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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
(RULE 14A-101)
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 ss.240.14a-12
MOVADO GROUP, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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MOVADO GROUP INC.
May 24, 2007
Dear Fellow Shareholder:
It is our pleasure to invite you to attend the 2007 Annual Meeting of
Shareholders of Movado Group, Inc. The meeting will be held on Thursday, June
14, 2007 at 10:00 a.m. at the Company's New York office and showrooms located
at 25 West 39th Street, 15th Floor, New York, NY 10018.
The enclosed Notice of Meeting and Proxy Statement describe the formal
business to be transacted at the meeting. We sincerely hope you will be able to
attend. We will report on the Company's progress and respond to questions you
may have about the Company's business.
Whether or not you plan to attend, the vote of every shareholder is
important and your cooperation in completing, signing and returning your proxy
promptly will be appreciated.
We hope to see you at the Annual Meeting.
Sincerely,
Gedalio Grinberg Efraim Grinberg
CHAIRMAN OF THE BOARD OF DIRECTORS PRESIDENT AND CHIEF EXECUTIVE OFFICER
650 From Road Paramus, New Jersey 07652
Telephone: 201 267 8000 Facsimile: 201 267 8050
MOVADO GROUP, INC.
650 From Road
Paramus, New Jersey 07652
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 14, 2007
Notice is hereby given that the Annual Meeting of Shareholders of Movado Group,
Inc. will be held on Thursday, June 14, 2007 at 10:00 a.m., at the Company's
New York office and showrooms located at 25 West 39th Street, 15th Floor, New
York, NY 10018 for the following purposes:
1. To elect nine directors to serve until the next Annual Meeting and
until their successors are elected and qualified.
2. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending January
31, 2008.
3. To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
Holders of the Company's Common Stock and Class A Common Stock of record at the
close of business on May 18, 2006 are entitled to notice of and to vote at the
Annual Meeting of Shareholders or any postponements or adjournments thereof.
Dated: May 24, 2007 By order of the Board of Directors
Timothy F. Michno
Secretary and General Counsel
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YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, SIGN AND RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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MOVADO GROUP, INC.
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
The Board of Directors of Movado Group, Inc. (the "Company") is
soliciting proxies for our 2007 Annual Meeting of Shareholders. The Annual
Meeting will be held on Thursday, June 14, 2007 at 10:00 a.m. at the Company's
New York office and showrooms located at 25 West 39th Street, 15th Floor, New
York, NY 10018. This proxy statement and the accompanying proxy card will first
be sent to shareholders on or about May 24, 2007.
WHY AM I RECEIVING THIS PROXY STATEMENT?
You are receiving this proxy statement and the accompanying Notice of
Meeting and proxy card because you owned shares of the Company's Common Stock
and/or its Class A Common stock on May 18, 2007, the record date for this
year's Annual Meeting.
WHO IS ASKING ME FOR MY VOTE?
The Company is soliciting your proxy on behalf of the Board and has
retained Georgeson Stockholder Communications, Inc., professional proxy
solicitors, to assist with the solicitation. We will pay the entire cost of
this proxy solicitation, including Georgeson's fee, which we expect to be
approximately $1,500.
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
The two matters scheduled to be voted on at the Annual Meeting are:
1. The election of nine directors to serve on the Board; and
2. The ratification of the selection of PricewaterhouseCoopers
LLP as the Company's independent accountants for the fiscal
year ending January 31, 2008.
In addition, such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof may be voted on.
WHAT ARE MY VOTING RIGHTS?
All owners of the Company's Common Stock and its Class A Common Stock
on the record date are entitled to attend and to vote on all items properly
presented at the Annual Meeting. Each share of Common Stock is entitled to one
vote and each share of Class A Common Stock is entitled to 10 votes on each
such matter. On May 7, 2007 there were 19,277,378 shares of Common Stock
outstanding and 6,638,239 shares of Class A Common Stock outstanding . A list
of all shareholders as of the record date will be available during ordinary
business hours at the Company's principal place of business located at 650 From
Road, Paramus, NJ 07652, from the Secretary of the Company, at least 10 days
before the Annual Meeting and will also be available at the Annual Meeting.
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
The Board recommends that you vote:
1. FOR the election of each of the director nominees; and
2. FOR the appointment of PricewaterhouseCoopers LLP as our
independent public accounting firm for the current fiscal
year.
HOW DO I VOTE?
If you are a shareholder on the record date you may vote by mail or by
voting in person at the Annual Meeting.
To vote by mail, sign, date and mail your proxy card in the enclosed
prepaid envelope and it will voted by one of the individuals indicated on the
card (your "proxy") as you direct. If you return your signed proxy card but do
not mark the boxes showing how you wish to vote, your shares will be voted FOR
the election of the director nominees and FOR the appointment of
PricewaterhouseCoopers LLP as our independent public accounting firm for the
current fiscal year. If your shares are held by your broker in "street name,"
you will receive a form from your broker seeking instruction as to how your
shares should be voted. We urge you to complete this form and instruct your
broker how to vote on your behalf.
You may also vote in person at the Annual Meeting. If you wish to vote
your shares in person at the Annual Meeting and they are held by your broker in
"street name," you must bring a letter from the broker to the meeting showing
that you were the beneficial owner of the shares on May 18, 2007.
CAN I CHANGE MY VOTE AFTER I HAVE RETURNED MY PROXY CARD?
Yes. You may change your vote at any time before voting concludes at
the Annual Meeting by:
o Sending in another proxy with a later date; or
o Notifying the Company's Secretary in writing before the
Annual Meeting that you wish to revoke your proxy; or
o Voting in person at the Annual Meeting.
WHAT IS A QUORUM?
For the purposes of the Annual Meeting, a "quorum" is a majority in
voting power of the outstanding shares of Common Stock and Class A Common Stock
owned by shareholders on the record date who are present in person or
represented by proxy at the Annual Meeting. There must be a quorum for the
Annual Meeting to be held. If you submit a properly executed proxy card, even
if you abstain from voting, your shares will be considered part of the quorum.
Broker "non-votes" are not considered a part of the quorum. Broker non-votes
occur when a broker holding shares for a beneficial owner does not vote on a
particular matter because the broker does not have discretionary voting power
with respect to that item and has not received voting instructions from the
beneficial owner.
WHAT IS BROKER "DISCRETIONARY" VOTING?
Under the rules of the New York Stock Exchange ("NYSE"), if you hold
your shares through a broker, your broker is permitted to vote your shares on
the election of directors and the ratification of our independent registered
public accounting firm in its discretion if it has transmitted the proxy
materials to you and has not received voting instructions from you on how to
vote your shares before the deadline set by your broker.
HOW ARE MATTERS PRESENTED AT THE ANNUAL MEETING APPROVED?
Directors are elected by a plurality of the votes cast at the Annual
Meeting. The approval of the proposal to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants for fiscal
2008 requires the affirmative vote of a majority of the votes cast at the
Annual Meeting.
MAY I VOTE CONFIDENTIALLY?
Yes. Our policy is to keep your vote confidential, except as otherwise
legally required, to allow for the tabulation and certification of votes and to
facilitate proxy solicitation.
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WHO WILL COUNT THE VOTES?
A representative of Bank of New York will count the votes and act as
the inspector of election for the Annual Meeting.
WHAT IF ADDITIONAL MATTERS ARE PRESENTED TO THE ANNUAL MEETING?
We do not know of any business to be considered at the Annual Meeting
other than the proposals described in this proxy statement. If any other
business is presented at the Annual Meeting, your signed proxy card gives
authority to each of Timothy F. Michno, our General Counsel and corporate
Secretary, and to Tasha Cooper Coleman, our Assistant General Counsel to vote
on such matters at his or her discretion.
WHERE CAN I FIND THE VOTING RESULTS FROM THE ANNUAL MEETING?
We will announce preliminary voting results at the Annual Meeting and
will publish final results in our quarterly report on Form 10-Q for the second
quarter of fiscal 2008.
HOW CAN I OBTAIN INFORMATION ABOUT THE COMPANY?
A copy of our fiscal 2007 Annual Report accompanies this proxy
statement and is available on our website at WWW.MOVADOGROUP.COM. Shareholders
may also obtain a free copy of our Annual Report on Form 10-K by visiting our
website or by sending a request in writing to Suzanne Rosenberg, Vice President
of Corporate Communications at the Company's address set forth in the Notice of
Meeting.
WHEN ARE SHAREHOLDER PROPOSALS DUE FOR CONSIDERATION AT NEXT YEAR'S ANNUAL
MEETING?
Under the Securities and Exchange Commission rules, for shareholder
proposals to be considered for inclusion in the proxy statement for the 2008
Annual Meeting, they must be submitted in writing to our corporate Secretary,
Movado Group, Inc., 650 From Road, Paramus, NJ 07652 on or before January 26,
2008. In addition, our bylaws provide that for directors to be nominated or
other proposals to be properly presented at the 2008 Annual Meeting, an
additional notice of any nomination or proposal must be received by us not less
than 60 nor more than 90 days before the Annual Meeting. If less than 70 days'
notice of our 2008 Annual Meeting is given, then to be timely, the notice by
the shareholder must be received by us not later than the close of business on
the tenth day following the day on which the first public announcement of the
date of the 2008 Annual Meeting was made or the notice of the meeting was
mailed, whichever occurs first.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the number of shares of the Company's Class
A Common Stock and the Common Stock beneficially owned as of May 7, 2007
(except as otherwise noted in footnotes 3, 4 and 6) by (i) each shareholder who
is known by the Company to beneficially own more than 5% of the outstanding
shares of either the Class A Common Stock or the Common Stock, (ii) each
director, (iii) each executive officer named in the Summary Compensation Table,
and (iv) all executive officers and directors as a group.
PERCENT OF OUTSTANDING
SHARES OF CAPITAL STOCK
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SHARES OF
CLASS A SHARES OF
COMMON COMMON PERCENT OF
STOCK STOCK CLASS A TOTAL
BENEFICIALLY BENEFICIALLY COMMON COMMON VOTING
NAME OF BENEFICIAL OWNER OWNED OWNED STOCK STOCK POWER (1)
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Margaret Hayes Adame (2) - 19,000 - * *
AXA Mutuelle (3) - 1,128,260 - 5.9 % 1.3 %
Barclays (4) - 1,057,922 - 5.5 % 1.2 %
Richard J. Cote (5) - 1,141,097 - 5.9 % 1.3 %
Dimensional Fund Advisors LP (6) - 1,534,922 - 8.0 % 1.8 %
Alexander Grinberg (7) 2,557,074 10,196 38.5 % * 29.9 %
Efraim Grinberg(8) 4,015,356 1,177,751 60.5 % 6.1 % 47.8 %
Gedalio Grinberg (9) 1,537,730 21,450 23.2 % * 18.0 %
Alan H. Howard (2) - 17,124 - * *
Richard Isserman (2) - 3,250 - - -
Eugene J. Karpovich (10) - 48,493 - * *
Nathan Leventhal (2) - 3,250 - - -
Timothy F. Michno - 1,106 - * *
Donald Oresman (2) 3,920 15,250 * * *
Miriam Phalen (11) 2,570,298 - 38.7 % - 30.0 %
Leonard L. Silverstein (2) (12) - 107,896 - * *
All executive officers and directors as a
group (13 persons) (13) 6,132,339 2,565,863 92.4 % 12.2 % 73.1 %
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* DENOTES LESS THAN ONE PERCENT
The address for Messrs. Cote, A. Grinberg, G. Grinberg, E. Grinberg, Howard,
Isserman, Karpovich, Leventhal, Michno, Oresman and Silverstein and Ms. Hayes
Adame and Ms. Phalen is c/o Movado Group, Inc., 650 From Road, Paramus, New
Jersey 07652.
(1) In calculating the percent of total voting power, the voting power of
shares of Common Stock (one vote per share) and Class A Common Stock
(10 votes per share) has been aggregated.
4
(2) The total number of shares of Common Stock reported as beneficially
owned by each of Ms. Hayes Adame and Messrs. Howard, Oresman and
Silverstein includes 14,500 shares, and the number reported as
beneficially owned by Mr. Leventhal and by Mr. Isserman represents
3,250 shares, each has the right to acquire by the exercise of options
under the Company's 1996 Stock Incentive Plan.
(3) On February 13, 2007, in a joint filing on Schedule 13G under the
Securities Exchange Act of 1934, as amended ("Exchange Act") by AXA
Financial, Inc.; AXA, which owns AXA Financial, Inc.; and AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle and AXA
Courtage Assurance Mutuelle (collectively "AXA Mutuelle") which, as a
group control AXA, AXA Mutuelle reported beneficial ownership as of
December 31, 2006 of 1,128,260 shares of Common Stock. It reported
having sole dispositive power as to all and sole voting power as to
515,800 of such shares. AXA and AXA Financial, Inc. each filed the
report in its capacity as a parent holding company with respect to the
holdings, respectively, of AXA Konzern AG and AXA Rosenberg Investment
Management LLC (both, subsidiaries of AXA) and Alliance Bernstein L.P.
and AXA Equitable Life Insurance Company (both, subsidiaries of AXA
Financial, Inc). The report stated that all such shares were acquired
in the ordinary course of business and not for the purpose or with the
effect of changing or influencing control of the Company, or in
connection with any transaction having such purpose or effect. The
address of AXA Mutuelle is 26 rue Drouot, 75009 Paris, France.
(4) On January 23, 2007, in a filing on Schedule 13G under the Exchange
Act, Barclays Global Investors, NA, Barclays Global Fund Advisors,
Barclays Global Investors, Ltd., Barclays Global Investors Japan Trust
and Banking Company Limited and Barclays Global Investors Japan
Limited (collectively "Barclays") reported beneficial ownership as of
December 31, 2006 of 1,057,922 shares of Common Stock. It reported
having sole dispositive power as to all and sole voting power as to
950,352 of such shares. Barclays reported that all of the shares of
Common Stock that it beneficially owns were acquired in the ordinary
course of business and not for the purpose or with the effect of
changing or influencing control of the Company, or in connection with
any transaction having such purpose or effect. The address of Barclays
Global Investors, NA and Barclays Global Fund Advisors is 45 Fremont
Street, San Francisco, CA 94105. The address of Barclays Global
Investors, Ltd. is Murray House, 1 Royal Mint Court, London, EC3N 4HH
England. The address of Barclays Global Investors Japan Trust and
Banking Company Limited and Barclays Global Investors Japan Limited is
Ebisu Prime Square Tower, 8th Floor, 1-1-39 Hiroo Shibuya-Ku, Tokyo
150-8402, Japan.
(5) The total number of shares of Common Stock reported as beneficially
owned by Mr. Cote includes 722,266 shares which he has the right to
acquire by the exercise of options under the Company's 1996 Stock
Incentive Plan and 2,200 shares held by a trust for the benefit of his
children as to which shares Mr. Cote has shared dispositive power with
his spouse who is the trustee with sole voting power.
(6) On February 9, 2007, in a filing on Schedule 13G under the Exchange
Act, Dimensional Fund Advisors LP ("DFA") reported beneficial
ownership as of December 31, 2006 of 1,534,922 shares of Common Stock
as to all of which it has sole voting and dispositive power. DFA also
reported that all of the shares of Common Stock that it beneficially
owns were acquired in the ordinary course of business and not for the
purpose or with the effect of changing or influencing control of the
Company, or in connection with any transaction having such purpose or
effect. The address of DFA is 1299 Ocean Avenue, 11th Floor, Santa
Monica, CA 90401.
(7) The total number of shares of Class A Common Stock beneficially owned
by Mr. A. Grinberg includes 2,225,924 shares owned by Grinberg
Partners L.P., a Delaware limited partnership, of which Mr. A.
Grinberg is a limited partner, and 80,774 shares owned by trusts for
the benefit of Mr. A. Grinberg's niece and nephew, of which trusts he
is a co-trustee with Mr. Mark Fishman. Mr. A. Grinberg has shared
voting power with Grinberg Partners L.P., Grinberg Group Partners, a
Delaware general partnership (general partner of Grinberg Partners
L.P.) and Miriam Phalen over the 2,225,924 shares owned by Grinberg
Partners L.P., and shared voting and investment power with Mr. Fishman
over the 80,774 shares owned by the trusts.
(8) The total number of shares of Class A Common Stock beneficially owned
by Mr. E. Grinberg includes an aggregate of 563,306 shares held by
several trusts for the benefit of Mr. E. Grinberg's siblings and
himself. Mr. E. Grinberg is the sole trustee of those trusts and, as
such, has sole investment and voting power with respect to the shares
held by such trusts. In addition, included in the shares of Class A
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Common Stock reported as beneficially owned by Mr. E. Grinberg are an
aggregate of 862,940 shares of Class A Common Stock held by several
trusts for the benefit of Mr. E. Grinberg's siblings and himself. Mr.
E. Grinberg is co-trustee of those trusts with Mr. Andrew Regan and,
as co-trustee, has shared investment and voting power with Mr. Regan
with respect to the shares of Class A Common Stock held by such
trusts. The total number of shares of Class A Common Stock
beneficially owned by Mr. E. Grinberg also includes 2,225,924 shares
owned by Grinberg Partners L.P., a Delaware limited partnership, of
which Grinberg Group Partners, a Delaware general partnership ("GGP"),
is the general partner. As the managing partner of GGP, Mr. E.
Grinberg has shared power to direct the voting and disposition of the
shares owned by Grinberg Partners L.P. Also included in the total
number of shares of Class A Common Stock reported as beneficially
owned by Mr. E. Grinberg are 15,000 shares owned by the Efraim
Grinberg Family Foundation and 100,191 shares owned by The Grinberg
Family Foundation, each a non-profit corporation. Mr. E. Grinberg is a
member of the board of directors of each of those non-profit
corporations and has shared investment and voting control over those
shares together with the other members of those boards. The total
number of shares of Common Stock owned by Mr. E. Grinberg includes
54,032 shares of Common Stock held under the Company's Employee
Savings and Investment Plan ("401(k) Plan"), as to which Mr. E.
Grinberg, as a co-trustee, has shared investment and voting power, and
82,039 shares of Common Stock held under the Company's Stock Bonus
Plan, for which Mr. E. Grinberg is a co-trustee and as to which shares
he has shared investment and voting power. The total number of shares
of Common Stock owned by Mr. E. Grinberg also includes 859,736 shares
of Common Stock which he has the right to acquire by the exercise of
options under the Company's 1996 Incentive Stock Plan. Mr. E. Grinberg
disclaims beneficial ownership as to the 954,218 shares of Class A
Common Stock held by the trusts for the benefit of his siblings of
which he is trustee or co-trustee; the 54,032 shares of Common Stock
held under the Company's 401(k) Plan (except to the extent of his
pecuniary interest in such shares); the 82,039 shares of Common Stock
held under the Company's Stock Bonus Plan; and all the shares held by
the Efraim Grinberg Family Foundation and The Grinberg Family
Foundation.
(9) The total number of shares of Class A Common stock beneficially owned
by Mr. G. Grinberg includes 100,191 shares owned by The Grinberg
Family Foundation, a non-profit corporation of which Mr. G. Grinberg,
his wife and three children are the directors and officers and as to
which shares they all have shared investment and voting power. Also
included in the total number of shares of Class A Common Stock
beneficially owned by Mr. G. Grinberg are 38,000 shares owned by CAP I
Partners L.P., a limited partnership of which CAP I Partners LLC is
the general partner. Mr. G. Grinberg, as the managing member of CAP I
Partners LLC, has the sole power to vote and dispose of the shares
owned by CAP I Partners L.P. The total number of shares of Common
Stock beneficially owned by Mr. G. Grinberg includes 10,000 shares of
Common Stock held by a charitable remainder trust for which Mr. G.
Grinberg is a co-trustee together with Mr. Andrew Weiss. Mr. G.
Grinberg disclaims beneficial ownership as to the shares of class A
Common Stock owned by The Grinberg Family Foundation and by CAP I
Partners L.P.
(10) The total number of shares of Common Stock reported as beneficially
owned by Mr. Karpovich includes 36,225 shares which he has the right
to acquire by the exercise of options under the Company's 1996 Stock
Incentive Plan.
(11) The total number of shares of Class A Common Stock beneficially owned
by Ms. Miriam Phalen includes 2,225,924 shares owned by Grinberg
Partners L.P., a Delaware limited partnership of which Ms. Phalen is a
limited partner, and 80,768 shares owned by trusts for the benefit of
Ms. Phalen's children, of which trusts Ms. Phalen is the sole trustee.
Ms. Phalen has shared voting power with Grinberg Partners L.P.,
Grinberg Group Partners, a Delaware general partnership (general
partner of Grinberg Partners L.P.) and A. Grinberg over the 2,225,924
shares owned by Grinberg Partners L.P., and sole voting and investment
power over the 80,768 shares owned by the trusts.
(12) The total number of shares of Common Stock beneficially owned by Mr.
Silverstein includes 4,000 shares owned by the Leonard and Elaine
Silverstein Family Foundation of which Mr. Silverstein and his wife
are the directors and officers and as to which shares they have shared
investment and voting power, and 88,646 shares held by a trust of
which Mr. Silverstein is trustee and as to which shares he has sole
investment and voting power. Mr. Silverstein disclaims beneficial
ownership of the shares of Common Stock held by the Leonard and Elaine
Silverstein Family Foundation.
(13) Excludes double counting of shares deemed to be beneficially owned by
more than one person. Unless otherwise indicated, the individuals
named have sole investment and voting power.
6
PROPOSAL 1 - ELECTION OF DIRECTORS
Directors hold office until the next annual meeting of shareholders
and until the election and qualification of their successors. Under the
Company's by-laws, the Board of Directors can change the number of directors
comprising the entire Board so long as the number is not less than three. The
Board currently consists of nine directors. All of the nominees are members of
the present Board of Directors. If any nominee for election to the Board of
Directors should be unable to accept nomination or election as a director,
which is not expected, your proxy may be voted for a substitute or substitutes
designated by the Board of Directors or the number of directors constituting
the Board may be reduced in accordance with the Company's by-laws. Directors
will be elected by the holders of a plurality of the voting power present in
person or represented by proxy and entitled to vote. Abstentions and broker
"non-votes" will not be counted for purposes of the election of directors. THE
BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES LISTED
BELOW.
DIRECTOR
NAME AGE SINCE POSITION
Margaret Hayes Adame 67 1993 Director
Richard J. Cote 52 2000 Executive Vice
President and
Chief Operating
Officer;
Director
Efraim Grinberg 49 1988 President and
Chief Executive
Officer; Director
Gedalio Grinberg 75 1967 Chairman of the
Board of Directors
Alan H. Howard 47 1997 Director
Richard Isserman 72 2005 Director
Nathan Leventhal 64 2003 Director
Donald Oresman 81 1981 Director
Leonard L. Silverstein 85 1975 Director
There are no family relationships between any of the Company's
directors, except for Efraim Grinberg who is the son of Gedalio Grinberg. There
are no arrangements between any director and any other person pursuant to which
any of them was elected a director.
MS. HAYES ADAME is the President of Fashion Group International, Inc.,
a non-profit organization working with the fashion industry, which she joined
in March 1993. From 1981 to March 1993, Ms. Hayes Adame was a Senior Vice
President and general merchandise manager at Saks Fifth Avenue, a major
retailer. She is also a member of the board of directors of International
Flavors & Fragrances, Inc.
MR. COTE joined the Company in January 2000 as Executive Vice
President - Finance and Administration. In May 2001 Mr. Cote was promoted to
Executive Vice President - Chief Operating Officer. Prior to joining the
Company, Mr. Cote worked for Colgate-Palmolive, a consumer goods company,
where, from 1998 to 2000, he was Vice President and Chief Financial Officer for
U.S. operations, and from 1993 to 1998, he was Vice President and Chief
Financial Officer for Asia/Pacific operations.
MR. E. GRINBERG joined the Company in June 1980 and served as the
Company's Vice President of Marketing from February 1985 until July 1986, at
which time he was elected to the position of Senior Vice President of
Marketing. From June 1990 to October 1995, Mr. E. Grinberg served as the
Company's President and Chief Operating Officer and since October 1995 served
as the Company's President. In May 2001, Mr. E. Grinberg was elected to the
position of President and Chief Executive Officer. Mr. E. Grinberg also serves
on the board of directors of Lincoln Center for the Performing Arts, Inc., the
American Watch Association and the Jeweler's Fund for Children.
7
MR. G. GRINBERG founded the Company's predecessor in 1961 and the
Company in 1967. He has been the Chairman of the Board of Directors since then.
Mr. G. Grinberg served as the Company's Chief Executive Officer until May 2001.
MR. HOWARD has been a Managing Director of Greenbriar Equity Group,
LLC, a private equity firm which focuses on transportation and transportation
related investments since July 2006. Prior to July 2006, Mr. Howard was a
Managing Director of Credit Suisse First Boston LLC, an international provider
of financial services. He had been with CSFB and its predecessor companies
since 1986.
MR. ISSERMAN was appointed to the Board in June 2005. In his nearly 40
year career with KPMG LLP, Mr. Isserman served as Audit Partner in KPMG's New
York office for 26 years. He also led KPMG's real estate audit practice in New
York and was a member of the firm's SEC Reviewing Partner's Committee. Mr.
Isserman retired from KPMG in June 1995. A licensed New York state CPA, Mr.
Isserman also serves as the chairman of the corporate compliance committee and
a member of the audit committee for Federation Employment and Guidance
Services, a social service agency in New York City.
MR. LEVENTHAL served as Chief of Staff to Mayor John Lindsay, Deputy
Mayor to Mayor Ed Koch, and Transition Chairman for both Mayors David Dinkins
and Michael Bloomberg. He currently chairs Mayor Bloomberg's Committee on
Appointments and is a Commissioner on the New York City Planning Commission. In
the not-for-profit sector, Mr. Leventhal served for 17 years as President of
Lincoln Center for the Performing Arts, where he is now President Emeritus and
Chairman of the Avery Fisher Artist Program. He currently serves on the boards
of a number of equity and fixed income mutual funds managed by the Dreyfus
Corporation, an investment advisor. Mr. Leventhal is a former partner of the
law firm Poletti Freidin Prashker Feldman & Gartner.
MR. ORESMAN was Executive Vice President and General Counsel of
Paramount Communications, Inc., a publishing and entertainment company, from
December 1983 until his retirement in March 1994. Prior to December 1983, Mr.
Oresman was engaged in the practice of law as a partner of Simpson Thacher &
Bartlett, where he is now Of Counsel.
MR. SILVERSTEIN has been engaged in the practice of law at Silverstein
and Mullens, a division of Buchanan Ingersoll & Rooney, in Washington, D.C.,
for over 40 years. Mr. Silverstein also serves as Vice President and Director
of Tax Management, Inc., a wholly owned subsidiary of BNA, Inc., and a director
of Chevy Chase FSB. He is a former Vice Chairman and currently an active
honorary trustee of the John F. Kennedy Center for the Performing Arts, Past
President of the Alliance Francaise of Washington, formerly President and
currently a director of the National Symphony Orchestra Association, Treasurer
of the Madison Council of the Library of Congress and President,
French-American Cultural Foundation.
THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
BOARD MEETINGS AND COMMITTEES
In fiscal 2007, the Board of Directors held 11 meetings. All directors
attended at least 75% of the meetings of the Board and of the committees on
which they served.
The Board of Directors has three committees:
o Audit
o Compensation
o Nominating/Corporate Governance.
The members of the committees and their chairs are selected by the
Nominating and Corporate Governance Committee and then appointed by the Board
annually. Each committee is comprised entirely of independent directors in
accordance with NYSE listing standards. Each committee operates under a written
charter which is available at the Company's website at WWW.MOVADOGROUP.COM by
clicking on "Investor Center", "Corporate Governance", "Committee Composition"
and then the name of the respective committee. Committee charters are also
available in print upon the written request of any shareholder. A copy of the
charter of the Audit Committee is attached to this proxy statement as Appendix
"A". The current committee membership is as follows:
8
AUDIT COMPENSATION NOMINATING/CORPORATE GOVERNANCE
COMMITTEE COMMITTEE COMMITTEE
---------------- ---------------------- -------------------------------
Donald Oresman * Alan H. Howard * Nathan Leventhal *
Alan H. Howard Margaret Hayes Adame Margaret Hayes Adame
Richard Isserman Leonard L. Silverstein Leonard L. Silverstein
Donald Oresman
* Committee Chair
AUDIT COMMITTEE
The Board of Directors believes that each member of the Audit
Committee is an "audit committee financial expert" as defined under the rules
adopted by the SEC and, therefore, has accounting or related financial
expertise in accordance with the NYSE listing standards. The Audit Committee
held four meetings in fiscal 2007.
The principal functions of the Audit Committee are to (i) appoint,
approve the compensation of, terminate and oversee the work of the Company's
independent auditors; (ii) approve in advance all audit and permissible
non-audit services provided to the Company by independent auditors; (iii)
review, in consultation with the Company's independent auditors, management and
the Company's internal auditors, the Company's financial reporting process,
including its internal controls; (iv) review with management and the Company's
independent auditors, the Company's annual and quarterly financial statements
before the same are publicly filed, and (v) report regularly to the Board with
respect to any issues that arise concerning, among other things, the quality or
integrity of the Company's financial statements, the performance of the
internal audit function, the Company's compliance with legal requirements and
the performance and independence of the Company's independent auditors.
COMPENSATION COMMITTEE
The Compensation Committee held seven meetings in fiscal 2007. The
principal functions of the Compensation Committee are to (i) review and approve
corporate goals and objectives relevant to CEO compensation, evaluate the CEO's
performance in light of those goals and objectives and set the CEO's
compensation level based on that evaluation; (ii) review and approve
compensation levels for executive non-CEO officers and key employees of the
Company; (iii) review significant employee benefit programs and (iv) establish
and administer executive compensation programs, including bonus plans, stock
option and other equity-based programs, deferred compensation plans and any
other cash or stock incentive programs.
For additional information concerning the operation of the
Compensation Committee, including the role of outside compensation consultants
and management in the process of determining the amount and form of executive
compensation, see "Compensation Discussion and Analysis" below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was at all times during fiscal
year 2007 comprised entirely of independent directors who at no time were
executive officers or employees of the Company. Mr. Silverstein, a member of
the Committee, is a partner at the law firm of Silverstein & Mullens, a
division of Buchanan Ingersoll & Rooney, P.C. That firm rendered legal services
to the Company during fiscal 2007 for which it was paid $19,417. The Board of
Directors determined that such relationship was immaterial. No executive
officer of the Company has ever served as a member of the board of directors or
compensation committee of any company whose executive officers include a member
of the Board of Directors or the Compensation Committee.
NOMINATING/ CORPORATE GOVERNANCE COMMITTEE
The Nominating/Corporate Governance Committee held two meetings in
fiscal 2007. The principal functions of the Nominating/Corporate Governance
Committee are to (i) identify individuals qualified to become directors,
consistent with criteria approved by the Board, and recommend director
candidates to the Board of Directors; (ii) develop and recommend corporate
governance principles to the Board of Directors; (iii) oversee the adoption of
a code of ethics for directors, officers and employees of the Company and
assure that procedures are in place for disclosure of any waivers of that code
9
for directors or executive officers; and (iv) facilitate an annual assessment
of the performance of the Board and each of its committees.
IDENTIFYING AND EVALUATING CANDIDATES FOR THE BOARD
In considering possible candidates to serve on the Board of Directors,
the Nominating/Corporate Governance Committee will take into account all
appropriate qualifications, qualities and skills in the context of the current
make-up of the Board and will consider the entirety of each candidate's
credentials. In addition, the Nominating/Corporate Governance Committee will
evaluate each nominee according to the following criteria: personal character,
accomplishments, integrity, and reputation in the business community; knowledge
of the industry in which the Company does business; sound business judgment;
leadership ability and capacity for strategic thinking; experience working
constructively with others; sufficient time to devote to Board matters;
diversity of viewpoints and backgrounds and the absence of any conflict of
interest that might interfere with performance as a director.
Shareholders may recommend director candidates for consideration by
the Nominating/Corporate Governance Committee. To have a candidate considered
by the Nominating/Corporate Governance Committee, a shareholder must submit the
recommendation in writing and must include the following information:
o The name of the shareholder and evidence of the shareholder's
ownership of Company stock, including the number and class of
shares owned and the length of time of ownership; and
o The name of the candidate, the candidate's resume or a
listing of his or her qualifications to be a director of the
Company and the person's consent to be named as a director if
nominated by the Board of Directors.
Each such recommendation must be sent to the Secretary of the Company
at Movado Group, Inc., 650 From Road, Paramus, New Jersey 07652 and must be
received within the time indicted above on page 3 under "WHEN ARE SHAREHOLDER
PROPOSALS DUE FOR CONSIDERATION AT NEXT YEAR'S ANNUAL MEETING?". The
Nominating/Corporate Governance Committee will evaluate shareholder recommended
director candidates in the same manner as it evaluates director candidates
identified by other means.
CORPORATE GOVERNANCE GUIDELINES
The Company's Corporate Governance Guidelines and its Code of Business
Conduct and Ethics are available on the Company's website at
WWW.MOVADOGROUP.COM by clicking on "Investor Center" and then "Corporate
Governance". The Corporate Governance Guidelines and the Code of Business
Conduct and Ethics are also available in print upon the written request of any
shareholder.
DIRECTOR INDEPENDENCE
The listing standards of the NYSE require that a majority of the Board
of Directors be independent. No director qualifies as independent unless the
Board of Directors affirmatively determines that the director has no material
relationship with the Company (directly or as a partner, shareholder or officer
of an organization that has a relationship with the Company). The Board of
Directors broadly considers all relevant facts and circumstances relative to
independence and considers the issue not merely from the standpoint of the
director, but also from the viewpoint of persons or organizations with which
the director has an affiliation. Material relationships can include commercial,
industrial, banking, consulting, legal, accounting, charitable and familial
relationships (among others). In accordance with the NYSE listing standards,
the Board has adopted categorical standards of director independence that
provide that none of the following relationships will be considered a material
relationship that would impair a director's independence:
o A director who is a director, an executive officer or an
employee, or whose immediate family member is a director, an
executive officer or an employee, of a company that makes
payments to, or receives payments from, the Company for goods
or services in an amount which, in any single fiscal year, is
less than the greater of $1,000,000 and 2% of such other
company's consolidated gross revenues; or
o A director who serves, or whose immediate family member
serves, as an executive, officer, director, trustee or
employee of a charitable organization and the Company's
10
discretionary charitable contributions to the organization
are less than the greater of $1,000,000 and 2% of that
organization's consolidated gross revenues.
The Board of Directors has determined that all of the members of the
Board of Directors, with the exception of those three members who are employees
of the Company (namely Messrs. E. Grinberg, G. Grinberg and R. Cote),
representing a majority of the entire Board, are independent under the NYSE
listing standards and satisfy the Company's categorical standards set forth
above.
In addition, in accordance with the NYSE listing standards, the Board
of Directors has determined that the Compensation Committee and
Nominating/Corporate Governance Committee are composed entirely of independent
directors. The Board of Directors has also determined that each member of the
Audit Committee is independent under the applicable rules of the SEC and under
the NYSE listing standards.
EXECUTIVE SESSIONS OF NON-MANAGEMENT DIRECTORS
The non-management directors hold regular executive sessions without
management at least once each quarter. The chairman of the Nominating/Corporate
Governance Committee is designated to chair these executive sessions under the
Company's Corporate Governance Guidelines.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders may communicate directly with the full Board of
Directors, the Audit Committee of the Board of Directors or any individual
director by sending such communication in writing to the attention of the
General Counsel of the Company, 650 From Road, Paramus, NJ 07652. Such
communications should indicate to whom they are intended to be directed. All
communications received that relate to accounting, internal accounting controls
or auditing matters will be referred to the chairman of the Audit Committee
unless the communication is otherwise addressed. Parties may communicate
anonymously and/or confidentially if they desire. All communications received
will be forwarded to the appropriate director or directors.
DIRECTOR ATTENDANCE AT ANNUAL MEETING
The Company encourages all of the directors to attend each annual
meeting of shareholders. To the extent reasonably practicable, the Company
regularly schedules a meeting of the Board of Directors on the same day as the
Annual Meeting of Shareholders. All members of the Board of Directors attended
the 2006 Annual Meeting of Shareholders.
DIRECTOR COMPENSATION
No executive officer of the Company receives any additional
compensation for serving on the Board of Directors. In fiscal 2007, we paid
each director who was not an employee of the Company an annual retainer of
$30,000. In addition, in fiscal 2007, we paid the Chair of the Audit Committee
an annual fee of $10,000, and the Chairs of the Compensation and
Nominating/Corporate Governance Committees an annual fee of $5,000 for service
in these capacities. Each committee member was also paid $1,500 for each
committee meeting attended, and we reimbursed reasonable out-of-pocket expenses
incurred by directors in connection with attending meetings and performing
other Board-related services for the Company in accordance with the same
policies applicable to our employees generally.
Also in fiscal 2007, we granted each non-employee director a stock
option to purchase 1,500 shares of Common Stock and a stock award for 750
shares of Common Stock under the Company's 1996 Stock Incentive Plan, as
amended. The stock option and the stock award each vest on the one year
anniversary of the grant date (May 31, 2006). The exercise price of each option
is the fair market value of our Common Stock on the date of grant. The option
expires ten years from the grant date.
The following chart shows the cash amounts and the value of other
compensation paid to each non-employee director for their service in fiscal
2007:
11
------------------------------------------------------------------------
FEES EARNED OR STOCK OPTION
PAID IN CASH AWARDS(1) AWARDS(2) TOTAL
NAME ($) ($) ($) ($)
---- --------- ----- --- -----
(a) (b) (c) (d) (h)
------------------------------------------------------------------------
Margaret Hayes Adame 42,000 3,115 7,724 52,839
Alan H. Howard 51,500 3,115 7,724 62,339
Richard Isserman 36,000 3,115 7,724 46,839
Nathan Leventhal 36,500 3,115 7,724 47,339
Donald Oresman 56,500 3,115 7,724 67,339
Leonard L. Silverstein 42,000 3,115 7,724 52,839
------------------------------------------------------------------------
(1) Amounts shown do not reflect compensation actually received by the
director. Instead, the dollar value of these awards is the compensation
cost recognized for financial statement reporting purposes for the fiscal
year ended January 31, 2007 in accordance with the provisions of
Statement of Financial Accounting Standards No. 123R, "Share-based
Payments," ("FAS 123(R)"). Each non-employee director was granted one
stock award in fiscal 2007 for 750 shares of the Company's Common Stock,
the grant date fair value of which, computed in accordance with FAS
123(R), disregarding the effect of forfeitures, is $9,795. At January 31,
2007 each non-employee director held no other stock awards except this
one, unvested stock award.
(2) Amounts shown do not reflect compensation actually received by the
director. Instead, the dollar value of these awards is the compensation
cost recognized for financial statement reporting purposes for the fiscal
year ended January 31, 2007 in accordance with the provisions of FAS
123(R) for grants made in fiscal 2006 and fiscal 2007. A discussion of
the relevant assumptions made in the valuations may be found in Notes 1
and 13 to the financial statements in the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 2007. Each non-employee
director was awarded one stock option in fiscal 2007 to purchase 1,500
shares of the Company's Common Stock, the grant date fair value of which,
calculated in accordance with FAS 123(R), disregarding the effect of
forfeitures, is $14,018. At January 31, 2007, the non-employee directors
held unexercised options to purchase Company Common Stock, whether or not
vested, in the following amounts: Ms. Hayes Adame and Mssrs. Howard,
Oresman and Silverstein: 15,000 shares each; and Mssrs. Isserman and
Leventhal 3,000 shares each.
EXECUTIVE OFFICERS
For detailed information concerning Richard Cote, Gedalio Grinberg and
Efraim Grinberg, see the listing for each under the heading "Election of
Directors" above. The names of the other executive officers of the Company (and
their respective ages as of the filing date of this report) are set forth
below, together with the positions held by each during the past five years.
NAME AGE POSITION
---- --- --------
Eugene J. Karpovich 61 Senior Vice President and Chief
Financial Officer
Timothy F. Michno 50 Secretary and General Counsel
MR. KARPOVICH joined the Company in 1998 as Chief Financial Officer
for the Movado brand. From 2000 to 2001 he was Vice President, Financial
Planning for the Company. He was promoted to Senior Vice President and Chief
Financial Officer in October 2001. Before joining the Company, Mr. Karpovich
had been the Chief Financial Officer of the watch company Wittnauer
International, Inc., a subsidiary of Westinghouse Electric Corporation, Inc.,
where he was employed for 23 years.
MR. MICHNO joined the Company in April 1992 and since then has served
as its Secretary and General Counsel. He has been engaged in the practice of
law since 1983. Immediately prior to joining the Company and since 1986, he was
12
an associate at the New York firm of Chadbourne & Parke. From 1988 to 1991 he
served as a resident outside counsel to Fortune Brands, Inc. (formerly known as
American Brands, Inc.), a consumer products company.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (for purposes of
this analysis, the "Committee") is responsible for reviewing and approving
annually corporate goals relative to the compensation of the Company's Chief
Executive Officer ("CEO"), evaluating the performance of the CEO against those
goals and determining the CEO's compensation based on that evaluation. In
addition, the Committee also reviews and approves the structure and levels of
compensation for the Company's other executive officers and senior management;
reviews and approves significant compensation programs generally; and reviews
and administers the Company's 1996 Stock Incentive Plan which, as amended and
restated, was approved by the shareholders in 2004. Throughout this proxy
statement, the individuals who served as the Company's CEO or Chief Financial
Officer during fiscal 2007, as well as the other individuals included in the
Summary Compensation Table on page 20, are referred to as the "named executive
officers".
COMPENSATION PHILOSOPHY AND OBJECTIVES
The compensation philosophy of the Company, as reflected in its
compensation programs in effect during fiscal year 2007, is to attract, retain,
motivate and appropriately reward a group of highly qualified individuals who
are expected to contribute to the Company's continued success. The Committee
believes that the most effective executive compensation programs are those
designed to reward the achievement of specific annual and long-term strategic
goals set by the Company. These programs closely link executives' interests
with those of the Company's shareholders by rewarding performance meeting or
exceeding the established goals, with the ultimate objective of enhancing
shareholder value.
SETTING EXECUTIVE COMPENSATION
Based on the foregoing objectives, the Committee has structured the
Company's incentive-based annual cash compensation and incentive-based
long-term equity compensation to motivate the named executive officers and the
Company's other management level employees to achieve the business goals set by
the Company and to appropriately reward those executives and managers for
achieving such goals. To assist it in evaluating the competitiveness of the
Company's executive compensation programs and in setting compensation for
fiscal 2007, the Committee engaged Frederic W. Cook & Co., Inc. ("FW Cook"), a
nationally recognized executive compensation consulting firm, to conduct a
review of the Company's compensation programs for the CEO and the other named
executive officers and to analyze the Company's long-term equity incentive
plans generally. FW Cook did not receive professional fees from the Company in
fiscal 2007 other than in connection with advising the Committee on executive
compensation matters.
FW Cook compared base salary levels, annual cash bonuses and long-term
incentive awards paid to the CEO and the other named executive officers in
fiscal 2005 and 2006 to data available from a peer group of publicly-traded
consumer products companies of similar size in terms of revenue and market
capitalization (collectively, the "COMPENSATION PEER GROUP"). The Compensation
Peer Group is periodically reviewed and updated by the Committee and consists
of companies against which the Committee believes the Company competes for
talent. The companies currently comprising the Compensation Peer Group are:
o Finlay Enterprises o Kenneth Cole o Steven Madden
o Fossil o K-Swiss o Tandy Brands
o Guess? o Oakley Accessories
o Hartmax o Perry Ellis
Recognizing that the Company competes with these and many other,
larger companies for top executive-level talent, the Committee sets
compensation for the CEO, the other named executive officers and the Company's
executive management team generally no lower than the 50th percentile of
compensation paid to similarly situated executives of the companies comprising
the Compensation Peer Group. Variations to this objective may occur as dictated
13
by Company performance, the experience level and performance of the individual
and market factors. For example, for certain positions that are particularly
important for the Company's ability to achieve its strategic goals and for
which the competition for experienced, highly successful executives is
especially acute, the Committee targets compensation as high as the 75th
percentile.
In accordance with the Company's compensation philosophy, a
significant percentage of total compensation is allocated to incentives. There
is no pre-established policy or target for the allocation between either cash
and non-cash or short-term and long-term incentive compensation. Rather, the
Committee reviews all available information including that provided by FW Cook
and other third party data gathered by the Company's Human Resources department
to determine the appropriate level and mix of incentive compensation.
The Committee makes all compensation decisions in respect of the
compensation awarded to the CEO. The CEO annually reviews the performance of
the Chief Operating Officer ("COO") who in turn annually reviews the
performance of each other named executive officer (with the exception of the
Chairman of the Board). The CEO and COO present their conclusions and
recommendations based on these reviews, including with respect to salary
adjustments and annual award amounts, to the Committee. The Committee considers
these recommendations with respect to the compensation of the other named
executive officers and other senior executives and, subject to any applicable
plan limitations, can exercise its discretion in modifying any recommended
adjustments or awards to executives. The Committee also reviews total
compensation earned by and awarded to such individual for the prior three
years.
FISCAL 2007 EXECUTIVE COMPENSATION COMPONENTS
For the fiscal year ended January 31, 2007, the principal components of
compensation for the named executive officers were:
o base salary;
o performance-based annual cash compensation;
o long-term equity incentive compensation;
o retirement and other post-employment benefits; and
o perquisites and other benefits
BASE SALARY
The Company provides named executive officers and other employees with
base salary to compensate them for services rendered during the fiscal year.
Base salaries for named executive officers are determined by the Committee for
each individual in light of the Committee's assessment of the responsibilities
relative to the position under consideration, as well as each individual's
background, training, experience and by reference to the competitive
marketplace for comparable talent. Annual increases in base salary levels, if
warranted, are reviewed with reference to the individual's performance, the
performance of the Company as a whole and the prevailing rate of increase in
base salary levels generally in the competitive marketplace with respect to
similar executive positions. During its review of base salaries for executives,
the Committee primarily considers:
o market data provided by FW Cook and obtained from other third
party sources;
o internal review of the executive's compensation, both
individually and relative to other executive officers; and
o individual performance of the executive.
At its meeting on March 27, 2007, the Committee approved a
recommendation by management not to increase the base salaries of the CEO, COO
or the Chairman for fiscal 2008, and to increase by 4.0% and 9.1%,
respectively, the base salary levels for Mr. Michno and Mr. Karpovich.
14
PERFORMANCE-BASED ANNUAL CASH COMPENSATION
The Company has two plans under which it provides its named executive
officers, other executives and key management level employees annual
performance-based opportunities for cash bonuses: the Movado Group, Inc.
Executive Performance Plan (the "EPP") in which only the named executive
officers participate (with the exception of the Chairman, who does not
participate in any cash incentive plan), and the Annual Incentive Compensation
Plan, in which the remaining bonus-eligible employees (except the named
executive officers) participate. Both plans are designed to tie a significant
portion of participants' annual cash compensation to the Company's annual
financial performance.
Under the EPP and consistent with the requirements of Section 162(m)
of the Internal Revenue Code of 1986, as amended ("Section 162(m)"), within 90
days after the beginning of each fiscal year the Committee establishes target
and maximum cash incentive levels for the named executive officers that are
expressed as a percentage of their respective base salaries. At the same time
it sets cash incentive targets, the Committee also establishes an earnings per
share objective that must be met before any cash incentive payments can be made
under the EPP to any of the named executive officers.
For fiscal 2007, the Committee set the target cash incentive payments
for each of the CEO and COO at 75% of their respective base salaries and set
the target payments for Mr. Karpovich and for Mr. Michno at 50% and 30% of
their respective base salaries. In addition, the Committee established the
maximum cash incentives payable under the EPP to any of the named executive
officers at 150% of their target cash incentive amounts. The EPP provides that
total cash incentives payable thereunder to all the named executive officers in
any year may not exceed $5 million. Please see the "Grants of Plan-Based
Awards" table for the threshold, target and maximum cash incentive awards
payable to each of the named executive officers in respect of fiscal 2007.
No cash incentives are paid to any of the named executive officers
under the EPP unless the threshold earnings per share objective for the year,
as determined by the Committee in or before each April, is achieved. If the
Company achieves the earnings per share goal set by the Committee under the
EPP, the Committee then assesses the Company's overall financial performance
and the named executive officers' individual performance in exercising its
discretion to determine the cash incentive actually paid to any of them under
the EPP, which may not, in any event, exceed the maximum set at the beginning
of the year.
To assess corporate performance for the fiscal year, the Committee
considers the extent to which the Company met the criteria for funding the
bonus pool under the Annual Incentive Compensation Plan and the other criteria
for measuring corporate performance that are established as financial targets
under the Annual Incentive Compensation Plan as part of the annual budgeting
process and approved by the Committee at the beginning of each fiscal year.
In fiscal 2007, the Annual Incentive Compensation Plan provided for
100% funding of the bonus pool if the Company achieved specified earnings per
share ("EPS") and return on capital employed ("ROCE") goals for the year. These
two funding criteria, weighted 75% for EPS and 25% for ROCE, were aligned with
the Company's financial objectives for the fiscal year and were set at levels
that the Committee believed were reachable if strong results were achieved. If
the EPS goal and the ROCE goal are both met, the bonus pool is 100% funded. If
either goal is exceeded, bonus pool funding is increased up to a maximum of
150% of target funding, as illustrated in the following table.
GOAL
ACHIEVED (%) POOL FUNDING (%)
------------ ----------------
125 150
110 120
105 110
100 100
Unless the applicable funding goal is met, the Annual Incentive Compensation
Plan provides that any funding of the bonus pool based on that goal is entirely
within the discretion of the Committee.
If the bonus pool is funded, the Committee also considers the extent
to which the other corporate objectives under the Annual Incentive Compensation
Plan have been met in determining final cash incentive amounts, if any, to pay
to each named executive officer under the EPP. The Committee has the discretion
to decrease or eliminate, but not to increase, the maximum cash incentive
payable to each named executive officer under the EPP. In fiscal 2007, the
15
Committee approved the following corporate performance objectives under the
Annual Incentive Compensation Plan.
o Net sales;
o Operating expenses;
o Gross margin (%);
o Net income;
o Operating cash flow; and
o Inventory and accounts receivable.
The Committee approved these measures and the level at which each was
set to ensure an appropriate focus on growth and profitability consistent with
the Company's strategic plan. Each measure was set at a level reflecting
significant improvement over the corresponding financial results for the prior
year and required the successful execution of a number of initiatives to
increase efficiency, reduce costs and continue to grow sales in the Company's
brands and business units. The degree of improvement varied by individual
financial target. Certain targets were set at levels from 11% to 14 % above the
prior year's results. The performance target for inventory and accounts
receivable was set at a level flat with the prior year's achievement.
In fiscal 2007 the Company exceeded the earnings per share objective
under the EPP and met both the EPS and ROCE goals for bonus pool funding under
the Annual Incentive Compensation Plan. Therefore the bonus pool was funded at
100% of target. In addition, the Company met or exceeded substantially all of
the other financial metrics under the Annual Incentive Compensation Plan for
measuring corporate performance for the year. The named executive officers
substantially achieved their individual performance objectives. Therefore the
Committee approved the following bonus payments which are also shown in column
(g) of the Summary Compensation Table on page 20.
----------------------------------------------------------------------
TARGET AS ACTUAL BONUS % OF AMOUNT
% OF BASE AS % OF BASE TARGET EARNED ($)
NAME SALARY SALARY
----------------------------------------------------------------------
Efraim Grinberg 75 71.25 95 675,000
----------------------------------------------------------------------
Richard Cote 75 71.25 95 410,000
----------------------------------------------------------------------
Eugene Karpovich 50 47.50 95 131,000
----------------------------------------------------------------------
Timothy Michno 30 30.00 100 90,000
----------------------------------------------------------------------
In March 2007, the Committee approved the earnings per share objective
and the cash incentive targets under the EPP, and the EPS and ROCE goals for
bonus pool funding and the other performance criteria under the Annual
Incentive Compensation Plan for fiscal 2008. The Committee retained the same
75%/25% weighting of the EPS and ROCE goals and substantially the same
additional measures of corporate performance because it believes that those
objectives and the relative significance given to each of them are the most
effective way to focus the executive officers and key management of the Company
to achieve specific financial results linked most closely with increasing
shareholder value. The target levels at which the corporate performance goals
were set for fiscal 2008 again reflect significant improvement in both growth
and profitability, with certain targets representing an improvement of from
approximately 7.0 % to 13.5 % compared to actual performance for fiscal 2007.
LONG-TERM EQUITY INCENTIVE COMPENSATION
STOCK INCENTIVE PLAN
Stock ownership is a key element of the Company's compensation
program. Under the Company's 1996 Stock Incentive Plan, which was amended,
restated and approved by the shareholders in 2004 (the "SIP"), the Committee
generally makes long term equity grants to executive officers and senior and
mid-level management employees at its regularly scheduled meeting each March.
Beginning in fiscal 2008, the Committee has determined to make all such grants
at its first regular meeting held approximately 30 days after the release of
the Company's fourth quarter and year-end earnings.
Under the SIP, the Committee may grant participants shares of the
Company's Common Stock, restricted stock, share units, stock options, stock
appreciation rights, performance units and/or performance bonuses. In granting
16
these awards, the Committee may establish any conditions or restrictions it
deems appropriate. Most grants under the SIP were in the form of stock options
until March 2003. At that time, the Committee decided to utilize primarily
stock awards for most grants and to use stock options primarily for grants to
certain newly hired and/or newly promoted employees and to the CEO and the COO.
The Committee believes that for the CEO and the COO stock options are an
effective means to closely tie individual performance directly to that of the
Company's stock price since the options (unlike stock awards which will have
some value upon vesting even if the price of the Company's stock has declined
since the date of grant) will have no value unless the Company's share price
has increased from the date of grant. Option grants to the CEO and COO last
year are reflected on the Summary Compensation table on page 20 and the Grants
of Plan Based Awards table on page 22. Newly hired and promoted employees who
receive options are granted them by the Committee either prospectively,
effective on the specified date of their hire or the date of their promotion,
or after their hiring or promotion on the next regularly scheduled meeting date
of the Committee.
The Committee grants stock awards and stock options based on market
data obtained by FW Cook and the Company's Human Resources department. Award
levels vary among participants and generally reflect the position held by the
grantee, contributions made by the person in the prior fiscal year as well as
expectations of future contributions. For certain newly hired employees, the
Committee may also take into account any equity compensation that the
individual is forfeiting from his or her former position in determining equity
grant amounts. Both option and stock grants are designed to retain executive
officers and management level employees by generally vesting either entirely on
the third anniversary of the grant date (in the case of stock awards) or
incrementally over three years from the grant date (in the case of options).
Options and stock awards also encourage recipients to focus on enhancing
shareholder value over the long term by directly aligning the grantee's
financial interests with the interests of the Company's shareholders. All
options granted under the SIP have an exercise price equal to or greater than
the fair market value of the Company's common stock on the grant date.
Last year, as part of its engagement by the Committee to review and
make recommendations with respect to the Company's long-term incentive grant
practices, FW Cook supported management's recommendation to replace the use of
time-vesting restricted stock for the Company's senior executives with
performance awards. Accordingly, the Committee limited the grant of annual
stock awards at its regular March 2006 meeting to the Company's middle
management and did not make any equity grants to executives at that time. After
consideration of the issue and the recommendations made by FW Cook and review
of a proposed long-term incentive plan, the Committee adopted in May 2006 a
long-term equity incentive program under the SIP.
LONG-TERM INCENTIVE PLAN
Under the Executive Long-Term Incentive Plan (the "LTIP") adopted by
the Committee on May 31, 2006, key employees of the Company (currently
approximately 40 executives worldwide) were granted "Performance Share Units"
by the Committee for the three-year performance period ending January 31, 2009.
Each Performance Share Unit represents the right to receive a share of Common
Stock if the predetermined performance goal is satisfied in the applicable
three-year period ("Award Period"). Under the LTIP, Performance Share Units
vest based upon the Company's achievement of a specified operating margin
(calculated as operating profit / net sales) for the final fiscal year in the
Award Period (the "Performance Goal"). The Committee established operating
margin as the performance goal to support the Company's strategic plan of
increasing profitability. At its meeting on April 30, 2007, the Committee
granted Performance Share Units to the named executive officers and certain
other key employees and established the Performance Goal for the Award Period
ending January 31, 2010.
The objectives of the LTIP are to:
o Link compensation directly to the achievement of specific
corporate goals, namely improvement of operating margin;
o Utilize best competitive practices in executive compensation
to attract, retain and motivate key employees; and
o Enhance the connection between the Company's operating
performance, creation of shareholder value and long-term
executive compensation.
17
The actual number of shares of Common Stock earned by a participant is
based on the Company's actual performance at the end of the Award Period
relative to the Performance Goal and can range from 0% to 150% of the target
award. No participant receives any Performance Share Units unless at least
89.5% of the Performance Goal (threshold performance) is achieved. Depending on
the extent to which the Performance Goal is achieved, up to 50% of the shares
of Common Stock equal to the target Award will be distributed within 75 days
after the completion of the Award Period and the remainder of the earned shares
will be distributed on the second anniversary of the completion of the Award
Period. Participants must be employed at the completion of the Award Period to
receive any shares. The amount deferred to the second anniversary is subject to
forfeiture only in the event of the participant's voluntary resignation or
termination of the participant's employment for cause. A pro-rata payout will
be made for "retirement" (as defined in the LTIP), permanent disability (as
determined by the Committee) or death occurring during the Award Period based
on actual performance at the end of the Award Period.
For further discussion of dividend rights and vesting of the
Performance Share Units in the event of a change in control, see the discussion
following the Grants of Plan-Based Awards table below. LTIP grants to the named
executive officers in fiscal 2007 are reflected in the Summary Compensation
table on page 20 and the Grants of Plan-Based Awards table on page 22.
RETIREMENT AND POST EMPLOYMENT BENEFITS
401(K) PLAN
All employees in the United States including the named executive
officers are eligible to participate in the Company's Employee Savings and
Investment Plan ("401(k) Plan"). In addition, the named executive officers as
well as certain other executives selected by the Committee are eligible to
participate in the Deferred Compensation Plan for Executives.
DEFERRED COMPENSATION PLAN
The Company's Deferred Compensation Plan for Executives ("DCP") was
originally adopted effective June 1, 1995, and was approved by the Company's
shareholders on June 14, 1996. It was amended most recently at the annual
shareholders meeting in 2004 to extend its term through June 17, 2014. The plan
is designed to offer retirement benefits to the named executive officers,
senior management and key employees, consistent with overall market practices
to attract and retain the talent needed in the Company. Under the DCP,
participants may defer up to 10% of their base salary annually and the Company
will credit to the account of each participant a matching contribution in an
amount equal to one hundred percent of the salary deferral up to a maximum
match equal to either 10% (for "group I" participants) or 5% (for "group II"
participants) of the participant's base salary. Twenty percent of the Company's
matching contribution is in the form of rights to Common Stock vesting ratably
in annual installments over five years. Participants may direct the investment
of amounts in their accounts (other than rights to Common Stock) among
investment funds that are made available to them under the plan. Those funds
and their returns for calendar year 2006 are shown on page 25 under
NONQUALIFIED DEFERRED COMPENSATION.
Further information regarding the participation by the named executive
officers in the DCP is discussed in further detail under the heading
NONQUALIFIED DEFERRED COMPENSATION on page 24.
SEVERANCE AGREEMENTS
The Company has severance agreements with Mr. Cote, Mr. Karpovich and
Mr. Michno. Under the agreement with Mr. Cote, he will continue to be paid his
then current base salary for 24 months after the termination of his employment
following a change in control unless termination was by the Company for cause
(or as a result of his death or disability) or was voluntary by Mr. Cote
without good reason. Under their agreements, Mr. Karpovich and Mr. Michno will
each continue to be paid their then current base salary plus costs for COBRA
coverage for up to 12 months if the Company terminates their employment without
cause. For a detailed description of the agreements between the Company and
each of Mr. Cote, Mr. Karpovich and Mr. Michno, please refer to the discussion
under the heading "Severance Agreements" on page 26.
PERQUISITES AND OTHER BENEFITS
As part of providing a competitive executive compensation program, the
Company provides the CEO, COO and Chairman of the Board with certain
perquisites that the Company and the Committee believe are reasonable and
consistent with its overall compensation program. The Committee reviews
annually the levels of perquisites provided to these named executive officers.
18
The Company reimburses the CEO and COO for certain automobile related
expenses incurred by them in connection with their commuting to the Company's
offices and pays directly for similar commuting expenses for the Chairman of
the Board, including the cost of a driver on an as-needed basis.
The Company has purchased life insurance policies insuring both the
CEO and the Chairman of the Board and pays the premiums for that insurance.
Under this arrangement, the named insureds are entitled to the cash surrender
value in respect of these life insurance policies and their respective
beneficiaries are entitled to the applicable death benefits without, in either
event, reimbursement to the Company.
Under a Death and Disability Benefit Plan agreement with Mr. G.
Grinberg, dated September 23, 1994, in the event of Mr. G. Grinberg's death or
disability while employed by the Company, the Company will pay to his spouse,
if she is then living, an annual benefit equal, as of fiscal 2007, to $380,474
(increased October 1 each year by an amount equal to two percent of the benefit
that would have been payable in the prior year). Benefits are payable for the
lesser of 10 years or the life of Mr. G. Grinberg's spouse, and are payable
only from the general assets of the Company. Neither Mr. G. Grinberg nor his
spouse may assign the agreement or any of the benefits payable thereunder and
none of the benefits are payable to the estates or any of the heirs of Mr. G.
Grinberg or his spouse. The agreement provides that it automatically terminates
in the event of the termination of Mr. G. Grinberg's employment with the
Company for any reason other than his death or disability. For purposes of the
agreement "disability" means the inability of Mr. G. Grinberg to perform the
duties pertaining to his job because of accident, sickness or other illness as
determined by a majority of disinterested directors.
Attributed costs of the perquisites described above for the named
executive officers for the fiscal year ended January 31, 2007, are included in
column (i) of the Summary Compensation Table on page 20.
TAX AND ACCOUNTING IMPLICATIONS
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
As part of its role, the Committee reviews and considers the
deductibility of executive compensation under Section 162(m) of the Internal
Revenue Code, which provides that the Company may not deduct compensation of
more than $1,000,000 that is paid to certain individuals. The Company believes
that compensation paid under the management incentive plans are generally fully
deductible for federal income tax purposes. However, in certain situations, the
Committee may approve compensation that may not meet these requirements in
order to ensure competitive levels of total compensation for its executive
officers.
NONQUALIFIED DEFERRED COMPENSATION
On October 22, 2004, the American Jobs Creation Act of 2004 was signed
into law, changing the tax rules applicable to nonqualified deferred
compensation arrangements. While the final regulations have not become
effective yet, the Company believes it is operating in good faith compliance
with the statutory provisions which were effective January 1, 2005.
ACCOUNTING FOR STOCK-BASED COMPENSATION
Beginning on January 1, 2006, the Company began accounting for
stock-based payments in accordance with the requirements of FASB Statement
123(R). The Committee considers the expense implications of the equity
compensation awards in determining the aggregate annual award levels.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company has reviewed and discussed
the Compensation Discussion and Analysis required by Item 402(b) of Regulation
S-K with management and, based on such review and discussions, the Compensation
Committee recommended to the Board that the Compensation Discussion and
Analysis be included in this Proxy Statement and the Company's Annual Report on
Form 10-K for the year ended January 31, 2007.
THE COMPENSATION COMMITTEE
Alan H. Howard, Chairman Donald Oresman
Margaret Hayes Adame Leonard L. Silverstein
19
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth information about
the compensation paid in respect of fiscal 2007 by the Company to the CEO, the
Chief Financial Officer (the "CFO") and the three other most highly compensated
executive officers of the Company (the "named executive officers").
----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN
PENSION VALUE
NON-EQUITY AND NONQUALI-
INCENTIVE FIED DEFERRED
SALARY STOCK OPTION PLAN COMPENSATION ALL OTHER
NAME AND ($)(1) BONUS AWARDS AWARDS COMPENSATION EARNINGS COMPENSATION TOTAL
PRINCIPAL POSITION YEAR ($) ($)(2) ($)(2) ($)(3) ($) ($) ($)
----------------------------------------------------------------------------------------------------------------------------------
Efraim Grinberg, 2007 941,346 - 97,013 342,989 675,000 - 148,588 (4) 2,204,936
President and Chief
Executive Officer
Eugene J. Karpovich 2007 270,674 - 19,530 131,000 - 22,500 (5) 509,558
Senior Vice President, 65,854
Chief Financial Officer
Gedalio Grinberg , 2007 650,000 - 0 0 0 - 492,625 (6) 1,142,625
Chairman of the Board
Richard Cote, Executive 2007 566,346 - 231,893 178,750 410,000 - 70,501 (7) 1,457,490
Vice President, Chief
Operating Officer
Timothy F. Michno 2007 295,672 - 23,435 26,040 90,000 - 23,150 (8) 458,297
Secretary and General
Counsel
----------------------------------------------------------------------------------------------------------------------------------
(1) Salary amounts include amounts deferred at the election of the executive
under the Company's DCP and under the 401(k) plan. Amounts deferred to the
DCP are also shown in the Nonqualified Deferred Compensation table.
(2) Amounts shown do not reflect compensation actually received by the named
executive officers. Instead the dollar value of these awards is the
compensation cost recognized for financial statement reporting purposes
for the fiscal year ended January 31, 2007 in accordance with the
provisions of FAS 123(R), but excluding any estimate of future forfeitures
and reflecting the effect of any actual forfeitures. These compensation
costs reflect equity awards granted in and prior to fiscal year 2007. See
Notes 1 and 13 of the consolidated financial statements in the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 2007
regarding the assumptions underlying the valuation of equity awards.
(3) Annual incentive payments for the named executive officers under the EPP
based on the Company's performance in fiscal 2007. See "Compensation
Discussion and Analysis - Performance-Based Annual Cash Compensation" on
page 15.
(4) Includes a taxable car allowance and automobile insurance reimbursement of
$22,129 and reimbursement of automobile fuel expenses. Includes $30,454
for premiums paid in respect of certain life insurance policies purchased
for Mr. E. Grinberg by the Company. Under his arrangement with the
Company, Mr. E. Grinberg is entitled to the cash surrender value in
respect of certain of these life insurance policies and his beneficiaries
are entitled to the applicable benefit without, in either event,
reimbursement to the Company of any premiums paid by the Company under
such policies. Also includes a $3,400 matching contribution made by the
Company for the account of Mr. E. Grinberg under the Company's 401(k) Plan
and a matching cash contribution of $72,000 and a non-cash contribution of
723 phantom stock units valued at $18,000 (based on the closing prices of
the Company's Common Stock on the grant dates) for fiscal 2007 to his
account under the DCP. These matching contributions under the DCP are
included in the Nonqualified Deferred Compensation table, below.
20
(5) Includes a taxable car allowance of $6,600. Also includes a $3,400
matching contribution made by the Company for the account of Mr. Karpovich
under the Company's 401(k) Plan and a matching cash contribution of
$10,000 and a non-cash contribution of 100.57 phantom stock units valued
at $2,458 (based on the closing prices of the Company's Common Stock on
the grant dates) for fiscal 2007 to his account under the DCP. These
matching contributions under the DCP are included in the Nonqualified
Deferred Compensation table, below.
(6) Includes $73,510 in payments made by the Company for the lease, garaging,
insurance and maintenance of an automobile and charges for a driver. Of
that amount, $63,933 was taxable to Mr. G. Grinberg in calendar year 2006.
Also includes $200,715 in premiums paid in respect of certain life
insurance policies and one travel accident policy purchased for Mr. G.
Grinberg by the Company. Under his arrangement with the Company, Mr. G.
Grinberg is entitled to the cash surrender value under these policies and
his beneficiary is entitled to the applicable benefit without, in either
event, reimbursement to the Company of any premiums paid by the Company
under such policies. Also includes a $3,400 matching contribution made by
the Company for the account of Mr. G. Grinberg under the Company's 401(k)
Plan and a matching cash contribution of $52,000 and a non-cash
contribution of 521.190 phantom stock units valued at $13,000 (based on
the closing prices of the Company's Common Stock on the grant dates) made
by the Company for fiscal 2007 to Mr. G. Grinberg's account pursuant to
the DCP. These matching contributions under the DCP are included in the
Nonqualified Deferred Compensation table, below. Also includes $150,000
accrued by the Company in respect of a Death and Disability Benefit Plan
agreement with Mr. G. Grinberg. See "Certain Relationships and Related
Transactions" below.
(7) Includes a taxable car allowance and automobile insurance reimbursement of
$12,787 and reimbursement of automobile fuel expenses. Also includes a
$3,400 matching contribution made by the Company for the account of Mr.
Cote under the Company's 401(k) Plan and a matching cash contribution of
$42,000 and a non-cash contribution of 422.33 phantom stock units valued
at $10,500 (based on the closing prices of the Company's Common Stock on
the grant dates) for fiscal 2007 to his account under the DCP. These
matching contributions under the DCP are included in the Nonqualified
Deferred Compensation table, below.
(8) Includes a taxable car allowance of $6,000. Also includes a $3,400
matching contribution made by the Company for the account of Mr. Michno
under the Company's 401(k) Plan and a matching cash contribution of
$11,000 and a non-cash contribution of 107.68 phantom stock units valued
at $2750 (based on the closing prices of the Company's Common Stock on the
grant dates) for fiscal 2007 to his account under the DCP. These matching
contributions under the DCP are included in the Nonqualified Deferred
Compensation table, below.
21
GRANTS OF PLAN-BASED AWARDS IN FISCAL 2007
---------------------- ---------------------------------------------------------------------------------------------------------
ALL OTHER
OPTION EXERCISE GRANT
AWARDS: OR BASE CLOSING DATE FAIR
NUMBER OF PRICE MARKET VALUE OF
SECURITIES OF PRICE ON STOCK AND
ESTIMATED POSSIBLE PAYOUTS ESTIMATE FUTURE UNDERLYING OPTION DATE OF OPTION
GRANT UNDER NON-EQUITY PAYOUTS UNDER EQUITY OPTIONS AWARDS GRANT AWARDS
NAME DATE INCENTIVE PLAN AWARDS INCENTIVE PLAN AWARDS ( #) ($/SH) ($/SH) ($)
(3)
---------- ----------- -------------------------------- ------------------------------ -------- --------- --------- ---------
(a) (b) (c) (d) (e) (f) (g) ( h) (j) (k) (l)
---------- ----------- -------------------------------- ------------------------------ -------- --------- --------- ---------
THRESHOLD TARGET MAXIMUM THRESHOLD TARGET MAXIMUM
($)(1) ($)(1) ($)(1) ($)(2) ($)(2) ($)(2)
---------- ----------- -------------------------------- ------------------------------ -------- --------- --------- ---------
Efraim 0 712,500 1,068,750
Grinberg 05/31/06 15,000 30,000 45,000 545,700
05/31/06 50,000 18.41 18.69 326,500
Eugene 0 137,500 206,250
Karpovich 05/31/06 3,000 6,000 9,000 109,140
Gedalio - - - - - - - - - - -
Grinberg(4)
Richard 0 431,250 646,875
Cote 05/31/06 11,250 22,500 33,750 409,275
05/31/06 30,000 18.41 18.69 195,900
Timothy 0 90,000 120,000
Michno 05/31/06 1,000 2,000 3,000 36,380
--------------------------------------------------------------------------------------------------------------------------------
(1) Includes annual cash incentive opportunities for the named executive
officers in fiscal 2007 under the Company's EPP. See "Compensation
Discussion and Analysis - Fiscal 2007 Executive Compensation
Components - Performance Based Annual Cash Compensation" on page 15.
(2) Reflects Performance Share Units, each of which represents the right
to receive a share of Common Stock if the predetermined performance
goal under the Company's LTIP is met in fiscal 2009. The LTIP is
discussed on page 17 under "Compensation Discussion and Analysis -
Fiscal 2007 Executive Compensation Components - Long-Term Equity
Incentive Compensation". See also the discussion following this table
for more information regarding the Performance Share Units
(3) All stock options granted under the Company's SIP have an exercise
price equal to or greater than the fair market value of the Company's
Common Stock on the grant date. Prior to December 5, 2006, the SIP
defined "fair market value" on any date as the mean between the
highest and lowest sale prices of the Company's Common Stock as
reported on the NYSE on the last business day immediately prior to
that date. The Board of Directors amended this definition on December
5, 2006 so that "fair market value" now means the closing price of the
Company's Common Stock on the grant date. The options granted to Mr.
E. Grinberg and to Mr. Cote in fiscal 2006 vest in equal increments
over three years beginning on the first anniversary of the grant date
and expire on the tenth anniversary of the grant date.
(4) Mr. G. Grinberg was not a participant in any of the Company's
incentive plans in fiscal 2007.
Each Performance Share Unit, reflected in columns (f), (g) and (h) in
the Grants of Plan-Based Awards table above, is credited with dividend
equivalents equal to the dividends paid on one share of Common Stock during the
three-year Award Period and the subsequent two-year mandatory deferral period.
Dividend equivalents are in the form of phantom stock units, with each unit
representing one share of Common Stock. The number of shares of Common Stock
underlying the phantom stock units will be distributed at the same time as the
distribution of earned shares in respect of the Performance Share Units.
Upon the occurrence of a "Change in Control" (as defined in the SIP),
all or a portion of the Performance Share Units awarded will be converted on a
one-for-one basis to time-based phantom stock units without pro-ration based on
the chart below, vesting at the end of the Award Period. Upon vesting, one
share of Common Stock will be distributed for each phantom stock unit not
22
previously forfeited. The number of Performance Share Units that are converted
into time-based phantom stock units depends on the time during an Award Period
when the Change in Control occurs as follows:
TIME OF THE CHANGE IN CONTROL SHARES CONVERTED BASED ON:
----------------------------- --------------------------
Months 1 through 12 Threshold performance (89.5%)
Months 13 through 24 Target performance (100%)
Months 25 through 36 Actual performance to date
If a participant's employment is terminated without cause within 24 months
after the Change in Control, any unvested phantom stock units will become
immediately vested and payable. Any Performance Share Units not converted will
be forfeited.
OUTSTANDING EQUITY AWARDS AT FISCAL 2007 YEAR-END
------------------------------------------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
------------------------------------------------------------------------------------------------------------------------------------
EQUITY
INCENTIVE
PLAN
EQUITY AWARDS:
EQUITY INCENTIVE MARKET OR
INCENTIVE PLAN PAYOUT
PLAN AWARDS: VALUE OF
AWARDS: MARKET NUMBER OF UNEARNED
NUMBER OF NUMBER OF NUMBER OF VALUE OF UNEARNED SHARES,
NUMBER OF SECURITIES SECURITIES SHARES OR SHARES OR SHARES, UNITS UNITS OR
SECURITIES UNDERLYING UNDERLYING UNITS OF UNITS OF OR OTHER OTHER
UNDERLYING UNEXERCISED UNEXERCISED OPTION STOCK THAT STOCK RIGHTS THAT RIGHTS
UNEXERCISED OPTIONS (#) UNEARNED EXERCISE OPTION HAVE NOT THAT HAVE NOT THAT HAVE
OPTIONS (#) UNEXERCISABLE OPTIONS PRICE EXPIRATION VESTED HAVE NOT VESTED NOT VESTED
NAME EXERCISABLE (1) (#) ($) DATE (2)(#) VESTED($) (3)(#) ($)
------------------------------------------------------------------------------------------------------------------------------------
Efraim 100,000 - 14.87 5/19/08 - - 15,000 430,500
Grinberg 100,000 12.00 3/30/09
303,898 15.02 3/16/11
94,962 15.57 3/16/11
177,542 18.48 3/16/11
33,334 66,666 18.34 3/22/15
50,000 18.41 5/31/16
------------------------------------------------------------------------------------------------------------------------------------
Eugene 14,000 - 9.73 3/11/12 7,500 215,250 3,000 86,100
Karpovich 15,000 12.50 3/11/12
1,312 11.92 3/16/11
1,974 14.36 3/16/11
3,233 18.48 3/16/11
706 18.48 3/16/11
15,000 14.05 8/27/14
------------------------------------------------------------------------------------------------------------------------------------
Richard 400,000 - 10.50 1/06/10 30,000 861,000 11,250 322,875
Cote 60,000 4.25 5/17/10
173,882 33,333 15.57 3/16/11
16,667 30,000 18.34 3/22/15
18.41 5/31/16
------------------------------------------------------------------------------------------------------------------------------------
Gedalio - - - - - - - - -
Grinberg
------------------------------------------------------------------------------------------------------------------------------------
Timothy 0 20,000 - 14.05 8/27/14 2,780 79,786 1,000 28,700
Michno
------------------------------------------------------------------------------------------------------------------------------------
(1) Mr. E. Grinberg's remaining unvested option to purchase 66,666 shares of
Common Stock will become exercisable with respect to 33,333 shares on
March 22, 2007 and 33,333 shares on March 22, 2008. His unvested option to
purchase 50,000 shares of Common Stock becomes exercisable with respect to
16,667 shares on May 31, 2007; 16,667 shares on May 31, 2008, and 16,666
shares on May 31, 2009. Mr. Karpovich's unvested option to purchase 15,000
shares of Common Stock becomes exercisable with respect to 5,000 shares on
each August 27 in 2007, 2008 and 2009. Mr. Cote's remaining unvested
option to purchase 33,333 shares of Common Stock becomes exercisable with
respect to 16,667 shares on March 22, 2007 and 16,666 on March 22, 2008.
Mr. Michno's unvested option to purchase 20,000 shares of Common Stock
23
becomes exercisable with respect to 6,667 shares on August 27, 2007, 6,667
shares on August 27, 2008 and 6,666 shares on August 27 2009.
(2) Represents unvested stock awards granted under the Company's Stock
Incentive Plan which is discussed on page 16 under "Compensation
Discussion and Analysis - Fiscal 2007 Executive Compensation Components -
Long-Term Equity Incentive Compensation". The awards vest on April 8, 2007
and April 8, 2008 as follows:
NAME APRIL 8, 2007 APRIL 8, 2008
---- ------------- -------------
Mr. Karpovich 4,000 shares 3,500 shares
Mr. Cote 20,000 shares 10,000 shares
Mr. Michno 1,580 shares 1,200 shares
(3) Reflects Performance Share Units, each of which represents the right to
receive a share of Common Stock if the predetermined performance goal
under the Company's Long-Term Incentive Plan is met in fiscal 2009. The
Long-Term Incentive Plan is discussed on page 17 under "Compensation
Discussion and Analysis - Fiscal 2007 Executive Compensation Components -
Long-Term Equity Incentive Compensation". If the performance goal is met,
shares of Common Stock equal to one-half of the number of Performance
Share Units earned will be issued within 75 days after January 31, 2009;
and shares of Common Stock equal to the remaining number of Performance
Share Units earned will be issued on January 31, 2011 unless, before that
date, the award recipient has voluntarily resigned or his employment has
been terminated for cause.
OPTION EXERCISES AND STOCK VESTED DURING FISCAL 2007
------------------------------------------------------------------------------ --------------------------------
OPTION AWARDS STOCK AWARDS
------------------------------------------------------------------------------ --------------------------------
(a) (b) (c) (d) (e)
------------------------------------------------------------------------------ --------------------------------
NUMBER OF SHARES VALUE REALIZED NUMBER OF SHARES VALUE REALIZED
ACQUIRED ON EXERCISE ON EXERCISE ACQUIRED ON VESTING ON VESTING
NAME (#) ($)(1) (#) ($)(2)
------------------------------------------------------------------------------ --------------------------------
Efraim Grinberg 75,000 1,246,500 0 0
------------------------------------------------------------------------------ --------------------------------
Eugene Karpovich 14,000 177,000 7,000 137,690
------------------------------------------------------------------------------ --------------------------------
Gedalio Grinberg 0 0 0 0
------------------------------------------------------------------------------ --------------------------------
Richard Cote 0 0 0 0
------------------------------------------------------------------------------ --------------------------------
Timothy Michno 0 0 2,400 47,208
------------------------------------------------------------------------------ --------------------------------
(1) For Mr. E. Grinberg this amount represents the difference between the
market price of the Common Stock on the date of option exercise and the
exercise price of the option. For Mr. Karpovich who sold the 14,000 shares
immediately upon acquiring them this amount represents the difference
between the sale price of the shares and the exercise price of the
options.
(2) Values represent the mathematical product resulting from multiplying the
number of shares vesting by the market price of the shares on the vesting
date.
NONQUALIFIED DEFERRED COMPENSATION
Under the Company's DCP, participants may defer up to 10% of their
base salary annually and the Company will credit to the account of each
participant a matching contribution in an amount equal to the salary deferral,
up to a maximum match of either 10% or 5% of the participant's base salary
(depending on whether the participant is included in group I or group II). Of
the named executive officers, Mr. E. Grinberg, Mr. G. Grinberg and Mr. Cote are
in group I and Mr. Karpovich and Mr. Michno are in group II. Deferral elections
must be made no later than December 31 of the year before the year in which the
24
salary will be deferred. Twenty percent of the Company's matching contribution
is made in the form of rights to the Company's Common Stock representing the
number of shares (including fractional shares) of Common Stock that the
matching contribution could purchase based upon the New York Stock Exchange's
closing price of the stock on the date when the matching contribution is made.
Matching contributions are made on the last business day of each calendar
quarter. Participants may direct the investment of amounts in their accounts
(other than rights to Common Stock) among investment funds that are made
available to them under the plan. The table below shows the funds available
under the DCP and their annual rate of return for calendar 2006 as reported by
the plan administrator.
---------------------------------------------------------------
NAME OF FUND RATE OF RETURN
(%)
---------------------------------------------------------------
Fidelity Advisor Treasury 4.37
---------------------------------------------------------------
Evergreen Adjustable Rate A 4.45
---------------------------------------------------------------
Pioneer High Yield A 10.60
---------------------------------------------------------------
Oppenheimer Balanced N 9.82
---------------------------------------------------------------
Fidelity Advisor Equity Income T 16.83
---------------------------------------------------------------
Oppenheimer Main Street N 14.56
---------------------------------------------------------------
American Funds Growth Fund of America R3 10.62
---------------------------------------------------------------
Fidelity Advisor Value Strategies T 15.62
---------------------------------------------------------------
Baron Small Cap 11.83
---------------------------------------------------------------
First Eagle Overseas A 22.29
---------------------------------------------------------------
Oppenheimer Global Opportunities 10.65
---------------------------------------------------------------
A participant's salary deferrals and any earnings on those deferrals
are immediately vested. Company matching contributions and any discretionary
contributions vest at the rate of 20% per year as long as the participant
remains employed by the Company. A participant who attains the age of 65 or
whose employment terminates due to death or disability automatically vests in
all amounts in such participant's account. A participant whose employment
terminates for other reasons forfeits unvested amounts. If there is a "change
in control" (as defined in the DCP) of the Company, all amounts attributable to
matching contributions (but not discretionary Company contributions) become
fully vested on the date of such change in control.
Distributions from the DCP commence in the January following
termination of the participant's employment, unless such termination was less
than six months before January 1, in which case distributions commence the next
following January 1. Benefits, including shares of Company Common Stock, are
paid in 10 annual installments unless (i) the Company determines to pay the
benefits in a lump sum or (ii) a participant who is a former employee provides
services to a competitor within two years following termination of employment,
in which case all remaining benefits will be paid to the participant in a lump
sum. Rights to Common Stock are distributed by the Company issuing to the
participant or to his or her beneficiary the number of shares of Common Stock
equal to the number of full shares then credited in such participant's account.
Any credited dividend amounts and any fractional shares are paid in cash.
The following table shows the deferrals made by the named executive
officers and the contributions made by the Company under the DCP in fiscal
2007.
NONQUALIFIED DEFERRED COMPENSATION IN FISCAL 2007
----------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
----------------------------------------------------------------------------------------------------------------
EXECUTIVE REGISTRANT AGGREGATE AGGREGATE AGGREGATE
CONTRIBUTIONS CONTRIBUTIONS EARNINGS IN WITHDRAWALS/ BALANCE AT
NAME IN LAST FY ($)(1) IN LAST FY ($)(2) LAST FY ($) DISTRIBUTIONS ($) LAST FY ($)
----------------------------------------------------------------------------------------------------------------
Efraim Grinberg 90,000 90,000 364,009 0 2,680,922
----------------------------------------------------------------------------------------------------------------
Eugene Karpovich 12,500 12,500 26,073 0 227,274
----------------------------------------------------------------------------------------------------------------
Gedalio Grinberg 65,000 65,000 487,893 0 3,250,975
----------------------------------------------------------------------------------------------------------------
Richard Cote 52,500 52,500 332,735 0 2,645,937
----------------------------------------------------------------------------------------------------------------
Timothy Michno 13,750 13,750 45,521 0 347,602
----------------------------------------------------------------------------------------------------------------
25
(1) The amounts reported in this column are also reported as compensation to
the named executive officer in column (i) of the Summary Compensation
table on page 20.
(2) The Company's matching contribution to each named executive officer
consisted of cash and phantom stock units, each representing the right to
one share of Common Stock, in the amounts and values as follows. Share
values are based on the closing prices of the Common Stock on the grant
dates.
CASH NON-CASH VALUE OF
CONTRIBUTION CONTRIBUTION SHARE UNITS
NAME ($) (# SHARE UNITS) ($)
---- ------------- --------------- -----------
Efraim Grinberg 72,000 723.00 18,000
Eugene Karpovich 10,000 100.57 2,500
Gedalio Grinberg 52,000 521.19 13,000
Richard Cote 42,000 422.33 10,500
Timothy Michno 11,000 107.68 2,750
POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
None of the named executive officers have employment agreements. The
Company has entered into severance agreements with Mr. Cote, Mr. Karpovich and
Mr. Michno which are described below. In addition, the DCP and the SIP provide
for accelerated vesting, respectively, of Company matching contributions and of
equity compensation (stock options and stock awards) in the event of a change
in control. The SIP also provides for accelerated vesting of equity awards in
the event of a participant's death, disability or retirement.
SEVERANCE AGREEMENTS
Mr. Cote's agreement provides for the continuation of his then
applicable annual base salary, paid bi-weekly for 24 months following the
termination of his employment within two years after a change in control.
(defined as the acquisition by a person or group of more than 50% of the
combined aggregate voting power represented by the Company's then outstanding
shares; or certain mergers and asset sales; or a liquidation or dissolution),
except that nothing is due if his termination is because of his death or
disability, or is by the Company for cause or is by Mr. Cote other than because
of an "adverse change" in the conditions of his employment. Mr. Cote's agreement
defines such an adverse change as any of the following by the Company:
o altering his duties or responsibilities so that his position
becomes one of substantially less importance, dignity or
scope;
o reducing his base salary;
o discontinuing his participation in any compensation or
benefit plan in which (and on at least as favorable a basis
as) he was participating before the change in control or
barring him from participating in any other plan that may be
adopted in which other key employees are entitled to
participate;
o requiring that he be based more than 50 miles from the
principal office location where he worked before the change
in control.
"Cause" is defined as gross negligence or willful misconduct that has resulted
in or is likely to result in material economic damage to the Company. The
agreement also obligates Mr. Cote to keep confidential and to not use any
confidential information pertaining to the Company obtained by him in the
course of his employment.
If there had been a change in control of the Company on January 31,
2007 and Mr. Cote's employment had been terminated immediately thereafter by
the Company without cause then he would have been entitled to the continuation
of his then current annual base salary of $575,000 paid in bi-weekly
installments through January 31, 2009.
Mr. Karpovich and Mr. Michno each have a severance agreement with the
Company providing that, although each is employed at will, he will be entitled
to receive severance payments in the form of salary continuation upon
termination of his employment by the Company without cause. For this purpose,
"cause" is defined as conviction of a felony, the knowing violation of a
material Company policy, the failure to perform any material obligation owed to
the Company or the gross negligence in the performance of duties or breach of
fiduciary duty as determined by the CEO. The severance payments will be paid
for 12 months after termination, in bi-weekly installments. The employee will
also be entitled to post-termination medical benefit coverage continuation
26
under COBRA for the 12 month severance period or, if shorter, until becoming
eligible for Medicare or accepting employment with another employer which
provides medical benefits. The agreements also contain a non-competition clause
which proscribes employment in the watch or jewelry industry for six months
after termination of employment with the Company, a twelve month
non-solicitation clause and a confidentiality provision. If the Company had
terminated the employment of Mr. Karpovich and Mr, Michno without cause on
January 31, 2007 then they would have been entitled to receive, respectively,
$275,000 and $300,000 in severance paid in bi-weekly installments through
January 31, 2008. Each of them also would have been entitled to maximum COBRA
benefits valued at $14,282, representing total maximum COBRA payments the
Company would be obligated to make for each of them through January 31, 2008.
CHANGE IN CONTROL
In the event of a change in control of the Company, all unvested
matching contributions under the DCP and all unvested options and time-vesting
stock awards then outstanding under the SIP immediately vest. Both plans have
similar definitions for what is considered a "change in control" including:
o (under both plans) dissolution or liquidation of the Company;
o (under both plans) sale of substantially all of the Company's
assets;
o a change in the composition of the Board of Directors such
that: (under the SIP) individuals who were on the Board of
Directors on April o 8, 2004 (or their successors who were
approved by at least two-thirds of the directors then on the
Board) cease to constitute a majority; or (under the DCP)
individuals who were on the Board on July 1, 2002 (or their
successors who were approved by at least two-thirds of the
directors then on the Board) cease to constitute at least
two-thirds of the members of the Board;
o a merger, consolidation or reorganization unless:
o shareholders in the Company immediately before any such
transaction control at least 50% (under the SIP) or 70%
(under the DCP) of the total voting power in the
resulting corporation immediately after any such
transaction; and
o no person (meaning an individual, entity or group acting
in concert) acquires (under the SIP) at least 20% of the
voting power or (under the DCP) at least 30% of the
voting power in the resulting corporation (unless, under
the DCP, such person had 20% or more of the voting power
before the transaction); and
o a majority (under the SIP) or at least two-thirds (under
the DCP) of the members of the Board after the
transaction were members of the Board immediately before
the transaction; and
o the acquisition by any person (with certain exceptions) of
20% or more of the combined voting power of the Company's
outstanding voting securities (or, under the DCP, the
commencement of a tender offer for such securities).
Under the Company's Long-Term Incentive Plan ,which was adopted by the
Compensation Committee under the SIP and is discussed at page 17 under
"Compensation Discussion and Analysis - Fiscal 2007 Executive Compensation
Components - Long-Term Equity Incentive Compensation" and at page 22 following
the Grants of Plan-Based Awards table, Performance Share Units do not become
immediately vested upon a change in control but, instead, convert one for one
into time-vesting phantom stock units (without pro-ration) which vest at the
end of the applicable Award Period. Upon vesting, one share of Common Stock is
distributed for each phantom stock unit not previously forfeited.
The following table shows the value of accelerated vesting of stock
options and stock awards under the SIP and of Company contributions under the
DCP that would have been provided to the named executive officers in the event
that a change in control of the Company had occurred immediately after the
close of business on January 31, 2007.
27
----------------------------------------------------------------------------
VESTING UPON CHANGE IN CONTROL
WITH OR WITHOUT TERMINATION OF EMPLOYMENT
----------------------------------------------------------------------------
EARLY VESTING OF EARLY VESTING
DEFERRED OF EARLY VESTING
COMPENSATION STOCK OPTIONS OF STOCK
NAME PLAN ($) ($)(1) AWARDS ($)(2)
----------------------------------------------------------------------------
Efraim Grinberg 226,759 1,205,160 0
----------------------------------------------------------------------------
Eugene Karpovich 30,722 219,750 215,250
----------------------------------------------------------------------------
Gedalio Grinberg 0 0 0
----------------------------------------------------------------------------
Richard Cote 131,645 654,030 861,000
----------------------------------------------------------------------------
Timothy Michno 31,571 293,000 79,786
----------------------------------------------------------------------------
(1) The value of early vesting of stock options was determined as the
amount by which $28.70/share (which was the closing price of the
Company's Common Stock as reported on the NYSE on January 31, 2007)
exceeded the exercise price of such options.
(2) The value of early vesting of stock awards was determined based on a
value of $28.70/share (which was the closing price of the Company's
Common Stock as reported on the NYSE on January 31, 2007).
DEATH OR DISABILITY; RETIREMENT
If any of the named executive officers had died, become permanently
disabled or retired on January 31, 2007, their unvested stock options and stock
awards would have immediately vested on that date. Under the SIP, retirement as
a trigger to immediate vesting may occur either when an employee reaches the
age of 65 or upon reaching the age of 55 provided, in that case, the employee
has been employed continuously by the Company for at least 10 years and the
Compensation Committee approves. As part of its approval, the Compensation
Committee may impose any conditions as it deems to be appropriate which are not
inconsistent with the express terms of the SIP, including covenants dealing
with non-competition, non-disparagement, non-solicitation and confidentiality.
The values of such early vesting are shown in the table above under the columns
"Early Vesting of Stock Options" and "Early Vesting of Stock Awards".
Under the Long Term Incentive Plan, in the event of a participant's
death, permanent disability or retirement during any Award Period, his or her
award is only determined at the end of that Award Period based on actual
performance and will be prorated based on the time employed during the Award
Period. After the prorated award is determined, it will be paid out within 75
days after the end of the Award Period. The definition of retirement under the
Long Term Incentive Plan is the same as the definition under the SIP.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has a Death and Disability Benefit Plan Agreement with Mr.
G. Grinberg, dated September 23, 1994. Under that agreement, in the event of
Mr. G. Grinberg's death or disability while employed by the Company, the
Company will pay to his spouse, if she is then living, an annual benefit equal,
as of fiscal 2007, to $380,474 (increased October 1 each year by an amount
equal to two percent of the benefit that would have been payable in the prior
year). Benefits are payable for the lesser of 10 years or the life of Mr. G.
Grinberg's spouse, and are payable only from the general assets of the Company.
Neither Mr. G. Grinberg nor his spouse may assign the agreement or any of the
benefits payable thereunder and none of the benefits are payable to the estates
or any of the heirs of Mr. G. Grinberg or his spouse. The agreement also
provides that it automatically terminates in the event of the termination of
Mr. G. Grinberg's employment with the Company for any reason other than his
death or disability and further provides that it is not to be considered a
contract of employment. For purposes of the agreement, "disability" means the
28
inability of Mr. G. Grinberg to perform the duties pertaining to his job
because of accident, sickness or other illness as determined by a majority of
disinterested directors.
In fiscal 1996, the Company entered into an agreement with a trust
which, at that time, owned an insurance policy issued on the lives of Mr. G.
Grinberg and his spouse. The insurance policy provides for a death benefit of
$27 million. The trustees of the trust are the three children of Mr. G.
Grinberg and his spouse, namely, Efraim Grinberg, Alexander Grinberg and Miriam
Phalen. Under the agreement, the trust assigned the insurance policy to the
Company as collateral to secure repayment by the trust of interest-free loans
made by the Company to the trust in amounts equal to the premiums on the
insurance policy (approximately $740,000 per annum). The agreement required the
trust to repay the loans from the death benefit proceeds of the policy. At
January 31, 2003 the Company had loaned the trust $5,186,860 under this
agreement. On April 4, 2003, the agreement was amended and restated to transfer
the policy (which at that time had a cash surrender value of $4,595,591) from
the trust to the Company in partial repayment of the then outstanding loan
balance which, as of that date, was reduced to $591,269. If the policy is
terminated prior to the death of the insureds, the trust must repay the Company
the amount of the accumulated premiums which the Company would also recover
from the death benefit in the event it is paid.
Mr. Alex Grinberg, a beneficial owner of more than five percent of the
Company's Class A Common Stock and the brother of Efraim Grinberg, is the
President of the Company's Concord brand in the United States and earned
$320,809 in salary and annual cash incentive compensation in fiscal 2007. In
addition, as a participant in the Company's Long Term Incentive Plan, Mr. Alex
Grinberg received an award of 2,000 Performance Share Units last year, subject
to the same terms and conditions applicable to similar awards made to the other
participants in that plan.
Mr. David Phalen is the spouse of Miriam Phalen, a beneficial owner of
more than five percent of the Company's Class A Common Stock, and the
brother-in-law of Efraim Grinberg. Mr. Phalen is President of Movado Company
Stores and earned $496,058 in salary and annual bonus in fiscal 2007. In
addition, as a participant in the Company's Long Term Incentive Plan, Mr.
Phalen received an award of 6,000 Performance Share Units last year, subject to
the same terms and conditions applicable to similar awards made to the other
participants in that plan.
The Board of Directors has adopted a code of business conduct and
ethics which provides for the review, approval and ratification of transactions
with the Company (or any of its subsidiaries) in which any officer or employee
of the Company or any of its subsidiaries or any director has any direct or
indirect material interest. Such transactions involving any executive officer
of the Company or any member of the Board of Directors are referred to the
Nominating/Corporate Governance Committee. Other transactions are referred to
the Company's General Counsel. In each case, the standard applied under the
Company's code is whether the transaction, when considered in the context of
all the relevant facts and circumstances, including the person's position with
the Company, the nature of the transaction and the amount involved, could
reasonably appear to present a conflict of interest.
See "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" for
information regarding certain business relationships between the Company and
Mr. Silverstein's law firm.
29
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth information with respect to shares of
Common Stock that may be issued under the Company's equity compensation plans
as of January 31, 2007.
Number of Securities to be Weighted-Average Number of securities
Issued Upon Exercise Of Exercise Price of Remaining Available For
Outstanding Options, Warrants Outstanding Options, Future Issuance Under Equity
and Rights Warrants and Rights Compensation Plans (Excluding
PLAN CATEGORY securities Reflected in Column (a))
------------- ----------------------------- -------------------- -----------------------------------
(a) (b) (c)
Equity compensation plans
approved by security
holders (1) ............... 3,405,228 (2) $ 13.91 (3) 1,938,112 (4)
Equity compensation plans
not approved by
security holders (5)....... 82,176 Not applicable 0 (5)
--------- -------------- ---------
Total ........................ 3,487,404 $ 13.91 1,938,112
--------------------
(1) Includes the SIP and the DCP.
(2) Includes 3,317,285 shares of common stock issuable upon the exercise of
options and the vesting of stock awards outstanding under SIP and 87,943
phantom stock units issuable as 87,943 shares of Common Stock under the
DCP.
(3) Weighted average exercise price of options outstanding under the SIP.
(4) Number of shares available for issuance under the SIP as options and as
other share based awards. The DCP does not provide for a limit on the
number of phantom stock units available for issuance.
(5) Includes the Stock Bonus Plan described in Note 14 to the Company's
consolidated financial statements included in the Company's Annual Report
on Form 10-K for the fiscal year ended January 31, 2007. The Company has
determined not to make any further grants under this plan.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding anything to the contrary set forth in any of the
Company's previous or future filings under the Securities Act of 1933 or the
Exchange Act, the following report of the Audit Committee shall not be deemed
to be incorporated by reference into any such filing and shall not otherwise be
deemed filed under such acts.
The Audit Committee has reviewed and discussed with the Company's
management and with PricewaterhouseCoopers LLP management's assessment of the
effectiveness of the Company's internal control over financial reporting, the
evaluation by PricewaterhouseCoopers LLP of the Company's internal control over
financial reporting and the audited financial statements of the Company for the
fiscal year ended January 31, 2007. The Audit Committee has discussed with
PricewaterhouseCoopers LLP the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended (Communications with Audit Committees) by
the Auditing Standards Board of the American Institute of Certified Public
Accountants.
The Audit Committee has also received the written disclosures and the
letter from PricewaterhouseCoopers LLP required by the Independence Standards
Board Standard No. 1 (Independence Discussion with Audit Committees) and the
Audit Committee has discussed the independence of PricewaterhouseCoopers LLP
with that firm.
Based on the Audit Committee's review and discussions noted above, the
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 2007 for filing with the SEC.
30
The Committee and the Board also have recommended, subject to
shareholder approval, the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for fiscal 2008.
Members of the Audit Committee:
Donald Oresman (chairman)
Alan H. Howard
Richard Isserman
FISCAL 2007 AND 2006 AUDIT FIRM FEE SUMMARY
The following table presents the aggregate fees billed for
professional services rendered by the Company's independent auditors,
PricewaterhouseCoopers LLP, in the "audit fees", "audit - related fees", "tax
fees", and "all other fees" categories, in each case as such terms are defined
by the SEC, for the fiscal years ended January 31, 2007 and 2006.
------------------------------------------------------------------------------------------
YEAR AUDIT ($) AUDIT RELATED ($) TAX ($) ALL OTHERS ($) TOTALS ($)
------------------------------------------------------------------------------------------
2006 1,312,200 61,000 51,050 2,320 1,426,570
------------------------------------------------------------------------------------------
2007 1,345,371 111,435 28,818 4,674 1,490,298
------------------------------------------------------------------------------------------
Audit fees include fees for audit or review services in accordance
with generally accepted auditing standards and fees for services that generally
only the Company's auditors provide, such as statutory audits and review of
documents filed with the SEC.
Audit related fees include fees for assurance and related services
that are traditionally performed by the Company's auditors. The services
include audits of employee benefit plans and consultation in connection with
financial and accounting standards.
Tax fees include fees for services that are performed by professional
tax staff other than in connection with the audit. The services include tax
compliance, tax advice and tax planning services.
All other fees are subscription fees for the use of the independent
auditors' database of authoritative literature and accounting and financial
guidance.
The Audit Committee reviews and approves all audit and non-audit
services to be rendered in every instance by the Company's independent auditors
before such auditors are engaged to render any such services. Therefore the
Audit Committee has not adopted a pre-approval policy with respect to such
services.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
The Audit Committee has appointed PricewaterhouseCoopers LLP to be the
Company's independent accountants for the year ending January 31, 2008, subject
to ratification of such appointment by the Company's shareholders.
PricewaterhouseCoopers LLP has served as the Company's independent accountants
since fiscal year 1977 and is considered by the Audit Committee and the Board
to be well qualified. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the Annual Meeting. Such representatives will have
the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions. THE BOARD RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR SUCH RATIFICATION. PROXIES SOLICITED BY THE BOARD WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers, directors, and persons who own more than 10% of a registered class of
the Company's equity securities (the "10% Stockholders") to file reports of
ownership and changes of ownership with the SEC. As a practical matter, the
Company assists its directors, officers and certain 10% Stockholders by
completing and filing Section 16 reports on their behalf. The Company's
executive officers, directors and 10% Stockholders timely complied with all
such filing requirements applicable to them with respect to their beneficial
ownership of the Company's securities, except that one Form 4 ("Statement of
31
Changes in Beneficial Ownership") reporting a share distribution made by
Grinberg Partners L.P., which should have been filed on or before March 10,
2006, was inadvertently filed late on March 22, 2006 by each of the limited
partners in Grinberg Partners L.P., namely: Efraim Grinberg, Gedalio Grinberg,
Alexander Grinberg, Grinberg Group Partners and Miriam Phalen. In addition, Ms.
Phalen inadvertently omitted to timely file one Form 5 reporting a year-end
gift to each of two trusts for her children for which she is the trustee. The
Form 5, which was due on March 17, 2006 was filed on June 23, 2006.
OTHER MATTERS
The Board of Directors, at the time of the preparation of this Proxy
Statement, knows of no business to come before the Annual Meeting other than
that referred to herein. If any other business should come before the Annual
Meeting, the persons named in the enclosed proxy will have discretionary
authority to vote all proxies received and not theretofore revoked in
accordance with their best judgment.
Upon the written request of any record holder or beneficial owner of
Common Stock or Class A Common Stock entitled to vote at the Annual Meeting,
the Company, without charge, will provide a copy of its Annual Report on Form
10-K for the fiscal year ended January 31, 2007, as filed with the SEC.
Requests should be directed to Suzanne Michalek, Vice President Corporate
Communications, Movado Group, Inc., 650 From Road, Paramus, New Jersey 07652.
May 24, 2007
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE ANNUAL MEETING AND WISH THEIR STOCK TO BE VOTED ARE URGED
TO DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
32
APPENDIX A
AUDIT COMMITTEE CHARTER
MEMBERSHIP
1. The Audit Committee (the "Committee") of the Board of Directors shall
consist of at least three directors who shall be appointed annually by
the Board of Directors. New members of the Committee will be proposed by
the Company's Nominating and Corporate Governance Committee for approval
and appointment by the Board. Each member of the Committee shall, in the
Board's judgment, satisfy the financial literacy and independence
requirements under the Sarbanes-Oxley Act (the "Act") and applicable
rules of the New York Stock Exchange ("NYSE") and the Securities and
Exchange Commission ("SEC"). At least one member of the Committee must be
an "audit committee financial expert" and have "accounting or related
financial management expertise" under the requirements of the Act and the
applicable rules of the NYSE and SEC. Unless a Chair is elected by the
full Board of Directors, the Committee shall designate one by majority
vote of the full Committee membership. No member of the Committee may
serve on the audit committees of more than two other public companies,
unless the Board of Directors determines that such simultaneous service
will not impair the ability of such member to effectively serve on the
Committee.
2. No member of the Committee shall receive any compensation from the
Company other than compensation for service as a director of the Company,
compensation for serving on the Committee and compensation under a
retirement plan for prior services with the Company (if such compensation
is not contingent on continued service with the Company).
PURPOSE
1. The Committee will assist the Board in its general oversight regarding:
a. The quality and integrity of the Company's financial statements;
b. The independent auditor's qualifications and independence;
c. The performance of the Company's internal audit function and independent
auditors; and
d. The Company's compliance with legal and regulatory requirements.
2. The Committee will prepare the Audit Committee Report required by the
rules of the SEC to be included in the Company's annual proxy statement.
MEETINGS AND PROCEDURES
1. The Committee shall meet at least four times each year and at such other
times as it deems necessary to carry out its responsibilities. The Chair
of the Committee or any two Committee meeting members may call a
Committee meeting whenever deemed necessary.
2. In the performance of its duties and responsibilities, it is not the
Committee's duty to plan or conduct audits, to determine that the
Company's financial statements are complete, accurate and in
A-1
Audit Committee Charter - As Amended April 8, 2004
accordance with generally accepted accounting principles or to assure
compliance with laws. These are the responsibilities of management and
the internal audit department. The independent auditor is responsible for
the audit of the Company's financial statements in accordance with the
standards of the profession.
RESPONSIBILITIES
The Committee shall:
1. Have the sole authority to appoint, retain, compensate, oversee,
evaluate and, where appropriate, replace the independent auditor.
2. Annually review and approve the proposed scope of each fiscal
year's internal and outside audit at the beginning of each new
fiscal year.
3. Inform each registered public accounting firm performing audit,
review or attest work for the Company that such firm shall report
directly to the Committee.
4. Directly oversee the work of any registered public accounting firm
employed by the Company, including the resolution of any
disagreement between management and the auditor regarding financial
reporting, for the purpose of preparing or issuing an audit opinion
or related work.
5. Review and approve in advance any audit and permitted non-audit
services and fees to be provided by the Company's independent
auditor. The Committee has the sole authority to make these
approvals.
6. At, or shortly after the end of each fiscal year, review with the
independent auditor, the internal auditor and Company management,
the audited financial statements and related opinion and costs of
the audit of that year.
7. Annually obtain and review a report by the independent auditor
describing: the audit firm's internal quality-control procedures;
any material issues raised by the most recent internal
quality-control review, or peer review of the firm, or by any
inquiry or investigation by governmental or professional
authorities within the preceding five years regarding one or more
independent audits carried out by the firm, and any steps taken to
deal with any such issues; and, to assess the auditor's
independence, all relationships between the independent auditor and
the Company.
8. Review with the chief executive officer and chief financial officer
and independent auditors, periodically, the following:
(a) The Company's administrative and operational controls and
internal controls over financial reporting and evaluate
whether the Company is operating in accordance with its
prescribed policies, procedures and code of conduct.
(b) All significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's
ability to record, process, summarize, and report financial
data, including any material weakness in internal controls
identified by the Company's independent auditors and internal
auditors.
A-2
Audit Committee Charter - As Amended April 8, 2004
(c) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Company's internal controls.
(d) Any significant changes in internal controls or in other
factors that could significantly affect internal controls,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
9. Provide any recommendations, certifications and reports that may be
required by the NYSE or the SEC including the report of the
Committee that must be included in the Company's annual proxy
statement.
10. Review and discuss with management and the independent auditor the
Company's interim financial results to be included in the Company's
quarterly reports to be filed with the SEC including a review and
discussion with management of the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations", and a discussion with the independent
auditor of the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees),
as it may be modified or supplemented.
11. Review with management and the independent auditor the financial
statements to be included in the Company's Annual Report on Form
10-K, including a review and discussion with management of the
Company's disclosures under "Management's Discussion and Analysis
of Financial Condition and Results of Operations", as well as the
auditor's judgment about the quality, not just acceptability, of
the Company's accounting principles as applied to its financial
reporting. The review shall also include a discussion of the
reasonableness of judgments and estimates made in the preparation
of the financial statements that may be viewed as critical, as well
as the clarity of financial statement disclosure. In addition, the
Committee shall discuss the results of the annual audit and any
other matters required to be communicated to the Committee by the
independent auditor under generally accepted auditing standards,
including the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Committees)), as it
may be modified or supplemented. Based on its review and
discussions, the Committee shall recommend to the Board of
Directors whether the financial statements should be included in
the Annual Report on Form 10-K.
12. Discuss with management the type of presentation and type of
information to be included in the Company's earnings press releases
and the financial information and earnings guidance provided to
analysts and rating agencies.
13. Have the authority to engage independent counsel and other advisers
as it determines necessary to carry out its duties. The Company
shall provide for appropriate funding, as determined by the
Committee, in its capacity as a committee of the Board of
Directors, for payment of compensation to any advisers employed by
the Committee and to the independent auditor employed by the
Company for the purpose of rendering or issuing an audit report or
performing other audit, review or attest services and ordinary
administrative expenses of the audit committee that are necessary
or appropriate in carrying out its duties.
14. Ensure the rotation of the audit partners of the Company's
independent auditor as defined in and as required by the Act and
the rules of the SEC.
15. Discuss with management and the independent auditor the Company's
policies with respect to risk assessment and risk management.
A-3
Audit Committee Charter - As Amended April 8, 2004
16. Meet separately, periodically, with management, with internal
auditors and with the independent auditor.
17. In consultation with the independent auditor, management and the
internal auditors, review the integrity of the Company's financial
reporting process.
18. Review periodically major issues regarding accounting principles
and financial statement presentations, including any significant
changes in the Company's selection or application of accounting
principles, and major issues as to the adequacy of the Company's
internal controls and any special audit steps adopted in light of
material control deficiencies; analyses prepared by management
and/or the independent auditor setting forth significant financial
reporting issues and judgments made in connection with the
preparation of the financial statements, including analyses of the
effects of alternative GAAP methods on the financial statements;
and the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements of the
Company.
19. Review with the independent auditor any audit problems or other
difficulties encountered by the auditor in the course of the audit
process, including any restrictions on the scope of the independent
auditor's activities or on access to requested information, and any
significant disagreements with management and management's
responses to such matters. In addition, the Committee shall timely
receive (and, in any event, prior to the filing of any audited
financial statements with the SEC) a report from the independent
auditor on (a) all critical accounting policies and practices; (b)
all alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management, including ramifications of the use of such
alternative disclosures and treatments, and the treatment preferred
by the registered public accounting firm; and (c) other material
written communications between the registered public accounting
firm and Company management, such as any management letter or
schedule of unadjusted differences.
20. Regularly review the responsibilities, budget and staffing of the
internal audit function of the Company, including the proposed
audit programs for the coming year and review summaries of findings
from completed internal audits and a progress report on the
proposed audit plan with explanations for any deviations from the
original plan.
21. Ensure that the chief executive officer, chief financial officer,
chief accounting officer, controller, or any other person serving
in an equivalent position was not, within one year prior to the
initiation of the audit, an employee of the independent auditor who
participated in any capacity in the Company's audit.
22. Report regularly to the Board of Directors. Such report to the
Board of Directors may take the form of an oral report by the Chair
or any other member of the Committee designated by the Committee to
make such report.
23. Meet with the Company's General Counsel, as appropriate, to review
legal and regulatory matters, including any matters that may have a
material impact on the financial statements of the Company.
24. Maintain procedures, as set forth in Annex A hereto, for the
receipt, retention and treatment of complaints received by the
Company regarding financial statement disclosures, accounting,
internal accounting controls or auditing matters, and the
A-4
Audit Committee Charter - As Amended April 8, 2004
confidential, anonymous submission by employees of the Company of
concerns regarding financial statement disclosures, accounting,
internal accounting controls or auditing matters.
25. Perform a review and evaluation, at least annually, of the
performance of the Committee. In addition, the Committee shall
review and reassess, at least annually, the adequacy of this
Charter and recommend to the Board of Directors any improvements to
this Charter that the Committee considers necessary or valuable.
The Committee shall conduct such evaluations and reviews in such
manner as it deems appropriate.
26. Perform such additional activities, and consider such other
matters, within the scope of its responsibilities, as the Committee
or the Board deems necessary or appropriate. In carrying out its
responsibilities, the policies and procedures of the Committee
should remain flexible in order in order that it can best react to
changing conditions and assure the directors and shareholders that
the corporate accounting and reporting practices of the Company are
in accordance with all requirements and are of the highest quality.
A-5
Audit Committee Charter - As Amended April 8, 2004
ANNEX A
PROCEDURES FOR THE SUBMISSION OF COMPLAINTS OR CONCERNS
REGARDING FINANCIAL STATEMENT DISCLOSURES, ACCOUNTING,
INTERNAL ACCOUNTING CONTROLS OR AUDITING MATTERS
1. The Company shall forward to the Audit Committee of the Board of
Directors any complaints that it has received regarding financial statement
disclosures, accounting, internal accounting controls or auditing matters.
2. Any employee of the Company may submit, on a confidential, anonymous
basis if the employee so desires, any concerns regarding financial statement
disclosures, accounting, internal accounting controls or auditing matters by
setting forth such concerns in writing and forwarding them in a sealed envelope
to the Chair of the Audit Committee, in care of the Company's General Counsel
at: Movado Group, Inc., Legal Department, 650 From Road, Paramus, NJ 07652,
such envelope to be labeled with a legend such as: "To be opened by the Audit
Committee only". If any employee would like to discuss any matter with the
Audit Committee, the employee should indicate this in the submission and
include a telephone number at which he or she might be contacted if the Audit
Committee deems it appropriate. Any such envelopes received by the Company's
General Counsel shall be forwarded promptly to the Chair of the Audit
Committee.
3. At each of its meetings, including special meeting called by the Chair
of the Audit Committee following the receipt of any information pursuant to
this Annex, the Audit Committee shall review and consider any such complaints
or concerns that it has received and take any action that it deems appropriate
in order to respond thereto.
4. The Audit Committee shall retain any such complaints or concerns for a
period of no less than 7 years.
5. Neither the Company nor any of its employees may discharge, demote,
suspend, threaten, harass or in any manner discriminate against any employee
who: (a) lawfully provides information regarding any conduct encouraged to be
reported under this policy which the employee reasonably believes has occurred
to a regulatory or law enforcement agency, to any member or committee of
Congress, or to any person with supervisory authority over the employee or the
authority to investigate such misconduct; (b) participates in or otherwise
assists with a proceeding relating to conduct encouraged to be reported this
policy; or (c) submits a complaint pursuant to this policy regarding any
conduct encouraged to be reported this policy which the employee reasonably
believes has occurred, even if after investigation the Company determines that
there has not been a violation; provided, however, that the foregoing shall in
no event be construed as in any way limiting the Company from discharging,
demoting, suspending or taking any other disciplinary measures in respect of an
employee for legitimate reasons . Disciplinary action will be taken against any
supervisor who retaliates, directly or indirectly, or encourages other to do
so, against an employee who takes any of the above-mentioned actions.
6. This Annex A shall appear on the Company's website as part of this
Charter.
A-6
Audit Committee Charter - As Amended April 8, 2004
MOVADO GROUP, INC. NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD JUNE 14, 2007
Dear Shareholder:
The Annual Meeting of Shareholders of Movado Group, Inc. will be held at 10:00
a.m. on Thursday, June 14, 2007, at the Company's New York office and showrooms
located at 25 West 39th Street, 15th Floor, New York, NY 10018, for the
following purposes:
1. To elect nine directors to the Board of Directors.
2. To ratify selection of independent public accountants.
Only holders of Common Stock and Class A Common Stock of Movado Group, Inc. of
record at the close of business on May 18, 2007 will be entitled to vote at the
meeting or any adjournment thereof.
To be sure that your vote is counted, we urge you to complete and sign the
proxy/voting instruction card below, detach it from this letter and return it
in the postage paid envelope enclosed in this package. The giving of such proxy
does not affect your right to vote in person if you attend the meeting. The
prompt return of your signed proxy will aid the Company in reducing the expense
of additional proxy solicitation.
BY ORDER OF THE BOARD OF DIRECTORS
May 24, 2007 TIMOTHY F. MICHNO
General Counsel and Secretary
DETACH PROXY CARD HERE
................................................................................
Please Sign, Date and [X]
Return the Proxy
Promptly Using the Votes MUST be indicated
Enclosed Envelope. (x) in Black or Blue ink.
1. Election of Directors
FOR all nominees [_] WITHHOLD AUTHORITY to vote [_] *EXCEPTIONS [_] In their discretion the proxies are
listed below for all nominees listed below authorized to vote upon such other matters
as may properly come before the meeting or
any adjournment or postponement thereof.
Nominees: Gedalio Grinberg, Efraim Grinberg, Margaret Hayes-Adame, Richard Cote,
Alan H. Howard, Richard Isserman, Nathan Leventhal, Donald Oresman and
Leonard L. Silverstein
*Exceptions ____________________________________
INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the
"Exceptions" box and write that nominee's name in the space provided.
2. To ratify and approve the FOR AGAINST ABSTAIN To change your address, please mark this box. [_]
selection by the Audit Committee [_] [_] [_]
of the Board of Directors of If you plan to attend the meeting, please
PricewaterhouseCoopers LLP as mark this box. [_]
independent public accountants
for the Company for the fiscal
year ending January 31, 2008.
-------------------------------------------------
S C A N L I N E
-------------------------------------------------
The signature on this Proxy should correspond
exactly with stockholder's name as printed to the
left. In the case of joint tenancies,
co-executors, or co-trustees, both should sign.
Persons signing as Attorney, Executor,
Administrator, Trustee or Guardian should give
their full title.
_______________________________ _______________________
Date Share Owner sign here Co-Owner sign here
................................................................................
MOVADO GROUP, INC. PROXY/VOTING INSTRUCTION CARD
_______________________________________________________________
This proxy is solicited on behalf of the Board of Directors of MOVADO GROUP,
INC. for the Annual Meeting on June 14, 2007
The undersigned appoints each of Timothy F. Michno and Tasha Cooper Coleman,
with full power of substitution, the proxies of the undersigned, to represent
the undersigned and vote all shares of Movado Group, Inc., which the
undersigned may be entitled to vote at the Annual Meeting of Shareholders to be
held on June 14, 2007, and at any adjournment or postponement thereof, as
indicated on the reverse side.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is given, this proxy
will be voted FOR proposals 1 and 2.
MOVADO GROUP, INC.
P.O. BOX 11346
NEW YORK, N.Y. 10203-0346
(Continued, and to be signed and dated on reverse side.)