SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
BLAIR CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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BLAIR CORPORATION
Warren, Pennsylvania
------------------------
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS OF
BLAIR CORPORATION
to be held on Tuesday, April 15, 2003
------------------------
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of Blair
Corporation (the "Company"), a Delaware corporation, will be held in the Library
Theatre, 302 Third Avenue West, Warren, Pennsylvania, on Tuesday, April 15,
2003, at 11:00 a.m., for the following purposes:
1. To elect eleven directors to serve for a term of one year and until
their successors are elected and qualified;
2. To approve an increase in the number of shares of common stock
authorized for issuance under the Company's 2000 Omnibus Stock Plan;
3. To ratify the appointment of Ernst & Young LLP as independent public
accountants of the Company for the year 2003; and
4. To transact such other business as may lawfully come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on February 21, 2003
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting, or any postponements or adjournments thereof.
To assure that your shares are represented at the meeting, please date,
sign and return the enclosed proxy. A postage-paid, self addressed envelope is
enclosed for your convenience in returning the proxy. If you decide to attend
the meeting, you may revoke the proxy at any time before it is voted.
DAVID A. BLAIR
Secretary
Dated: March 14, 2003
Warren, Pennsylvania
BLAIR CORPORATION
Warren, Pennsylvania
March 14, 2003
PROXY STATEMENT
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement solicits proxies on behalf of the management of Blair
Corporation (the "Company") for use at the Annual Meeting of Stockholders of the
Company, to be held at 11:00 a.m. on Tuesday, April 15, 2003, at the Library
Theatre, 302 Third Avenue West, Warren, Pennsylvania. The Company's principal
executive offices are located at 220 Hickory Street, Warren, Pennsylvania 16366.
Under Delaware law, any person giving a proxy pursuant to this solicitation
may revoke it at any time before it is voted by filing a written notice of
revocation with the Secretary of the Company, by delivering to the Company a
duly executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person.
The shares represented by proxies received by the Company's management will
be voted at the meeting, or at any adjournment thereof, in accordance with the
specifications made therein. If no specification is made on a proxy card, it
will be voted FOR the nominees listed on the proxy card and FOR the other
matters specified on the proxy card. All proxies not voted will not be counted
toward establishing a quorum. Stockholders should note that while broker
non-votes and votes to ABSTAIN will count toward establishing a quorum, passage
of any proposal considered at the Annual Meeting will occur only if a sufficient
number of votes are cast FOR the proposal.
Other than the matters listed on the attached Notice of Annual Meeting of
Stockholders, the Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of the proxy card,
however, confers on the designated proxy holders discretionary authority to vote
the shares of Common Stock in accordance with their best judgment on such other
business, if any, that may properly come before the Annual Meeting or any
adjournments thereof.
A copy of the 2002 Annual Report of the Company, including financial
statements and a description of the Company's operations for 2002, accompanies
this Proxy Statement, but is not incorporated in this Proxy Statement by this
reference. This Proxy Statement, Notice of Meeting and the enclosed proxy card
are first being mailed to stockholders on or about March 14, 2003.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of shares
of common stock of the Company ("Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Annual Meeting. There is
no cumulative voting for the election of directors.
The close of business on February 21, 2003 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. As reported by the transfer agent, there were
8,042,080 shares of the Company's Common Stock outstanding as of the Record
Date.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of the Company's Common Stock outstanding on
February 21, 2003 will constitute a quorum. In the event there are not
sufficient votes for a quorum or to approve or ratify any proposal at the time
of the Annual Meeting, the Annual Meeting may be adjourned in order to permit
the further solicitation of proxies.
As to the election of directors, the enclosed proxy card enables a
stockholder to vote FOR the election of the nominees proposed by the Board, or
to WITHHOLD AUTHORITY to vote for one or more of the nominees being proposed.
Under Delaware law and the Company's bylaws, directors are elected by a
plurality of votes cast, without regard to either (i) broker non-votes, or (ii)
proxies as to which authority to vote for one or more of the nominees being
proposed is withheld.
As to the increase in the number of shares authorized for issuance under
the Company's 2000 Omnibus Stock Plan (the "Omnibus Plan"), a stockholder may:
(i) vote FOR the item; (ii) vote AGAINST the item; or (iii) ABSTAIN from voting
on such item. Under the Plan, the amendment to the Omnibus Plan must be approved
by a majority of the votes present in person or by proxy at the meeting.
Therefore, for the purposes of the proposal to amend the Omnibus Plan, proxies
marked ABSTAIN will be treated as votes AGAINST the proposal.
As to the ratification of Ernst & Young LLP as independent auditors of the
Company and all other matters that may properly come before the Annual Meeting,
by checking the appropriate box, a stockholder may: (i) vote FOR the item; (ii)
vote AGAINST the item; or (iii) ABSTAIN from voting on such item. Under the
Company's bylaws, all such matters shall be determined by a plurality of the
votes cast without regard to either (a) broker non-votes, or (b) proxies marked
ABSTAIN as to that matter.
Proxies solicited hereby will be returned to the Company's transfer agent
and will be tabulated by inspectors of election designated by the Company, who
will not be employed by, or be a director of, the Company or any of its
affiliates. After the final adjournment of the Annual Meeting, the proxies will
be returned to the Company for safekeeping.
PRINCIPAL HOLDERS OF COMMON STOCK
(a) Security Ownership of Certain Beneficial Owners. The table below sets
forth information as of February 21, 2003 with respect to each person and
institution known to the Company's management to be the beneficial owner of more
than five percent (5%) of the outstanding shares of the Company's Common Stock.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS*
------------------- -------------------- ---------
The PNC Financial Services Group, Inc.
249 5th Avenue
Pittsburgh, PA 15222................................ 625,262(1) 7.77%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401.............................. 589,100(2) 7.33%
FMR Corp.
82 Devonshire Street
Boston, MA 02109.................................... 782,900(3) 9.74%
Paradigm Capital Management, Inc.
Nine Elk Street
Albany, NY 12207.................................... 401,800(4) 5.00%
Advisory Research, Inc.
180 North Stetson Street, Suite 5780
Chicago, IL 60601................................... 419,132(5) 5.21%
---------------
* For purposes of calculating the percent of class ownership, the figure used
for the amount of outstanding Common Stock is 8,042,080, which amount
represents the figure reported as outstanding by the transfer agent as of
the Record Date.
2
(1) PNC Bank, N.A., a wholly owned subsidiary of PNC Bancorp, Inc. which is
itself a wholly owned subsidiary of PNC Financial Services Group, Inc., is
deemed to have beneficial ownership of 625,262 shares of the Company's
Common Stock as of December 31, 2002.
The above information was provided to the U.S. Securities and Exchange
Commission in a Schedule 13G filed on February 12, 2003 by PNC Financial
Services Group.
(2) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 589,100 shares of the
Company's Common Stock as of December 31, 2002, all of which shares are held
in portfolios of four registered investment companies, for which Dimensional
serves as investment advisor, and certain other investment vehicles,
including co-mingled group trusts and separate accounts, for which
Dimensional serves as investment manager. All of the shares are owned by the
portfolios and Dimensional disclaims beneficial ownership of all such
shares.
The above information was provided to the U.S. Securities and Exchange
Commission in a Schedule 13G filed on February 12, 2003 by Dimensional Fund
Advisors, Inc.
(3) Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp. and a registered investment adviser, is the
beneficial owner of 782,900 shares of the Company's Common Stock as of
December 31, 2002, as a result of acting as investment adviser to various
investment companies registered under Section 8 of the Investment Company
Act of 1940. The ownership of one investment company, Fidelity Low-Priced
Stock Fund, amounted to 782,900 shares of the Common Stock outstanding of
the Company as of December 31, 2002. The Fidelity Low-Priced Stock Fund has
its principal business office at 82 Devonshire Street, Boston, Massachusetts
02109.
The above information was provided to the U.S. Securities and Exchange
Commission in a Schedule 13G filed on February 13, 2003 by FMR Corp.
(4) Paradigm Capital Management, Inc. ("Paradigm"), a registered investment
advisor, is deemed to have beneficial ownership of 401,800 shares of the
Company's Common Stock as of December 31, 2002. All of such shares are owned
by advisory clients of Paradigm.
The above information was provided to the U.S. Securities and Exchange
Commission in a Schedule 13G filed on February 14, 2003 by Paradigm Capital
Management, Inc.
(5) Advisory Research, Inc. ("ARI"), a registered investment advisor, is deemed
to have beneficial ownership of 419,132 shares of the Company's Common Stock
as of December 31, 2002.
This information was provided to the U.S. Securities and Exchange Commission
in a Schedule 13G filed on February 14, 2003 by Advisory Research, Inc.
(b) Security Ownership of Management. The following table sets forth, as
of February 21, 2003, certain information with respect to the Company's Common
Stock owned beneficially by each director and nominee for election as a
director, the named executive officers included below under "Executive
Compensation," and by all current directors and executive officers of the
Company as a group.
3
NUMBER OF SHARES
NAME OF AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS**
---------------- ------------------------ ----------
David A. Blair............................ 49,029(2)(3)(4)(5)(6)(7) *
Robert W. Blair........................... 283,390(3)(4)(6)(7) 3.52%
Steven M. Blair........................... 32,312(4)(5)(7) *
Robert D. Crowley......................... 25,417(4)(5) *
Harriet Edelman........................... -0-(8) *
Bryan J. Flanagan......................... 5,834 *
John O. Hanna............................. 10,300(4) *
Craig N. Johnson.......................... 4,650 *
John A. Lasher............................ 20,610(5) *
Murray K. McComas......................... 59,525(4)(8) *
Thomas P. McKeever........................ 29,734(5) *
Ronald L. Ramseyer........................ 1,075 *
Michael A. Schuler........................ -0- *
Kent R. Sivillo........................... 23,994(5)(6) *
Blair T. Smoulder......................... 49,651(4)(5)(6) *
John E. Zawacki........................... 56,247(4)(5) *
All directors and executive officers as a
group (includes 27 persons)............. 810,146(2)(3)(4)(5)(8)(9)(10) 10.1%
---------------
* Does not exceed 1%
** For purposes of calculating the percent of class ownership, the figure used
for the amount of outstanding Common Stock is the number of shares of
Common Stock reported as outstanding by the transfer agent as of the Record
Date (8,042,080).
(1) Unless otherwise indicated, each person has sole voting and investment
power with respect to the shares beneficially owned.
(2) Such share totals include, with respect to David A. Blair, 39,500 shares
held in a revocable trust established by David A. Blair and administered by
a commercial bank.
(3) The share totals include the following shares of stock held by a bank as
trustee for the benefit of the indicated nominee, as to which the indicated
nominees have no voting or investment power, beneficial interest in which
shares is disclaimed by such nominees: David A. Blair (200 shares) and
Robert W. Blair (43,500 shares).
(4) The share totals include the following shares of Common Stock held by and
for the benefit of members of the immediate families of certain nominees
and executive officers, as to which the indicated nominees and executive
officers have no voting or investment power, beneficial interest in which
is disclaimed by such nominees and executive officers: David A. Blair
(2,995 shares), Robert W. Blair (7,160 shares), Steven M. Blair (7,500
shares), Robert D. Crowley (10,748 shares), John O. Hanna (1,800 shares),
Murray K. McComas (980 shares), Blair T. Smoulder (8,500 shares) and John
E. Zawacki (18,079 shares).
(5) The share totals include the following shares of Common Stock underlying
stock options granted by the Company, which are exercisable now or within
60 days of the Record Date: David A. Blair (2,334 shares), Steven M. Blair
(3,067 shares), Robert D. Crowley (4,735 shares), John A. Lasher (4,735
shares), Thomas P. McKeever (6,534 shares), Kent R. Sivillo (4,534 shares),
Blair T. Smoulder (10,334 shares), John E. Zawacki (20,168 shares), and all
directors and executive officers listed as a group (95,584).
(6) David A. Blair, Robert W. Blair, Kent R. Sivillo, and Blair T. Smoulder
will retire as directors effective as of the close of business on April 14,
2003 and will not stand for reelection.
4
(7) David A. Blair is the nephew of Robert W. Blair. Steven M. Blair is not
related to either Robert W. Blair or David A. Blair.
(8) The share totals do not include the following shares which were deferred
pursuant to the Company's Stock Accumulation and Deferred Compensation Plan
for non-management directors: Harriet Edelman (1,325 shares), Murray K.
McComas (1,500 shares), and all directors and executive officers listed as
a group (2,825).
(9) The share totals include 3,765 shares of Common Stock which are held by or
for the benefit of members of the immediate families of executive officers
of the Company not identified individually in this chart, as to which such
executive officers have no voting or investment power, beneficial interest
in which is disclaimed by such executive officers.
(10) Such share totals include an aggregate of 7,100 shares of Common Stock
jointly owned by the directors and executive officers with their spouses.
5
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
One of the purposes of the meeting is to elect eleven directors to serve
until the next Annual Meeting of Stockholders and until their successors have
been elected and qualified. The persons named in the proxy intend to vote the
proxy for the election as directors of the nominees named below. If, however,
any nominee is unwilling or unable to serve as a director, which is not now
expected, the persons named in the proxy reserve the right to vote for such
other person as may be nominated by management. Directors will be elected by a
plurality of the votes cast at the Annual Meeting.
The table below sets forth the name of each nominee for election as a
director and the nominee's age, position with the Company, business experience
and principal occupation during the past five years, and family relationships
with other directors. With the exception of Bryan J. Flanagan, who was appointed
as a director on July 16, 2002, and Michael A. Schuler, who is a first-time
nominee, all of the nominees were elected as directors at the Company's 2002
Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF EACH NOMINEE FOR DIRECTOR
LISTED BELOW.
BUSINESS
POSITION WITH DIRECTOR EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- ------- ----- ---------------
Steven M. Blair...... 59 Director and Vice 1986 Vice President (Customer
President (Customer Services) for the past five
Services) years.
Robert D. Crowley.... 53 Director and Senior 1994 Senior Vice President
Vice President (Menswear, Home, and Marketing
(Menswear, Home, and Services), July,
Marketing Services) 2002 - present; Vice President
(Menswear), June, 1981 - July,
2002.
Harriet Edelman...... 47 Director 2001 Senior Vice President and Chief
Information Officer, Avon
Products, Inc., New York, NY,
January, 2000 - present; Group
Vice President (Global
Operations), Avon Products,
Inc., New York, NY, June,
1998 - January, 2000; Vice
President (Customer Service)
Avon Products, Inc., New York,
NY, November, 1995 - May, 1998.
Bryan J.
Flanagan(1)........ 50 Director, Senior Vice 2002 Chief Financial Officer, June,
President, and Chief 2002 - present; Senior Vice
Financial Officer President, July,
2002 - present; Chief Financial
Officer and Chief Operating
Officer, Mattress Discounters
Corporation, Upper Marlboro,
MD, July, 2000 - November,
2001; Senior Vice President
(Financial Operations),
Security Capital Group Inc., El
Paso, TX, June, 1995 - June,
2000.
6
BUSINESS
POSITION WITH DIRECTOR EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- ------- ----- ---------------
John O. Hanna........ 71 Director and Member 1992 Member of Executive Committee,
of Executive January, 2000 - present;
Committee Chairman of the Board of
Directors, Northwest Bancorp,
Inc., Warren, PA, July,
2001 - present; Director,
President and Chief Executive
Officer, Northwest Bancorp,
Inc., Warren, PA, November,
1994 - July, 2001; Chairman,
Northwest Savings Bank, Warren,
PA, July, 1998 - present;
Director, President and Chief
Executive Officer, Northwest
Savings Bank, Warren, PA,
January, 1972 - July, 1998;
Director, Jamestown Savings
Bank, Jamestown, NY, November,
1995 - present; President and
Chief Executive Officer,
Jamestown Savings Bank,
Jamestown, NY, July, 1998 -
present.
Craig N. Johnson..... 61 Director and Member 1997 Member of Executive Committee,
of Executive January, 2000 - present;
Committee Managing Director and Partner,
Glenthorne Capital, Inc.,
Philadelphia, PA, February,
1994 - February, 2002.
Murray K. McComas.... 66 Chairman of the Board 1977 Chairman of the Board and
and Member of Member of Executive Committee
Executive Committee for the past five years;
President and Chief Executive
Officer, October,
1987 - December, 1999.
Thomas P. McKeever... 54 Director and Senior 1994 Senior Vice President
Vice President (Operations and
(Operations and Administration), July 2002 -
Administration) present; Vice President
(Corporate Affairs and Human
Resources) January, 1997 - July
2002; Member of Executive
Committee, October,
1996 - January, 2000; Director,
Blair Holdings, Inc.,
September, 1996 - September,
2001; Manager and Vice
President, Blair Payroll LLC,
May, 2000 - present.
Ronald L. Ramseyer... 60 Director 2001 President of Direct Marketing,
Bass Pro Shops, Springfield,
MO, April, 2001 - November,
2002; President and Chief
Executive Officer, Macy's By
Mail, Inc., September,
1997 - March, 2001.
7
BUSINESS
POSITION WITH DIRECTOR EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- ------- ----- ---------------
Michael A. Schuler... 53 Director Nominee -- President and CEO, Donerail
Investments, Ltd., Bradford,
PA, March, 2001 - Present;
Chairman of Audit Committee,
National City Corporation,
Cleveland, OH, 2000 - 2002;
Board Member, Audit Committee
Member, Public Policy Committee
Member, National City
Corporation, Cleveland, OH,
1996 - 2002; Chairman,
President and CEO, Zippo
Manufacturing Co., Bradford,
PA, September, 1986 - March,
2001.
John E. Zawacki...... 54 Director, President, 1988 President and Chief Executive
Chief Executive Officer, December,
Officer, and Member 1999 - present; Member of
of Executive Executive Committee for the
Committee past five years; Manager and
President, Blair Payroll LLC,
May, 2000 - present; Vice
President (Womenswear),
January, 1988 - December, 1999.
---------------
(1) Bryan J. Flanagan's previous employer, Mattress Discounters Corporation,
filed for Chapter 11 bankruptcy protection in October, 2002, approximately
one year after his departure from the company.
The table below sets forth the name of each executive officer of the
Company not listed above, his or her name, age, position with the Company,
present principal occupation and business experience during the past five years.
EXECUTIVE BUSINESS
POSITION WITH OFFICER EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- ------- ----- ---------------
David A. Blair(1)....... 52 Secretary and 1991 Director, Secretary, and
Director of Director of Customer
Customer Services for the past five
Services years.
Timothy J. Baker........ 56 Vice President 1990 Vice President (Marketing)
(Marketing) for the past five years.
Mark J. Espin........... 47 Vice President 1999 Vice President
(Womenswear) (Womenswear), December,
1999 - present; Assistant
Vice President
(Womenswear), January,
1991 -- December, 1999.
Patrick J. Kennedy...... 53 Vice President 1996 Vice President (Home
(Home Products) Products) for the past five
years.
8
EXECUTIVE BUSINESS
POSITION WITH OFFICER EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- ------- ----- ---------------
John A. Lasher.......... 51 Vice President 1987 Vice President
(Advertising) (Advertising) for the past
five years; Director, Blair
Holdings, Inc., September,
1993 - present; President,
Blair Holdings, Inc.,
September, 2001 - present.
Marsha D. Maier......... 53 Vice President 2002 Vice President (Menswear),
(Menswear) July, 2002 - present;
Assistant Vice President
(Menswear), April,
1995 - July, 2002.
Jeffrey H. Parnell...... 41 Vice President 2000 Vice President
(E-commerce) (E-commerce), September,
2000 - present; Chief
Executive Officer,
Eximious, Inc. and
Eximious, Ltd., Northfield,
IL and London, U.K.,
November, 1998 - August,
2000; Vice President,
Marketing/Business
Development, Overton's,
Inc., Greenville, NC,
September, 1994 - November,
1998.
Michael A. Rowe......... 48 Vice President 2000 Chief Information Officer,
(Information July, 2002 - present; Vice
Services President (Information
and Chief Services), January, 2000 -
Information present; Assistant Vice
Officer) President (Information
Services) July, 1998 -
December, 1999; Senior
Director (Information
Services) April,
1997 - July, 1998.
Randall A. Scalise...... 48 Vice President 1993 Vice President
(Fulfillment) (Fulfillment) for the past
five years.
Lewis Shapiro........... 57 Vice President 2000 Vice President (Crossing
(Crossing Pointe) Pointe), January, 2000 -
present; Assistant Vice
President and Senior
Director (Womenswear),
June, 1999 - December,
1999; Executive Director
Retail, Military Channel,
Louisville, KY, October,
1998 - May, 1999; Vice
President and General
Manager, America's Health
Network, Orlando, FL,
August, 1994 - September,
1998.
9
EXECUTIVE BUSINESS
POSITION WITH OFFICER EXPERIENCE DURING
NAME AGE COMPANY SINCE PAST FIVE YEARS
---- --- ------- ----- ---------------
Kent R. Sivillo (2)..... 56 Vice President 1997 Vice President (Finance)
(Finance) for the past five years;
Director, April,
1996 - present; Treasurer,
January, 1997 - January,
2002; Director, Blair
Holdings, Inc., September,
1993 - September, 2001;
President, Blair Holdings,
Inc., September,
1996 - September, 2001;
Manager and Treasurer,
Blair Payroll LLC, May,
2000 - present; Director
and Treasurer, Blair Credit
Services Corporation,
December, 2000 - present.
James H. Smith.......... 56 Vice President 1995 Vice President (Corporate
(Corporate Facilities Planning),
Facilities August, 2000 - present;
Planning) Vice President (Corporate
Development and
Facilities), April, 1997 -
August, 2000.
Lawrence R. Vicini...... 54 Vice President 1992 Vice President
(International (International Trade) for
Trade) the past five years;
Director and President,
Blair International
Holdings, Inc., December,
2000 - present; Director,
Blair International, Ltd.,
January, 2001 - present;
Director, Blair
International Singapore
Pte. Ltd., January,
2001 - present.
Stephen P. Wiedmaier.... 51 Vice President 1998 Vice President (Credit
(Credit Management) Management) December,
1998 - present; President
and Director, Blair Credit
Services Corporation,
December, 2000 - present;
President and Director,
Blair Factoring Company,
December, 2000 - present;
Assistant Vice President
(Credit Management) April,
1997 - December, 1998.
---------------
(1) David A. Blair will retire as a director effective as of the close of
business on April 14, 2003 and as an officer effective as of the close of
business on April 15, 2003.
(2) Kent R. Sivillo will retire as a director effective as of the close of
business on April 14, 2003 and as an officer effective as of the close of
business on May 30, 2003.
10
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers (as defined in regulations promulgated by
the Securities and Exchange Commission ("SEC") thereunder) and directors, and
persons who own more than ten percent (10%) of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than ten percent (10%)
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on a review of copies of such reports of ownership furnished
to the Company, or written representations that no forms were necessary, the
Company believes that during the past fiscal year it complied with all filing
requirements applicable to its officers, directors and greater than ten percent
(10%) beneficial owners, with the exception of William E. Warrin, a former
officer, who, due to an oversight, did not report one transaction on a timely
basis.
PROPOSAL 2. AMENDMENT TO THE
COMPANY'S 2000 OMNIBUS STOCK PLAN
On February 21, 2003 the Board of Directors adopted, subject to stockholder
approval at the Annual Meeting, an amendment to the Company's 2000 Omnibus Stock
Plan (the "Omnibus Plan") that would increase the total number of shares of
Common Stock authorized for issuance under the plan from 750,000 shares to
1,150,000 shares, an increase of 400,000 shares. The Board of Directors has
directed that the proposal to increase the number of shares of Common Stock
authorized for issuance under the Omnibus Plan be submitted to the Company's
stockholders for their approval.
The Board of Directors believes that the number of shares currently
available for issuance under the Omnibus Plan is not sufficient in view of the
Company's compensation structure and strategy. The Board of Directors has
concluded that the Company's ability to attract, retain and motivate top quality
management and employees is material to the Company's success and would be
enhanced by the Company's continued ability to grant equity compensation. In
addition, the Board of Directors believes that the interests of the Company and
its stockholders will be advanced if the Company can continue to offer its
employees, advisors, consultants, and non-employee directors the opportunity to
acquire or increase their proprietary interests in the Company. The Board of
Directors believes that the availability of the additional 400,000 shares of
Common Stock will ensure that the Company continues to have a sufficient number
of shares of Common Stock authorized for issuance under the Omnibus Plan.
SUMMARY OF MATERIAL TERMS OF THE OMNIBUS PLAN
The following summary of the material terms of the Omnibus Plan is
qualified by reference to the full text of the Omnibus Plan attached as Appendix
A to this proxy statement.
General. The Omnibus Plan permits the grant of awards to officers,
directors, employees and consultants of the Company or of any of the Company's
affiliates (each, a "Participant"). The Omnibus Plan provides for the grant of
incentive stock options qualifying under Section 422 of the Internal Revenue
Code of 1986, as amended, (the "Code"), nonqualified stock options, restricted
or unrestricted stock awards, awards denominated in stock-equivalent units or
Phantom Stock, performance awards, stock appreciation rights or SARs or any
combination of the foregoing (collectively, the "Awards"). While the Company may
grant any of the foregoing under the plan, to date the Company has granted only
nonqualified stock options and stock awards.
Administration and Eligibility. The Omnibus Plan is administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee construes and interprets the Omnibus Plan, determines the terms and
conditions of the Awards granted under the Omnibus Plan, including the
individuals who are to be granted Awards, the type of Awards to be granted, the
number of shares subject to an Award and the vesting and duration of Awards,
subject to any restrictions contained in the Omnibus Plan. Awards may be granted
individually or in tandem with other types of Awards.
11
Employees, officers, directors and consultants of the Company or its affiliates
are all eligible participants for all Awards, except that Incentive Stock
Options only may be granted to employees and officers.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion briefly
summarizes certain general rules of the federal income tax consequences of the
types of options granted and the stock awarded under the Omnibus Plan and does
not attempt to describe all possible federal or any foreign, state, local or
other tax consequences related to these and other types of Awards or tax
consequences based upon particular circumstances. Please see the Omnibus Plan at
Appendix A for the general rules that are applicable to other types of grants
which may be made in the future under the plan.
Nonqualified Stock Options. An optionee generally will not recognize any
taxable income at the time he or she is granted a nonqualified option. However,
upon exercise, (a) ordinary income is realized by the optionee in an amount
equal to the difference between the option price and the fair market value of
the shares on the date of exercise and (b) the Company is entitled to a tax
deduction for the same amount, provided that certain income tax reporting
requirements are satisfied. Upon disposition of the shares, appreciation or
depreciation in comparison to the value as of the date of exercise is generally
treated as a long-term capital gain or loss, provided that the shares are held
as capital assets at the time of the disposition, and will not result in any
deduction by the Company.
Stock Awards. The Omnibus Plan provides for grants of restricted and
unrestricted stock awards. Unrestricted stock awards give rise to ordinary
income based on the fair market value of the stock received by the recipient as
of the date of receipt. The Company generally is entitled to a deduction equal
to the amount of ordinary income recognized by the recipient, provided that the
deduction is not otherwise disallowed under the Code. Restricted stock awards
that are subject to a substantial risk of forfeiture generally give rise to
ordinary income equal to the excess of the fair market value of the stock over
the purchase price only at the time the risk of forfeiture lapses (unless the
recipient elects to accelerate recognition as of the date of grant). The Company
generally is entitled to a deduction equal to the amount of ordinary income
recognized by the recipient upon lapse of the risk of forfeiture, provided that
the deduction is not otherwise disallowed under the Code.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE INCREASE IN SHARES
AUTHORIZED TO BE ISSUED UNDER THE 2000 OMNIBUS STOCK PLAN.
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about the Company's Common Stock that
may be issued upon the exercise of options, warrants and rights under all
existing equity compensation plans as of February 21, 2003. The table does not
include the additional 400,000 shares for which approval is being sought in
Proposal 2.
EQUITY COMPENSATION PLAN INFORMATION
(C)
(A) (B) NUMBER OF SECURITIES
NUMBER OF SECURITIES WEIGHTED AVERAGE REMAINING AVAILABLE
TO BE ISSUED UPON EXERCISE PRICE OF FOR FUTURE ISSUANCE
EXERCISE OF OUTSTANDING UNDER EQUITY COMPENSATION
OUTSTANDING OPTIONS, OPTIONS, WARRANTS PLANS (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- -------------------- ----------------- -----------------------------
Equity Compensation Plans
Approved by Stockholders..... 240,712 $18.59 397,927
Equity Compensation Plans Not
Approved by Stockholders..... -0- -- -0-
------- ------ -------
Total.......................... 240,712 397,927
12
EXECUTIVE COMPENSATION
The following table summarizes the compensation awarded to, earned by, or
paid to the Company's chief executive officer, John E. Zawacki, its four most
highly compensated executive officers other than Mr. Zawacki, and Blair T.
Smoulder who served as an executive officer for a portion of 2002 (the "named
executive officers"), for all services rendered to the Company during 2002 and
for each of the previous two years.
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------
-------------------------------------- RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) AWARDS(4) OPTIONS(5) COMPENSATION(6)
------------------ ---- --------- -------- --------------- ---------- ---------- ---------------
John E. Zawacki....... 2002 $424,684 $158,391 $72,779 $96,525 26,502 $39,367
President and CEO 2001 427,280 -- 3,822 -- 17,001 43,061
2000 353,993 73,665 62,972 81,378 -- 24,932
Robert D. Crowley..... 2002 245,526 79,970 22,888 32,191 6,201 30,897
Senior Vice President 2001 233,478 -- 2,054 -- 4,002 25,513
(Menswear, Home and 2000 229,512 38,877 19,311 21,701 -- 27,025
Marketing Services)
John A. Lasher........ 2002 233,158 62,876 8,398 8,625 6,201 29,136
Vice President 2001 233,478 -- 1,878 -- 4,002 24,195
(Advertising) 2000 231,255 38,876 13,219 13,563 -- 22,909
Thomas P. McKeever.... 2002 246,573 80,641 36,046 48,263 9,600 26,519
Senior Vice President 2001 235,986 -- 2,940 -- 5,001 21,128
(Operations and 2000 227,181 38,843 35,663 40,689 -- 22,250
Administration)
Kent R. Sivillo....... 2002 247,736 62,381 25,700 20,646 9,102 26,837
Vice President 2001 250,609 -- 2,477 -- 4,500 32,148
(Finance) 2000 242,999 28,523 27,727 34,369 -- 30,603
Blair T. Smoulder..... 2002 395,862 133,870 49,186 64,358 15,000 39,808
Executive Vice 2001 390,378 -- 3,876 -- 8,001 36,922
President -- Retired(7) 2000 337,253 73,724 43,694 54,252 -- 47,695
---------------
(1) There were no directors' fees paid to the named executive officers during
2000, 2001 and 2002 except that Blair T. Smoulder was paid directors' fees
subsequent to his resignation as an executive officer in August 2002.
(2) On February 13, 2002, the Compensation Committee (formerly the Executive
Officer Compensation Committee) approved an incentive award schedule for
fiscal year 2002. Executive officers were eligible to receive awards equal
to a percentage of their salary income for 2002. The base payout goal for
2002 was $18 million such that no incentive awards would be received unless
the Company's income before income taxes equaled or exceeded this threshold
figure. The income before income taxes in 2002 was $31,112,556.
Consequently, the incentive compensation was paid by the Company to its
executive officers in 2003 for fiscal year 2002. Incentive compensation was
not paid by the Company to its executive officers in 2002 for 2001, however,
incentive compensation was paid by the Company to its executive officers in
2001 for 2000.
The figure for 2002 includes the following amounts paid by the Company to
the named executive officers to allow such officers to pay in full for
restricted stock awards issued pursuant to the Company's Employee Stock
Purchase Plan in 1994 and 1995: John E. Zawacki ($19,519); Robert D.
Crowley ($18,343); John A. Lasher ($18,343); Thomas P. McKeever ($20,145);
Kent R. Sivillo ($8,870); and Blair T. Smoulder ($28,571).
The figure for 2000 includes the following amounts paid by the Company to
the named executive officers to allow such officers to pay in full for
restricted stock awards issued pursuant to the Company's Employee Stock
Purchase Plan in 1991, 1992 and 1993: John E. Zawacki ($22,552); Robert D.
Crowley ($21,170); John A. Lasher ($21,170); Thomas P. McKeever ($19,056);
Kent R. Sivillo ($6,894); and Blair T. Smoulder ($33,828).
13
(3) The figure for 2002 includes the sum of (i) amounts reimbursed to the named
executive officers for the payment of taxes on restricted stock awards, (ii)
interest imputed on the deferred payment for restricted stock not yet fully
paid for by the named executive officers, and (iii) with respect to shares
purchased by the named executive officers through the exercise of
nonqualified stock options, the dollar value of the difference between the
price paid by the named executive officers and the fair market value of such
security at the date of purchase.
The figure for 2001 includes only interest imputed on the deferred payment
for restricted stock not yet fully paid for by the named executive
officers. In 2001, no restricted stock awards were made and, although
nonqualified stock options were granted in 2001, these options were not yet
exercisable.
The figure for 2000 includes the sum of (i) amounts reimbursed to the named
executive officers for the payment of taxes on restricted stock awards and
(ii) interest imputed on the deferred payment for restricted stock not yet
fully paid for by the named executive officers. Prior to December 31, 2000,
no nonqualified stock options had been granted.
(4) Restricted stock awards were made in 2000 under the Company's Employee Stock
Purchase Plan ("ESPP") and in 2002 under the Company's 2000 Omnibus Stock
Plan (the "Omnibus Plan"). On April 17, 2001, in light of the adoption of
the Omnibus Plan, the Company's Board of Directors terminated the ESPP and
returned the remaining shares reserved under the ESPP to Treasury. No
restricted stock awards were made in 2001.
The figures for restricted stock awards made in 2000 under the ESPP and
prior to July 30, 2002 under the Omnibus Plan, include the dollar value of
the difference between the purchase price to be paid by the named executive
officer for stock and the fair market value of the stock on the date of
grant. The purchase price for shares purchased prior to July 30, 2002 under
the ESPP or the Omnibus Plan is paid over time out of cash dividends, when
and if declared and paid by the Company. No cash is received by the Company
at the time the shares are purchased, although the participant receives the
rights to receive dividends and vote the shares at that time. Awarded
shares are subject to repurchase by the Company for the dividends which
have been paid toward the purchase price, if the participant's employment
with the Company terminates for reasons other than death, retirement or
disability. For stock received under the ESPP or the Omnibus Plan prior to
July 30, 2002, there is no vesting schedule and vesting occurs when the
stock received is fully paid. Full payment will vary, therefore, depending
upon changes to the Company's dividend policy from year to year. Dividends
are paid on all shares of restricted stock received pursuant to the ESPP or
the Omnibus Plan prior to July 30, 2002 as and when dividends are declared
by the Company with respect to all of its outstanding Common Stock.
After July 30, 2002, the Company no longer allows deferred payment of
employee stock purchases by named executive officers at less than the fair
market value of the stock pursuant to the Omnibus Plan. Accordingly, the
figure for 2002 includes the full value of the stock grants received
pursuant to restricted stock awards made to the named executive officers
after July 30, 2002 under the Omnibus Plan.
Aggregate restricted stock award holdings at the end of 2002 for each of
the named executive officers were:
NUMBER OF SHARES DOLLAR VALUE
---------------- ------------
(ON 12/31/02)
John E. Zawacki.................... 15,000 $87,300
Robert D. Crowley.................. 6,100 35,300
John A. Lasher..................... 4,500 25,250
Thomas P. McKeever................. 9,750 55,950
Kent R. Sivillo.................... 8,059 44,984
Blair T. Smoulder.................. 12,500 72,500
14
(5) Pursuant to the 2000 Omnibus Stock Plan, in both 2002 and 2001 the Company
issued nonqualified stock options to certain eligible Participants. The 2002
issuance of the nonqualified stock options is described more fully below
under "2002 Stock Option Grants" and "Report of the Compensation Committee."
(6) Includes the Company's contributions made for the benefit and on behalf of
the named executive officer under the following:
A. Life Insurance -- The dollar value of premiums for term life insurance
(having a face value in excess of $50,000) paid by the Company for the
benefit of each of the named executive officers is:
2000 2001 2002
---- ---- ----
John E. Zawacki....................... $ 841 $1,043 $1,060
Robert D. Crowley..................... 497 509 544
John A. Lasher........................ 327 509 513
Thomas P. McKeever.................... 491 515 545
Kent R. Sivillo....................... 535 1,038 1,047
Blair T. Smoulder..................... 1,484 1,759 2,794
B. Personal and Vacation Days -- The dollar value of all unused personal
and vacation days paid by the Company to each of the named executive
officers is:
2000 2001 2002
---- ---- ----
John E. Zawacki...................... $ 0 $ 0 $ 0
Robert D. Crowley.................... 4,469 4,394 4,526
John A. Lasher....................... 230 2,856 3,168
Thomas P. McKeever................... 215 0 0
Kent R. Sivillo...................... 7,386 7,631 1,402
Blair T. Smoulder.................... 14,629 0 0
C. The Company's Profit Sharing and 401(k) Plan -- In 2001, the Board
renamed the Company's Profit Sharing and Savings Plan the Blair
Corporation Profit Sharing and 401(k) Plan and approved certain
amendments to the Plan to be effective as of January 1, 2002. These
amendments did not affect the amounts allocated to the named executive
officers in 2000, 2001 or 2002.
The Company's Profit Sharing and 401(k) Plan has two components, a
savings component and a profit sharing component. Under the savings
component, which is available to all eligible employees of the Company
with six months of service, the Company matches employees' 401(k)
contributions to the Plan of 1% to 5% of their salary. In 2002, the
Company's contributions, and the earnings thereon, were subject to
divestiture in accordance with a vesting schedule under which 25% vests
after two years of service to the Company, 50% vests after three years
of service, 75% vests after four years of service and full vesting is
achieved after five years of service. This vesting schedule applies to
(i) Profit Sharing Contributions by the Company and (ii) Matching
Employer Contributions prior to January 1, 2002. After January 1, 2002,
15
Employee Contributions and the Matching Employer Contributions are
always 100% vested. Amounts allocated to the named executive officers
are:
2000 2001 2002
---- ---- ----
John E. Zawacki.................... $12,197 $20,706 $12,243
Robert D. Crowley.................. 11,453 11,706 12,280
John A. Lasher..................... 11,492 11,706 11,661
Thomas P. McKeever................. 11,386 11,820 12,334
Kent R. Sivillo.................... 12,167 12,557 10,000
Blair T. Smoulder.................. 13,514 15,512 11,476
Under the 2002 profit sharing component of the Company's Profit Sharing
and 401(k) Plan, which covers all eligible employees of the Company with
one or more years of service, the Company contributed 10% of its
"adjusted net income," as defined in the Plan, to the Plan's trust fund.
Amounts contributed by the Company to the trust fund are allocated among
participating employees based on salary and years of service to the
Company, but allocations to the executive officers listed in this table
are limited to $35,000 (adjusted to take into account cost-of-living
adjustments provided for under Section 415(d) of the Internal Revenue
Code since 1986). The amounts allocated are invested in accordance with
the instructions of the individual Plan participants in investments
approved by the Plan trustees. Amounts allocated to the named executive
officers are:
2000 2001 2002
---- ---- ----
John E. Zawacki....................... $8,192 $3,207 $7,620
Robert D. Crowley..................... 8,192 3,207 7,620
John A. Lasher........................ 8,173 3,200 7,605
Thomas P. McKeever.................... 8,144 3,189 7,583
Kent R. Sivillo....................... 8,182 3,203 7,613
Blair T. Smoulder..................... 8,216 3,216 7,639
D. Benefit Restoration Plans -- The following amounts were paid as
reimbursement under the Company's benefit restoration plans to
compensate the named executive officers for benefits not otherwise paid
under the savings component of the Company's Profit Sharing and 401(k)
Plan due to limitations imposed by tax law:
2000 2001 2002
---- ---- ----
John E. Zawacki...................... $ 0 $9,665 $14,598
Robert D. Crowley.................... 0 3,100 4,836
John A. Lasher....................... 0 3,287 5,097
Thomas P. McKeever................... 0 3,072 4,920
Kent R. Sivillo...................... 0 4,451 6,421
Blair T. Smoulder.................... 3,531 8,773 14,008
The following amounts were paid as reimbursement under the Company's
benefit restoration plans to compensate the named executive officers for
benefits not otherwise paid under the profit sharing
16
component of the Company's Profit Sharing and 401(k) Plan due to
limitations impacted by tax law:
2000 2001 2002
---- ---- ----
John E. Zawacki....................... $3,702 $8,440 $4,613
Robert D. Crowley..................... 2,416 2,597 1,091
John A. Lasher........................ 2,688 2,637 1,091
Thomas P. McKeever.................... 2,014 2,532 1,137
Kent R. Sivillo....................... 2,333 3,268 1,402
Blair T. Smoulder..................... 6,322 7,662 3,892
The above-stated amounts of reimbursement under the Company's benefit
restoration plans to compensate the named executive officers for benefits
not otherwise paid under both the profit sharing and savings components of
the Company's Profit Sharing and 401(k) Plan were paid by the Company to
the named executive officers in 2002 for 2001, in 2001 for 2000 and in 2000
for 1999.
(7) Mr. Smoulder, who retired as Executive Vice President on August 15, 2002, is
included as a named executive officer because he would have qualified as one
of the Company's most highly compensated executive officers if he had been
serving as an executive officer on December 31, 2002.
2002 STOCK OPTION GRANTS
The 2000 Omnibus Stock Plan, (the "Omnibus Plan"), which is administered by
the Compensation Committee (the "Committee"), permits the grant of awards to
officers, directors, employees and consultants of the Company or of any of the
Company's affiliates (each, a "Participant"). The Committee may grant to
eligible Participants awards of incentive stock options or nonqualified stock
options; provided, however, that awards of incentive stock options shall be
limited to employees of the Company or of any parent or subsidiary of the
Company. No incentive stock options were granted by the Company during the
Company's last fiscal year.
The following table summarizes the individual grants of nonqualified stock
options made by the Company to the named executive officers during the Company's
last fiscal year, the percent of the total options granted to employees in 2002
that such options represented, the exercise price, expiration date, and grant
date present value of such options.
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE GRANT
OPTIONS GRANTED TO PRICE EXPIRATION DATE PRESENT
NAME GRANTED(1) EMPLOYEES(2) ($/SHARE)(3) DATE VALUE(4)
---- ---------- ------------ ------------ ---------- ------------
John E. Zawacki.............. 26,502 15.85% $19.30 04/15/12 $234,013
Robert D. Crowley............ 6,201 3.71% $19.30 04/15/12 $ 54,755
John A. Lasher............... 6,201 3.71% $19.30 04/15/12 $ 54,755
Thomas P. McKeever........... 9,600 5.74% $19.30 04/15/12 $ 84,768
Kent R. Sivillo.............. 9,102 5.44% $19.30 04/15/12 $ 80,371
Blair T. Smoulder............ 15,000 8.97% $19.30 04/15/12 $132,450
---------------
(1) The nonqualified stock options granted in 2002 vest in three equal annual
installments, beginning on April 16, 2003.
(2) The total number of nonqualified stock options granted to employees in 2002
was 167,229. This figure was used to calculate the percent of total options
granted to the named executive officers.
(3) The exercise price of the nonqualified stock options granted in 2002 is
equal to the fair market value of the Common Stock of the Company at the
time of the grant (April 15, 2002). No options granted pursuant to the
Omnibus Plan may be repriced, except in the context of a stock dividend,
split-up, recapitalization, merger, consolidation, business combination or
exchange of shares or the like, which event affects similarly all of the
Company's outstanding shares of Common Stock.
17
(4) The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rate of 4.95%; dividend yield of 3.11%;
volatility factor of the expected market price of the Company's common stock
of .564; and a weighted-average expected life of the option of 7 years. The
per share fair value of the options granted in 2002, which has been used to
calculate the grant date present value of the total options granted, was
$8.83.
The following table provides certain information with respect to the number
of shares of Common Stock represented by outstanding options held by the named
executive officers as of December 31, 2002. Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year-end price of the Common
Stock.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS ON IN THE MONEY OPTIONS ON
DECEMBER 31, 2002 DECEMBER 31, 2002
--------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE(2)
---- ----------- ------------- -------------- ----------------
John E. Zawacki..................... 5,667 37,836 $35,249 $177,036
Robert D. Crowley................... 1,334 8,869 $ 8,297 $ 41,523
John A. Lasher...................... 1,334 8,869 $ 8,297 $ 41,523
Thomas P. McKeever.................. 1,667 12,934 $10,369 $ 59,329
Kent R. Sivillo..................... 0 12,102 $ 0 $ 55,250
Blair T. Smoulder................... 2,667 20,334 $16,589 $ 93,477
---------------
(1) Based on the market value of the underlying Common Stock at December 31,
2002 ($23.32) minus the exercise price ($17.10).
(2) Based on the market value of the underlying Common Stock at December 31,
2002 ($23.32) minus the relevant exercise price (either $17.10 or $19.30).
COMMITTEES OF THE BOARD OF DIRECTORS
During 2002, the Board of Directors held seven meetings. Each nominee for
election to the Board of Directors attended more than 75 percent of the total
number of meetings of the Board of Directors and the total number of meetings of
all committees of the Board on which he or she served.
The Board of Directors has the following standing committees which met
during fiscal year 2002: Executive Committee, Nominating Committee, Audit
Committee, and Compensation Committee. On July 16, 2002, the Omnibus Stock Plan
Committee was merged with the Compensation Committee to form a single committee
having responsibility for review and approval of executive officer compensation
as well as issuance of all awards under the Omnibus Plan.
EXECUTIVE COMMITTEE
The Company has a standing Executive Committee of the Board of Directors
which held six meetings during 2002. The Executive Committee of the Board of
Directors consists of Murray K. McComas, Robert W. Blair, John O. Hanna, Craig
N. Johnson and John E. Zawacki.
NOMINATING COMMITTEE
The Nominating Committee, which consists of Robert W. Blair, John O. Hanna,
and Craig N. Johnson, held three meetings during 2002. The Nominating Committee
is responsible for considering and recommending the nominees for director to
stand for election at the Company's Annual Meeting of Stockholders, as well as
recommending director candidates in the interim and recommending nominees for
executive officer positions.
18
AUDIT COMMITTEE
The Audit Committee consists of Harriet Edelman, John O. Hanna, and Craig
N. Johnson. Each of the members of the Audit Committee is independent, as
defined by the listing standards of the American Stock Exchange. The Audit
Committee assists the Board of Directors in fulfilling its responsibilities
concerning corporate accounting, the reporting practices of the Company and the
integrity and quality of financial reports of the Company. The Audit Committee
met four times during 2002. The Board of Directors adopted a written charter for
the Audit Committee in June 2000, a copy of which was included as an appendix to
the proxy statement for the Company's 2001 Annual Meeting of Stockholders. The
Board of Directors will reassess the adequacy of the Audit Committee charter
following the final adoption of new corporate governance standards currently
proposed by the American Stock Exchange and the new rules regarding audit
committee responsibility contemplated by the Sarbanes-Oxley Act of 2002.
REPORT OF THE AUDIT COMMITTEE
In accordance with its written charter adopted by the Board of Directors,
the Audit Committee (the "Committee") assists the Board of Directors in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of the Company.
In discharging its oversight responsibility as to the audit process, the
Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and the Company that might
bear on the auditors' independence consistent with Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," discussed with
the auditors any relationships that may impact their objectivity and
independence and satisfied itself as to the auditors' independence.
The Committee reviewed and satisfied itself with the Company's internal
auditors and independent auditors, the overall scope and plans for their
respective audits, and the results of internal audit examinations. The Committee
also discussed with management, the internal auditors and the independent
auditors the quality and adequacy of the Company's internal controls and the
overall quality of the Company's financial reporting process.
The Committee discussed, reviewed, and satisfied itself with the
independent auditors' communications required by generally accepted auditing
standards, including those described in Statement on Auditing Standards No. 61,
as amended, "Communication with Audit Committees" and discussed and reviewed the
results of the independent auditors' examination of the financial statements. In
addition, the Committee considered the compatibility of non-audit services with
the auditors' independence.
The Committee, or its Chairman on behalf of the Committee, discussed the
interim financial information contained in each quarterly earnings announcement
with management and independent auditors prior to public release. The Committee
reviewed the audited financial statements of the Company as of and for the
fiscal year ended December 31, 2002, with management and the independent
auditors. Management has the responsibility for the preparation of the Company's
financial statements and the independent auditors have the responsibility for
the examination of those statements.
19
Based on the above mentioned reviews and discussions with management and
the independent auditors, the Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-K for the fiscal year ended December 31, 2002, and for filing with the
Securities and Exchange Commission. The Committee also recommended the
reappointment, subject to shareholder approval, of the independent auditors and
the Board of Directors concurred in such recommendation.
MEMBERS OF THE AUDIT COMMITTEE
John O. Hanna (Chairman)
Harriet Edelman
Craig N. Johnson
COMPENSATION COMMITTEE
The Compensation Committee (formerly the Executive Officer Compensation
Committee), consisting of Robert W. Blair, John O. Hanna, and Craig N. Johnson,
recommends policies for and levels of executive officer compensation and
administers the Company's 2000 Omnibus Stock Plan. The Compensation Committee
held seven meetings during 2002.
COMPENSATION OF DIRECTORS
In 2002, non-management members of the Board of Directors each received an
annual retainer of a stock grant of 750 shares of the Company's Common Stock for
transfer on April 16, 2002 and a cash grant equal to the value of 750 shares of
the Company's Common Stock calculated as of the close of business on April 16,
2002. The value of this April 16, 2002 cash grant for each director was $15,165.
Non-management members also received compensation in 2002 in the amount of
$1,000 for each meeting of the Board of Directors attended and $750 for each
meeting attended of each of the Committees of the Board of Directors. Murray K.
McComas also earned $10,000 per month for serving as the Company's Chairman of
the Board. In 2002, Harriet Edelman deferred all of her directors' compensation
and John O. Hanna deferred his fees and cash grant directors' compensation.
Management members of the Board of Directors are not compensated for
attending meetings of the Board of Directors or its Committees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Robert W. Blair, John O.
Hanna, and Craig N. Johnson. Robert W. Blair was a Vice President and Executive
Vice President of the Company in 1989 and 1990, respectively, but he has not
served as a Company employee since that time. Although not an appointed member
of the Compensation Committee, Murray K. McComas, the Company's Chairman of the
Board, participated, at the request of the Committee, in the evaluation and
discussion of appropriate salary levels for all executive officers.
EXECUTIVE OFFICER COMPENSATION
For fiscal year 2002, decisions on compensation for executive officers of
the Company were made by the Compensation Committee (a responsibility previously
shared with the Omnibus Stock Plan Committee). In accordance with the rules of
the Securities and Exchange Commission (the "SEC") designed to enhance
disclosure of policies concerning executive compensation, set forth below is the
report submitted by this committee addressing the Company's compensation
policies with respect to executive officers for fiscal year 2002.
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REPORT OF THE COMPENSATION COMMITTEE
General. The Compensation Committee of the Board of Directors is
responsible for salary levels, bonuses and other compensation components for all
officers of the Company deemed by the Board of Directors to be within the SEC's
definition of "executive officer," i.e., a company's president, any vice
president in charge of a principal business unit, division or function or any
other officer or person who performs similar policymaking functions for the
Company.
The Compensation Committee's decisions on compensation levels for executive
officers ultimately were subjective, based on consideration of a number of
factors. No one factor was determinative of the compensation level of any of the
executive officers. Moreover, the Compensation Committee did not weigh any one
factor against any other in a way that makes it possible to assign a numerical
value to the weight of any factor in the determination of the salaries of the
executive officers.
Murray K. McComas, the Chairman of the Board and former President of the
Company, participated, at the request of the Compensation Committee, in the
evaluation and discussion of appropriate salary levels for all executive
officers.
Executive Salaries and Bonuses. The Compensation Committee annually
reviews and evaluates base salaries and annual bonuses for its executive
officers pursuant to a compensation schedule (the "Schedule") which is based
both upon the recommendations of an internal Company Salary Review Task Force
and upon those of Towers Perrin, an outside compensation consultant. The
Schedule was most recently updated in 2002 when a review was conducted of the
compensation paid to the Company's exempt employees, inclusive of all executive
officers. The Schedule includes compensation ranges for differing job grades
based upon a review process that includes both a proxy analysis and compensation
surveys of related position responsibilities among similar industries, as well
as the regional market, provided by Towers Perrin.
Individual salaries are determined on the basis of the executive officer's
job grade, experience, and individual performance. Executive officers' salary
ranges are reviewed annually, with assistance from Towers Perrin, to provide for
as-needed and market-based adjustments. Ongoing market benchmarking relative to
the placement of individual executive officer positions within the compensation
structure is performed commensurate with changes in assigned duties and
responsibilities. With the assistance of Towers Perrin, a comprehensive and
market-based assessment of the executive officer compensation structure is
performed every three to four years.
In 2002, the Compensation Committee reviewed all base salary ranges at
executive officer levels in comparison with documented market ranges provided by
Towers Perrin. All executive officer merit increases ranged from 0-4% and fell
within the market ranges for their respective salary levels.
Incentive Awards. On February 13, 2002, the Compensation Committee
reviewed and approved the incentive award schedule for the fiscal year 2002.
Under this incentive award schedule, executive officers were eligible to receive
awards equal to a percentage of their base salary income for the year. The
percentage is dependent upon the range of the Company's income before income
taxes for the year. The threshold payout goal for 2002 was $18 million. No
incentive awards are received unless the Company's income before income taxes
equals or exceeds this threshold figure. If the company's income before income
taxes falls higher, within a graduated range, incentive awards are increased.
The Company's income before income taxes in 2002 was $31,112,556, consequently,
the incentive compensation was paid by the Company to its executive officers in
2003 for fiscal year 2002.
Stock Option Grants. On July 16, 2002 the Omnibus Stock Plan Committee was
merged with the Compensation Committee to form a single committee having
responsibility for review and approval of Executive Officer compensation as well
as issuance of all awards under the Omnibus Plan. Previously, both of these
committees were composed of the same three independent directors.
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The Omnibus Plan, a comprehensive benefits plan adopted at the Company's
April 18, 2000 Annual Meeting of Stockholders, gives the Company the ability to
offer a variety of equity-based incentives to persons who are key to the
Company's growth, development, and financial success.
On April 15, 2002, nonqualified stock option grants were awarded to
nineteen executive officers. The number of stock options granted to each
executive officer was based upon compensation ranges established for each
executive officer grade level. The stock option compensation ranges were based
upon market-based data provided by Towers Perrin. In each case, the number of
stock options granted to the executive officer fell in the lower portion of the
established range for their respective grade level. A total of 167,229
nonqualified stock options were granted to employees in 2002. Of this total,
146,319 were granted to executive officers. The options vest in three equal
annual installments, beginning on April 15, 2003. The exercise price of the
nonqualified stock options granted in 2002 is equal to the fair market value of
the Common Stock of the Company at the time of the grant ($19.30).
Restricted Stock Awards. Restricted stock awards under the Omnibus Plan
are designed to recognize the contributions of individual employees key to the
Company's performance and to align the interests of management and stockholders.
For many years, the Company has endorsed the view that management and key
employees of the Company should be stockholders of the Company, so that they
will be motivated to increase stockholder value. This policy is implemented
through the award of rights to purchase shares of the Company's Common Stock
under the Omnibus Plan to selected employees of the Company. Awards ordinarily
are considered twice each year. In 2002, awards were made three times (see
further discussion below).
The Compensation Committee selects employees to receive base awards under
the Omnibus Plan (determined, in part, on recommendations of the Company's
executive officers for employees who are not executive officers), determines the
number of shares subject to the award and establishes the price at which shares
will be made available for purchase under the Omnibus Plan. Prior to July 30,
2002, the price paid to purchase the stock under the grant was below fair market
value and was paid out of dividends earned on the purchased shares.
Consequently, the price at which the shares were sold directly affected the
degree to which grants under the Plan served as incentive compensation for
future performance rather than as bonuses for past performance. Following July
30, 2002, and in light of the requirements of the Sarbanes-Oxley Act of 2002,
the Company is no longer allowing deferred payment of employee stock purchases
by named executive officers at less than the fair market value of the stock.
Many factors, both objective and subjective, were considered by the
Compensation Committee before making base grants in 2002, including, but not
limited to, the Company's financial performance, the historic responsibilities
and performance of individual employees, the future potential value of the
employees to the Company, prior grants to the employee, and the employee's
current vested and unvested ownership of the Company's Common Stock. There is no
direct correlation between regular salary and awards under the Plan. No award
was specifically tied to any one measure of performance or factor, and the
Compensation Committee did not assign relative weights to the factors it
considered in a way that would make it possible to assign a numerical value to
the weight of any factor. For grants made prior to July 30, 2002, full ownership
of the shares ordinarily does not vest, however, until they are fully paid for
out of corporate dividends. The Company's dividend level can thus affect the
full vesting of the shares, and the market price of the shares in large part
determines the value of the grant to an individual employee. For grants made
after July 30, 2002, restricted share awards were granted as fully paid at the
then applicable market price per share.
On July 26, 2002, base restricted share awards as outlined above, were made
to 106 employees, totaling 51,500 shares in awards ranging from 250 shares to
3000 shares, with 855.3 being the average number of shares sold to the Company's
executive officers. The purchase price for these shares was $8.00 or
approximately 32% of the closing price of the company's stock on July 25, 2002
($25.25).
On May 1, 2002, matching restricted stock awards were made to executive
officers ranging from 100 to 1500 shares. These recipients were granted
additional shares, up to the size of a grant opportunity, on a matching basis
for shares they purchased on the open market, or through their personal or DRIP
22
accounts, during calendar year 2001. These matching shares, based on purchases
made by qualifying executive officers, totaled 11,611. The purchase price for
these shares was $7.50, approximately 31% of the closing price of the company's
stock on April 30, 2002 ($23.20).
Executive officers were also able to qualify for matching share awards
based on their purchases of company stock during the period from February 22 to
December 9, 2002. These awards were granted on December 12, 2002, to ten
qualifying participants. In accordance with the Sarbanes-Oxley Act of 2000,
executive officers are precluded from having loan accounts with the Company.
Accordingly, 3,849 restricted share awards were granted as fully paid at the
closing price on December 11, 2002 ($23.55).
In 2002, Mr. Zawacki, the Company's Chief Executive Officer, received a
grant of 5,500 shares, having a value of $166,852 by reason of the difference
between the price paid and the fair market value of the stock at the time of
purchase. Mr. Zawacki's award criteria were the same as those of other executive
officers. The Compensation Committee was of the view that Mr. Zawacki's strong
leadership of the Company warranted the shares awarded.
In December 2002, the Compensation Committee recommended to the Board of
Directors that the Company permit the prepayment by holders of outstanding
amounts owed in connection with restricted stock awards granted in 1994 and 1995
under the Company's now terminated Employee Stock Purchase Plan ("ESPP"). This
action was in recognition of reduced and more uniform dividend payments in
recent years which, in turn, reflected the need for greater investment in
internal growth initiatives. Included among these initiatives is the Company's
conversion to catalog marketing, a rapidly growing position in the e-commerce
market, the substantial expansion and up-grade of merchandise fulfillment
capabilities, and significant investment in information services to support this
internal growth.
Whereas previous ESPP restricted stock awards were typically paid in full
by participants through the remittance of applicable dividends to the Company
over a period of three to eight years, the Compensation Committee felt that
employee ownership of shares awarded in 1994 and 1995 should be considered to be
substantially "vested." On December 16, 2002, special bonus awards were made to
137 Plan participants (exempt and non-exempt employees) representing 77,025
shares. Of these awards, fourteen executive officers held 22,725 of the issued
shares and received an aggregate of $128,078 from the Company to apply as
prepayment of share awards issued in 1994 and 1995. Mr. Zawacki received $19,519
of this amount.
The Compensation Committee is composed entirely of independent directors.
Decisions of the Committee are final and binding on the Company, subject to
ratification by the Board of Directors.
MEMBERS OF THE COMPENSATION COMMITTEE
Craig N. Johnson (Chairman)
Robert W. Blair
John O. Hanna
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STOCK PERFORMANCE GRAPH
The following graph compares the yearly change in the cumulative total
stockholder return on the Company's Common Stock with the cumulative total
return of the AMEX Market Value Index and an industry peer group index selected
by the Company ("Peer Group Index"). The Peer Group Index consists of Coldwater
Creek, Inc., Concepts Direct, Inc., dELiA*s, Corp., Hanover Direct, Inc., J.
Jill Group, Inc., Lillian Vernon Corp., Sharper Image Corp., Spiegel, Inc. and
Williams-Sonoma, Incorporated. Companies selected for the Peer Group Index
market their products through alternative channels, such as the mail and
e-commerce.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Among Blair Corporation Common Stock, AMEX Market Value Index and Peer Group
Index**
BLAIR CORPORATION AMEX MARKET VALUE INDEX PEER GROUP INDEX***
----------------- ----------------------- -------------------
1/1/98 100 100 100
1998 132 101 135
1999 86 128 145
2000 118 131 71
2001 148 124 115
2002 158 120 125
1/1/98 1998 1999 2000 2001 2002
Blair Corporation 100 132 86 118 148 158
AMEX Market Value Index 100 101 128 131 124 120
Peer Group Index*** 100 135 145 71 115 125
Assumes $100 invested on January 1, 1998 in Blair Corporation Stock, AMEX Market
Value Index and Peer Group Index.
* Total return assumes reinvestment of dividends.
** Fiscal year ending December 31.
*** Lands' End, Inc., which was included in the Peer Group Index for the
Company's 2002 Proxy Statement, has not been included in the 2003 Peer Group
Index because it is no longer a publicly traded company. dELiA*s, Inc. was
included in the Peer Group Index in the year 2000 through 2002 Proxy
Statements. Due to a merger with iTurf, Inc., a new company was formed under
the name of dELiA*s, Corp. This new company markets their products through
similar channels and markets as the other members of the Peer Group Index
and has been included in the 2003 Peer Group Index.
24
The closing price of the Company's Common Stock on the American Stock
Exchange on February 28, 2003, was $23.20.
The Report of the Compensation Committee and the Stock Performance Graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 (the "Securities Act") or the Exchange Act, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
PROPOSAL 3. APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Company's independent accountants for the year ended December 31, 2002
were Ernst & Young LLP. The Company's Board of Directors has reappointed Ernst &
Young LLP to continue as independent accountants for the Company for the year
ending December 31, 2003, subject to the ratification of such appointment by the
stockholders. Fees for the last fiscal year were: annual audit -- $190,800; and
all other fees -- $134,398, including audit-related services which consisted of
$32,732 and all other non-audit services in the amount of $101,666.
A resolution calling for the ratification of the appointment of Ernst &
Young LLP will be presented at the Annual Meeting. Representatives of Ernst &
Young LLP will be present at the Annual Meeting to make a statement if they
desire to do so and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS RATIFICATION OF THE APPOINTMENT OF ERNST
& YOUNG LLP.
OTHER MATTERS
Management does not know of any matters to be brought before the meeting
other than the matters that are set forth in the Notice of the Annual Meeting of
Stockholders that accompanies this Proxy Statement and are described herein. In
the event that any such matters do come properly before the meeting, it is
intended that the persons named in the form of proxy solicited by management
will vote all proxies in accordance with their best judgment.
RECEIPT OF STOCKHOLDER PROPOSALS
Any stockholder proposals which are to be presented for inclusion in the
Company's proxy materials for the 2004 Annual Meeting of Stockholders in
reliance on Rule 14a-8 of the Securities Exchange Act of 1934 must be received
by the, Secretary of Blair Corporation, 220 Hickory Street, Warren, Pennsylvania
16366, no later than November 17, 2003. The proxy to be solicited on behalf of
the Company for the 2004 Annual Meeting of Stockholders may confer discretionary
authority to vote on any such proposal not considered to have been timely
received that nonetheless properly comes before the 2004 Annual Meeting of
Stockholders.
EXPENSE OF SOLICITATION OF PROXIES
The cost of solicitation of proxies on behalf of management will be borne
by the Company. The Company has retained the services of Georgeson Shareholder
Communications, Inc. for a fee of $7,500 to assist in the solicitation. Proxies
may also be solicited personally or by telephone by directors, officers and
other employees of the Company without additional compensation therefor. The
Company will also request persons, firms and companies holding shares in their
names, or in the name of their nominees, which are beneficially owned by others,
to send proxy material to and obtain proxies from such beneficial owners, and
will reimburse such holders for their reasonable expenses in doing so.
DAVID A. BLAIR
Secretary
March 14, 2003
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APPENDIX A
BLAIR CORPORATION
2000 OMNIBUS STOCK PLAN
1. PURPOSE AND TYPES OF AWARDS
Blair Corporation (the "Company") hereby establishes the Blair Corporation
2000 Omnibus Stock Plan (the "Plan"). The purpose of the Plan is to promote the
long-term growth and profitability of the Company by (i) providing key people
with incentives to improve stockholder value and to contribute to the growth and
financial success of the Company and (ii) enabling the Company to attract,
retain and reward the best-available persons.
The Plan permits the granting of stock options (including incentive stock
options qualifying under Section 422 of the Internal Revenue Code of 1986, as
amended, and nonqualified stock options), stock appreciation rights, restricted
or unrestricted stock awards, phantom stock, performance awards, or any
combination of the foregoing.
2. DEFINITIONS
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
a) "Affiliate" shall mean any entity, whether now or hereafter existing,
which controls, is controlled by, or is under common control with, the Company
(including, but not limited to, joint ventures, limited liability companies, and
partnerships). For this purpose, "control" shall mean ownership of 50% or more
of the total combined voting power or value of all classes of stock or interests
of the entity.
b) "Award" shall mean any stock option, stock appreciation right, stock
award, phantom stock award, or performance award granted under this Plan.
c) "Board" shall mean the Board of Directors of the Company.
d) "Code" shall mean the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
e) "Common Stock" shall mean shares of common stock of the Company, without
par value.
f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
g) "Fair Market Value" of a share of the Company's Common Stock for any
purpose on a particular date shall be determined in a manner such as the
Administrator shall in good faith determine to be appropriate; provided that in
the event the Common Stock shall become registered under Section 12 of the
Exchange Act, then thereafter the Fair Market Value of the Company's Common
Stock for any purpose on a particular date shall mean the last reported sale
price per share of Common Stock, regular way, on such date or, in case no such
sale takes place on such date, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on a national securities exchange or included for quotation on the
Nasdaq National Market, or if the Common Stock is not so listed or admitted to
trading or included for quotation, the last quoted price, or if the Common Stock
is not so quoted, the average of the high bid and low asked prices, regular way,
in the over-the-counter market as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or if such system is no
longer in use, the principal other automated quotations system that may then be
in use or if the Common Stock is not quoted by any such organization, the
average of the closing bid and asked prices, regular way, as furnished by a
professional market maker making a market in the Common Stock as selected in
good faith by the Administrator or by such other source or sources as shall be
selected in good faith by the Administrator. If, as the case may be, the
relevant date is not a trading day, the determination shall be made as of the
next preceding trading day. As used herein, the term "trading day" shall mean a
day on which public trading of securities occurs and is
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reported in the principal consolidated reporting system referred to above, or if
the Common Stock is not listed or admitted to trading on a national securities
exchange or included for quotation on the Nasdaq National Market, any business
day.
h) "Grant Agreement" shall mean a written document memorializing the terms
and conditions of an Award granted pursuant to the Plan and shall incorporate
such terms of the Plan as the Administrator or the Board shall deem appropriate.
i) "Parent" shall mean a corporation, whether now or hereafter existing,
within the meaning of the definition of "parent corporation" provided in Code
section 424(e), or any successor thereto.
j) "Subsidiary" and "subsidiaries" shall mean only a corporation or
corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424 of the Code, or
any successor provision thereto.
3. ADMINISTRATION
a) Administration of the Plan. The Plan shall be administered by the Board
or by such committee or committees as may be appointed by the Board from time to
time (the Board, committee or committees hereinafter referred to as the
"Administrator").
b) Powers of the Administrator. The Administrator shall have all the powers
vested in it by the terms of the Plan, such powers to include authority, in its
sole and absolute discretion, to grant Awards under the Plan, prescribe Grant
Agreements evidencing such Awards and establish programs for granting Awards.
The Administrator shall have full power and authority to take all other
actions necessary to carry out the purpose and intent of the Plan, including,
but not limited to, the authority to (i) determine the eligible persons to whom,
and the time or times at which Awards shall be granted, (ii) determine the types
of Awards to be granted, (iii) determine the number of shares to be covered by
or used for reference purposes for each Award, (iv) impose such terms,
limitations, restrictions and conditions upon any such Award as the
Administrator shall deem appropriate, (v) accelerate or otherwise change the
time in which an Award may be exercised or becomes payable and to waive or
accelerate the lapse, in whole or in part, of any restriction or condition with
respect to the vesting or exercisability of an Award following termination of
any grantee's employment and (vi) establish objectives and conditions, if any,
for earning Awards and determining whether Awards will be paid after the end of
a performance period.
The Administrator shall have full power and authority, in its sole and
absolute discretion, to administer and interpret the Plan and to adopt and
interpret such rules, regulations, agreements, guidelines and instruments for
the administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.
c) Non-Uniform Determinations. The Administrator's determinations under the
Plan (including without limitation, determinations of the persons to receive
Awards, the form, amount and timing of such Awards, the terms and provisions of
such Awards and the Grant Agreements evidencing such Awards) need not be uniform
and may be made by the Administrator selectively among persons who receive, or
are eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.
d) Limited Liability. To the maximum extent permitted by law, no member of
the Administrator shall be liable for any action taken or decision made in good
faith relating to the Plan or any Award thereunder.
e) Indemnification. To the maximum extent permitted by law and by the
Company's charter and by-laws, the members of the Administrator shall be
indemnified by the Company in respect of all their activities under the Plan.
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f) Effect of Administrator's Decision. All actions taken and decisions and
determinations made by the Administrator on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Administrator's
sole and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Company, its stockholders, any participants in the Plan
and any other employee of the Company, and their respective successors in
interest.
4. SHARES AVAILABLE FOR THE PLAN; MAXIMUM AWARDS
Subject to adjustments as provided in Section 7(d) of the Plan, the shares
of Common stock that may be issued with respect to Awards granted under the Plan
shall not exceed an aggregate of 750,000 shares of Common Stock. The Company
shall reserve such number of shares for Awards under the Plan, subject to
adjustments as provided in Section 7(d) of the Plan. If any Award, or portion of
an Award, under the Plan expires or terminates unexercised, becomes
unexercisable or is forfeited or otherwise terminated surrendered or canceled as
to any shares, or if any shares of Common Stock are surrendered to the Company
in connection with any Award (whether or not such surrendered shares were
acquired pursuant to any Award), the shares subject to such Award and the
surrendered shares shall thereafter be available for further Awards under the
Plan; provided, however, that any such shares that are surrendered to the
Company in connection with any Award or that are otherwise forfeited after
issuance shall not be available for purchase pursuant to incentive stock options
intended to qualify under Code section 422.
5. PARTICIPATION
Participation in the Plan shall be open to all employees, officers,
directors, and consultants of the Company, or of any Affiliate of the Company as
may be selected by the Administrator from time to time.
6. AWARDS
The Administrator, in its sole discretion, establishes the terms of all
Awards granted under the Plan. Awards may be granted individually or in tandem
with other types of Awards. Each Award is subject to the terms and conditions
provided in the Grant Agreement relating to such Award.
a) Stock Options. The Administrator may from time to time grant to
eligible participants Awards of incentive stock options as that term is defined
in Code section 422 or nonqualified stock options; provided, however, that
Awards of incentive stock options shall be limited to employees of the Company
or of any Parent or Subsidiary of the Company. Options intended to qualify as
incentive stock options under Code section 422 and nonqualified options must
have an exercise price at least equal to Fair Market Value on the date of grant.
No stock option shall be an incentive stock option unless so designated by the
Administrator at the time of grant or in the Grant Agreement evidencing such
stock option.
b) Stock Appreciation Rights. The Administrator may from time to time
grant to eligible participants Awards of Stock Appreciation Rights ("SAR"). A
SAR entitles the grantee to receive, subject to the provisions of the Plan and
the Grant Agreement, a payment having an aggregate value equal to the product of
(i) the excess of (A) the Fair Market Value on the exercise date of one share of
Common Stock over (B) the base price per share specified in the Grant Agreement,
times (ii) the number of shares specified by the SAR, or portion thereof, which
is exercised. Payment by the Company of the amount receivable upon any exercise
of a SAR may be made by the delivery of Common Stock or cash, or any combination
of Common Stock and cash, as determined in the sole discretion of the
Administrator. If upon settlement of the exercise of a SAR a grantee is to
receive a portion of such payment in shares of Common Stock, the number of
shares shall be determined by dividing such portion by the Fair Market Value of
a share of Common Stock on the exercise date. No fractional shares shall be used
for such payment and the Administrator shall determine whether cash shall be
given in lieu of such fractional shares or whether such fractional shares shall
be eliminated.
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c) Stock Awards. The Administrator may from time to time grant restricted
or unrestricted stock Awards to eligible participants in such amounts on such
terms and conditions, and for such consideration, including no consideration or
such minimum consideration as may be required by law, as it shall determine. A
stock Award may be paid in Common Stock, in cash, or in a combination of Common
Stock and cash, as determined in the sole discretion of the Administrator.
d) Phantom Stock. The Administrator may from time to time grant Awards to
eligible participants denominated in stock-equivalent units ("phantom stock") in
such amounts and on such terms and conditions as it shall determine. Phantom
stock units granted to a participant shall be credited to a bookkeeping reserve
account solely for accounting purposes and shall not require a segregation of
any of the Company's assets. An Award of phantom stock may be settled in Common
Stock, in cash, or in a combination of Common Stock and cash, as determined in
the sole discretion of the Administrator. Except as otherwise provided in the
applicable Grant Agreement, the grantee shall not have the rights of a
stockholder with respect to any shares of Common Stock represented by a phantom
stock unit solely as a result of the grant of a phantom stock unit to the
grantee.
e) Performance Awards. The Administrator may, in its discretion, grant
performance awards which become payable on account of attainment of one or more
performance goals established by the Administrator. Performance awards may be
paid by the delivery of Common Stock or cash, or any combination of Common Stock
and cash, as determined in the sole discretion of the Administrator. Performance
goals established by the Administrator may be based on the Company's or an
Affiliate's operating income or one or more other business criteria selected by
the Administrator that apply to an individual or group of individuals, a
business unit, or the Company or an Affiliate as a whole, over such performance
period as the Administrator may designate.
7. MISCELLANEOUS
a) Withholding of Taxes. Grantees and holders of Awards shall pay to the
Company or its Affiliate, or make provision satisfactory to the Administrator
for payment of, any taxes required to be withheld in respect of Awards under the
Plan no later than the date of the event creating the tax liability. The Company
or its Affiliate may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to the grantee or holder
of an Award. In the event that payment to the Company or its Affiliate of such
tax obligations is made in shares of Common Stock, such shares shall be valued
at Fair Market Value on the applicable date for such purposes.
b) Loans. The Company or its Affiliate may make or guarantee loans to
grantees to assist grantees in exercising Awards and satisfying any withholding
tax obligations.
c) Transferability. Except as otherwise determined by the Administrator,
and in any event in the case of an incentive stock option or a stock
appreciation right granted with respect to an incentive stock option, no Award
granted under the Plan shall be transferable by a grantee otherwise than by will
or the laws of descent and distribution. Unless otherwise determined by the
Administrator in accordance with the provisions of the immediately preceding
sentence, an Award may be exercised during the lifetime of the grantee, only by
the grantee or, during the period the grantee is under a legal disability, by
the grantee's guardian or legal representative.
d) Adjustments; Business Combinations. In the event of changes in the
Common Stock of the Company by reason of any stock dividend, split-up,
recapitalization, merger, consolidation, business combination or exchange of
shares and the like, the Administrator shall, in its discretion, make
appropriate adjustments to the maximum number and kind of shares reserved for
issuance or with respect to which Awards may be granted under the Plan as
provided in Section 4 of the Plan and to the number, kind and price of shares
covered by outstanding Awards, and shall, in its discretion and without the
consent of holders of Awards, make any other adjustments in outstanding Awards,
including but not limited to reducing the number of shares subject to Awards or
providing or mandating alternative settlement methods such as settlement of the
Awards in cash or in shares of Common Stock or other
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securities of the Company or of any other entity, or in any other matters which
relate to Awards as the Administrator shall, in its sole discretion, determine
to be necessary or appropriate.
Notwithstanding anything in the Plan to the contrary and without the
consent of holders of Awards, the Administrator, in its sole discretion, may
make any modifications to any Awards, including but not limited to cancellation,
forfeiture, surrender or other termination of the Awards in whole or in part
regardless of the vested status of the Award, in order to facilitate any
business combination that is authorized by the Board to comply with requirements
for treatment as a pooling of interests transaction for accounting purposes
under generally accepted accounting principles.
The Administrator is authorized to make, in its discretion and without the
consent of holders of Awards, adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events affecting the Company, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Administrator determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
e) Substitution of Awards in Mergers and Acquisitions. Awards may be
granted under the Plan from time to time in substitution for Awards held by
employees or directors of entities who become or are about to become employees
or directors of the Company or an Affiliate as the result of a merger or
consolidation of the employing entity with the Company or an Affiliate, or the
acquisition by the Company or an Affiliate of the assets or stock of the
employing entity. The terms and conditions of any substitute Awards so granted
may vary from the terms and conditions set forth herein to the extent that the
Administrator deems appropriate at the time of grant to conform the substitute
Awards to the provisions of the awards for which they are substituted.
f) Stock Restriction Agreement. As a condition precedent to the grant of
any Award under the Plan or the exercise pursuant to such an Award or to the
delivery of certificates for shares issued pursuant to any Award, the
Administrator may require the grantee or the grantee's successor or permitted
transferee, as the case may be, to become a party to a stock restriction
agreement of the Company, in such form as the Administrator may determine from
time to time.
g) Termination, Amendment and Modification of the Plan. The Board may
terminate, amend or modify the Plan or any portion thereof at any time. However,
without the approval of the holders of the majority of the shares of the
Company's Common Stock present in person or by proxy at a meeting of the
stockholders of the Company and entitled to vote thereon which meeting is duly
held in accordance with the applicable laws of the state of the Company's
incorporation, or by the written consent of the holders of a majority of the
shares of the Company's Common Stock entitled to vote thereon, no change may be
made by the Board of Directors that increases the number of shares that may be
issued under the Plan, materially increases the benefits accruing to
participants under the plan, or materially modifies the requirements as to
eligibility for participation in the Plan. The termination or any modification
or amendment of the Plan shall not, without the consent of an Award grantee,
affect his or her rights under an Award previously granted to him or her. With
the consent of the grantees affected (if so required hereby), the Board of
Directors may amend outstanding Grant Agreements in a manner not inconsistent
with the Plan, provided, however, that no such amendment may provide for the
repricing to a lower exercise price of any previously issued and outstanding
stock option at any time during the term of such option (except in the context
of a stock dividend, split-up, recapitalization, merger, consolidation, business
combination or exchange of shares or the like which event affects similarly all
of the Company's outstanding shares of Common Stock) without the prior
affirmative vote of a majority of the shares of the Company's Common Stock
entitled to vote thereon.
h) Non-Guarantee of Employment or Service. Nothing in the Plan or in any
Grant Agreement thereunder shall confer any right on an individual to continue
in the service of the Company or shall interfere in any way with the right of
the Company to terminate such service at any time.
A-5
i) Compliance with Securities Laws; Listing and Registration. Common Stock
shall not be issued with respect to an Award granted under the Plan unless the
exercise of such Award and the issuance and delivery of stock certificates for
such Common Stock pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933 and the Exchange
Act, the rules and regulations promulgated thereunder, and the requirements of
any national securities exchange or any listing or quotation system established
by the National Association of Securities Dealers, Inc. ("Nasdaq System") upon
which the Common Stock may then be listed or quoted, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance to the extent such approval is sought by the Committee. The Company
may require that a grantee, as a condition to exercise of an Award, and as a
condition to the delivery of any share certificate, provide to the Company, at
the time of each such exercise and each such delivery, a written representation
that the shares of Common Stock being acquired shall be acquired by the grantee
solely for investment and will not be sold or transferred without registration
or the availability of an exemption from registration under the Securities Act
and applicable state securities laws. The stock certificates for any shares of
Common Stock issued pursuant to this Plan may bear a legend restricting
transferability of the shares of Common Stock unless such shares are registered
or an exemption from registration is available under the Securities Act and
applicable state securities laws.
j) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a grantee or any other person. To the
extent that any grantee or other person acquires a right to receive payments
from the Company pursuant to an Award, such right shall be no greater than the
right of any unsecured general creditor of the Company.
k) Governing Law. The validity, construction and effect of the Plan, of
Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator relating to
the Plan or such Grant Agreements, and the rights of any and all persons having
or claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with applicable federal laws and the laws of the State
of Delaware, without regard to its conflict of laws principles.
l) Effective Date, Termination Date. The Plan is effective as of the date
on which the Plan was adopted by the Board, subject to approval of the
stockholders within twelve months before or after such date. No Award shall be
granted under the Plan after the close of business on the day immediately
preceding the tenth anniversary of the effective date of the Plan. Subject to
other applicable provisions of the Plan, all Awards made under the Plan prior to
such termination of the Plan shall remain in effect until such Awards have been
satisfied or terminated in accordance with the Plan and the terms of such
Awards.
A-6
BLAIR CORPORATION LOGO
DETACH CARD
--------------------------------------------------------------------------------
BLAIR CORPORATION LOGO
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF BLAIR CORPORATION
The undersigned hereby appoints Murray K. McComas, David A.
Blair, and Bryan J. Flanagan, and each of them with power of
P substitution in each, as proxies to represent the undersigned
R at the annual meeting of the stockholders of Blair Corporation,
O to be held at the Library Theatre, 302 Third Avenue West,
X Warren, Pennsylvania on Tuesday, April 15, 2003 at 11:00 A.M.
Y and at any adjournments thereof, to vote the same number of
shares and as fully as the undersigned would be entitled to
vote if then personally present in the manner directed by the
undersigned.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
LISTED IN ITEM 1.
1. THE ELECTION OF DIRECTORS
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as shown below to vote for all
to the contrary) nominees listed below
Steven M. Blair, Robert D. Crowley, Harriet Edelman,
Bryan J. Flanagan, John O. Hanna, Craig N. Johnson,
Murray K. McComas, Thomas P. McKeever, Ronald L.
Ramseyer, Michael A. Schuler, John E. Zawacki
(Instructions: to withhold authority to vote for any
individual nominee, strike a line through that nominee's
name.)
THE BOARD RECOMMENDS A VOTE FOR THE AMENDMENT TO THE 2000
OMNIBUS STOCK PLAN IN ITEM 2.
2. AMENDMENT TO INCREASE THE COMMON STOCK AUTHORIZED FOR
ISSUANCE UNDER THE 2000 OMNIBUS STOCK PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF ERNST &
YOUNG LLP AS AUDITORS IN ITEM 3.
3. RATIFICATION OF ERNST & YOUNG LLP AS AUDITORS:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed, on the reverse side)
Blair Building Picture
BLAIR CORPORATION HEADQUARTERS
220 Hickory Street
Warren, Pennsylvania
DETACH CARD
--------------------------------------------------------------------------------
(Continued from reverse side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES IN ITEM 1, FOR THE
AMENDMENT TO THE 2000 OMNIBUS STOCK PLAN IN ITEM 2, AND FOR THE
RATIFICATION OF AUDITORS IN ITEM 3; AND THE PROXIES ARE
AUTHORIZED, IN ACCORDANCE WITH THEIR JUDGMENT, TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENTS THEREOF.
DATE: , 2003
--------------
--------------------------
--------------------------
(Sign here)
INSTRUCTIONS: The signer
hereby revokes all proxies
heretofore given by the
signer to vote at said
meeting or any
adjournments thereof.
NOTE: Please sign exactly
as name appears hereon.
Joint owners should each
sign. When signing as
attorney, executor,
trustee, administrator or
guardian, please give full
title as such.
PLEASE SIGN, DATE, AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE TO NATIONAL CITY BANK, P.O. BOX 94509,
CLEVELAND, OHIO 44101-9854.