris Goldfarb, Aron Goldfarb, Lyle Berman, Thomas J. Brosig, Alan
Feller, Carl Katz, Willem van Bokhorst and George J. Winchell
(2) PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion upon such other business as may properly come
before the meeting and any and all adjournments and postponements thereof.
(Continued on reverse side.)
(Continued)
Shares represented by this Proxy will be voted in accordance with the
instructions indicated in items 1 and 2 above. IF NO INSTRUCTION IS INDICATED,
THIS PROXY WILL BE VOTED FOR ALL LISTED NOMINEES FOR DIRECTORS AND FOR PROPOSAL
2.
Any and all proxies heretofore given by the undersigned are hereby
revoked.
Dated: -----------------------------
---------------------------------
---------------------------------
Please sign exactly as your
name(s) appear hereon. If shares
are held by two or more persons
each should sign. Trustees,
executors and other fiduciaries
should indicate their capacity.
Shares held by corporations,
partnerships, associations, etc.
should be signed by an authorized
person, giving full title or
authority.
PLEASE DATE, SIGN AND MAIL IN THE ENCLOSED REPLY ENVELOPE