UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
(Rule 14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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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):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title of each class of securities to which transaction applies:
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2)
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Aggregate number of securities to which transaction applies:
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3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was determined):
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4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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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.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration Statement No.:
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MOVADO GROUP, INC.
650 From Road, Ste. 375
Paramus, New Jersey 07652-3556
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 22, 2017
The 2017 Annual Meeting of Shareholders of Movado Group, Inc.
will be held on Thursday, June 22, 2017 at 10:00 a.m., at the Company’s offices located at 25 West 39
th
Street, 15
th
Floor, New York, NY 10018 for the following purposes:
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1.
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To elect nine directors to serve on the Board of Directors until the next Annual Meeting and until their successors are elected
and qualified.
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2.
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To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm
for the fiscal year ending January 31, 2018.
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3.
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To approve, on an advisory basis, the compensation of the Company’s named executive officers, as described in the proxy
statement under “Executive Compensation”.
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4.
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To select, on an advisory basis, the frequency of the advisory shareholder vote on the compensation of the Company’s
named executive officers.
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5.
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To transact such other business as may properly come before the meeting or any postponement or adjournment thereof.
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Holders of the Company’s Common Stock and Class A Common
Stock of record at the close of business on April 24, 2017 are entitled to notice of and to vote at the Annual Meeting of Shareholders
or any postponements or adjournments thereof.
Again this year, we will furnish proxy materials to our shareholders
via the Internet in order to expedite shareholders’ receipt of proxy materials while lowering the cost of delivery and reducing
the environmental impact of our Annual Meeting.
Accordingly, we are mailing to our shareholders of record
and beneficial owners a Notice of Internet Availability of Proxy Materials, which provides instructions on how to access the attached
proxy statement and our annual report to shareholders for the fiscal year ended January 31, 2017 via the Internet and how to vote
online. The Notice of Internet Availability of Proxy Materials also contains instructions on how to obtain the proxy materials
in printed form.
Dated:
May 9, 2017
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By order of the Board of Directors
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Mitchell C. Sussis
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Secretary and General Counsel
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Your vote is important. Regardless
of whether you plan to attend the Annual Meeting, please follow the instructions you received to vote your shares as soon as possible,
to ensure that your shares are represented at the Annual Meeting. Shareholders of record, or beneficial shareholders named
as proxies by their shareholders of record, who attend the meeting may vote their shares personally, even though they have sent
in proxies or voted online.
MOVADO GROUP, INC.
PROXY STATEMENT
Annual Meeting of Shareholders of Movado
Group, Inc. to be held Thursday, June 22, 2017
Some Questions You May Have Regarding
This Proxy Statement
What is the purpose of these materials?
The Board of Directors (the “Board
of Directors”) of Movado Group, Inc. (the “Company”) is soliciting proxies for our 2017 Annual Meeting of Shareholders
(the “Annual Meeting”). The Annual Meeting will be held on Thursday, June 22, 2017 at 10:00 a.m. at the Company’s
offices located at 25 West 39
th
Street, 15
th
Floor, New York, NY 10018. The information included in this proxy statement relates to the proposals to be voted on at the Annual
Meeting, the voting process, the compensation of Directors and our most highly paid executive officers, and other required information.
Our annual report to shareholders for the fiscal year ended January 31, 2017 is available to review with this proxy statement.
We are mailing a notice of the Annual Meeting (and, for those who request it, a paper copy of this proxy statement and the enclosed
form of proxy) to our shareholders on or about May 9, 2017.
What proposals will be voted on at the Annual Meeting?
The four matters scheduled to be voted
on at the Annual Meeting are:
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1.
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The election of nine directors to serve on the Board of Directors;
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2.
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The ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting
firm for the fiscal year ending January 31, 2018;
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3.
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The approval, on an advisory basis, of the compensation of the Company’s named executive officers, as described in the
proxy statement under “Executive Compensation;” and
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4.
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The selection, on an advisory basis, of the frequency of the advisory shareholder vote on the compensation of the Company’s
named executive officers.
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In addition, such
other business as may properly come before the Annual Meeting or any adjournment or postponement thereof may be voted on.
Who can vote at the Annual Meeting?
Anyone owning shares of the Company’s
Common Stock and/or its Class A Common Stock at the close of business on April 24, 2017, the record date for this year’s
Annual Meeting, is entitled to attend and to vote on all items properly presented at the Annual Meeting.
Who is asking me for my vote?
The Company is soliciting your proxy on
behalf of the Board of Directors and has retained Broadridge Investor Communications Solutions, Inc., professional proxy solicitors,
to assist with the solicitation. We will pay the entire cost of this proxy solicitation, including the cost of preparing and mailing
the Notice of Internet Availability of Proxy Material and the Proxy Statement and Broadridge’s fee, which we expect to be
less than $10,000.
What are my voting rights?
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 matter properly presented at the Annual Meeting.
At the close of business on April 24, 2017, the record date for determining the shareholders entitled to notice of, and to vote
at, the Annual Meeting, there were 16,332,508 shares of Common Stock outstanding and 6,685,877 shares of Class A Common Stock outstanding.
The Common Stock and the Class A Common Stock are hereinafter referred to together as the “Capital Stock”. 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, Ste. 375, Paramus, NJ 07652-3556, 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 of Directors
recommend that I vote?
The Board of Directors
recommends that you vote:
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1.
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FOR the election of each of the director nominees;
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2.
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FOR the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the current fiscal
year;
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3.
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FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers, as described in
the proxy statement under “Executive Compensation;” and
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4.
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FOR the selection, on an advisory basis, of 1 YEAR for the frequency of the advisory shareholder vote on the compensation of
the Company’s named executive officers.
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Why did I receive a one-page notice in the mail regarding
the Internet availability of proxy materials instead of a full printed set?
In accordance with the rules of the Securities
and Exchange Commission (the “SEC”), the Company is providing access to its proxy materials via the Internet.
Accordingly, the Company is mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to shareholders
of record and beneficial owners. All shareholders will have the ability to access the proxy materials on a website referred
to in the Notice or to request a printed set of the proxy materials. Instructions on how to access the proxy materials via
the Internet or to request a printed set may be found in the Notice. In addition, shareholders may request to receive proxy
materials in printed form by mail or electronically by email on an ongoing basis.
Where can I view the proxy materials on the Internet?
The Notice provides you with instructions
on how to:
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view proxy materials for the Annual Meeting via the Internet; and
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instruct the Company to send future proxy materials to you by email.
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You can view the proxy materials for the
Annual Meeting online at www.movadogroup.com by clicking on
Investor Center
and then
Annual Report & Proxy Materials
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How do I vote?
If you are a shareholder on the record
date, you may vote by following the instructions for voting on the Notice. If you receive paper copies of these proxy materials,
you can vote by completing, signing and dating your proxy card and returning it in the enclosed envelope. Alternatively, you may
attend the Annual Meeting and vote your shares in person. If you vote online, by phone or mail in a proxy card, you may still attend
the Annual Meeting and vote in person but, in that case, only your in-person votes will count. 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 Annual Meeting showing that you were the beneficial owner of the shares on April 24, 2017.
Can I change my vote after I have delivered my proxy?
Yes. You may change your vote at any time
before voting concludes at the Annual Meeting by:
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providing another proxy, or using any of the available methods for voting, with a later date;
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notifying the Companys Secretary in writing before the Annual Meeting that you wish to revoke your proxy; or
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voting in person at the Annual Meeting.
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What is a quorum?
For the purposes of the Annual Meeting,
a “quorum” is a majority in voting power of the outstanding shares of Capital Stock owned by shareholders on the record
date. There must be a quorum present in person or represented by proxy for the Annual Meeting to be held. Broker non-votes (as
further described below) and abstentions are counted for purposes of determining whether a quorum is present.
What is broker “discretionary” voting?
Under the rules of the New York Stock
Exchange (“NYSE”), brokers who have transmitted proxy materials to customers will have discretion to vote the
shares of customers who fail to provide voting instructions on “routine matters,” but brokers may not vote such shares
on “non-routine matters” without voting instructions. When a broker’s customer does not provide the broker
with voting instructions on non-routine matters, the broker cannot vote on those matters and instead reports the number of such
shares as broker “non-votes.” Broker non-votes are counted as present for the purpose of determining the presence
of a quorum for the transaction of business, but they are not counted as shares voting. Thus, broker non-votes can have the effect
of preventing approval of certain proposals where the number of affirmative votes, although a majority of the votes cast, does
not constitute a majority of the voting power present. Non-routine matters include: the election of directors and the approval,
on an advisory basis, of the executive compensation of the Company’s named executive officers and of the selection of the
frequency of the advisory vote on executive compensation. Therefore, if you hold your shares in street name through a broker, you
must cast your vote if you want it to count in respect of these non-routine matters. The ratification of the appointment of the
Company’s independent registered public accounting firm is a routine matter, so brokers will have discretion to vote any
uninstructed shares on that proposal (Proposal 2).
How are matters presented at the Annual Meeting approved?
Directors are elected by a plurality of
the votes cast at the Annual Meeting. Approval of the proposals to: (i) ratify the selection of PricewaterhouseCoopers LLP
as the Company’s independent registered public accounting firm for fiscal 2018 and (ii) approve, on an advisory basis, the
compensation of the Company’s named executive officers, requires the affirmative vote of the holders of a majority in voting
power of the outstanding shares of Capital Stock present in person or represented by proxy and entitled to vote at the Annual Meeting.
The advisory vote on the frequency of future advisory votes on executive compensation asks shareholders to specify one of three
choices for this proposal: one year, two years or three years. Shareholders may also abstain from voting on this matter. The
frequency option receiving the greatest number of votes will be considered the preferred frequency of our shareholders.
With respect to all of the aforementioned
proposals, abstentions and broker non-votes will not be counted as votes cast in accordance with New York law. For this reason,
abstentions and broker non-votes will have no effect on the election of directors or the advisory vote on the frequency of future
advisory votes on executive compensation. However, abstentions and broker non-votes will have the effect of votes against (i) the
proposal to ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting
firm for fiscal 2018 and (ii) the proposal to approve the compensation of the Company’s named executive officers.
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.
Who will count the votes?
A representative of Broadridge 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 properly executed proxy gives authority to Mitchell C. Sussis, our General Counsel and Corporate Secretary, and to
Sallie A. DeMarsilis, our Chief Financial Officer, 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 a Current Report on Form 8-K that we will file with the SEC within four
business days after the date of the Annual Meeting.
How can I obtain information about the Company?
A copy of our fiscal 2017 Annual Report
on Form 10-K is available on our website at
www.movadogroup.com
. Shareholders may also obtain a free copy of our Annual
Report on Form 10-K for the fiscal year ended January 31, 2017 by visiting our website or by sending a request in writing to Mitchell
C. Sussis, Corporate Secretary, at the Company’s address set forth in the Notice.
When are shareholder proposals due for consideration
at next year’s annual meeting?
Under SEC rules, for shareholder proposals
to be considered for inclusion in the proxy statement for the 2018 Annual Meeting, they must be submitted in writing to our Corporate
Secretary at Movado Group, Inc., 650 From Road, Ste. 375, Paramus, NJ 07652-3556, on or before January 9, 2018. In addition, our
by-laws provide that for directors to be nominated or other proposals to be properly presented at the 2018 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 2018 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 2018 Annual Meeting is made or the notice of the meeting is mailed, whichever occurs first.
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 Common Stock beneficially owned as of April 30, 2017 (except as otherwise
noted in footnotes 2, 3, 4 and 5) by (i) each shareholder 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 current director, (iii) each executive officer named in
the Summary Compensation Table, and (iv) all current executive officers and directors as a group.
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Percent
of Outstanding
Shares of Capital Stock
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Name
of Beneficial Owner
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Shares
of
Class A
Common
Stock
Beneficially
Owned (1)
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Shares
of
Common
Stock
Beneficially
Owned (1)
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Class
A
Common
Stock (1)
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Common
Stock (1)
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Percent
of
Total
Voting
Power (1)
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BlackRock Inc.(2)
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—
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1,812,584
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—
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10.81%
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2.17%
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Dimensional Fund Advisors LP(3)
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—
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1,418,847
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—
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8.46%
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1.70%
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Royce & Associates, LLC(4)
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—
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1,266,640
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—
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7.55%
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1.51%
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The Vanguard Group, Inc.(5)
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—
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1,490,111
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—
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8.89%
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1.78%
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Margaret Hayes Adame(6)
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—
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33,469
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—
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*
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*
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Peter A. Bridgman
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—
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10,702
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—
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*
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*
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Richard J. Coté(7)
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—
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708,939
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—
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4.23%
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*
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Alexander Grinberg(8)
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4,191,540
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15,153
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62.69%
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*
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50.14%
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Efraim Grinberg(9)
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5,782,281
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306,941
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86.49%
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1.83%
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69.51%
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Alan H. Howard(6)
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—
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40,781
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—
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*
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*
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Richard Isserman(6)
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—
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9,764
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—
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*
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*
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Nathan Leventhal(6)
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—
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15,125
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—
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*
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*
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Maurice S. Reznik
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—
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22,841
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—
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*
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*
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Sallie A. DeMarsilis(10)
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—
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64,079
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—
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*
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*
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Percent
of Outstanding
Shares of Capital Stock
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Name
of Beneficial Owner
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Shares
of
Class A
Common
Stock
Beneficially
Owned (1)
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Shares
of
Common
Stock
Beneficially
Owned (1)
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Class
A
Common
Stock (1)
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Common
Stock (1)
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Percent
of
Total
Voting
Power (1)
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Frank A. Morelli(11)
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—
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59,934
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—
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*
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*
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Miriam Phalen(12)
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4,023,936
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24,651
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60.19%
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*
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48.15%
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Ricardo Quintero(13)
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—
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30,199
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—
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*
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*
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Mitchell C. Sussis
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—
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—
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—
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*
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*
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All executive officers and directors as a group (13 persons)(14)
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6,363,600
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1,301,818
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95.18%
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7.76%
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77.65%
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* Denotes
less than one percent
The address for Messrs. Bridgman, Coté, A. Grinberg,
E. Grinberg, Howard, Isserman, Leventhal, Morelli, Quintero, Reznik and Sussis and for Mses. Hayes Adame, DeMarsilis and Phalen
is c/o Movado Group, Inc., 650 From Road, Ste. 375, Paramus, New Jersey 07652-3556.
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(1)
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Although each share of Class A Common Stock is convertible at any time into one share of Common Stock,
the shares of Common Stock shown as beneficially owned by each of the persons or groups listed in the table above do not include
the shares of Common Stock deemed to be beneficially owned by such persons or groups as a result of beneficial ownership of shares
of Class A Common Stock, which shares are shown in a separate column. The percentage of outstanding shares of Common Stock shown
as beneficially owned by each of the persons or groups in the table above is shown on the same basis. In calculating the percent
of total voting power held by each person or group, the voting power of shares of Common Stock (one vote per share) and Class A
Common Stock (10 votes per share) has been aggregated. Except as otherwise indicated, the persons listed have advised the Company
that they have sole voting power and sole dispositive power with respect to the shares of Class A Common Stock and of Common Stock
indicated as owned by them.
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(2)
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On January 12, 2017, in a filing on Schedule 13G under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), BlackRock Inc. reported beneficial ownership as of December 31, 2016 of 1,812,584 shares of Common
Stock. It reported having sole voting power as to 1,773,702 of such shares, shared voting power as to none of such shares, and
sole dispositive power as to all such shares. It 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 BlackRock Inc. is 55 East 52
nd
Street, New York, NY 10055.
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(3)
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On February 9, 2017, in a filing on Schedule 13G under the Exchange Act, Dimensional Fund Advisors
LP (“DFA”) reported beneficial ownership as of December 31, 2016 of 1,418,847 shares of Common Stock, as to all of
which it has sole dispositive power. DFA reported having sole voting power as to 1,375,838 of the shares and shared voting power
as to none of the shares. DFA also reported that all of 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 DFA is Palisades West, Building One, 6300 Bee Cave Road, Austin, TX 78746.
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(4)
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On January 11, 2017, in a filing on Schedule 13G under the Exchange Act, Royce & Associates, LLC
(“Royce”) reported beneficial ownership as of December 31, 2016 of 1,266,640 shares of Common Stock, as to which it
has sole dispositive and sole voting power. Royce also reported that all of 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 Royce is 745 Fifth Avenue, New York, NY 10151.
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(5)
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On February 10, 2017, in a filing on Schedule 13G under the Exchange Act, The Vanguard Group, Inc.
(“Vanguard”) reported beneficial ownership as of December 31, 2016 of 1,490,111 shares of Common Stock, as to which
it reported having shared voting power of 1,455 shares; shared dispositive power of 19,099 shares; sole voting power of 18,760
shares; and sole dispositive power of 1,471,012 shares. Vanguard reported that all of 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. Vanguard’s address is 100 Vanguard Boulevard, Malvern, PA 19355.
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(6)
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The total number of shares of Common Stock reported as beneficially owned by each of Ms. Hayes Adame,
Mr. Howard, Mr. Isserman and Mr. Leventhal includes 1,500 shares which each has the right to acquire by the exercise of options
under the Company’s 1996 Stock Incentive Plan as amended and restated as of April 4, 2013 (the “Stock Plan”).
4,839 shares of Common Stock beneficially owned by Mr. Isserman are held in a joint account with his wife and adult daughter who
share voting and dispositive power over such shares with Mr. Isserman.
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(7)
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The total number of shares of Common Stock reported as beneficially owned by Mr. Coté includes
115,200 shares which he has the right to acquire by the exercise of options under the Company’s Stock Plan and 2,120 shares
held by trusts for the benefit of his children as to which shares Mr. Coté has shared dispositive power with his spouse
who is the trustee with sole voting power. The total also includes 169,388 shares held by a trust for the benefit of his children
as to which Mr. Coté’s spouse is the sole trustee with sole voting and dispositive power and 35,200 shares held by
a charitable foundation as to which Mr. Coté and his spouse share dispositive and voting power. Mr. Coté disclaims
beneficial ownership of the 169,388 shares of common stock held in trust for the benefit of his children and the 35,200 shares
held by the charitable foundation.
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(8)
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The total number of shares of Class A Common Stock beneficially owned by Mr. A. Grinberg includes
3,655,640 shares owned by Grinberg Partners L.P., a Delaware limited partnership (“GPLP”) of which Mr. A. Grinberg
is a limited partner; 84,790 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; and 100,191 shares owned by the Grinberg Family Foundation. Mr. A. Grinberg has shared
voting power with GPLP, Grinberg Group Partners (a Delaware general partnership (“GGP”) which is the general partner
of GPLP), Mr. E. Grinberg and Ms. Phalen over the 3,655,640 shares owned by GPLP. Mr. A. Grinberg has shared voting and investment
power with Mr. Fishman over the 84,790 shares owned by the trusts. As one of three directors of the Grinberg Family Foundation
(along with Mr. E. Grinberg and Ms. Phalen), Mr. A. Grinberg has shared voting and dispositive power with
such other directors over the shares owned by such foundation. Also includes 11,292 shares of Class A Common Stock and 6,426 shares
of Common Stock held by a trust for the benefit of Mr. A. Grinberg of which Mr. A. Grinberg is co-trustee with Mr. E.
Grinberg and Sharon Trulock, with whom he shares voting and dispositive power.
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(9)
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Of the shares reported as beneficially owned by Mr. E. Grinberg: 217,600 are shares of Common Stock
which Mr. E. Grinberg has the right to acquire by the exercise of options under the Company’s Stock Plan; 6,425
are shares of Common Stock held by a remainder trust for the benefit of Mr. E. Grinberg (“EG Remainder Trust”),
for which trust Mr. E. Grinberg is co-trustee together with Sharon Trulock with whom he shares voting and dispositive power;
12,852 are shares of Common Stock held by remainder trusts for the benefit of Ms. Phalen and Mr. A. Grinberg (“MP/AG
Remainder Trusts”), for which trusts Mr. E. Grinberg is co-trustee together with Sharon Trulock and Ms. Phalen
or Mr. A. Grinberg, as the case may be, with whom he shares voting and dispositive power; and 5,000 are shares of Common
Stock held by the Efraim Grinberg Family Foundation for which Mr. E. Grinberg is one of two directors (the other being Sharon Trulock)
with shared voting and dispositive power. The balance of Mr. E. Grinberg’s shares is comprised of shares of Class A Common
Stock. Included in Mr. E. Grinberg’s total number of shares of Class A Common Stock are: an aggregate of 563,306 shares
held by several trusts for the benefit of Mr. E. Grinberg’s siblings and himself, of which trusts Mr. E. Grinberg is sole
trustee; and 289,596 shares held by six testamentary trusts for the benefit of Mr. E. Grinberg’s children and the children
of his siblings, of which trusts he is sole trustee. As sole trustee of the foregoing trusts, Mr. E. Grinberg has sole investment
and voting power with respect to the Class A Common Stock held in such trusts. In addition, the number of shares of Class A Common
Stock reported for Mr. E. Grinberg also includes: an aggregate of 862,940 shares held by several trusts for the benefit of Mr.
E. Grinberg’s siblings and himself; 855 shares held by a trust for the benefit of Mr. E. Grinberg’s nephew; and
11,291 shares held by the EG Remainder Trust. Mr. E. Grinberg is co-trustee with Sharon Trulock for each of these trusts and, as
co-trustee, Mr. E. Grinberg has shared voting and dispositive power, together with Ms. Trulock, with respect to the Class
A Common Stock held in such trusts. The number of shares of Class A Common Stock reported for Mr. E. Grinberg also includes 22,584
shares held by the MP/AG Remainder Trusts for the benefit of Mr. A. Grinberg and Ms. Phalen, respectively, of which
Mr. E. Grinberg is co-trustee along with Sharon Trulock and Mr. A. Grinberg or Ms. Phalen (as the case
may be), with whom he shares voting and dispositive power. The total number of shares of Class A Common Stock beneficially owned
by Mr. E. Grinberg also includes 3,655,640 shares owned by GPLP, 100,191 shares owned by the Grinberg Family Foundation and 23,000
shares owned by the Efraim Grinberg Family Foundation. As the managing partner of GGP (the general partner of GPLP), Mr. E. Grinberg
shares voting and dispositive power with respect to the 3,655,640 shares of Class A Common Stock held directly by GPLP with GGP
and GPLP. Mr. E. Grinberg also shares voting power with respect to such shares with Ms. Phalen and with Mr. A. Grinberg, both of
whom are also limited partners of GPLP. Mr. E. Grinberg is one of three directors of the Grinberg Family Foundation (along
with Ms. Phalen and Mr. A. Grinberg) and shares voting and dispositive power with such other directors over the
shares owned by that foundation. As one of two directors of the Efraim Grinberg Family Foundation, Mr. E. Grinberg shares
voting and dispositive power with the other director over the shares owned by that foundation. Mr. E. Grinberg disclaims beneficial
ownership as to the shares of Class A Common Stock and Common Stock held by GPLP, the trusts of which he is a trustee and the foundations
for which he is a director, except, in each case, to the extent of his pecuniary interest therein.
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(10)
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The total number of shares of Common Stock reported as beneficially owned by Ms. DeMarsilis includes
43,000 shares which she has the right to acquire by the exercise of options under the Company’s Stock Plan.
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(11)
|
The total number of shares of Common Stock beneficially owned by Mr. Morelli includes 32,250 shares
which he has the right to acquire by the exercise of options under the Company’s Stock Plan.
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(12)
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Of the shares of Class A Common Stock reported as beneficially owned by Ms. Phalen: 531 are owned
jointly with her husband, as to which she shares voting and dispositive power with him; 3,655,640 are owned by GPLP, in which Ms. Phalen
is a limited partner; and 100,191 shares are owned by the Grinberg Family Foundation. Ms. Phalen shares voting power with respect
to the 3,655,640 shares of Class A Common Stock held directly by GPLP with GPLP, GGP (GPLP’s general partner), Mr. E. Grinberg
(GGP’s Managing Partner) and Mr. A. Grinberg. As one of three directors of the Grinberg Family Foundation (along with Mr. E. Grinberg
and Mr. A. Grinberg), Ms. Phalen has shared voting and dispositive power with such other directors over the shares
owned by such foundation. Of the shares of Common Stock reported as beneficially owned by Ms. Phalen, 5,786 shares are owned jointly
with her husband, with whom she shares voting and dispositive power over such shares, and 2,504 shares are owned by her husband,
with whom she may be deemed to share voting and dispositive power over such shares. Also includes 11,292 shares of Class A Common
Stock and 6,426 shares of Common Stock held by a remainder trust for the benefit of Ms. Phalen of which Ms. Phalen is
co-trustee with Mr. E. Grinberg and Sharon Trulock, with whom she shares voting and dispositive power.
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(13)
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Mr. Quintero ceased employment with the Company on April 30, 2017. The total number of shares
of Common Stock beneficially owned by Mr. Quintero includes 19,853 shares which he had (as of April 30, 2017) the right to acquire
by the exercise of options under the Company’s Stock Plan.
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(14)
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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.
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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 of Directors so long as the number is not
less than three. The Board of Directors 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 of Directors 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 will not be counted for purposes of the election of directors.
The Board
of Directors recommends that shareholders vote FOR the election of the nominees listed below.
Name
|
Age
|
Director Since
|
Position
|
Margaret Hayes Adame
|
77
|
1993
|
Director
|
Peter A. Bridgman
|
65
|
2014
|
Director
|
Richard J. Coté
|
62
|
2000
|
Director
|
Efraim Grinberg
|
59
|
1988
|
Chairman of the Board of Directors and Chief Executive Officer; Director
|
Alex Grinberg
|
54
|
2011
|
Senior Vice President Customer/Consumer Centric Initiatives; Director
|
Alan H. Howard
|
57
|
1997
|
Director
|
Richard Isserman
|
82
|
2005
|
Director
|
Nathan Leventhal
|
74
|
2003
|
Director
|
Maurice Reznik
|
62
|
2011
|
Director
|
Except for Efraim Grinberg
and Alex Grinberg, who are brothers, there are no family relationships between any of the Company’s directors. There
are no arrangements between any director and any other person pursuant to which any of them was elected a director.
Margaret Hayes Adame
is
the President and Chief Executive Officer of Fashion Group International, Inc., an international, non-profit trade 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. For more than 19 years, she was also a member
of the Board of Directors of International Flavors & Fragrances, Inc., a manufacturer and supplier of flavors and fragrances
for the food, beverage, personal care and household products industries. She also serves on the Board of Trustees of Montefiore
Medical Center. Her expertise in the areas of retail and fashion provide her with a thorough understanding of numerous issues involving
the Company’s products and customers and makes her very suitable for service on the Board of Directors.
Peter A. Bridgman
served
as Senior Vice President and General Auditor at PepsiCo Inc. before his election to the Board of Directors of the Company in February
2014. From 2000 to 2011, Mr. Bridgman was SVP and Controller at PepsiCo Inc., during which time he led the financial reporting
and control functions for the $67 billion global consumer products company, ensuring best practice governance and regulatory compliance
around the world. From 1992 to 2000, Mr. Bridgman served as SVP and Controller of Pepsi Bottling Group and from
1985 to 1992, he held positions of increasing responsibility at Pepsi International. Prior to that, Mr. Bridgman spent
12 years at KPMG where he had global client audit responsibilities. Mr. Bridgman served on the board of Alltel Corporation,
a $10 billion wireless provider acquired by Verizon in 2009, and Pepsi Bottling Ventures, an $800 million private beverage manufacturer.
He received a B.S. in Economics and Accounting from Bristol University in England, and is both a Certified Public Accountant in
the United States and a Chartered Accountant in England. Mr. Bridgman’s extensive experience in financial reporting
and internal control and his background in public accounting qualify him for service on our Board of Directors and bring the Board
of Directors additional expertise in these areas.
Richard Coté
retired
from his position as Vice Chairman and Chief Operating Officer of the Company in July 2016. Mr. Coté, who continues
to serve as a member of the Board of Directors, joined the Company in January 2000 as Executive Vice President – Finance
and Administration. In May 2001, Mr. Coté was promoted to Executive Vice President - Chief Operating Officer; in March
2010, he was promoted to the position of President and Chief Operating Officer; and in July 2014, he was promoted to Vice Chairman
and Chief Operating Officer. Prior to joining the Company, Mr. Coté worked for Colgate-Palmolive, a global 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. Prior to joining Colgate-Palmolive, Mr. Coté
spent eight years at KPMG LLP in public accounting. Mr. Coté’s extensive experience in the areas of international
business, accounting and corporate operations, as well as his familiarity with the Company, make him well qualified for service
on the Board of Directors.
Efraim 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. Grinberg served
as the Company’s President and Chief Operating Officer and, from October 1995 until May 2001, served as the Company’s
President. In May 2001, Mr. Grinberg was elected to the position of President and Chief Executive Officer and, in addition,
effective January 31, 2009, he was elected Chairman of the Board of Directors. In March 2010 Mr. Grinberg resigned as President.
He continues to serve as the Company’s Chairman of the Board of Directors and Chief Executive Officer. Mr. Grinberg’s
more than three decades of experience in the watch industry and in a variety of positions at the Company during this period of
its growth provides him with a detailed and extensive knowledge of the Company’s brands, markets, competitors, customers
and virtually every other aspect of its business and the industry as a whole and qualifies him for service on the Board of Directors.
Mr. Grinberg also serves on the Board of Directors of Lincoln Center for the Performing Arts, Inc. and Jewelers of America.
Alex Grinberg
joined the
Company in December 1994 as a territory manager for the Movado brand and was promoted to Vice President of International Sales
for the Concord brand in June 1996. From February 1999 through October 2001 he was stationed in the Far East developing Movado
Group brands in Hong Kong and Japan. Beginning in November 2001 he held a number of positions of increasing responsibility within
the Concord brand in the United States until November 2010, when he was appointed to his current position of Senior Vice President
of Customer/Consumer Centric Initiatives with responsibility for creating programs to enhance the Company’s relationships
with its retail partners and improve its worldwide customer service and after sales service performance. Mr. Grinberg’s
many years with the Company, during which time he has held a number of positions in sales and brand management, and his international
experience, make him well qualified for service on the Board of Directors.
Alan Howard
is the Managing
Partner of Heathcote Advisors LLC, which he formed in March 2008 and which provides financial advisory services as well as
makes principal investments. In addition, Mr. Howard is the President of Dynatech/MPX Holdings LLC (“D/M Holdings”),
a privately held company that is a global supplier and service provider of military aircraft parts for multiple platforms and engines.
Mr. Howard has been a member of the Board of Directors of D/M Holdings since 2012 and serves as chief executive officer of
one of its two operating companies (Dynatech International LLC), while also sitting on the boards of D/M Holdings’ two operating
companies (Dynatech International LLC and Military Parts Exchange LLC). He is also currently a Senior Advisor at Rossoff &
Company LLC, an independent investment banking firm that provides advice on mergers and acquisitions, corporate finance and restructurings
and assists on raising debt and equity capital in the private and public markets. From September 2008 through June 2010 he was
Managing Partner of S3 Strategic Advisors LLC which provides strategic advice to hedge funds and asset managers. Prior to July
2006, Mr. Howard was a Managing Director of Credit Suisse First Boston LLC (“CSFB”), an international provider of financial
services. He had been with CSFB and its predecessor companies since 1985. As a Managing Director in the Global Industrial and Services
Investment Banking Group, he was an advisor to several of the firm’s most important clients on mergers and acquisitions,
corporate finance and capital raising assignments. With his broad experience in investment banking, Mr. Howard provides the Board
of Directors with corporate finance, capital markets and mergers and acquisitions experience.
Richard Isserman
had
a distinguished career of nearly 40 years with KPMG LLP and for 26 years served as Audit Partner in KPMG’s New York office.
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. He is a licensed New York State CPA. Based on his years of demonstrated
leadership in the field of public accounting, Mr. Isserman provides our Board of Directors with in-depth knowledge and experience
in financial, accounting and risk management issues.
Nathan 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 chaired Mayor Michael Bloomberg’s Committee on Appointments during his three terms as Mayor and was
a Commissioner on the New York City Planning Commission from 2007 to 2011. He currently serves on the Board of Directors of a number
of equity, fixed income and money market funds managed by the Dreyfus Corporation, an investment advisor, and serves on the Budget
and Finance Committee of the Town of Southampton, New York. Mr. Leventhal is a former partner of the law firm Poletti Freidin Prashker
Feldman & Gartner. Other New York City governmental positions held by Mr. Leventhal include Fiscal Director of the Human Resources
Administration, Commissioner of Rent and Housing Maintenance, Commissioner of Housing Preservation and Development, and Secretary
of the New York City Charter Revision Commission. In Washington, D.C., Mr. Leventhal served as an attorney in the Office
of the Air Force General Counsel, Assistant to the Executive Director of the Equal Employment Opportunity Commission, and Chief
Counsel to the U.S. Senate Subcommittee on Administrative Practice and Procedure. 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. Mr. Leventhal’s
wealth of experience in the areas of government, law, public policy, fiscal affairs and management make him well qualified to serve
on our Board of Directors.
Maurice Reznik
is the Chief
Executive Officer of the Women’s Intimate Apparel division in the United States and Great Britain for Delta Galil Industries,
Ltd. and President of Delta Galil USA. He served as the Chief Executive Officer and a member of the Board of Directors of Maidenform
Brands, Inc., a global intimate apparel company, from July 2008 to April 2014. From May 2004 until July 2008, he was President
of Maidenform Brands with responsibility for marketing, merchandising, design and sales for both branded and private label products.
From April 1998 to May 2004, Mr. Reznik was President of the Maidenform division of Maidenform Brands’ predecessor company
and, in the 19 years prior to joining Maidenform, held various sales and management positions in the intimate apparel industry,
including President of Warner’s Intimate Apparel Group, a division of Warnaco, Inc., a global intimate apparel, swimwear
and sportswear company. Mr. Reznik is also the founder of the For Love of Life Colon Cancer charity and serves on the Board of
Directors of public company KapStone Paper and Packaging Corporation (whose board Mr. Reznik joined in July 2014) and not-for-profits
Dignity U Wear and Queens College. He also serves on the Parent Leadership Council of Shatterproof, a 501(c)(3) organization dedicated
to reducing the impact of addiction on families across America. With over 30 years of experience working in positions of increasing
responsibility in the intimate apparel industry and as the CEO of a public, consumer products company, Mr. Reznik has expertise
in product design and sourcing, wholesale, retail, brand development and merchandising as well as in core business areas such as
strategy and business development, operations, brand management, finance, compliance and risk management, all of which make him
well qualified to serve on the Board of Directors.
THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board of Directors Leadership Structure
Prior to January 31, 2009, the positions
of Chairman of the Board of Directors and Chief Executive Officer were held by two individuals. Following the retirement and passing
of the Company’s former Chairman, Mr. Gedalio Grinberg, the Board of Directors appointed Mr. Efraim Grinberg, who at that
time was the Chief Executive Officer and a sitting Board of Directors member, to also serve as Chairman. In making the
decision to combine the positions of the Chairman and Chief Executive Officer, the Board of Directors took into consideration Mr.
E. Grinberg’s almost 30 years of management, financial and administrative leadership at the Company and his extensive knowledge
of, and experience with, all other aspects of the Company’s business and concluded that he is the director most capable of
guiding our business, at both the strategic and operational levels.
In May 2011, upon the recommendation of
the Nominating/Corporate Governance Committee, the Board of Directors established the position of “lead director” to
help coordinate the activities of the other independent directors and to perform such other duties and responsibilities as the
Board of Directors may determine from time to time. Mr. Howard was appointed by the Board of Directors as lead director at that
time and currently continues to serve in that capacity, in addition to chairing the Compensation Committee. The primary duties
of the lead director include providing advice on agendas for and the scheduling of Board of Directors meetings, advising the Chairman
as to the quality, quantity and timeliness of the information submitted by the Company’s management to the Board of Directors,
serving as the principal liaison for consultation and communication between the independent directors of the Board of Directors
and the Chairman, without inhibiting direct communication between the Chairman and the other directors, and presiding at meetings
of the Board of Directors in the absence of or upon the request of the Chairman and presiding at all meetings of the independent
directors.
The composition of the Board of Directors,
the tenure of the directors with the Company, the overall experience of the directors and the experience that the directors have
had with the Chairman, the lead director and the executive management group permit and encourage each member to take an active
role in all discussions, and each member does actively participate in all substantive discussions. We believe that our current
Board of Directors leadership structure is serving the Company well at this time.
Board of Directors
Meetings and Committees
In fiscal 2017, the Board of Directors
held eleven meetings. All directors attended at least 75% of the meetings of the Board of Directors and of the committees on which
they served.
The Board of Directors has three committees:
|
|
Nominating/Corporate Governance.
|
The members of the committees and their
chairs are appointed by the Board of Directors 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. The current committee membership is as follows:
Audit
Committee
|
Compensation
Committee
|
Nominating/Corporate
Governance Committee
|
Richard Isserman *
|
Alan H. Howard *
|
Nathan Leventhal *
|
Peter A. Bridgman
|
Margaret Hayes Adame
|
Margaret Hayes Adame
|
Alan H. Howard
|
Nathan Leventhal
|
Peter A. Bridgman
|
Maurice Reznik
|
Maurice Reznik
|
Richard Isserman
|
|
|
|
*
Committee Chair
|
|
|
Audit Committee
The Board of Directors has determined
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 five meetings in fiscal 2017.
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 of Directors 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 five meetings
in fiscal 2017. The principal functions of the Compensation Committee are to (i) review and approve corporate goals and objectives
relevant to the CEO’s 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 non-CEO executive 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 2017 comprised entirely of independent directors who at no time were executive officers or
employees of the Company. 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 2017. 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 of Directors, 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 for directors or executive officers; and (iv) facilitate an annual assessment
of the performance of the Board of Directors and each of its committees.
The Board of Directors and individual
committee self-assessments typically occur each May or June. The annual Board of Directors self-assessment is organized by the
chairman of the Nominating/Corporate Governance Committee who generally circulates a list of proposed key discussion topics as
well as current and relevant governance issues in advance of the meeting to each member of the Board of Directors for review, consideration
and input. Topics are centered on Board of Directors practices and performance and are intended to and do engender analysis and
robust discussion. Management members of the Board of Directors attend and participate in the first part of the self-assessment
meeting together with the independent directors, after which the independent directors meet alone. At the first regularly scheduled
Board of Directors meeting following the self-assessment meetings, the Nominating/Corporate Governance Committee chairman reports
to the full Board of Directors on the results of the Board of Directors self-assessment. Based on those results and any recommendations
coming out of the self-assessment, the Board of Directors may implement changes, as appropriate, to its corporate governance guidelines
or other processes.
Identifying and Evaluating Candidates
for the Board of Directors
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 of Directors 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 of Directors matters; diversity of viewpoints and backgrounds;
and the absence of any conflict of interest that might interfere with performance as a director. While the Nominating/Corporate
Governance Committee has no other policy with respect to the consideration of diversity in identifying nominees, it seeks directors
who represent a diverse mix of backgrounds and experiences that will enhance the quality of the Board of Directors’ deliberations
and decisions.
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:
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The name and address 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;
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A description of all arrangements or understandings between the shareholder and each candidate pursuant to which the nomination
is being made;
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The name of the candidate, the candidate’s résumé 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; and
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Such other information regarding each proposed candidate as would be required to be included in a proxy statement under the
rules of the SEC if such candidate had been 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, Ste. 375, Paramus, New Jersey 07652-3556 and must be
received within the time indicted above 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 has adopted a Code of Business
Conduct and Ethics that applies to all directors, officers and employees, including the Company’s Chief Executive Officer,
Chief Financial Officer and principal accounting and financial officers.
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, without charge, 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 (either 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 of Directors 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:
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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
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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 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 Alex Grinberg, Efraim Grinberg and Richard Coté,
representing a majority of the entire Board of Directors, 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 lead director is designated to chair these executive
sessions under the Company’s Corporate Governance Guidelines.
Board of Directors Role in Risk
Oversight
While management is responsible for managing the
various risks that may arise in the course of the Company’s business, the Board of Directors has a role in the oversight
of the risk management process. The Board of Directors and, as appropriate, its committees regularly meet to receive and
discuss operating and financial reports presented by the Chairman of the Board of Directors and Chief Executive Officer, the Chief
Financial Officer, the Company’s General Counsel, the Senior Vice President of Human Resources, the Senior Vice President
of Global Business Processes and Chief Information Officer, the Vice President of Internal Audit and Business Controls and numerous
other officers and employees of the Company as well as experts and other advisors. In addition, each year management presents a
budget and business plan for the following fiscal year which is reviewed by and discussed with the Board of Directors. Management
also regularly discusses with the Board of Directors strategic initiatives and the associated risks. The Board of Directors also
reviews specific risk areas on a regular basis. These include insured risks, disaster recovery, management authority and internal
controls, litigation risks, risks associated with the Company’s information systems and data privacy, foreign currency risks,
risks associated with the Company’s customer mix, supply chain and credit risks, inventory risks and other operational
and financial risks. The Audit Committee has particular oversight responsibility with respect to the preparation and audit of the
Company’s financial statements and internal audit issues and is specifically charged in its charter to, and does, discuss
with management and the independent auditor the Company’s policies with respect to risk assessment and risk management. The
Audit Committee concerns itself most specifically with the integrity of the financial reporting process, but also with personnel,
asset and information security risk. All committee meetings are open to the other directors and many regularly attend because the
committee meetings are regularly scheduled on the same day as Board of Directors meetings.
Compensation Risk Assessment
We believe that the performance goals
and incentive plan structures generally established under the Company’s executive, annual and long-term incentive programs
would not contribute to excessive risk by our senior executives or employees. The approved goals under our incentive programs
are consistent with our financial operating plans and strategies, and these programs are discussed and reviewed by the Compensation
Committee. The Company’s compensation systems are balanced, rewarding both short-term and long-term performance, and
its performance goals are team oriented rather than individually focused, and include measurable factors and objective criteria.
The Compensation Committee is actively engaged in setting compensation systems, monitoring those systems during the year and using
discretion in making rewards, as necessary. As a result of the procedures and practices described above, the Committee believes
that the Company’s compensation policies and practices for its employees do not encourage risk taking that is reasonably
likely to have a material adverse effect on the Company.
Communications
with the Board of Directors
Shareholders and other interested parties
desiring to communicate directly with the full Board of Directors, the Audit Committee of the Board of Directors, the non-management
directors as a group or with any individual director or directors may do so by sending such communication in writing addressed
to the attention of the intended recipient(s), c/o Secretary and General Counsel, Movado Group, Inc., 650 From Road, Ste. 375,
Paramus, NJ 07652-3556. Interested parties may communicate anonymously and/or confidentially if they desire. 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. All other 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. Eight of the nine members of the Board of
Directors attended the 2016 Annual Meeting of Shareholders.
EXECUTIVE OFFICERS
For detailed information concerning Efraim Grinberg,
see the listing for Mr. Grinberg under the heading “PROPOSAL 1 - ELECTION OF DIRECTORS” above. The names
of the other current executive officers of the Company (and their respective ages as of the date of this proxy statement) are set
forth below, together with the positions held by each during the past five or more years.
Name
|
Age
|
Position
|
Sallie A. DeMarsilis
|
52
|
Chief Financial Officer; Principal Accounting Officer
|
Frank A. Morelli
|
66
|
Senior Vice President Global Business Processes and Chief Information Officer
|
Mitchell C. Sussis
|
52
|
Senior Vice President, General Counsel and Secretary
|
Ms. DeMarsilis
joined the
Company in January 2008 as a Senior Vice President of Finance and was appointed Chief Financial Officer and Principal Accounting
Officer effective March 31, 2008. From December 2004 through December 2007, she served as Senior Vice President of Finance with
The Warnaco Group, Inc., a global wholesaler and retailer of apparel. Prior to that, Ms. DeMarsilis held several senior financial
positions with Ann Inc. (formerly known as Ann Taylor Stores Corporation), a specialty retailer in the United States of women’s
apparel, shoes and accessories, from November 1994 through December 2004, including Controller and Senior Vice President of Finance.
Both The Warnaco Group, Inc. and Ann Inc. were publicly traded companies during Ms. DeMarsilis’ tenure. Ms. DeMarsilis is
a Certified Public Accountant and worked in public accounting with Deloitte & Touche LLP for eight years before joining Ann
Inc.
Mr. Morelli
began with
the Company in February 2006 as Senior Vice President Business Processes and Chief Information Officer. Immediately prior to joining
the Company and since 1995, Mr. Morelli was the Vice President – Global Information Technology at Colgate-Palmolive
Company, a global consumer goods company, which he joined in 1973. Prior to 1995, Mr. Morelli held a number of different positions
of increasing responsibility in the areas of information technology, finance, customer service, distribution/logistics and marketing.
Mr. Sussis
joined the Company
in November 2015 as Senior Vice President, General Counsel and Secretary. Immediately prior to joining the Company, Mr. Sussis
served as Vice President and Deputy General Counsel of Time Inc., an international media company, since January 2014. Prior thereto,
he served as Senior Vice President and Deputy General Counsel of Level 3 Communications, Inc., a global telecommunications services
provider, since October 2011, and as Senior Vice President, Deputy General Counsel and Secretary of Global Crossing Limited from
1999 until its acquisition by Level 3 Communications in 2011. Earlier in his career, Mr. Sussis held senior legal positions
at The Dun & Bradstreet Corporation and Automatic Data Processing, Inc., after having started in legal practice in 1989 at
the international law firm of Simpson Thacher & Bartlett LLP.
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 with respect 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, including performance goals under annual
and long-term incentive plans; and reviews and administers the Company’s 1996 Stock Incentive Plan, as amended and restated
as of April 4, 2013 (the
“
Stock Plan
”)
. Throughout this proxy statement, the individuals who served
as the Company’s CEO or Chief Financial Officer (“CFO”) during fiscal 2017, as well as the other individuals
included in the SUMMARY COMPENSATION TABLE below, are referred to as the “named executive officers”. The named executive
officers include Richard Coté, who served as the Company’s Vice Chairman and Chief Operating Officer until his retirement
in July 2016, as well as Ricardo Quintero, who served as the Company’s President until his separation from the Company on
April 30, 2017.
The Committee considers feedback from our shareholders regarding the Company’s executive compensation programs,
including the results of our shareholders’ advisory vote on executive compensation. At the 2016 annual meeting, over
96% of the votes represented at the meeting and over 99% of the votes cast approved our executive compensation program. Also,
in accordance with the preference indicated by more than 97% of the votes cast at our 2011 annual meeting regarding the frequency
of future advisory votes on executive compensation, the Board of Directors decided that such future advisory votes would be submitted
to shareholders every year. See “PROPOSAL 4 – ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE
COMPENSATION,” for a proposal regarding the frequency of such advisory votes in the future. Shareholders are invited to
express their views to the Board of Directors regarding executive compensation as well as other matters as described in this proxy
statement under the heading “
Communications with the Board of Directors”
.
Compensation Objectives
The fundamental purpose served by
every compensation recommendation made by the Company and approved by the Committee is to attract, retain, motivate and appropriately
reward a group of highly qualified individuals who contribute to the Company’s continued success, with the ultimate objective
of enhancing shareholder value. The three most significant elements of compensation used by the Company in developing specific
compensation packages offered to its executives and management level employees generally are: (1) base salary, (2) annual incentive
cash bonuses and (3) long term equity compensation. Of these, the variable elements (annual incentive cash bonuses and equity compensation)
vary with performance, are closely linked to the creation of long-term shareholder value and, as such, most closely align executives’
interests with those of the Company’s shareholders. The Company and the Committee believe that the most effective executive
compensation programs are those designed to reward the achievement of specific strategic goals set by the Company and those that
are closely linked to the creation of long-term shareholder value; therefore, a significant portion of the total compensation that
may be earned by the named executive officers is determined by these variable elements.
Setting Executive Compensation
With the foregoing objectives in mind,
the Company determines overall compensation levels for the named executive officers and senior management based on particular facts
and circumstances, including, for example, the experience level and performance of the individual executive and market factors.
The Committee periodically engages the
services of independent executive compensation and benefits consulting firms, primarily Frederic W. Cook & Co., Inc. (“FW
Cook”), to advise on the structure of the Company’s compensation programs and to assist it in assessing the competitiveness
of the Company’s executive and independent director compensation levels. The Committee did not receive extensive executive
compensation consulting advice from FW Cook during fiscal 2017.
The Committee does not rely solely, or even
primarily, on available compensation data from any single group of companies because the Committee believes that the Company competes
for top executive talent with many other larger companies in addition to companies that may be considered to be the Company’s
peer group. Therefore, the Committee considers prevailing compensation trends and practices in other industries and other companies
but does not engage in any formal benchmarking with respect to these other industries or companies.
Consistent with the Company’s
compensation philosophy, a significant percentage of total compensation, particularly in the case of the named executive officers,
is allocated to variable incentive compensation. The Committee reviews all information made available to it periodically from outside
compensation consultants and annually from the Company’s Senior Vice President of Human Resources to determine the appropriate
level and mix of incentive compensation as among cash and non-cash or short-term and long-term incentive compensation. In setting
the compensation for the CEO and the other named executive officers for fiscal 2017, the Committee considered the financial performance
of the Company in fiscal 2016, the Company’s projected financial performance in fiscal 2017, the Company’s historical
base pay, bonus and equity grant data from the previous three fiscal years and information relating to compensation survey data
from the luxury goods industry provided by the Company’s Senior Vice President of Human Resources.
The Committee makes all compensation
decisions affecting the compensation awarded to the CEO. With respect to the compensation of the other named executive officers
and other senior executives, the Committee considers the recommendations of the CEO and the Senior Vice President of Human Resources,
including recommendations regarding salary adjustments and annual award amounts. Subject to any applicable plan limitations, the
Committee may exercise its discretion in modifying any recommended adjustments or awards to executives. The Committee also reviews
total compensation earned by and awarded to the named executive officers for the prior three years.
Fiscal 2017 Executive Compensation Components
For the fiscal year ended January 31,
2017, the principal components of compensation for the named executive officers were:
|
|
performance-based annual incentive compensation;
|
|
|
equity incentive compensation;
|
|
|
retirement and other post-employment benefits; and
|
|
|
perquisites and other personal 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 and 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:
|
|
market data with respect to average merit and cost of living increases for similar positions;
|
|
|
internal review of the executive’s compensation, both individually and relative to other executive officers; and
|
|
|
individual performance of the executive.
|
For fiscal 2017, the Committee determined
to increase the salaries of Mr. E. Grinberg by $50,000 to $1,050,000; of Mr. Quintero by $25,000 to $775,000; of Ms. DeMarsilis
by $15,000 to $500,000; and of Mr. Morelli by $15,000 to $490,000. Mr. Sussis was not considered for a salary increase
since he started employment with the Company in November 2015.
Performance-Based Annual Incentive
Compensation
The Company has two plans that together
govern the annual performance-based incentive compensation program in which each of its named executive officers, other executives
and key management level employees participate: the Movado Group, Inc. Executive Performance Plan (the “EPP”), in which
only the CEO and the three most highly compensated executive officers as of the last day of the Company’s taxable year, excluding
the principal financial officer (“Covered Employees”), participate, and the Annual Incentive Compensation Plan, in
which all bonus-eligible employees participate. These 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 Section
162(m) of the Internal Revenue Code, as amended (the “Code”), within 90 days after the beginning of each fiscal year
the Committee establishes target and maximum incentive levels for the Covered Employees that are expressed as a percentage of their
respective base salaries. At the same time, the Committee establishes a corporate performance objective that must be met before
any annual incentive payments can be made under the EPP to any of the Covered Employees. As was the case in the five prior fiscal
years, for fiscal 2017 the Committee selected adjusted operating profit as the performance objective for the EPP.
For fiscal 2017, the Committee set the
target annual incentive payments (based on 100% bonus pool funding of the Annual Incentive Compensation Plan discussed below) for
the CEO at 100% of his base salary; for Mr. Quintero at 75% of his base salary; for Mr. Morelli at 50% of his base salary;
for Ms. DeMarsilis at 50% of her base salary; and for Mr. Sussis at 40% of his base salary. Mr. Coté did not participate
in the fiscal 2017 incentive compensation program in light of his planned retirement during the year. The Committee determines
the target bonus under the EPP for each named executive officer by exercising its subjective judgment of what an appropriate percentage
is, informed by a consideration of the target bonus that was in effect for such officer for each of the three previous years and
such person’s total compensation compared to target bonus levels and total compensation payable to other executive officers
in other positions within the Company and, more generally, relative to similar executive positions in the broad competitive marketplace.
In addition, the Committee established the maximum annual incentive payments under the EPP to any of the named executive officers
at 200% of their target annual incentive amounts. The EPP provides that total cash incentives payable thereunder to all the named
executive officers (or any single named executive officer) in any year may not exceed $5 million. Please see the GRANTS OF PLAN-BASED
AWARDS TABLE for the target and maximum annual incentive awards payable to each of the named executive officers in respect of fiscal
2017.
No payments are made to any of the Covered
Employees under the EPP unless the threshold corporate performance objective for the year is achieved. For fiscal 2017, the threshold
performance goal under the EPP was established as operating profit of $40 million, adjusted for restructuring charges and other
unusual items.
If the Company achieves the corporate
performance goal under the EPP, the Committee then assesses the Company’s overall financial performance and each Covered
Employee’s individual performance in exercising its discretion to determine the annual bonus actually paid to any of them
under the Annual Incentive Compensation Plan, which may not, in any event, exceed the maximum set at the beginning of the year.
Just as with the corporate performance objective established by the Committee under the EPP, the financial performance targets
approved by the Committee under the Annual Incentive Compensation Plan are determined within 90 days after the beginning of the
award period taking into account the Company’s operating budget for the year.
The Committee’s usual practice is
to pay seventy-five percent of each named executive officer’s Annual Incentive Compensation Plan payout in cash and twenty-five
percent in a Common Stock award that cliff-vests on the third anniversary of the grant date subject to continued employment through
such third anniversary. See discussion under
“Equity Incentive Compensation”
below.
The Committee considers the extent to
which the financial criteria under the Annual Incentive Compensation Plan have been met in determining the annual incentive amount
to pay to each named executive officer; provided that no payment may be made to any Covered Employee unless the threshold corporate
performance objective for the year is achieved under the EPP. The financial performance measures serve the purpose of providing
the Committee with objective criteria by which to assess the Company’s performance notwithstanding that they are not assigned
a relative weight to one another. Those criteria consist of key indicators against which to measure how well or how poorly
the Company performed overall for the year.
It is not necessary that every single
corporate performance measure be met for bonuses to be paid. However, as discussed above, the corporate performance objective
established by the Committee under the EPP must be met as a precondition to making any payments to Covered Employees. Subject
to the foregoing, the Committee may determine in its discretion to pay bonuses to the named executive officers regardless of whether
any of the Annual Incentive Compensation Plan targets are met. Similarly, even if all the corporate performance targets are met,
the Committee retains the discretion to modify or eliminate the annual incentive payable to each named executive officer, although
the Committee may not authorize a payment to any Covered Employee in excess of his or her maximum annual incentive established
under the EPP.
In fiscal 2017, the
Committee approved the following corporate performance objectives under the Annual Incentive Compensation Plan that would correspond
to a payout at the 100% (target) funding level. The table below shows each measure at the target level and the corresponding result
actually achieved.
|
Measure
|
Target
|
Actual (Adjusted)*
|
|
Net Sales
|
$610.0 million
|
$552.8 million
|
|
Gross Profit
|
$329.8 million
|
$294.8 million
|
|
Gross Margin %
|
54.1%
|
53.3%
|
|
Operating Profit
|
$74.1 million
|
$55.8 million
|
|
Cash Flow from Operations
|
$60.0 million
|
$58.4 million
|
|
Net Income
|
$49.4 million
|
$37.1 million
|
|
EPS
|
$2.10
|
$1.59
|
*
Consistent with
the Annual Incentive Compensation Plan, Operating Profit, Net Income and EPS were adjusted to exclude the impacts of a $0.9 million
impairment charge, net of tax of $0.4 million, relating to a long-term investment in a privately held company and a $1.1 million
charge, net of tax of $0.7 million, for the immediate vesting of stock awards and certain other compensation related to the announcement
of Mr. Coté’s retirement.
In addition to the above financial performance
targets, the Committee also considers individual performance in determining the amount of each named executive officer’s
bonus payment under the Annual Incentive Compensation Plan. There is no specific relative weight given by the Committee either
to the financial performance of the Company as compared to the individual performance of any executive officer or to any one financial
performance measure as compared to any other. The Committee retains the absolute discretion to determine the amount of each
named executive officer’s annual incentive payment regardless of the extent to which any of the performance criteria (individual
or corporate) are met, subject, in the case of any bonus payment to a Covered Employee, to the achievement of the threshold corporate
performance objective for the year under the EPP. However, in exercising its discretion the Committee does, in practice, take into
account these criteria, including individual performance. In considering individual performance, the Committee is briefed
by, and relies on a general summary assessment and recommendation provided by, the Company’s CEO and/or Senior Vice
President of Human Resources relative to the performance of the named executive officers (other than the CEO). That summary assessment
and recommendation is based on and generally reflects the individual assessment provided by each named executive officer’s
immediate supervisor which itself would typically address the individual performance goals of such named executive officer as well
as his or her overall performance. Therefore, when the Committee considers individual named executive officer performance
in this way, including consideration of whether individual goals have been met, the Committee does so indirectly as it is not apprised
of any named executive officer’s specific personal goals nor does it (with the exception of the CEO) independently consider,
or assess individual named executive officer performance relative to, those goals.
When it considers the individual performance
of the CEO in exercising its discretion to approve any annual incentive payment to be made to him, the Committee refers to the
CEO’s individual performance goals but does not base its assessment of his performance solely or even primarily on those
goals since it may, consistent with the plan, approve award payments regardless of whether other performance criteria (besides
the threshold corporate performance goal established under the EPP) have been met. In fiscal 2017, the CEO’s individual
objectives included net sales of $610 million, operating profit of $74.1 million and cash flow from operations of $60 million.
Other goals set for the CEO for fiscal 2017 included non-quantitative objectives that were not specifically considered by the Committee
as part of its determination of his cash incentive payment under the Annual Incentive Compensation Plan. However, the Committee
does evaluate the CEO’s individual performance against those other objectives for the year subsequent to and separate from
the deliberative process conducted under the Annual Incentive Compensation Plan.
In determining the annual incentive compensation
payments for the named executive officers for fiscal 2017, the Committee considered the factors described above. The Committee
noted that the Company had achieved the threshold corporate performance objective under the EPP but did not achieve the targeted
levels of financial performance established under the Annual Incentive Compensation Plan. However, the Committee also took into
account the challenging retail and watch industry environment and unfavorable impacts of foreign currency exchange rate changes,
as well as the Company’s market share gains, relative performance in the watch industry, working capital management and total
shareholder return performance during the year. In light of these factors, the Committee exercised its discretion to award each
of the named executive officers other than the CEO a 2017 bonus equal to approximately one-quarter of his or her respective target
bonus opportunity
. Each of these named executive officers received all of his or her bonus
payment in cash. The CEO declined to be considered for a 2017 bonus award.
Equity Incentive Compensation
Stock ownership is a key element of the
Company’s compensation program for the named executive officers, senior management generally, as well as mid-level managers
throughout the Company. Under the Stock Plan, 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
these awards, the Committee may establish any conditions or restrictions it deems appropriate.
All grants made by the Committee under
the Stock Plan since its inception have been in the form of stock options, time-vesting restricted stock unit awards (pursuant
to which unrestricted shares of Common Stock are issued to the grantee when the award vests) or performance-based awards (under
which vesting occurs only if one or more predetermined financial goals are achieved within the relevant performance period). The
Committee believes that all of these equity awards are useful retention tools to the extent that vesting only occurs after a period
of several years and are also an effective means of encouraging award recipients to focus on enhancing shareholder value over the
long term by directly aligning the recipient’s financial interests with the interests of the Company’s shareholders.
The Committee normally makes annual grants under the Stock Plan within 30 days after the release of the Company’s fourth
quarter and year-end earnings results.
All stock options granted under the Stock
Plan have an exercise price equal to or greater than the fair market value of the Company’s Common Stock on the grant date
and have typically either vested incrementally over a period of three or five years or cliff-vested after three years. The Committee
views stock options as an effective means to closely tie individual performance directly to the Company’s stock price performance
because stock options will have no value unless the Company’s share price increases from the date of grant. Accordingly,
the Committee has been using stock options as a standard long-term, non-cash incentive for the named executive officers and other
senior executives since fiscal 2013.
Since the beginning of fiscal 2011, the
Committee has been including an equity component as part of the Annual Incentive Compensation Plan. Specifically, 25% of
each participant’s bonus opportunity under the Annual Incentive Compensation Plan is generally payable in restricted Common
Stock units. On the same date that a participant receives his or her cash incentive payment (if any) in respect of the prior fiscal
year, he or she also generally receives a number of restricted Common Stock units equal in value on the grant date to approximately
25% of the total bonus amount approved by the Committee for such participant. These restricted stock units cliff-vest on the third
anniversary
of the grant date, subject to the participant’s continued employment with
the Company through such vesting date
. However, given the size of the bonus payouts for fiscal 2017, it was decided to make
them all in cash and not to include an equity component.
In April 2016, the Committee granted fiscal
2017 equity awards to the named executive officers and other key employees taking into account the considerations described above.
Such equity awards made to the named executive officers are reported in the SUMMARY COMPENSATION TABLE for fiscal 2017 and in the
GRANTS OF PLAN-BASED AWARDS table below.
Considering this history of using various types
of equity grants under the Stock Plan, the Committee currently believes that the most effective use of equity as a component of
compensation for the named executive officers and other senior level executives is a mix of restricted stock unit awards and stock
options which, in each case, cliff-vest three years from the grant date. In this way, a significant portion of their compensation
is directly dependent on an increase in the share price, thereby more closely aligning their long-term objectives with enhancing
shareholder value over time. The Committee also considers the possible benefits of performance-based vesting criteria in its equity
grant practices and retains the discretion to include such criteria where it deems appropriate. In this regard, Mr. E. Grinberg’s
fiscal 2017 restricted stock unit award included a performance-based vesting condition. Specifically, this award required the achievement
of fiscal 2017 operating profit of at least $40 million, adjusted for restructuring charges and other unusual items. Since this
condition was satisfied, Mr. E. Grinberg’s fiscal 2017 restricted stock unit award will vest on the third anniversary
of the grant date, subject to Mr. Grinberg’s continued employment.
Retirement and Other 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”), a tax-qualified defined contribution retirement savings plan.
Deferred Compensation Plan
The named executive officers and certain
other executives selected by the Committee are eligible to participate in the Company’s Amended and Restated Deferred Compensation
Plan for Executives (“DCP”), which was most recently amended and restated at the annual shareholders meeting in 2013
to extend its term through June 13, 2023. The DCP 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 amounts from their base salary and cash bonus (if any) 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 compensation 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. Of the named executive officers, Mr. Grinberg is a Group I participant and, while
they were employees, Mr. Coté and Mr. Quintero were Group I participants. Messrs. Morelli and Sussis and Ms.
DeMarsilis are Group II participants. Twenty percent of the Company’s matching contribution is in the form of rights to Common
Stock. All matching contributions vest ratably in annual installments over five years. The DCP also permits the Company to make
discretionary contributions to any participant’s DCP account.
Participants may direct the investment
of amounts in their DCP accounts (other than rights to Common Stock) among third-party investment funds that are made available
to them under the plan. Those funds largely track the funds offered under the 401(k) Plan. Further information regarding the participation
by the named executive officers in the DCP is discussed in further detail under the heading “NONQUALIFIED DEFERRED COMPENSATION”
below.
Severance and Change of Control Agreements
The Company has a severance agreement
with Mr. Morelli which would provide him with certain benefits in connection with the termination of his employment in exchange
for certain post-employment restrictions. The agreement prohibits Mr. Morelli from (i) working in the watch or jewelry business
for six months after the termination for any reason (with such six month period being extended to 12 months to the extent the Company
is paying Mr. Morelli severance during that time) and (ii) soliciting Company employees and clients for 12 months after
termination. Under the agreement, Mr. Morelli would continue to be paid his then current base salary for 12 months after the
termination of his employment (18 months in the case of termination 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. Morelli without good reason.
For a detailed description of the agreement
between the Company and Mr. Morelli, please refer to the discussion under POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
below.
Prior to his separation from the Company
on April 30, 2017, Mr. Quintero was party to a severance agreement that would have entitled him to certain benefits in connection
with a termination of employment in exchange for certain post-employment restrictions. Under this agreement, Mr. Quintero
would have been entitled to continuation of his then current base salary for 12 months after an involuntary termination of employment
and would have been prohibited from (i) working in the watch or jewelry business for six months after termination (12 months to
the extent the Company was paying Mr. Quintero severance during that time) and (ii) soliciting Company employees and
clients for 12 months after the termination. This severance agreement was superseded by the arrangements made in connection with
Mr. Quintero’s actual separation from the Company on April 30, 2017. See “
Mr. Quintero’s Separation
Arrangements
,” below.
Mr. Coté’s Retirement
Arrangements
Mr. Coté retired as Chief Operating
Officer of the Company effective July 1, 2016, although he continues to serve as a member of the Board of Directors. On March
29, 2016, the Board of Directors approved compensation arrangements for Mr. Coté in connection with his retirement.
Specifically, Mr. Coté received bi-weekly payments equivalent, on an annualized basis, to his annual salary, payable
for the period from Mr. Coté’s retirement date through January 31, 2017. Mr. Coté also qualifies
for continued coverage under the Movado Group health and medical plan until he turns 65 years old (in 2020) so long as he remains
a member of the Board of Directors. Mr. Coté’s annual equity grant made on April 15, 2016 and the portion
of his fiscal year 2016 bonus paid in equity on April 15, 2016 were immediately vested; provided that each such award will be issued
or become exercisable, as the case may be, over the respective time period applicable to such award but is not conditioned on Mr. Coté’s
continued employment. In addition, the Board of Directors approved the immediate vesting of the unvested portion of Mr. Coté’s
outstanding equity awards for prior fiscal years, with such awards becoming immediately issuable or exercisable, as the case may
be. An immediately-vested employer contribution of $44,135 was deposited into Mr. Coté’s deferred compensation
account under the DCP, and the Board of Directors approved the immediate vesting of the unvested balance in such account. Mr. Coté
was not entitled to compensation under the Company’s compensation program for non-employee directors until the beginning
of fiscal year 2018. In connection with these compensation arrangements, Mr. Coté agreed to certain restrictions on
his ability to compete with the Company for a period beginning on his retirement date and ending on the later of the one-year anniversary
thereof or the date on which he ceases to serve on the Board of Directors.
Mr. Quintero’s Separation
Arrangements
On April 4, 2017, the Company announced
the termination of Mr. Quintero’s employment effective April 30, 2017. The Company agreed to provide Mr. Quintero
certain benefits in connection with his separation from the Company. Specifically, for the twelve-month period following his separation
date, Mr. Quintero will receive bi-weekly payments equivalent, on an annualized basis, to his annual salary plus his $12,000
per year automobile allowance. Mr. Quintero will be allowed to continue participating in the Company’s medical, dental
and vision plan through October 31, 2018, and the Company will pay the plan premiums in excess of the rate applicable to active
employees. The Company will also pay the costs of Mr. Quintero’s participation in an
outplacement
assistance program. Mr. Quintero also received a lump sum payment of $316,950 primarily in respect of certain restricted stock
units forfeited as a result of his separation from the Company.
In connection with these compensation arrangements, Mr. Quintero
agreed to certain restrictive covenants, including restrictions on his ability (i) to compete with the Company for a 15-month
period beginning on his separation date and (ii) to solicit the employment of Company employees for an 18-month period beginning
on his separation date.
Perquisites and Other Personal Benefits
As part of providing a competitive executive
compensation program, the Company provides to the CEO and the other named executive officers certain perquisites, described below,
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 the named executive officers.
The Company pays the CFO a taxable housing
allowance for the rental of an apartment located near the Company’s New Jersey headquarters.
The Company provides each of its named
executive officers with a taxable car allowance, and in some cases, automobile insurance reimbursement.
The Company has purchased life insurance
policies insuring the CEO and pays the premiums for that insurance. Under the Company’s arrangement with the CEO, the named
insured is entitled to the cash surrender value in respect of these life insurance policies and the respective beneficiaries are
entitled to the applicable death benefits without, in either event, reimbursement to the Company.
Attributed costs of the perquisites described
above for the named executive officers for the fiscal year ended January 31, 2017 are included in column (i) of the SUMMARY
COMPENSATION TABLE below.
Tax and Accounting Implications
Deductibility of Executive Compensation
The Committee reviews and considers the
deductibility of executive compensation under Section 162(m) of the Code, which provides that the Company may not deduct compensation
of more than $1,000,000 that is paid to any one of the chief executive officer and the three other highest paid executive officers
(other than our chief financial officer) unless the compensation meets certain requirements relating to performance-based compensation.
Certain of the Company’s compensation plans (including our Stock Plan and EPP) have been approved by our shareholders and
are designed to enable the Committee to award annual bonuses and grants of stock options and other equity-based awards which could
qualify for exemption from the application of Section 162(m). The Committee reviews compensation plans in light of applicable
tax provisions, including Section 162(m), and may revise compensation plans from time to time to maximize deductibility. However,
the Committee may approve compensation that does not qualify for deductibility when deemed to be in the Company’s best interests.
Accounting for Stock-Based Compensation
Beginning on February 1, 2006, the
Company began accounting for stock-based payments in accordance with the requirements of FASB ASC Topic 718 (previously 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 of Directors 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, 2017.
THE COMPENSATION COMMITTEE
Alan H. Howard, Chairman, Lead Director
Margaret Hayes Adame
Nathan Leventhal
Maurice Reznik
The Report of the Compensation Committee is not to be deemed
to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C or to the
liabilities of Section 18 of the Exchange Act, except to the extent the Company specifically requests that such information be
treated as soliciting material or specifically incorporates it by reference into any filing under the Securities Act or the Exchange
Act.
SUMMARY COMPENSATION TABLE FOR FISCAL 2017
The following Summary Compensation Table sets
forth information about the compensation paid in respect of fiscal 2017 by the Company to the CEO, the CFO and the three most highly
compensated executive officers of the Company other than the CEO and the CFO who were serving as executive officers at January
31, 2017. The table also includes compensation information for Richard Coté, who served as the Company’s Vice Chairman
and Chief Operating Officer until his retirement in July 2016. The foregoing individuals are referred to in this proxy statement
as the “named executive officers”.
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
|
(j)
|
Name and
Principal Position
|
Year
|
Salary
($)(1)
|
Bonus
($)
|
Stock
Awards
($)(2
)
|
Option Awards
($)(2)
|
Non-Equity
Incentive Plan
Compensation
($)(3)
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
Efraim Grinberg,
Chairman and Chief
Executive Officer
|
2017
2016
2015
|
1,041,538
1,000,000
1,000,004
|
—
—
—
|
700,019
—
755,422
|
499,994
—
485,730
|
—
600,000
—
|
—
—
—
|
166,047
165,494
258,243
|
(4)
|
2,374,250
1,765,494
2,499,399
|
Sallie A. DeMarsilis,
Chief Financial Officer
|
2017
2016
2015
|
497,098
485,000
482,635
|
—
—
—
|
169,741
121,288
185,117
|
121,246
121,254
113,337
|
60,000
145,500
—
|
—
—
—
|
60,073
60,383
59,317
|
(5)
|
908,158
933,425
840,406
|
Richard Coté,
Former Vice Chairman, Chief
Operating Officer
|
2017
2016
2015
|
314,422
750,000
742,116
|
—
—
—
|
393,769
281,285
392,390
|
281,247
281,284
251,860
|
—
337,500
—
|
—
—
—
|
525,872
93,848
128,623
|
(6)
|
1,515,310
1,743,917
1,514,989
|
Ricardo Quintero,
Former President
|
2017
2016
2015
|
768,750
750,000
419,665
|
—
—
—
|
407,806
281,285
1,000,034
|
500,747
281,284
535,742
|
145,000
379,688
—
|
—
—
—
|
93,897
94,995
45,403
|
(7)
|
1,916,200
1,787,252
2,000,844
|
Frank A. Morelli,
SVP, Global Business
Processes, CIO
|
2017
2016
2015
|
486,856
475,000
472,635
|
—
—
—
|
166,246
118,708
171,218
|
118,749
118,792
109,739
|
60,000
142,500
—
|
—
—
—
|
34,373
34,664
33,618
|
(8)
|
866,224
889,664
787,210
|
Mitchell C. Sussis,
SVP, General Counsel and Secretary
|
2017
2016
2015
|
365,001
84,230
—
|
—
—
—
|
51,097
184,960
—
|
36,498
—
—
|
40,000
43,800
—
|
—
—
—
|
30,040
3,628
—
|
(9)
|
522,636
316,618
—
|
|
(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 under the DCP are also shown in the NONQUALIFIED DEFERRED COMPENSATION TABLE.
|
|
(2)
|
Amounts shown under the “Stock Awards” column and the “Option Awards” column do not reflect compensation
actually received by the named executive officers. Instead the dollar value of these awards represents the fair value of the awards
on the date of grant calculated in accordance with FASB ASC Topic 718. Assumptions used in calculating these amounts are described
in Note 10 to the Company’s audited financial statements for the fiscal year ended January 31, 2017, included in our
Annual Report on Form 10-K filed with the SEC on March 20, 2017. The stock and option awards granted in fiscal 2015, 2016
and 2017 cliff-vest on the third anniversary of the grant date and are not subject to any performance conditions other than the
continued employment of the grantee, except that the stock and option awards granted to Mr. Quintero in fiscal 2015 provided for
vesting in equal installments on each of the first, second and third anniversaries of the grant date.
|
|
(3)
|
Represents the cash component of the annual incentive payments under the EPP and the Annual Incentive Compensation Plan. The
equity component of such annual incentive payments is reflected in the “Stock Awards” column for the fiscal year in
which the equity grant is made (i.e., the fiscal year immediately following the fiscal year in respect of which the bonus is paid).
See “Fiscal 2017 Executive Compensation Components –
Equity Incentive Compensation
” above.
|
|
(4)
|
Includes a taxable car allowance and automobile insurance reimbursement of $25,145. Includes $33,348 for premiums paid in respect
of certain life insurance policies purchased for Mr. Grinberg by the Company. Under his arrangement with the Company, Mr. 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. Includes a $3,400 matching contribution made by the Company for the account of Mr. Grinberg under the Company’s
401(k) Plan. Includes a matching cash contribution of $83,385 and a matching non-cash contribution of phantom stock units valued
at $20,769 (based on the closing prices of the Company’s Common Stock on the grant dates) to his account under the DCP. These
contributions under the DCP are also shown in the NONQUALIFIED DEFERRED COMPENSATION TABLE below.
|
|
(5)
|
Includes a taxable car allowance of $6,600 and a taxable housing allowance of $25,200. Includes a $3,400 matching contribution
made by the Company for the account of Ms. DeMarsilis under the Company’s 401(k) Plan. Includes a matching cash contribution
of $19,908 and a matching non-cash contribution of phantom stock units valued at $4,965 (based on the closing prices of the Company’s
Common Stock on the grant dates) to her account under the DCP. These contributions under the DCP are also shown in the NONQUALIFIED
DEFERRED COMPENSATION TABLE below.
|
|
(6)
|
Includes payments of $435,577 made to Mr. Coté in connection with his retirement, as described above under “Mr. Coté’s
Retirement Arrangements.” Includes a taxable car allowance and automobile insurance reimbursement of $5,538. Includes a $3,400
matching contribution made by the Company for the account of Mr. Coté under the Company’s 401(k) Plan. Includes a
cash contribution of $65,077 and a non-cash contribution of phantom stock units valued at $16,270 (based on the closing prices
of the Company’s Common Stock on the grant dates) to his account under the DCP. These contributions under the DCP are also
shown in the NONQUALIFIED DEFERRED COMPENSATION TABLE below.
|
|
(7)
|
Includes a taxable car allowance of $13,420. Includes a $3,400 matching contribution made by the Company for the account of
Mr. Quintero under the Company’s 401(k) Plan. Includes a matching cash contribution of $61,692 and a matching non-cash contribution
of phantom stock units valued at $15,385 (based on the closing prices of the Company’s Common Stock on the grant dates) to
his account under the DCP. These contributions under the DCP are also shown in the NONQUALIFIED DEFERRED COMPENSATION TABLE below.
|
|
(8)
|
Includes a taxable car allowance of $6,600. Includes a $3,400 matching contribution made by the Company for the account of
Mr. Morelli under the Company’s 401(k) Plan. Includes a matching cash contribution of $19,508 and a matching non-cash contribution
of phantom stock units valued at $4,865 (based on the closing prices of the Company’s Common Stock on the grant dates) to
his account under the DCP. These contributions under the DCP are also shown in the NONQUALIFIED DEFERRED COMPENSATION TABLE below.
|
|
(9)
|
Includes a taxable car allowance of $6,600. Includes a $3,400 matching contribution made by the Company for the account of
Mr. Sussis under the Company’s 401(k) Plan. Includes a matching cash contribution of $14,600 and a matching non-cash contribution
of phantom stock units valued at $5,440 (based on the closing prices of the Company’s Common Stock on the grant dates) to
his account under the DCP. These contributions under the DCP are also shown in the NONQUALIFIED DEFERRED COMPENSATION TABLE below.
|
GRANTS OF PLAN-BASED AWARDS IN FISCAL 2017
Name
|
Grant
Date
|
Date of
Action by
Committee
|
Estimated Possible Payouts
Under Non-Equity
Incentive Plan Awards
|
Estimated Possible Payouts
Under Equity
Incentive Plan Awards
(#)
(2)
|
All Other Stock Awards:
Number of Shares of Stock or Units
(#)
(3)
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
(4)
|
Exercise
or Base
Price
of
Option
Awards
($/sh)
|
Grant
Date Fair Value of
Stock and
Option
Awards
($)
(5)
|
(a)
|
(b)
|
|
(c)
|
(d)
|
(e)
|
(g)
|
(i)
|
(j)
|
(k)
|
(l)
|
|
|
|
Threshold
($) (1)
|
Target
($) (1)
|
Maximum
($) (1)
|
Target
|
|
|
|
|
Efraim Grinberg
|
03/29/16
04/15/16
04/15/16
04/15/16
|
03/29/16
03/29/16
03/29/16
03/29/16
|
—
|
1,050,000
|
2,100,000
|
18,025
|
7,210
|
43,440
|
27.74
|
—
200,005
500,014
499,994
|
Sallie DeMarsilis
|
03/29/16
04/15/16
04/15/16
04/15/16
|
03/29/16
03/29/16
03/29/16
03/29/16
|
—
|
250,000
|
500,000
|
|
1,748
4,371
|
10,534
|
27.74
|
—
48,490
121,252
121,246
|
Richard Coté
|
04/15/16
04/15/16
04/15/16
|
03/29/16
03/29/16
03/29/16
|
|
|
|
|
4,056
10,139
|
24,435
|
27.74
|
112,513
281,256
281,247
|
Frank Morelli
|
03/29/16
04/15/16
04/15/16
04/15/16
|
03/29/16
03/29/16
03/29/16
03/29/16
|
—
|
245,000
|
490,000
|
|
1,712
4,281
|
10,317
|
27.74
|
—
47,491
118,755
118,749
|
Ricardo Quintero
|
03/29/16
04/15/16
04/15/16
04/15/16
06/23/16
|
03/29/16
03/29/16
03/29/16
03/29/16
06/23/16
|
—
|
581,250
|
1,162,500
|
|
4,562
10,139
|
24,435
25,000
|
27.74
21.55
|
—
126,550
281,256
281,247
219,500
|
Mitchell Sussis
|
03/29/16
04/15/16
04/15/16
04/15/16
|
03/29/16
03/29/16
03/29/16
03/29/16
|
—
|
146,000
|
292,000
|
|
526
1,316
|
3,171
|
27.74
|
—
14,591
36,506
36,498
|
|
(1)
|
Includes annual incentive opportunities for the named executive officers in fiscal 2017 under the Company’s EPP and Annual
Incentive Compensation Plan. Payouts are typically made 75% in cash and 25% in time-based restricted stock units with three-year
vesting. See “Fiscal 2017 Executive Compensation Components –
Performance Based Annual Incentive Compensation
”
above. There is no threshold performance level provided for under the EPP or the Annual Incentive Compensation Plan. Mr. Coté
was not given an annual incentive opportunity for fiscal 2017 in light of his anticipated retirement.
|
|
(2)
|
Reflects the performance-based vesting stock award discussed above under “Equity Incentive Compensation”. Since
the performance condition (which related to fiscal 2017 operating profit) was achieved, the shares subject to this award will now
cliff-vest on the third anniversary of the grant date.
|
|
(3)
|
Reflects time-vesting stock awards discussed above under “Equity Incentive Compensation”. The shares subject
to the awards cliff-vest on the third anniversary of the grant date.
|
|
(4)
|
Reflects stock options to purchase Common Stock granted under the Stock Plan. These options become fully exercisable on the
third anniversary of the grant date. All of the options expire on the tenth anniversary of the grant date.
|
|
(5)
|
The amounts in column (l) represent the grant date fair value of the stock awards and the option awards computed in accordance
with FASB ASC Topic 718.
|
OUTSTANDING EQUITY AWARDS AT FISCAL 2017 YEAR-END
|
Option Awards
|
Stock Awards
|
(a)
|
(b)
|
(c)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
Name
|
Number of Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of Shares or
Units of Stock that Have
Not Vested
(2) (#)
|
Market Value
of Shares or Units of Stock That Have
Not Vested
($)
|
Equity Incentive Plan Awards:
Number of Unearned Shares, Units or Other
Rights That Have Not Vested
(#)
|
Equity Incentive Plan Awards:
Market or Payout Value of Unearned Shares,
Units or Other Rights That Have Not Vested
($)
|
Efraim Grinberg
|
40,000
58,000
60,000
32,600
|
27,000
43,440
|
32.92
22.04
26.59
30.34
42.12
27.74
|
4/30/17
4/28/18
4/20/22
4/19/23
4/15/24
4/15/26
|
25,145
|
682,687
|
18,025
|
489,379
|
Sallie DeMarsilis
|
10,000
18,800
7,900
|
6,300
9,850
10,534
|
23.77
26.59
30.34
42.12
30.36
27.74
|
1/07/18
4/20/22
4/19/23
4/15/24
4/15/25
4/15/26
|
14,509
|
393,919
|
|
—
|
Richard Coté
|
24,000
37,600
16,750
14,000
22,850
|
24,435
|
32.92
26.59
30.34
42.12
30.36
27.74
|
4/30/17
4/20/22
4/19/23
4/15/24
4/15/25
4/15/26
|
14,195
|
385,394
|
|
|
Ricardo Quintero
|
19,853
|
9,927
22,850
24,435
25,000
|
40.52
30.36
27.74
21.55
|
7/13/24
4/15/25
4/15/26
6/23/26
|
32,193
|
874,040
|
|
|
Frank Morelli
|
18,400
7,750
|
6,100
9,650
10,317
|
26.59
30.34
42.12
30.36
27.74
|
4/20/22
4/19/23
4/15/24
4/15/25
4/15/26
|
13,968
|
379,231
|
|
|
Mitchell Sussis
|
|
3,171
|
27.74
|
4/15/26
|
9,842
|
267,210
|
|
|
|
(1)
|
The options with an exercise price of $42.12/share were granted April 15, 2014 and vest April 15, 2018. The option granted
to Mr. Quintero when he joined the Company on July 14, 2014 has an exercise price of $40.52 per share and vests in equal installments
on each of the first, second and third anniversaries of the grant date. The options with an exercise price of $30.36/share were
granted April 15, 2015 and vest April 15, 2018. Notwithstanding the foregoing, in March 2016 the Board of Directors approved the
immediate vesting of the unvested portion of Mr. Coté’s then-outstanding equity awards in connection with his
decision to retire effective July 1, 2016. The options with an exercise price of $27.74/share were granted April 15, 2016 and vest
April 15, 2019. The options with an exercise price of $21.55/share were granted June 23, 2016 and vest June 23, 2019. All vesting
dates are contingent on continued employment though such dates, except for the vesting of Mr. Coté’s unvested
option.
|
|
|
|
|
(2)
|
Represents unvested stock awards granted under the Company’s Stock Plan which is discussed above under “Fiscal
2017 Executive Compensation Components –
Equity Incentive Compensation
”. The following table lists the vesting
dates (assuming continued employment on such dates, except that the future vesting of Mr. Coté’s award is not
contingent on his continued employment or service) and the number of shares of Common Stock vesting on such dates.
|
Name
|
Vesting Date
|
Shares (#)
|
Efraim Grinberg
|
04/15/2017
04/15/2019
|
17,935
7,210
|
|
Sallie DeMarsilis
|
04/15/2017
04/15/2018
04/15/2019
|
4,395
3,995
6,119
|
|
Richard Coté
|
04/15/2019
|
14,195
|
|
Ricardo Quintero
|
07/14/2017
04/15/2018
04/15/2019
|
8,227
9,265
14,701
|
|
Frank Morelli
|
04/15/2017
04/15/2018
04/15/2019
|
4,065
3,910
5,993
|
|
Mitchell Sussis
|
11/19/2018
04/15/2019
|
8,000
1,842
|
|
OPTION EXERCISES AND STOCK
VESTED
DURING FISCAL 2017
|
Option Awards
|
Stock Awards
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
Name
|
Number of Shares
Acquired on Exercise
(#)
|
Value Realized
on Exercise
($)
|
Number of Shares
Acquired on Vesting
(#)
|
Value Realized
on Vesting
($) (1)
|
Efraim Grinberg
|
—
|
—
|
23,503
|
662,080
|
Sallie DeMarsilis
|
—
|
—
|
5,695
|
160,428
|
Richard Coté
|
—
|
—
|
30,648
|
932,925
|
Ricardo Quintero
|
—
|
—
|
8,226
|
186,182
|
Frank Morelli
|
—
|
—
|
5,554
|
156,456
|
Mitchell Sussis
|
—
|
—
|
—
|
—
|
|
(1)
|
Value represents the number of shares vesting multiplied by the market price of the shares on the vesting date.
|
NONQUALIFIED DEFERRED COMPENSATION
Under the Company’s DCP, participants
may defer amounts from their base salary and cash bonus, if any, annually and the Company will credit to the account of each participant
a matching contribution in an amount equal to the 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, as defined in the DCP). Of the named executive
officers, Mr. Grinberg is in Group I; while they were employees, Mr. Coté and Mr. Quintero were in Group I; and Ms. DeMarsilis,
Mr. Morelli and Mr. Sussis are in Group II. Deferral elections must be made no later than December 31 of the year before the
year in which the salary or bonus 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.
The Company also has the right to make discretionary contributions to any participant’s account in such amount and in such
manner as it shall determine.
The following table shows the deferrals
made by the named executive officers and the contributions made by the Company under the DCP in fiscal 2017.
NONQUALIFIED
DEFERRED COMPENSATION IN FISCAL 2017
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
Name
|
Executive
Contributions
in Last FY ($) (1)
|
Registrant
Contributions
in Last FY ($) (1)
|
Aggregate
Earnings in
Last FY ($) (2)
|
Aggregate
Withdrawals/
Distributions ($)
|
Aggregate
Balance at
Last FYE ($) (3)
|
Efraim Grinberg
|
104,231
|
104,154
|
912,479
|
—
|
6,717,681
|
Sallie DeMarsilis
|
160,798
|
24,873
|
229,905
|
—
|
1,786,532
|
Richard Coté
|
367,076
|
81,347
|
1,190,079
|
-170,298
|
8,413,989
|
Frank Morelli
|
160,938
|
24,373
|
248,717
|
—
|
1,910,715
|
Ricardo Quintero
|
77,115
|
77,077
|
40,553
|
—
|
412,944
|
Mitchell Sussis
|
18,250
|
20,040
|
4,082
|
—
|
44,935
|
|
(1)
|
The amounts reported in column (b) are also reported as compensation to the named executive officer in columns (c) and/or (g)
of the SUMMARY COMPENSATION TABLE above. The amounts reported in column (c) are also reported as compensation to the named executive
officer in column (i) of the SUMMARY COMPENSATION TABLE above.
|
|
(2)
|
These amounts are not required to be reported as compensation in the Summary Compensation Table for fiscal 2017 because there
were no above-market earnings on the deferred compensation.
|
|
(3)
|
The amounts reported in column (f), other than earnings on deferred compensation, have all been previously disclosed in Summary
Compensation Tables in our prior proxy statements, except for Mr. Morelli. Mr. Morelli was not a named executive officer
prior to fiscal 2010. Therefore, the portion of the aggregate balance for Mr. Morelli attributable to contributions and earnings
prior to fiscal 2010 was not previously disclosed in Summary Compensation Tables in our prior proxy statements.
|
A participant’s compensation 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 so 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 may also vest in all amounts credited to his or her account upon their “separation from service”
as defined under Code Section 409A and the Treasury Regulations promulgated thereunder after attaining the age of fifty-five
(55), provided the participant has been employed by the Company or one of the Company’s affiliates for at least 10 years
and further subject to the approval of the Compensation Committee of the Company’s Board of Directors including any limitations
or conditions such committee may, in its discretion, impose which are not inconsistent with the terms of the DCP (including, without
limitation, a covenant not to compete with the Company or any Company affiliate). Pursuant to these provisions, in March
2016 the Board of Directors approved the immediate vesting of the unvested portion of Mr. Coté’s DCP account
balance in connection with his decision to retire effective July 1, 2016. A participant whose employment terminates for any other
reason forfeits unvested amounts. If there is a “change in control” (as defined in the DCP) of the Company, all
amounts attributable to matching contributions and discretionary Company contributions become fully vested on the date of such
change in control.
Participants may direct the investment
of amounts in their accounts (other than rights to Common Stock) among third-party investment funds that largely track the funds
offered under the 401(k) Plan.
Participants in the DCP elect as part of
their initial deferral election whether to receive distributions after termination of their employment in a lump sum or in 10 equal
annual installments. Payments are made in Common Stock to the extent a participant’s vested account balance is denominated
in Common Stock, except for any fractional shares which are paid in cash. All other payments are made in cash. Payments generally
are made or begin only upon the expiration of six months following the participant’s separation of service from the Company
except to the extent that the payments are payable during the short-term deferral period set forth in Treasury Regulation Section
1.409A-1(b)(4). In the event that an exception to the six-month delay provision applies, payments are made or begin within 90 days
after a participant’s employment terminates.
POTENTIAL PAYMENTS ON TERMINATION
OR CHANGE IN CONTROL
None of the named executive officers have
employment agreements. The Company has entered into severance and/or change in control agreements with Messrs. Coté, Morelli
and Quintero, which are described below. In addition, the DCP and the Stock Plan provide for accelerated vesting of Company matching
contributions and of equity compensation (stock options and stock awards), respectively, in the event of a change in control. The
Stock Plan also provides for accelerated vesting of equity awards in the event of a participant’s death, disability or retirement.
Severance Agreements
Mr. Morelli has an agreement providing
for the continuation of his then applicable annual base salary, paid bi-weekly for 18 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 if by Mr. Morelli, other than because of an “adverse change” in the conditions of his employment. Mr. Morelli’s
agreement defines such an adverse change as any of the following by the Company:
|
|
altering his duties or responsibilities so that his position becomes one of substantially less importance, dignity or scope;
|
|
|
reducing his base salary;
|
|
|
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; or
|
|
|
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. Morelli 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, 2017, and Mr. Morelli’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 $490,000 through
June 30, 2018, for a total of $735,000.
Mr. Morelli has a severance agreement
with the Company providing that, although he 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 agreement also contains 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. Morelli
without cause on January 31, 2017, then he would have been entitled to receive $490,000 in severance paid in bi-weekly installments
through January 31, 2018.
During his tenure with the Company, Mr.
Quintero was party to a severance agreement with the Company pursuant to which he would have been entitled to receive severance
payments for one year in the form of salary continuation upon termination of his employment by the Company without cause, which
was not defined. The agreement also contained a non-competition clause which would have proscribed employment in the watch or jewelry
industry for six months after termination of employment, or, if longer, for the duration of any period during which Mr. Quintero
were paid severance. The Agreement also contained a prohibition against the solicitation of Company employees and clients for a
period of 12 months after the termination of his employment. If the Company had terminated the employment of Mr. Quintero without
cause on January 31, 2017, then under the agreement he would have been entitled to receive $775,000 in severance paid in bi-weekly
installments through January 31, 2018. See “
Mr. Quintero’s Separation Arrangements
,” above, for a
summary of the compensation and benefits actually provided to Mr. Quintero in connection with his April 30, 2017 separation
from the Company.
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 Stock Plan immediately vest. Both plans have identical definitions for what is considered a “change in control,”
including:
|
|
irrevocable termination and liquidation of the plan within 12 months of the dissolution of the Company taxed under Section
331 of the Code or with the approval of a bankruptcy court;
|
|
|
sale of substantially all of the Company’s business or assets;
|
|
|
a change in the composition of the Board of Directors such that the individuals comprising the Board of Directors on the effective
date of the Stock Plan (or DCP, as applicable) (or their successors who were approved by at least two-thirds of the directors then
on the Board) cease for any 12 month period to constitute a majority of the Board, exclusive, in any event, of any individual initially
elected or nominated as a director as a result of an actual or threatened election contest or actual or threatened proxy solicitation
by any person other than the Board;
|
|
|
a merger, consolidation, reorganization or similar corporate transaction unless shareholders in the Company immediately before
any such transaction control at least 50% of the total voting power in the resulting corporation immediately after any such transaction;
and no person (meaning an individual, entity or group acting in concert) acquires at least 20% of the voting power in the resulting
corporation; and a majority of the members of the Board of Directors after the transaction were Board members immediately before
the transaction; and
|
|
|
the acquisition by any person (with certain exceptions) of 30% or more of the combined voting power of the Company’s
outstanding voting securities.
|
The following table shows the value of
accelerated vesting of stock options and stock awards under the Stock Plan 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, 2017.
Vesting Upon Change in Control
With or Without Termination of Employment
|
Name
|
Early Vesting of
Deferred
Compensation
Plan ($)
|
Early Vesting of
Stock Options
($) (1)
|
Early Vesting
of Stock
Awards ($) (2)
|
Efraim Grinberg
|
302,309
|
—
|
682,687
|
Sallie DeMarsilis
|
54,094
|
—
|
393,919
|
Richard Coté
|
—
|
—
|
385,394
|
Ricardo Quintero
|
134,276
|
140,000
|
874,040
|
Frank Morelli
|
—
|
—
|
379,231
|
Mitchell Sussis
|
18,756
|
—
|
267,210
|
|
(1)
|
The value of early vesting of stock options was determined based on the extent (if any) by which
$27.15/share, which was the closing price of the Company’s Common Stock as reported on the NYSE on January 31, 2017, exceeded
the exercise price of the subject options.
|
|
(2)
|
The value of early vesting of stock awards was determined based on a value of $27.15/share, which
was the closing price of the Company’s Common Stock as reported on the NYSE on January 31, 2017.
|
Death or Disability;
Retirement
If any of the named executive officers
had died, become permanently disabled or retired on January 31, 2017, their unvested stock options and stock awards granted under
the Stock Plan would have immediately vested on that date. Retirement triggers immediate vesting (i) under the Stock Plan provided
that the retiring employee is at least the age of 65 and (ii) under both the Stock Plan and the DCP if the retiring employee is
at least the age of 55 and has been employed continuously by the Company for at least 10 years and the Compensation Committee approves
the immediate vesting. 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 subject plan, including covenants dealing with non-competition, non-disparagement,
non-solicitation and confidentiality. The values of such early vesting under both plans as of January 31, 2017 are shown
in the table above.
DIRECTOR COMPENSATION
No executive officer of the Company receives
any additional compensation for serving on the Board of Directors. The annual compensation paid to the independent directors
for fiscal 2017 consisted of a $65,000 cash retainer and an equity component valued at approximately $95,000 in the form of a stock
award, cliff-vesting in one year. In addition to the annual base compensation, the annual retainers paid to the committee chairpersons
were as follows: Audit: $17,500; and Compensation and Nominating/Corporate Governance: $12,500; and the annual retainer paid to
the lead director was $25,000. The cash compensation is paid quarterly and the equity grant is made once each year in April. The
aforementioned cash retainers each represent an increase of $5,000 (in the case of the Board retainer and the lead director retainer)
or $2,500 (in the case of the committee chairperson retainers) from fiscal year 2016 levels as a result of a competitive analysis
conducted by the Compensation Committee and the Board in early fiscal 2017.
Each director is granted an annual allowance
for the purchase of Company watches up to an aggregate suggested retail value of $5,000. In addition, recognizing that ownership
of the Company’s common stock more closely aligns independent director interests with the long-term interests of shareholders
and is consistent with best governance practices, the Compensation Committee recommended and the Board of Directors adopted stock
ownership guidelines for the independent directors to the effect that each independent director is expected to beneficially own
shares of the Company’s Common Stock with a market value of at least $200,000.
The following table shows the cash amounts
and the value of other compensation paid to each non-employee director in respect of fiscal 2017:
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
Name
|
Fees Earned or
Paid in Cash
($)
|
Stock
Awards (1)
($)
|
Option
Awards
($)
|
All Other
Compensation (2)
($)
|
Total
($)
|
Margaret Hayes Adame
|
65,000
|
95,010
|
—
|
—
|
160,010
|
Peter Bridgman
|
65,000
|
95,010
|
—
|
—
|
160,010
|
Alan H. Howard
|
102,500
|
95,010
|
—
|
—
|
197,510
|
Richard Isserman
|
82,500
|
95,010
|
—
|
—
|
177,510
|
Nathan Leventhal
|
77,500
|
95,010
|
—
|
—
|
172,510
|
Maurice Reznik
|
65,000
|
95,010
|
—
|
1,119
|
161,129
|
|
(1)
|
Amounts shown do not reflect compensation actually received by the director. Instead the dollar value of these awards represents
the fair value of the stock award on the date of grant calculated in accordance with FASB ASC Topic 718. Assumptions used in calculating
these amounts are described in Note 10 to the Company’s audited financial statements for the fiscal year ended January
31, 2017, included in our Annual Report on Form 10-K filed with the SEC on March 20, 2017. Each non-employee director was
granted one stock award in fiscal 2017 for 3,425 shares of the Company’s Common Stock. At January 31, 2017 each non-employee
director held no other stock awards except this one, unvested stock award.
|
|
(2)
|
Each independent director is provided an annual allowance for the purchase of Company watches up to an aggregate suggested
retail value of $5,000. The amounts listed above reflect the actual allowance utilized by each independent director, at Company
cost.
|
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
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 Company’s
Senior Vice President Customer/Consumer Centric Initiatives in the United States and earned $317,742 in salary in fiscal 2017.
In addition, as a participant in
the
Stock Plan, Mr. Alex Grinberg received an award
of 2,515 time-vesting shares last year, subject to the same terms and conditions applicable to similar awards made to the other
participants in the Stock Plan. Mr. Alex Grinberg is also a member of the Board of Directors.
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 Retail Group, Inc., the Company’s retail outlet store business, and earned $425,357
in salary in fiscal 2017. In addition, as a participant in the Company’s Annual
Incentive
Compensation Plan and the
Stock Plan, Mr. Phalen received
a cash bonus of $107,000
in respect of fiscal 2017 and
an award of 3,273 time-vesting shares last year, subject to the same terms and conditions
applicable to similar awards made to the other participants in those plans.
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.
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, 2017.
Plan category
|
|
Number of Securities
to be Issued Upon Exercise of Outstanding Options,
Warrants and Rights
|
|
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
|
Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (excluding securities reflected in Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by security holders
(1)
|
|
1,326,321
|
(2)
|
|
$ 29.83
|
(3)
|
|
2,659,319
|
(4)
|
Equity compensation plans not approved by security holders
(5)
|
|
26,387
|
|
|
Not Applicable
|
|
|
—
|
|
Total
|
|
1,352,708
|
|
|
$ 29.83
|
|
|
2,659,319
|
|
|
(1)
|
Includes the Stock Plan and the DCP.
|
|
(2)
|
Includes 859,358 shares of Common Stock issuable upon the exercise of options and 381,158 shares of Common Stock issuable upon
the vesting of stock awards in each case outstanding under the Stock Plan, as well as 85,805 phantom stock units issuable as 85,805
shares of Common Stock under the DCP.
|
|
(3)
|
Weighted average exercise price of options outstanding under the Stock Plan.
|
|
(4)
|
Number of shares available for issuance under the Stock Plan 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)
|
Relates to the Company’s 401(k) Plan, described in Note 11 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, 2017.
|
REPORT OF THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
The Audit Committee has reviewed and discussed
with the Company’s management and with PricewaterhouseCoopers LLP (“PwC”), the evaluation by PwC of the Company’s
internal control over financial reporting and the audited financial statements of the Company for the fiscal year ended January
31, 2017. The Audit Committee has discussed with PwC the matters required to be discussed under the standards of the Public
Company Accounting Oversight Board (United States).
The Audit Committee has also received
the written disclosures and the letter from PwC required by the applicable requirements of the Public Company Accounting Oversight
Board and the Audit Committee has discussed the independence of PwC 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, 2017 for filing with the SEC.
The Committee and the Board of Directors
also have recommended, subject to shareholder approval, the selection of PwC as the Company’s independent auditors for fiscal
2018.
Members of
the Audit Committee:
Richard Isserman
(chairman)
Peter A. Bridgman
Alan H. Howard
Maurice
Reznik
The Report of
the Audit Committee is not to be deemed to be “soliciting material” or to be “filed” with the SEC or subject
to Regulation 14A or 14C or to the liabilities of Section 18 of the Exchange Act, except to the extent the Company specifically
requests that such information be treated as soliciting material or specifically incorporates it by reference into any filing under
the Securities Act of 1933 (the “Securities Act”) or the Exchange Act.
AUDIT-RELATED FEES, TAX FESS
AND ALL OTHER FEES
The following table presents the aggregate fees
billed for professional services rendered by the Company’s independent registered public accounting firm, 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, 2016 and 2017.
Year
|
Audit ($)
|
Audit Related ($)
|
Tax ($)
|
All Other ($)
|
Total ($)
|
2016
|
1,763,000
|
—
|
—
|
2,000
|
1,765,000
|
2017
|
1,787,000
|
—
|
35,000
|
2,000
|
1,824,000
|
___________
The fees in the table above exclude “out-of-pocket”
expenses of approximately $45,000 incurred by PwC and billed to the Company in connection with these services for each of fiscal
years 2017 and 2016.
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. Tax fees were for international tax consulting
and planning related to potential business transactions. 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 registered public accounting firm for the year ending January 31, 2018, subject to ratification
of such appointment by the Company’s shareholders. PricewaterhouseCoopers LLP has served as the Company’s independent
registered public accounting firm since fiscal year 1977 and is considered by the Audit Committee and the Board of Directors 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 of Directors 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.
PROPOSAL 3 – ADVISORY APPROVAL OF EXECUTIVE
COMPENSATION
In accordance with Section 14A of the
Exchange Act and the related rules of the SEC and as a matter of good corporate governance, a proposed resolution will be presented
at the Annual Meeting asking our shareholders to approve, on an advisory basis, the compensation of the Company’s named executive
officers as disclosed in the Compensation Discussion and Analysis (“CD&A”), the Summary Compensation Table and
the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2017 Annual Meeting of Shareholders.
As set forth in the
CD&A, above, the Company has designed its compensation programs to: (i) properly incentivize executive officers to accomplish
the short- and long-term objectives of the Company, (ii) be in line with prevailing pay practices and overall compensation
levels at other companies with which the Company competes for executive-level talent, (iii) reward our executives for their
individual performance as well as the performance of their respective business units and the Company overall and (iv) retain
our executive officers and key management employees. Although the vote to approve executive compensation is purely advisory
and non-binding, the Board of Directors values the opinions of our shareholders and will consider the results of the vote in determining
the compensation of the named executive officers and the Company’s compensation programs generally. The vote is not intended
to address any specific item of compensation but rather the overall compensation of our named executive officers and the policies
and practices described in this proxy statement. If any shareholder wishes to communicate with the Board of Directors regarding
executive compensation, the Board can be contacted using the procedures outlined in “
Communications with the Board of
Directors”
set forth in this proxy statement.
Accordingly, we are asking for shareholder
approval of the following resolution:
“RESOLVED, that the compensation of the Company’s
named executive officers as described under “Compensation Discussion and Analysis,” the compensation tables and the
narrative discussion associated with the compensation tables in the Company’s proxy statement for its 2017 Annual Meeting
of Shareholders is hereby APPROVED.”
The Board of Directors recommends a
vote FOR the approval, on an advisory basis, of the compensation paid by the Company to the named executive officers as disclosed
in this proxy statement.
PROPOSAL 4 – ADVISORY VOTE ON THE FREQUENCY
OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
Pursuant to Section 14A of the Exchange
Act, the Company is asking shareholders to vote on whether future advisory votes on executive compensation (such as that addressed
in Proposal 3 above) should occur every year, every two years or every three years. Under Section 14A of the Exchange Act,
this advisory vote on the frequency of future advisory votes on executive compensation must take place at least once every six
years. The last such advisory vote took place at the 2011 annual meeting of shareholders, at which more than 97% of the votes cast
recommended a frequency of every year.
The Board believes that an annual advisory
vote on executive compensation continues to be the most appropriate policy, and recommends that shareholders vote for future advisory
votes on executive compensation to occur every year. While the Company’s executive compensation programs are designed to
promote a long-term connection between pay and performance, the Board recognizes that executive compensation disclosures are made
annually and holding an annual advisory vote on executive compensation will provide the Company with more direct and immediate
feedback on its compensation disclosures.
Pursuant to this advisory vote on the
frequency of future advisory votes on executive compensation, shareholders will be able to specify one of four choices for this
proposal on the proxy card or voting instruction: one year, two years, three years or abstain. Shareholders are not voting to approve
or disapprove the Board’s recommendation. The vote is non-binding on the Board. Nevertheless, the Board and the Compensation
Committee will carefully review the voting results. Notwithstanding the Board’s recommendation and the outcome of the shareholder
vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based
on factors such as discussions with shareholders and the adoption of material changes to compensation programs.
The Board recommends stockholders vote to conduct future
advisory votes on executive compensation every 1 YEAR
.
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. The
Company assists its directors, officers and certain 10% Stockholders by assisting in their completion of Section 16 reports and
filing these reports on their behalf. The Company’s executive officers, directors and 10% Stockholders timely complied with
all such filing requirements applicable to them last fiscal year with respect to their beneficial ownership of the Company’s
securities, except that the Form 4s filed on behalf of the executive officers, Alexander Grinberg and Ms. Phalen relating to the
annual equity grants made on April 15, 2016 were inadvertently filed one day late, and a Form 4 filed on behalf of Mr. Coté
relating to the vesting of an outstanding equity award on March 29, 2016 was inadvertently filed eight days late. Each such late
Form 4 reported one transaction, except that the late Form 4 for each executive officer’s annual equity grant reported two
transactions (i.e., an annual restricted stock unit grant and an annual stock option grant).
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 properly 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, 2017, as filed with the SEC.
Requests should be directed to Mitchell C. Sussis, Secretary, Movado Group, Inc., 650 From Road, Ste. 375, Paramus, New Jersey
07652-3556.
May 9, 2017
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MOVADO
GROUP, INC
C/O BROADRIDGE
PO BOX 1342
BRENTWOOD, NY 11717
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VOTE
BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions
to obtain your records and to create an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If
you would like to help us reduce our costs for mailing proxy materials, you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE
BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE,
MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP
THIS PORTION FOR YOUR RECORDS
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THIS PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN
THIS PORTION ONLY
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For
All
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Withhold
All
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For All
Except
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To withhold
authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s)
on the line below.
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The
Board of Directors recommends you vote FOR the following:
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☐
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☐
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☐
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1.
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Election of Directors
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Nominees
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01 Margaret Hayes Adame
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02 Peter A. Bridgman
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03 Richard Coté 04 Alex Grinberg
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05 Efraim Grinberg
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06 Alan H. Howard
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07 Richard Isserman
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08 Nathan Leventhal 09 Maurice Reznik
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The
Board of Directors recommends you vote FOR proposals 2. and 3.
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For
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Against
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Abstain
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2.
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To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent accountants for the fiscal year
ending January 31, 2018.
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☐
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☐
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☐
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3.
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To approve, on an advisory basis, the compensation of the Company’s named executive officers, as described in the
proxy statement under “Executive Compensation”.
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☐
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☐
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☐
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The
Board of Directors recommends you vote 1 YEAR on the following proposal:
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1 year
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2 years
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3 years
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Abstain
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4.
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To select, on an advisory basis, the frequency of the advisory shareholder vote on the compensation of the Company’s
named executive officers.
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☐
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☐
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☐
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☐
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Yes
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No
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Please
indicate if you plan to attend this meeting
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☐
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☐
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN
BOX]
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Date
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Signature (Joint Owners)
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Date
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0000327760_1 R1.0.1.15
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting
: The Annual Report, Notice & Proxy Statement, Shareholder
Letter is/are available at
www.proxyvote.com
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MOVADO
GROUP, INC.
THIS PROXY IS SOLICTED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - June 22, 2017
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The
shareholder(s) hereby appoint(s) Mitchell C. Sussis and Sallie A. DeMarsilis, or either of them, as proxies, each with the
power to appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse
side of this ballot, all of the shares of Common Stock and class A Common Stock of MOVADO GROUP, INC. that the shareholder(s)
is/are entitled to vote at the annual meeting of shareholders to be held at 10:00 AM, Eastern Time on June 22, 2017, at 25
West 39th Street, 15th Floor, New York, NY 10018, and any adjournment or postponement thereof.
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THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS; FOR PROPOSALS 2 AND
3; AND FOR 1 YEAR ON PROPOSAL 4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
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PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
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Continued
and to be signed on reverse side
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0000327760_2 R1.0.1.15
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