-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BEcDhVCfJqKj4b8w7DX/kh/MK6vuXIii8kkSLdp9I6v0kEcGQzKpZkqY8rH+TBom 3LwcdjWpfen56D+3XOzzvA== 0000892569-97-000471.txt : 19970222 0000892569-97-000471.hdr.sgml : 19970222 ACCESSION NUMBER: 0000892569-97-000471 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970321 FILED AS OF DATE: 19970218 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUIKSILVER INC CENTRAL INDEX KEY: 0000805305 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320] IRS NUMBER: 330199426 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-15131 FILM NUMBER: 97537008 BUSINESS ADDRESS: STREET 1: 1740 MONROVIA AVE CITY: COSTA MESA STATE: CA ZIP: 92627 BUSINESS PHONE: 7146451395 MAIL ADDRESS: STREET 1: 1740 MONROVIA AVE CITY: COSTA MESA STATE: CA ZIP: 92627 DEF 14A 1 QUIKSILVER, INC. - DEFINITIVE PROXY STATEMENT 1 SCHEDULE 14A INFORMATION 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 [X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
QUIKSILVER, 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)(4) 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: --------------------------------------------------------------------- 2 QUIKSILVER, INC. 1740 MONROVIA AVENUE COSTA MESA, CALIFORNIA 92627 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 21, 1997 TO THE STOCKHOLDERS OF QUIKSILVER, INC.: Please take notice that the Annual Meeting of Stockholders of Quiksilver, Inc. (the "Company") will be held at the Newport Beach Marriott Hotel, located at 900 Newport Center Drive, Newport Beach, California on Friday, March 21, 1997, at 10:00 a.m. local time, for the following purposes: 1. To elect a Board of seven Directors for the ensuing year; and 2. To transact such other business as may properly come before the meeting or any adjournment thereof. At the Annual Meeting, the Board of Directors intends to present William M. Barnum, Jr., Charles E. Crowe, Michael H. Gray, Harry Hodge, Robert G. Kirby, Robert B. McKnight, Jr. and Tom Roach, as nominees for election to the Board of Directors. Only stockholders of record on the books of the Company at the close of business on January 28, 1997 will be entitled to notice of and to vote at the Annual Meeting or any adjournment thereof. All stockholders are cordially invited to attend the Annual Meeting in person. A majority of the outstanding shares must be represented at the meeting in order to transact business. Consequently, if you are unable to attend in person, please execute the enclosed proxy and return it in the enclosed addressed envelope. Your promptness in returning the proxy will assist in the expeditious and orderly processing of the proxies. If you return your proxy, you may nevertheless attend the meeting and vote your shares in person, if you wish. By Order of the Board of Directors, QUIKSILVER, INC. ROBERT B. McKNIGHT, JR. Chairman of the Board and Chief Executive Officer Costa Mesa, California February 14, 1997 3 QUIKSILVER, INC. 1740 MONROVIA AVENUE COSTA MESA, CALIFORNIA 92627 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 21, 1997 PROXY STATEMENT SOLICITATION OF PROXIES The accompanying proxy is solicited by the Board of Directors of Quiksilver, Inc. (the "Company") for use at the Company's Annual Meeting of Stockholders to be held at the Newport Beach Marriott Hotel, located at 900 Newport Center Drive, Newport Beach, California, on Friday, March 21, 1997, at 10:00 a.m. local time, and any and all adjournments or postponements thereof. All shares represented by each properly executed, unrevoked proxy received in time for the Annual Meeting will be voted in the manner specified therein. If the manner of voting is not specified in an executed proxy received by the Company, the proxy holders will vote for the election of the nominees for election to the Board of Directors listed in the proxy and, as to any other business which may properly come before the meeting, in accordance with their best judgment. Any stockholder has the power to revoke his or her proxy at any time before it is voted. A proxy may be revoked by delivering a written notice of revocation to the Secretary of the Company, by presenting at the meeting a later-dated proxy executed by the person who executed the prior proxy, or by attendance at the meeting and voting in person by the person who executed the prior proxy. This Proxy Statement and form of Proxy are being mailed to the Company's stockholders on or about February 14, 1997. The Bylaws of the Company provide that the holders of a majority of the shares of stock of the Company issued and outstanding and entitled to vote at the Annual Meeting, present in person or represented by proxy, shall constitute a quorum and that, except as otherwise provided by statute, the Certificate of Incorporation of the Company or the Bylaws, all other matters coming before the Annual Meeting shall be decided by the vote of the holders of a majority of the stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereat. Votes cast at the Annual Meeting will be tabulated by the persons appointed by the Company to act as inspectors of election for the Annual Meeting. The inspectors of election will treat shares of voting stock represented by a properly signed and returned proxy as present at the Annual Meeting for purposes of determining a quorum, without regard to whether the proxy is marked as casting a vote or abstaining. Likewise, the inspectors of election will treat shares of voting stock represented by "broker non-votes" (i.e., shares of voting stock held in record name by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote; (ii) the broker or nominee does not have discretionary voting power under applicable rules or the instrument under which it serves in such capacity; or (iii) the recordholder has indicated on the proxy card or has executed a proxy and otherwise notified the Company that it does not have authority to vote such shares on that matter) as present for purposes of determining a quorum. Directors will be elected by a favorable vote of a plurality of the shares of voting stock present and entitled to vote, in person or by proxy, at the Annual Meeting. Accordingly, abstentions or broker non-votes as to the election of Directors will not affect the election of the candidates receiving the plurality of votes. 4 The cost of soliciting proxies will be borne by the Company. The solicitation will be by mail. Expenses will include reimbursements paid to brokerage firms and others for their expenses incurred in forwarding solicitation material regarding the meeting to beneficial owners of the Company's Common Stock. Further solicitation of proxies may be made by telephone or oral communication with some stockholders by the Company's regular employees who will not receive additional compensation for the solicitation. The Company has no present plans to hire special employees or paid solicitors to assist in obtaining proxies, but reserves the option of doing so if it should appear that a quorum otherwise might not be obtained. OUTSTANDING SHARES AND VOTING RIGHTS Only holders of record of the 7,020,830 shares of the Company's Common Stock outstanding at the close of business on January 28, 1997 will be entitled to notice of and to vote at the meeting or any adjournment or postponement thereof. On each matter to be considered at the Annual Meeting, stockholders will be entitled to cast one vote for each share held of record on January 28, 1997. CERTAIN STOCKHOLDERS Certain information with respect to (i) each of the current Directors and nominees for election as Directors, (ii) each of the four Executive Officers listed in the compensation tables below, and all current Directors and Executive Officers as a group, including the number of shares of the Company's Common Stock beneficially owned by each of them as of December 31, 1996, is set forth below:
PERCENT OF SHARES OF OUTSTANDING COMMON STOCK COMMON STOCK NAME OF INDIVIDUAL BENEFICIALLY BENEFICIALLY OR IDENTITY OF GROUP(1) OWNED OWNED ------------------------------------------------ ------------ ------------ Mellon Bank Corporation......................... 365,000(2) 5.3% One Mellon Bank Center Pittsburgh, PA 15258 William M. Barnum, Jr. ......................... 10,000(4) (3) Charles E. Crowe................................ 73,000(5) 1.1% Michael H. Gray................................. 17,000(4) (3) Randall L. Herrel, Sr. ......................... --(6) -- Robert G. Kirby................................. 33,250(7) (3) Robert B. McKnight, Jr. ........................ 318,000(8) 4.6% Tom Roach....................................... 11,900(9) (3) Harry Hodge..................................... -- -- Steven L. Brink................................. -- -- All Executive Officers and Directors as a Group (8 persons)........................ 463,150(10) 6.6%
- --------------- (1) The address for each of the named individuals is c/o Quiksilver, Inc., 1740 Monrovia Avenue, Costa Mesa, California 92627. Unless otherwise indicated, the named persons possess sole voting and investment power with respect to the shares listed (except to the extent such authority is shared with spouses under applicable law). (2) According to the Schedule 13G filed by Mellon Bank Corporation ("MBC") with the Securities and Exchange Commission, MBC is a parent holding company which, through its direct and indirect subsidiaries Mellon Bank, N.A., Franklin Portfolio Associates Trust, Mellon Capital Management Corporation and The Dreyfus Corporation, has sole voting power with respect to all 365,000 shares, sole dispositive power with respect to 255,000 shares and share dispositive power with respect to 110,000 shares. (3) Less than 1% of the outstanding shares of Common Stock. 2 5 (4) Includes an aggregate of 9,000 shares which the Director has, or will have within 60 days after December 31, 1996, the right to acquire upon the exercise of outstanding options. (5) Includes an aggregate of 8,000 shares which the Director has, or will have within 60 days after December 31, 1996, the right to acquire upon exercise of outstanding options. (6) Mr. Herrel resigned as a Director of the Company on October 24, 1996 and as an Executive Officer on November 20, 1996. (7) Includes an aggregate of 2,000 shares owned of record by Mr. Robert Kirby's spouse and 9,000 shares which Mr. Kirby has, or will have within 60 days after December 31, 1996, the right to acquire upon exercise of outstanding options. (8) Includes an aggregate of 65,000 shares which Mr. McKnight has, or will have within 60 days after December 31, 1996, the right to acquire upon the exercise of outstanding options. (9) Includes an aggregate of 1,400 shares owned of record by Mr. Tom Roach's children and 9,000 shares which Mr. Roach has, or will have within 60 days after December 31, 1996, the right to acquire upon exercise of outstanding options. (10) Includes an aggregate of 109,000 shares which the Executive Officers and Directors as a Group have, or will have within 60 days after December 31, 1996, the right to acquire upon the exercise of outstanding options and warrants. PROPOSAL 1 ELECTION OF DIRECTORS Directors are elected at each Annual Meeting of Stockholders and hold office until the next Annual Meeting of Stockholders when their respective successors are duly elected and qualified. The Company's Bylaws authorize a Board consisting of four to eight Directors, with the number of Directors currently fixed at seven. Of the seven nominees for election to the Board of Directors, all are currently serving as Directors of the Company and, except for Mr. Hodge, were elected to their present terms of office by the stockholders at the 1996 Annual Meeting of Stockholders. Mr. Hodge was elected a Director by the Board in December 1996 to fill the vacancy created by the resignation of Randall L. Herrel, Sr. Unless instructed to the contrary, the shares represented by the proxies will be voted in favor of the election of the nominees named below as Directors. Although it is anticipated that each nominee will be able to serve as a Director, should any nominee become unavailable to serve, the proxies will be voted for such other person or persons as may be designated by the Company's Board of Directors. The nominees receiving the highest number of votes, up to the number of Directors to be elected, will be elected as Directors. The following sets forth certain biographical information for each of the nominees. Mr. William M. Barnum, Jr., age 42, has served as a Director of the Company since November 1991. Mr. Barnum also currently serves as a director of several private companies, and has been a general partner of Brentwood Associates, a Los Angeles based venture capital and private equity investment firm since 1986. Prior to that, Mr. Barnum held several positions at Morgan Stanley & Co. Mr. Barnum graduated from Stanford University in 1976 with a B.A. in Economics and from the Stanford Graduate School of Business and Stanford Law School in 1981 with M.B.A. and J.D. degrees. Mr. Barnum is a Director of Rental Service Corporation. Mr. Charles E. Crowe, age 41, has served as a Director of the Company since December 1980. Mr. Crowe also served as a Vice President of the Company until his leave of absence in fiscal 1992 and subsequent resignation on February 5, 1993. Prior to 1981, Mr. Crowe was employed by Bateman Eichler, Hill Richards, Incorporated. Mr. Crowe graduated from the University of California, Santa Barbara, with a B.A. degree in Economics. Mr. Crowe is the step son-in-law of Mr. Kirby. 3 6 Mr. Michael H. Gray, age 44, has served as a Director of the Company since November 1991. He is currently President of Sweet Life Restaurants, a specialty baked goods and food services company, and was formerly President of St. John Knits, Inc., a women's clothing company, from 1986 to 1991, where he was employed beginning in 1971. Mr. Gray graduated from Long Beach State University with a degree in Business Administration. Mr. Harry Hodge, age 46, has served as a Director of the Company since December 1996. Mr. Hodge co-founded Na Pali, S.A. ("Quiksilver Europe"), the European licensee of Quiksilver International, in 1984 in Biarritz, France. Following the acquisition of Quiksilver Europe by the Company, Mr. Hodge remained as President Director General. From 1981 to 1983, he was the Marketing Director for Quiksilver International, in Torquay, Australia. Prior to his experience with Quiksilver International, Mr. Hodge was a journalist in Australia. Mr. Robert G. Kirby, age 71, has served as a Director of the Company since October 1986. Mr. Kirby is a Senior Partner of the Capital Group Partners L.P. and former Chairman of the Board of Capital Guardian Trust Company, a wholly-owned subsidiary of The Capital Group, Inc. Capital Guardian Trust Company is an institutional portfolio manager for pension funds. Mr. Kirby has also been a Director of The Capital Group, Inc., from 1978 to 1991. Mr. Kirby is a graduate of Stanford University and Harvard University Graduate School of Business Administration. Mr. Kirby is the step father-in-law of Mr. Crowe. Mr. Robert B. McKnight, Jr., age 43, was a co-founder of the Company in 1976, served as President from 1979 through July 1991 and has served as Chairman of the Board and Chief Executive Officer since August 1991 and a Director of the Company since its inception. Mr. McKnight received a B.S. degree in Business Administration from the University of Southern California. Mr. Tom Roach, age 53, has been President and owner of Palm Springs Harley Davidson, a motorcycle retail and specialty store, since 1990, and is also co-owner and co-founder of Sweetwater Ranch, a high-end western furniture manufacturer. Prior to 1990, Mr. Roach was President and Chief Operating Officer of Woodward and Lothrop from 1987 through 1989 and JW Robinson's during 1986. Mr. Roach received an M.S. degree in Marketing and an M.B.A. from the University of Wyoming. The Board of Directors held seven meetings during the fiscal year ended October 31, 1996. Each incumbent Director attended at least 75% of the total number of meetings of the Board of Directors and of Board of Director committees on which that Director served which were held during the period for which he was a Director. Each Director who is not an employee of the Company receives an attendance fee of $2,000 for each meeting of the Board of Directors he personally attends and for each meeting of a committee of the Board of Directors he personally attends which is not held on the same day as a meeting of the Board of Directors. Nonemployee Directors receive $1,000 for each Board meeting attended telephonically. In addition, nonemployee Directors received an annual retainer of $10,000. There was also an arrangement between the Company and Mr. Crowe pursuant to which he provided consulting services to the Company for the period from April 1995 to January 1996 for which he was paid $30,000. The Board of Directors has a standing Compensation and Audit Committee, but does not have a Nominating Committee. The Compensation Committee is responsible for making recommendations to the Board of Directors concerning the annual compensation for all executive officers and key employees of the Company, as well as administering the Company's Stock Option Plans. The Compensation Committee is comprised of Messrs. Barnum, Gray, Kirby and Roach. The Compensation Committee held four meetings during the fiscal year ended October 31, 1996. The principal duties of the Audit Committee are to approve the selection of the Company's independent auditors, to discuss and review the Company's accounting policies and to review the accounting and internal control procedures recommended by the Company's independent auditors. The Audit Committee is comprised of Messrs. Crowe, Barnum, Gray and Roach. During the fiscal year ended October 31, 1996, the Audit Committee held two meetings. 4 7 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's Directors and Executive Officers, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, Directors and greater-than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on its review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended October 31, 1996 all Section 16(a) filing requirements applicable to its Officers, Directors and greater-than ten percent beneficial owners were satisfied except that Tom Roach inadvertently failed to file a Form 4 upon acquiring shares in September 1996 and failed to file a Form 5 at year end reporting such delinquency. Mr. Roach subsequently filed this report. 5 8 EXECUTIVE OFFICERS The current Executive Officers of the Company are as follows:
NAME AGE POSITION - ------------------------- --- --------------------------------------------- Robert B. McKnight, Jr. 43 Chairman of the Board and Chief Executive Officer Harry Hodge 46 President Director General, Quiksilver Europe Steven L. Brink 35 Chief Financial Officer, Secretary and Treasurer
For additional information with respect to Messrs., McKnight and Hodge who are also nominees as Directors of the Company, see "Election of Directors." Mr. Steven L. Brink has served as Vice President, Secretary, Treasurer and Chief Financial Officer since October 1996. He joined the Company in July 1996 as Vice President of Finance. Mr. Brink previously served as Senior Manager in the TRADE Group with Deloitte & Touche, LLP, where he was employed from 1985 through 1996. He is a Certified Public Accountant and holds a B.S. Degree in Business Administration from California State University at Los Angeles, graduating summa cum laude. SUMMARY COMPENSATION TABLE The following sets forth certain summary compensation information concerning the named Executive Officers for each of the Company's last three fiscal years:
LONG-TERM COMPENSATION AWARDS ------------ ANNUAL COMPENSATION SECURITIES NAME AND FISCAL --------------------- UNDERLYING ALL OTHER PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS# COMPENSATION(1) ---------------------------- ------ --------- --------- ------------ --------------- Robert B. McKnight, Jr. 1996 $347,000 $589,000 50,000 $4,500 Chairman of the Board 1995 342,000 910,000 30,000 5,000 and Chief Executive 1994 317,000 584,000 15,000 3,500 Officer Randall L. Herrel, Sr.(2) 1996 $296,000 $581,000 50,000 $2,400 President, Chief 1995 279,000 910,000 30,000 4,500 Operating Officer and 1994 240,000 584,000 15,000 3,500 Secretary Harry Hodge 1996 $294,000 $378,000 50,000 $1,000 President Director 1995 248,000 133,000 30,000 1,000 General, Quiksilver Europe 1994 206,000 35,000 15,000 --
- --------------- (1) The amounts disclosed in this column include premiums for personal life insurance policies for Messrs. McKnight, Herrel and Hodge for the fiscal year ended October 31, 1996 of $2,200, $2,400 and $1,000, respectively, and for the fiscal years ended October 31, 1995 and 1994 of $2,500, $2,500 and $1,000, respectively. The amounts disclosed in this column also include the Company's matching 401(k) employer contribution for Mr. McKnight of $2,300, $2,500 and $1,000 for the fiscal years ended 1996, 1995 and 1994, respectively. (2) Mr. Herrel resigned as an Executive Officer of the Company effective November 20, 1996. 6 9 OPTION GRANTS IN LAST FISCAL YEAR The following sets forth certain information concerning individual grants of stock options during the fiscal year ended October 31, 1996 to each of the named Executive Officers:
INDIVIDUAL GRANTS - --------------------------------------------------------------------------------------------- NUMBER OF % OF TOTAL SECURITIES OPTIONS GRANT UNDERLYING GRANTED TO EXERCISE OR DATE OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT NAME GRANTED(1) FISCAL YEAR ($/SHARE)(2) DATE VALUE($)(3) - -------------------------------------- ---------- ------------ ------------ ---------- ----------- Robert B. McKnight, Jr................ 50,000 6.7% $30.25 03/26/06 $810,000 Randall L. Herrel, Sr.(4)............. 50,000 6.7% 30.25 03/26/06 810,000 Harry Hodge........................... 50,000 6.7% 30.25 03/26/06 810,000
- --------------- (1) The options were granted under the Quiksilver Inc. 1996 Stock Option Plan for a term of 10 years, subject to earlier termination in certain events related to termination of employment. The options become exercisable 33 1/3% per year beginning one year from the date of grant. To the extent not already exercisable, the options generally become exercisable upon a sale of assets, a merger or consolidation of the Company with or into another corporation or the acquisition by another corporation or person of all or substantially all of the Company's assets or 80% or more of the Company's outstanding voting stock, unless the option is assumed or replaced with a comparable option by the surviving entity. (2) All options were granted at fair market value (the last sales price for the Company's Common Stock on the day previous to the date of grant as reported by NASDAQ). (3) The indicated present value amounts are based on a variation of the Black-Scholes option pricing model. For purposes of the Black-Scholes model, the Company assumed a volatility of 53.79%, a risk free rate of return of 6.3%, a dividend yield of 0%, and a time of exercise of five years. Actual gains, if any, on exercise will be dependent on a number of factors including future performance of the Company and the Common Stock, and overall market conditions as well as the holder's continued employment through the vesting period. As a result, the indicated present values may vary substantially from actual realized values. (4) Mr. Herrel resigned as a Director of the Company on October 22, 1996 and as an Executive Officer on November 20, 1996. All of the options granted to him during fiscal 1996 expired by their terms upon his resignation. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following sets forth certain information concerning each exercise of stock options during the fiscal year ended October 31, 1996 by each of the named Executive Officers and the aggregated fiscal year-end value of the unexercised options of each such Executive Officer:
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT SHARES VALUE OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END ($)(1) ACQUIRED ON REALIZED --------------------------- --------------------------- NAME EXERCISE (1)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ----------------------------- ----------- -------- ----------- ------------- ----------- ------------- Robert B. McKnight, Jr....... -- -- 65,000 70,000 $715,000 $48,000 Randall L. Herrel, Sr........ 35,000 $658,000 -- 72,000 -- 68,000 Harry Hodge.................. 10,000 118,000 -- 70,000 -- 48,000
- --------------- (1) Market value of underlying securities at exercise date or year-end, as the case may be, minus the exercise or base price of "in-the-money" options. 7 10 EMPLOYMENT ARRANGEMENTS The Company has entered into executive employment agreements with each of Messrs. McKnight, Brink and Hodge. Pursuant to the terms of these employment agreements, Mr. McKnight is to receive a base salary of $364,000, Mr. Brink a base salary of $150,000 and Mr. Hodge a base salary of 1,200,000 French francs (approximately $235,000 as of October 31, 1996). These base salaries are subject to periodic review by the Company and may be adjusted either up or down, based on the Company's performance, the individual's performance, market conditions or such other factors as are deemed relevant by the Company, provided, however, that the base salaries may not be adjusted below the amounts set forth above prior to March 31, 1999. The employment agreements of Messrs. McKnight and Hodge provide that they were eligible for a bonus for the fiscal year ended October 31, 1996 only, based on the Company, in the case of Mr. McKnight and based on Quiksilver Europe, in the case of Mr. Hodge, achieving certain pre-tax return on equity goals for the fiscal year. For the fiscal year ended October 31, 1996, Messrs. McKnight and Hodge received $533,000 and $254,000, respectively, pursuant to this bonus plan. In addition, the employment agreements of Messrs. McKnight, Brink and Hodge provide that each of them is eligible for a bonus based on growth in the Company's operating income for the fiscal year ended October 31, 1996 and growth in pretax income for the years thereafter in the case of Messrs. McKnight and Brink, and based on growth in pretax income of Quiksilver Europe in the case of Mr. Hodge. For the fiscal year ended October 31, 1996, Messrs. McKnight, and Hodge received $56,000, and $124,000, respectively, pursuant to this bonus plan. Mr. McKnight's and Mr. Brink's employment agreements require that the Company maintain a $1,000,000 and $500,000 term life insurance policy on their lives, respectively, payable to their designees; provided, however, that the Company is not required to pay premiums for such policies in excess of $2,500 and $1,250, respectively, annually. Each of the employment agreements continues for an unspecified term and may be terminated by the Company or the executive without cause at any time for any reason, subject to the payment of certain amounts as set forth below. If the Company terminates an executive's employment without cause, or if the executive terminates his employment for "good reason" following a change in control of the Company, the Company will continue to pay the executive's base salary for a period of twelve months. For purposes of the executive employment agreements, "good reason" is defined as (i) the assignment to executive of duties materially inconsistent with his position, as set forth in the agreement, without executive's consent, (ii) a material diminution in executives's authority, without executive's consent, (iii) a material breach by the Company of its obligations under the agreement, or (iv) the failure by the Company to obtain from any successor, before the succession takes place, an agreement to assume and perform the obligations of the Company under the employment agreement. COMPENSATION COMMITTEE REPORT The report of the Compensation Committee which follows shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference. As members of the Compensation Committee, it is our duty to administer the Company's various executive compensation plans. In addition, we review compensation levels of members of management, evaluate the performance of management, consider management succession and related matters. The Committee reviews with the Board in detail all aspects of compensation for the Company's executive officers. In fiscal 1996, the Committee reevaluated the Company's executive compensation structure in light of the Company's philosophy of linking compensation with enhancement of shareholder value. As a result of this reevaluation, the Company revised its compensation program for its executive officers. The principles followed by the Committee were (i) to provide a cash compensation package consisting of competitive base salary levels and incentive opportunities 8 11 linked to corresponding levels of Company performance and (ii) to grant stock option incentives which require increases in the Company's stock price in order for executives to realize value and, thus, tie them to the Company's long-term stock performance. The result was a total compensation opportunity significantly dependent upon the Company's performance. In August 1993, Congress enacted tax legislation that, among other things, places a ceiling of $1 million on the amount of an executive officer's annual compensation that may be deducted for federal income tax purposes in any year (the "Deductibility Cap"). The legislation provides that compensation paid under certain incentive compensation plans may be excluded from the calculation of compensation that is subject to the Deductibility Cap, provided the plans meet certain conditions, which are contained in regulations that have recently been adopted by the Internal Revenue Service. As a result of the revisions made by the Committee to the Company's compensation program during 1996, the Committee believes that no executive officer's compensation will exceed the Deductibility Cap thereby preserving the deductibility of all executive compensation paid by the Company. EXECUTIVE COMPENSATION COMPONENTS The Company's executive compensation program is currently based on three principal components, each of which is intended to support the overall compensation philosophy. The three principal components are: - BASE SALARY: Base salary ranges are reviewed and established annually. The Company tries to ensure that the base salary ranges reflect competitive job market conditions for similarly related companies in terms of sales, employees and related factors. Adjustments to actual base salaries are made pursuant to job performance in relationship to the midpoint of the salary range for the position and level of responsibilities. The Company's philosophy generally is to provide a base salary that is at or above the midpoint of the applicable salary range, particularly in light of the Company's decision to operate with a minimal number of executive officers by assigning each executive officer multiple functions. - INCENTIVE COMPENSATION: The incentive compensation opportunity under the Company's Executive Officer Incentive Plan is based on the growth in the Company's pretax income over the prior year, in the case of officers of the Company, and growth in Quiksilver Europe's pretax income, in the case of officers of Quiksilver Europe. Under the Plan, each executive officer receives a bonus equal to a percentage of such executive officer's base salary, ranging from 0% for pretax income growth under 10% over the prior year up to a maximum of 200% for pretax income growth of 40% or more over the prior year. - STOCK OPTIONS: Executive officers are eligible to receive annual grants of stock options, which have historically been granted as nonqualified stock options. The awards are intended to retain and motivate executive officers to improve stock market performance. Awards are granted at the fair market value of the Company's Common Stock at the date of grant. Awards are based on an evaluation of past granting practices, Company performance and the individual executive's performance and responsibilities. 9 12 CEO COMPENSATION In April 1996, the Committee increased Mr. McKnight's annual base salary to $364,000 to cover the increased cost of living and to keep Mr. McKnight's base salary at a level the Committee believes is at or above the midpoint of base salaries for Chief Executives at similarly situated companies, given the multiple functions performed by Mr. McKnight and the Committee's assessment of his performance. He was also awarded options to acquire 50,000 shares of nonqualified stock options during fiscal 1996 at an exercise price of $30.25 per share, which was the price of the Company's stock on the date of the grant. The options vest 33 1/3% per year beginning one year after the date of grant and have a term of ten years. The increase in base salary and the award of options was based on Mr. McKnight's responsibilities and performance as they relate to the Company's increased volume from worldwide operations, the expansion of new territories, principally in Central and South America, and increased operating efficiencies. For fiscal 1996, Mr. McKnight was paid $589,000 of incentive compensation under the Company's Executive Officer Incentive Plan. The Executive Officer Incentive Plan was revised during fiscal 1996 from being based on a return on stockholders' equity over target returns established by the Committee to being based on growth in operating or pretax income over the prior year. During fiscal 1996, Mr. McKnight's incentive compensation was determined using both of these methods and their taking a fraction of the result. This award was principally due to the Company's performance which resulted in a return on stockholders' equity significantly in excess of the target return established by the Committee. Compensation Committee William M. Barnum, Jr. Michael H. Gray Robert G. Kirby Tom Roach January 28, 1997 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation Committee of the Board of Directors of the Company during the last fiscal year consisted of William M. Barnum, Jr., Michael H. Gray, Robert G. Kirby and Tom Roach, each of whom was a non-employee director of the Company. COMPANY STOCK PRICE PERFORMANCE The following graph compares from October 31, 1991 to October 31, 1996 the yearly percentage change in the Company's cumulative total stockholder return on its Common Stock with the cumulative total return of (i) the NASDAQ Market Index and (ii) selected public companies with similar market capitalizations. The yearly percentage change has been measured by dividing (i) the sum of (A) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (B) the difference between the price of the stock at the end and the beginning of the measurement period; by (ii) the stock price at the beginning of the measurement period. The Company has chosen to compare its stock performance with that of issuers with similar market capitalizations since the Company does not have a published industry or line-of-business index and does not believe any comparison with "peer" issuers within the SEC rules governing presentation of this graph can be made. Market capitalization is the dollar figure obtained by multiplying the per share stock price on a given date by the total number of outstanding shares. The thirty-five companies with a market capitalization closest to the Company's market capitalization of $145,000,000 at October 31, 1996 were selected from the Standard & Poor's Compustat Industrial Database at such date. The selected companies also had the five-year market capitalization histories necessary for the comparative purposes of the graph. Although the Company believes a comparison with a peer group would more adequately measure the Company's stock performance, the Company is unaware of any comparable public beachwear and casual clothing manufacturers which serve the Company's market. As a result, the group market capitalization may 10 13 not be meaningful. In addition, the historical stock performance shown on the graph is not intended to and may not be indicative of future stock performance. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG QUIKSILVER, INC. NASDAQ MARKET INDEX, & SIMILAR MARKET CAPITALIZATION PEER GROUP
MEASUREMENT PERIOD SIMILAR MARKET (FISCAL YEAR COVERED) QUIKSILVER, INC. NASDAQ CAPITALIZATIONS 10/1991 100 100 100 10/1992 62.12 96.87 110.27 10/1993 139.39 127.13 130.86 10/1994 212.12 135.16 126.93 10/1995 375.76 160.32 127.03 10/1996 257.58 188.27 133.42
Note: Past or present performance is not necessarily indicative of future performance. The following public companies are those which were used in the above graph: Allied Bankshares GA, Arrow Bank Corp, BHI Corp, BMC West Corp, BSB Bankcorp Inc, BTG Inc, Cell Genesys Inc, Central Tractor Farm, Central Vermont Pub Svc, Chad Therapeutics A, Chateau Properties, Computer Learning Center, Emco Ltd, Evengreen Bancorp Inc, First Financial Holdings, Marcam Corp, Mattson Technology Inc, Medarex Inc, Midwest Grain Products, National Energy Group, Peoples Holding Co, Quaker Chemical Corp, Rainbow Technologies Inc, Right Mgmt Consultants, Ross Systems Inc, Semtech Corp, SJW Corp, State of the Art Inc, Teltrend Inc, Vidamed Inc, Vitro Sociedad Anonima, Wall Data Inc, World Acceptance Corp, Worldtex Inc, WSFS Financial Corp. CERTAIN TRANSACTIONS The Company and Mr. Crowe, who is a former officer and current Director of the Company, entered into an arrangement pursuant to which he provided consulting services to the Company for the period from April 1995 to January 1996 for which he was paid $30,000. APPOINTMENT OF INDEPENDENT AUDITORS The Company has not yet selected its independent public auditors for the year ending October 31, 1997. The Audit Committee is expected to make a decision in the near future. Deloitte & Touche LLP were the independent public auditors for the Company for the fiscal year ended October 31, 1996. Representatives of Deloitte & Touche are expected to be present at the Annual Meeting and will be available to respond to appropriate questions and to make such statements as they may desire. 11 14 NOMINATIONS AND STOCKHOLDER PROPOSALS The Bylaws of the Company require that all nominations for persons to be elected Directors, other than those made by the Board of Directors, be made pursuant to written notice to the Secretary of the Company. The notice must be received not less than 30 nor more than 60 days prior to the meeting at which the election will take place (or not later than 10 days after notice of public disclosure of such meeting date if such disclosure occurs less than 40 days prior to the date of such meeting). The notice must set forth all information relating to each nominee that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required pursuant to the Securities Exchange Act of 1934, as amended. The notice must also include the stockholder's name and address as they appear on the Company's books and the class and number of shares of stock beneficially owned by such stockholder. In addition, the Bylaws require that for business to be properly brought before an annual meeting by a stockholder, the Secretary of the Company must have received written notice thereof not less than 30 nor more than 60 days prior to the meeting (or not later than 10 days after a notice or public disclosure of such meeting date if such disclosure occurs less than 40 days prior to the date of the meeting). The notice must set forth (i) a brief description of the business desired to be brought before the meeting; (ii) the stockholder's name and address as they appear on the Company's books; (iii) the class and number of shares of stock beneficially owned by the stockholder; and (iv) any material interest of the stockholder in such business. Any proposal of a stockholder intended to be presented at the Company's 1998 Annual Meeting of Stockholders and included in the proxy statement and form of proxy for that meeting must be received by the Company no later than November 21, 1997. ANNUAL REPORT The Company's Annual Report containing audited financial statements for the fiscal years ended October 31, 1996 and 1995 accompanies this Proxy Statement. THE COMPANY WILL SEND A STOCKHOLDER UPON REQUEST, WITHOUT CHARGE, A COPY OF THE ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR ENDED OCTOBER 31, 1996, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, WHICH THE COMPANY HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE REQUEST MUST BE DIRECTED TO THE ATTENTION OF STEVEN L. BRINK, SECRETARY, AT THE ADDRESS OF THE COMPANY SET FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT. 12 15 OTHER MATTERS At the time of the preparation of this Proxy Statement, the Board of Directors knows of no other matter which will be acted upon at the Annual Meeting. If any other matter is presented properly for action at the Annual Meeting or at any adjournment or postponement thereof, it is intended that the proxies will be voted with respect thereto in accordance with the best judgment and in the discretion of the proxy holders. By Order of the Board of Directors, QUIKSILVER, INC. ROBERT B. McKNIGHT, JR. Chairman of the Board and Chief Executive Officer Costa Mesa, California February 14, 1997 13 16 QUIKSILVER, INC. 1740 MONROVIA AVENUE COSTA MESA, CA 92627 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Robert B. McKnight, Jr. and Steven L. Brink as Proxies, each with the power to appoint his substitute, and hereby authorizes each of them to represent and to vote, as designated below, all the shares of Common Stock of Quiksilver, Inc. held of record by the undersigned on January 28, 1997, at the Annual Meeting of Stockholders to be held on March 21, 1997 and at any adjournment or postponement thereof. 1. Election of Directors: [ ] FOR ALL nominees listed below [ ] WITHHOLD AUTHORITY for all (except as indicated to the contrary below) nominees listed below
William M. Barnum, Jr., Charles E. Crowe, Michael H. Gray, Harry Hodge, Robert G. Kirby, Robert B. McKnight, Jr. and Tom Roach. INSTRUCTION: To withhold authority to vote for an individual nominee, write that nominee's name in the space provided below: - -------------------------------------------------------------------------------- 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. (Continued on reverse side) 17 (Continued from other side) THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. All other proxies heretofore given by the undersigned to vote shares of stock of Quiksilver, Inc., which the undersigned would be entitled to vote if personally present at the Annual Meeting or any adjournment or postponement thereof, are hereby expressly revoked. Date: ______________________, 1997 ---------------------------------- (Signature) ---------------------------------- (Signature) Please date this Proxy and sign it exactly as your name or names appear below. When shares are held by joint tenants, both should sign. When signing as an attorney, executor, administrator, trustee or guardian, please give full title as such. If shares are held by a corporation, please sign in full corporate name by the President or other authorized officer. If shares are held by a partnership, please sign in partnership name by an authorized person. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. IF YOUR ADDRESS IS INCORRECTLY SHOWN, PLEASE PRINT CHANGES. -----END PRIVACY-ENHANCED MESSAGE-----