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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
(RULE 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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LANDS' END, INC.
(Name of Subject Company)
LANDS' END, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title and Classes of Securities)
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515086 10 6
(Cusip Number of Class of Securities)
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DONALD R. HUGHES
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
LANDS' END, INC.
ONE LANDS' END LANE
DODGEVILLE, WISCONSIN 53595
(608) 935-9341
(Name, Address and Telephone number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
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with copies to:
KARL DAHLEN ROBERT S. OSBORNE, P.C.
VICE PRESIDENT AND SENIOR KIRKLAND & ELLIS
LEGAL OFFICER 200 EAST RANDOLPH DRIVE
LANDS' END, INC. CHICAGO, ILLINOIS 60601
ONE LANDS' END LANE (312) 861-2368
DODGEVILLE, WISCONSIN
53595
(608) 935-9341
[_] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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ITEM 1. SUBJECT COMPANY INFORMATION
NAME AND ADDRESS
The name of the subject company to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (this "Statement") relates is Lands' End, Inc., a
Delaware corporation (the "Company"). The address of the principal executive
offices of the Company is One Lands' End Lane, Dodgeville, Wisconsin 53595. The
telephone number of the principal executive offices of the Company is (608)
935-9341.
SECURITIES
The title of the class of securities to which this Statement relates is the
common stock, par value $0.01 per share, of the Company (the "Common Stock").
As of May 12, 2002, there were 30,012,942 shares of Common Stock issued and
outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON
NAME AND ADDRESS
The name, address and telephone number of the Company, which is the person
filing this Statement and is also the subject company, are set forth under the
caption Item 1. "Subject Company Information -- Name and Address" above.
TENDER OFFER AND MERGER
This Statement relates to the tender offer by Inlet Acquisition Corp., a
Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Sears,
Roebuck and Co., a New York corporation ("Parent"), disclosed in a Tender Offer
Statement on Schedule TO filed by Purchaser and Parent (the "Schedule TO") with
the United States Securities and Exchange Commission (the "SEC") on May 17,
2002, to purchase all the outstanding shares of Common Stock at a purchase
price of $62 per share, net to the seller in cash (the "Offer Price"), on the
terms and subject to the conditions set forth in the Offer to Purchase, dated
May 17, 2002 (the "Offer to Purchase"), and the related Letter of Transmittal
(the "Letter of Transmittal" which, together with the Offer to Purchase, as
they may be amended and supplemented from time to time, constitute the
"Offer"). As set forth in the Schedule TO, the principal executive offices of
Parent and Purchaser are located at 3333 Beverly Road, Hoffman Estates, IL
60179.
The Offer is being made pursuant to the Acquisition Agreement and Agreement
and Plan of Merger, dated as of May 12, 2002, among Parent, Purchaser and the
Company (the "Acquisition Agreement"). The Acquisition Agreement provides,
among other things, that as soon as practicable following consummation of the
Offer and the satisfaction or waiver of the conditions set forth in the
Acquisition Agreement, in accordance with the relevant provisions of Delaware
law, Purchaser will be merged with and into the Company (the "Merger").
Following the effective time of the Merger (the "Effective Time"), the Company
will continue as the surviving corporation (the "Surviving Corporation") and a
wholly-owned subsidiary of Parent.
In the Merger, each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares of Common Stock owned by the
Company, any subsidiary of the Company, Parent or Purchaser or any other
wholly-owned subsidiary of Parent, which shall be canceled, and other than the
shares of Common Stock, if any, held by holders of Common Stock who have
properly demanded and perfected their appraisal rights under Section 262 of the
General Corporation Law of the State of Delaware ("DGCL")) will, by virtue of
the Merger and without any action on the part of the holders of Common Stock,
be converted into the right to receive the Offer Price, in cash, less any
required withholding taxes and without interest, upon surrender of the
certificate(s) formerly representing such shares of Common Stock. The
Acquisition Agreement is more fully described in Section 11. "The Transaction
Documents--The Merger Agreement" of the Offer to Purchase, which is filed
herewith as Exhibit (a)(1) and incorporated herein by reference.
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Each of Mr. Gary C. Comer, the Company's Chairman, certain trusts and
charitable foundations established by Mr. Comer, and a trust associated with
Mr. Richard C. Anderson, the Company's Vice Chairman, have entered into Tender
Agreements, dated as of May 12, 2002 (each, a "Tender Agreement"), with Parent
and Purchaser, pursuant to which they have, among other things, agreed to
tender in the Offer an aggregate of approximately 55% of the issued and
outstanding Common Stock (approximately 50.1% on a fully diluted basis),
subject to certain terms and conditions. For purposes of the Offer and as used
herein, "on a fully diluted basis" means, as of any date, the number of shares
of Common Stock issued and outstanding, together with the shares of Common
Stock that may be issued by the Company pursuant to warrants, options, rights
or obligations outstanding at that date, whether or not vested or then
exercisable.
The Tender Agreements are more fully described in Section 11. "The
Transaction Documents--The Tender Agreements" of the Offer to Purchase, which
is filed herewith as Exhibit (a)(1) and incorporated herein by reference.
Copies of the Acquisition Agreement and form of Tender Agreement
(collectively, the "Transaction Agreements") are filed herewith as Exhibits
(e)(1) and (e)(2), respectively, and incorporated herein by reference. Copies
of (i) the joint press release issued by the Company and Parent on May 13,
2002, Q&A to Company employees and certain other materials issued by the
Company on May 13, 2002; (ii) the transcript of the conference call held by the
Company on May 13, 2002; (iii) the press release issued by the Company on May
16, 2002; and (iv) the employee newsletter circulated by the Company on May 16,
2002, are filed herewith as Exhibits (a)(3) through (a)(6) and incorporated
herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates and certain of its directors and executive officers
and between the Company and Parent and Purchaser are, except as noted below,
described in the Information Statement pursuant to Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule
14f-1 thereunder (the "Information Statement") that is attached as Annex B to
this Statement and incorporated herein by reference. Except as set forth in
this Item 3 or in the Information Statement or as incorporated by reference
herein, to the knowledge of the Company, as of the date hereof, there are no
material agreements, arrangements or understandings and no actual or potential
conflicts of interest between the Company or its affiliates and (i) the Company
or its executive officers, directors or affiliates or (ii) Parent, Purchaser,
or their respective executive officers, directors or affiliates.
THE TRANSACTION AGREEMENTS
The summaries of the Transaction Agreements and the description of the
conditions of the Offer are contained in Sections 11. "The Transaction
Agreements--The Merger Agreement" and "--The Tender Agreements" and 15.
"Certain Conditions of the Offer" of the Offer to Purchase, which is filed
herewith as Exhibit (a)(1) and incorporated herein by reference. Such summaries
and descriptions are qualified in their entirety by reference to the
Transaction Agreements, which are filed herewith as Exhibits (e)(1) and (e)(2)
and incorporated herein by reference.
CEO EMPLOYMENT AGREEMENT; SENIOR EXECUTIVE RETENTION AGREEMENTS; AND EXECUTIVE
RETENTION PLANS
CEO Employment Agreement. The Company entered into an Amended and Restated
Agreement with David F. Dyer, its President and Chief Executive Officer, dated
as of May 12, 2002 (the "CEO Agreement"), which amends a previous agreement
between Mr. Dyer and the Company dated December 11, 1998. Under the CEO
Agreement, Mr. Dyer will continue to serve as President and Chief Executive
Officer of the Company, and after a sale of the Company to Parent, will report
directly to the Chief Executive Officer of Parent. The CEO Agreement also
provides that Mr. Dyer's base salary will be at least $600,000 per annum and
that he is eligible to receive an annual bonus at specified target bonus
levels. Mr. Dyer is also entitled to participate in the Company's long-term
incentive plans and in any employee pension and welfare benefit plans and
programs made available to other senior executives, and to use the Company's
plane.
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If Mr. Dyer's employment with the Company is terminated by the Company
without cause or by Mr. Dyer following certain specified actions by the
Company, Mr. Dyer will be entitled to: (i) payment of his base salary, any
earned and unpaid incentive awards and accrued and unused vacation days through
the termination date, and all other vested benefits as of the termination date,
(ii) payment of an aggregate amount, to be paid on a regular basis over a
24-month period (the "Salary Continuation Period"), equal to two times the sum
of his annual base salary plus a specified percentage of his target bonus,
(iii) participation in the Company's health and medical insurance policies for
himself and his spouse during the Salary Continuation Period at the same cost
and expense as other senior executives of the Company, (iv) participation in
the Company's retiree medical plan for himself and his spouse at the same cost
and expense as other participants in such plan from the end of the Salary
Continuation Period until the earlier of his 65/th birthday or his death, and
(v) the right to elect to have the Company purchase his home in Dodgeville,
Wisconsin. In addition, after a sale of the Company, Mr. Dyer may be entitled
to receive certain gross up payments under certain circumstances to compensate
him for the amount of any excise tax he incurs in connection with the accrual
of benefits in respect of such sale and any incremental income tax he incurs as
a result of the gross up payments. Under the terms of the CEO Agreement, the
consummation of the Merger, but not the consummation of the Offer, constitutes
a sale of the Company.
Mr. Dyer's agreement prohibits him from engaging in certain activities that
compete with the Company's business for a period of one year after the
termination of his employment with the Company and prohibits him from
soliciting employees and certain customers of the Company for a period of two
years after the termination of his employment with Company.
CEO Letter Agreement. On May 13, 2002, Mr. Dyer entered into a letter
agreement with Parent regarding his employment with Parent after a sale of the
Company (the "CEO Letter Agreement"). The CEO Letter Agreement, which is
subject to approval by the compensation committee of Parent's board of
directors, provides that following the Merger, Mr. Dyer will be the President
and CEO of the Company and Executive Vice President/General Manager, Customer
Direct, of Parent, reporting directly to the Chairman and Chief Executive
Officer of Parent.
The CEO Letter Agreement also provides that following a sale of the Company
to Parent, Mr. Dyer will be granted 50,000 non-qualified stock options to
purchase Parent stock, which will vest over a three-year period and 40,000
shares of restricted stock of Parent that vest on the second and third
anniversaries of the date of grant. If Mr. Dyer's employment is terminated, his
stock options and shares of restricted stock will continue to vest during any
salary continuation period. If an involuntary termination occurs during the
first year of employment other than for cause, including for good reason, (i)
any restricted stock not vested at the end of the Salary Continuation Period
shall vest in full at the end of such period, (ii) Parent will pay Mr. Dyer,
within 30 days after the Salary Continuation Period, an amount equal to the
option spread on up to 16,668 stock options of Parent that do not otherwise
vest during the Salary Continuation Period and (iii) his participation in the
long-term incentive plan will be prorated through the last active day worked.
Mr. Dyer will also be entitled to participate in the long-term performance
incentive program of Parent and the qualified and non-qualified pension plans
of Parent. Under the non-qualified pension plan of Parent, Mr. Dyer will
receive 2 years of service credit for each year of service during the first
five years of his employment with Parent. In the event of a change of control
of Parent during his employment or if his employment is terminated without
cause after the expiration of his current employment agreement, the terms of
Mr. Dyer's separation would mirror those of other similarly situated executives
of Parent. At the expiration of the CEO Agreement, it is anticipated that Mr.
Dyer will be asked to enter into agreements regarding severance,
non-competition, non-solicitation and non-disclosure with Parent on terms that
would mirror those of other similarly situated executives of Parent.
Senior Executive and Other Officer Retention Agreements. In addition to the
CEO Agreement, the Company entered into agreements, dated as of May 12, 2002,
with 16 of its senior executives and other officers (the "Executive Retention
Agreements"). Under the Executive Retention Agreements, if an executive remains
continuously employed by the Company for one year following a sale of the
Company, such executive will be entitled to receive a retention bonus, payable
in a lump sum, in an amount equal to such executive's base salary
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multiplied by either 1.0 or 0.75, depending on the identity of the covered
executive. If all such executives receive a retention bonus, the aggregate
amount of these retention bonuses would be approximately $3.5 million. The
Executive Retention Agreements provide that the consummation of the Merger, but
not the Offer, constitutes a sale of the Company.
In addition to the retention bonuses, if an executive's employment with the
Company is terminated by the Company other than for cause or by such executive
following certain specified actions by the Company, such executive would be
entitled to: (i) receive his or her base salary through the date of
termination, any earned and unpaid bonus from the fiscal year prior to the
termination date, and all other vested benefits as of the date of termination
and payment with respect to any unused vacation time, (ii) payment of a pro
rata portion of a specified percentage of his or her target bonus for the then
current fiscal year, (iii) a severance payment in an aggregate amount equal to
1.5 of the sum of (x) his or her then current base salary plus (y) a specified
percentage of his or her target bonus, which severance payment is payable over
18 months and (iv) if such termination occurs after a sale of the Company and
during the two year period following such sale, participation in the Company's
health and medical benefits during such severance payment period at the same
cost and expense as other executives of the Company. If employment with the
Company of all 16 executives is terminated by the Company other than for cause
or by such executives following certain specified actions by the Company, the
aggregate amount of the severance payments under clause (iii) above would be
approximately $11.2 million (excluding all retention bonuses and gross up
payments).
After a sale of the Company, each executive may be entitled to receive
certain gross up payments under certain circumstances to compensate him or her
for the amount of excise tax he or she incurs in connection with the accrual of
benefits in respect of such sale and any incremental income tax he or she
incurs as a result of the gross up payments.
The Executive Retention Agreements also contain restrictive covenants that
prohibit each covered executive from engaging in certain activities that
compete with the Company's business for a period of 6 months following the
termination of his or her employment with the Company and from soliciting
employees and certain customers of the Company for a period of two years
following the termination of his or her employment with the Company.
Executive Retention Plans. On May 12, 2002, the Company adopted the
Executive Retention Plan -- Group A ("Plan A") and the Executive Retention Plan
-- Group B ("Plan B" and, together with Plan A, the "Plans"). Twenty-four
officers and other key employees of the Company are eligible to participate in
Plan A and sixty-nine key employees of the Company are eligible to participate
in Plan B (collectively, "Eligible Employees"). The Plans provide that each
Eligible Employee will be entitled to receive a retention bonus, payable in a
lump sum, if such Eligible Employee remains continuously employed by the
Company for one year following a sale of the Company, in an amount equal to (x)
0.5 times such Eligible Employee's base salary, for Eligible Employees under
Plan A and (y) 0.25 times such Eligible Employee's base salary, for Eligible
Employees under Plan B (in each case, the "Retention Bonus"). If, during the
one year period following a sale of the Company, an Eligible Employee is
terminated by the Company other than for cause or if such Eligible Employee
terminates his or her employment following certain specified actions by the
Company, such Eligible Employee would be entitled to receive his or her
Retention Bonus upon such termination. If all Eligible Employees receive
Retention Bonuses, the aggregate amount of all Retention Bonuses payable under
the Plans would be approximately $3.7 million. Under the terms of the Plans,
the consummation of the Merger, but not the Offer, constitutes a sale of the
Company.
The Plans also provide that if, after the occurrence of a sale of the
Company and prior to the second anniversary of such sale, an Eligible
Employee's employment with the Company is terminated by the Company other than
for cause or by such Eligible Employee following certain specified actions by
the Company, than such Eligible Executive shall be entitled to: (i) payment of
such Eligible Employee's base salary through the date of termination, (ii) any
earned and unpaid bonus from the previous fiscal year, (iii) a pro rata portion
of a specified percentage of his or her target bonus for the then current
fiscal year, (iv) an amount equal to either 1.0 times, in the case of Plan A,
or 0.5 times, in the case of Plan B, the sum of (x) his or her then current
annual base salary plus (y) a specified percentage of his or her target bonus,
which severance amount is payable over 12 months under Plan A and 6 months
under Plan B, (v) all other vested benefits as of the termination date, (vi)
payment
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with respect to unused vacation time and (vii) participation in the Company's
health and medical benefits during such respective severance period at the same
cost and expense as other similarly situated employees. If, after a sale of the
Company, all Eligible Employees were terminated other than for cause or if they
were to terminate their employment following certain specified actions by the
Company, then the aggregate amount of the severance payments under clause (iv)
above would be approximately $10.6 million (excluding all retention bonuses and
gross up payments). Prior to a sale of the Company, no amounts are payable
under the Plans.
After a sale of the Company, each Eligible Employee covered under Plan A may
be entitled to receive certain gross up payments under certain circumstances to
compensate him or her for the amount of excise tax he or she incurs in
connection with the accrual of benefits in respect of such sale and any
incremental income tax he or she incurs as a result of the gross up payments.
The foregoing summaries of the CEO Employment Agreement, the CEO Letter
Agreement, Executive Retention Agreements and the Plans are qualified in their
entirety by reference to the CEO Employment Agreement, CEO Letter Agreement,
form of Executive Retention Agreement and the Plans filed herewith as Exhibits
(e)(4) through (e)(9) and incorporated herein by reference.
CONFIDENTIALITY AGREEMENT
On February 26, 2002, Parent and the Company entered into a confidentiality
agreement in connection with Parent's evaluation of the Company and the
Company's provision of certain information to Parent (the "Confidentiality
Agreement"). The Confidentiality Agreement is filed herewith as Exhibit (e)(3)
and incorporated herein by reference.
EFFECT OF THE MERGER ON EMPLOYEE BENEFIT PLANS AND STOCK PLANS
The Acquisition Agreement provides that from the Effective Time until the
first anniversary of the Effective Time, the Parent will provide (or cause the
Surviving Corporation to provide) employees who were employees of the Company
at the Effective Time with salary and benefits (including benefits pursuant to
qualified and nonqualified benefit and retirement plans, savings plans,
medical, dental, disability and life insurance plans and programs, deferred
compensation arrangements, bonus and incentive compensation plans, and retiree
benefit plans, policies and arrangements) other than equity related
compensation, that are no less favorable in the aggregate than those provided
by the Company and the Company's subsidiaries to such employees immediately
prior to the Effective Time. The Parent has also agreed to honor and perform
(and to cause the Surviving Corporation to honor and perform) all severance,
change in control and termination programs, policies, agreements (including any
change in control, termination, severance agreements or employment agreements
containing such type of provisions) and plans of the Company or any of the
Company's subsidiaries. However, the employee benefits section of the
Acquistion Agreement provides that it does not create in any Company employee
any rights of employment or continued employment.
The consummation of the Offer constitutes a "Sale of the Company" pursuant
to the terms of the options to purchase Common Stock under the Lands' End Stock
Option Plan (together with the options outstanding under the Non-Employee
Director Stock Option Plan, the "Company Options"). Consequently, upon
consummation of the Offer, all unvested Company Options will fully vest and
become exercisable and all conditions and restrictions with respect to the
Company Options then outstanding, including limitations on exercisability and
vesting, risk of forfeiture and conditions and restrictions requiring continued
performance of services or the meeting of any targets or milestones with
respect to the exercisability or vesting of any such Company Options, will
immediately lapse.
The Acquisition Agreement further provides that each Company Option
unexercised and outstanding at the Effective Time will be cancelled as of the
Effective Time in exchange for a cash payment to the holder of the Company
Option in an amount equal to the excess of (x) the Offer Price multiplied by
the number of shares of Common Stock purchasable pursuant to such Company
Option immediately prior to the Effective Time over (y) the aggregate exercise
price for the shares of Common Stock purchasable pursuant to such Company
Option immediately prior to the Effective Time (in each case assuming such
Company Option had been fully vested and fully exercisable as of the Effective
Time as contemplated by the Acquisition Agreement), less any amounts as
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are required to be deducted and withheld under the United States Internal
Revenue Code of 1986, as amended, or any provision of state or local tax law in
connection with such payment. The aggregate value of vested Company Options
(based on the difference between $62 and the per share exercise price of such
Company Options), held by each of the Company's directors and executive
officers, as of May 7, 2002, is approximately $31.35 million. The aggregate
value of unvested Company Options (based on the difference between $62 and the
per share exercise price of such Company Options), held by each of the
Company's directors and executive officers, as of May 7, 2002, is approximately
$20.55 million.
INDEMNIFICATION AND INSURANCE
The Acquisition Agreement provides that the Parent and the Surviving
Corporation jointly and severally shall indemnify, to the full extent permitted
under Delaware law, the present and former directors and officers of the
Company and its subsidiaries in respect of actions taken prior to and including
the Effective Time in connection with their duties as directors or officers of
the Company or its subsidiaries (including in connection with the Offer and the
Merger). The Acquisition Agreement also provides that for at least six years
after the Effective Time, the Parent or the Surviving Corporation will maintain
in effect directors' and officers' liability insurance covering the persons who
are currently covered by the existing directors' and officers' liability
insurance of the Company with respect to actions that have taken place prior to
or at the Effective Time, on terms and conditions (including coverage amount)
no less favorable to such persons than those in effect under the existing
directors' and officers' liability insurance of the Company. Furthermore, under
the terms of the Acquisition Agreement, any successor to or assignee of Parent,
Purchaser or the Company will be bound by these indemnification and insurance
obligations.
REPRESENTATION ON THE BOARD
The Acquisition Agreement provides that, subject to compliance with Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, upon the
purchase of and payment for at least two-thirds of the issued and outstanding
Common Stock in connection with the Offer by Parent or any of its subsidiaries
and prior to the Effective Time:
. The size of the Company's board of directors (the "Board") will be
increased to 9.
. All current directors will resign, other than 3 of the current directors
who are not employees of the Company or stockholders, affiliates,
associates or employees of Parent or Purchaser (the "Independent
Directors").
. A number of persons equal to the aggregate vacancies so created will be
designated by Parent and will be elected to fill the vacancies so created.
After the election of Parent's designees to the Board and prior to the
Effective Time, the affirmative vote of 8 out of 9 of the Company's directors
(or such other number that would constitute a majority of the Independent
Directors) will be necessary to (i) amend or terminate the Acquisition
Agreement, (ii) waive any obligation or other act of Parent or Purchaser or
waive any of the Company's rights, remedies or benefits under the Acquisition
Agreement or (iii) take any other action of the Company's Board under or in
connection with the Acquisition Agreement in any manner that adversely affects
the holders of Common Stock.
As of the date of this Statement, no determination has been made as to which
directors of the Company will serve as Independent Directors.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
RECOMMENDATION OF THE BOARD
At a meeting held on May 12, 2002, the members of the Board unanimously:
. determined that the terms of the Acquisition Agreement, the Offer and the
Merger were fair to, and in the best interests of, the Company and its
stockholders, and declared that the Offer and the Merger are advisable;
. approved the Acquisition Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and each of the Tender
Agreements and the transactions contemplated by the Tender Agreements; and
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. recommended (subject to the further exercise of its fiduciary duties) that
the Company's stockholders accept the Offer and tender their shares of
Common Stock pursuant to the Offer and, if necessary under the DGCL,
approve and adopt the Acquisition Agreement and the Merger.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES OF COMMON STOCK PURSUANT TO THE OFFER.
BACKGROUND
Over a period of several years prior to the Transaction, the Company and Mr.
Comer had contacts from time to time with Parent regarding Parent's potential
interest in engaging in a business or strategic transaction with the Company.
Among other things, in connection with the Company's exploration of strategic
alternatives in 2000, the Company and Parent entered into a confidentiality
agreement in May 2000 pursuant to which the Company provided Parent with
certain confidential information. In addition, Mr. Comer received a preliminary
contact from the Chief Executive Officer of Parent in late summer 2001, but
subsequently indicated to him that the Company was not interested in engaging
in a business or strategic transaction at that time.
None of the foregoing contacts matured into any definitive or binding
proposal by either party. Further information provided by the Parent with
respect to these contacts is set forth in Section 10. "Background of the Offer;
Past Contacts or Negotiations with the Company" of the Offer to Purchase, which
is filed herewith as Exhibit (a)(1) and incorporated herein by reference.
At a November 3, 2001 meeting of the Board of Directors, Mr. Comer reported
that he had recently received an inquiry from a third party regarding a
potential strategic transaction involving the Company. The directors engaged in
a discussion with the Company's outside counsel, Kirkland & Ellis, regarding
the fiduciary responsibilities of the Board in connection with strategic
transactions. Mr. Comer expressed his intention not to individually sell his
interest in the Company and stated that he only would support a transaction
that involved all stockholders and gave each stockholder the opportunity to
receive the same consideration. He also confirmed that he had no intention of
controlling or limiting the process by which the Company might engage in a
strategic transaction and intended that the Board as a whole would control any
strategic process for the benefit of all stockholders. After further discussing
the potential strategic opportunity, the Board reviewed the Company's then
current strategic plan for operating on a stand-alone basis and discussed a
wide range of possible strategic transactions that could be viewed as
alternatives to the then current plan. Based on these discussions, the Board
determined that it should take steps to become better informed about the recent
inquiry and that it should consult with an independent financial advisor in
determining how best to proceed.
Peter J. Solomon Company Limited ("PJSC") was invited to attend portions of
a Board meeting on November 5, 2001 to make a presentation regarding the
resources and capabilities of PJSC as an independent financial advisor. At the
conclusion of the meeting, the Board decided to engage PJSC as the Company's
financial advisor for purposes of evaluating the third party's strategic
proposal and any other strategic transactions to be considered by the Board.
In November 2001, PJSC engaged in preliminary discussions with the third
party and its financial advisor with respect to a possible strategic
transaction. Shortly after such discussions commenced, however, the third party
determined not to pursue a transaction with the Company.
At a January 22, 2002 meeting, the Board invited PJSC to discuss its views
with respect to other strategic opportunities that might be available to the
Company. Kirkland & Ellis also provided advice to the directors regarding the
legal standards applicable to their decision making process in this regard. The
Board then authorized management to proceed to work with PJSC on exploring
other strategic opportunities subject to further Board review and guidance.
Commencing in late February 2002, PJSC contacted over 35 potential strategic
and financial buyers selected on the basis of a variety of factors, including
perceived interest in the Company, familiarity with the business in which the
Company operated and financial ability to consummate a transaction with the
Company. PJSC
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engaged in preliminary discussions with these potential buyers, and those
parties expressing an interest in pursuing a possible transaction were asked to
sign a confidentiality agreement. Seven parties signed confidentiality
agreements and received a confidential information memorandum prepared by PJSC.
These parties were asked to submit a written, non-binding preliminary
indication of interest to the Company by April 15, 2002.
On March 18, 2002, the Board met by telephone conference to review, among
other matters, the progress of the strategic review process. At the meeting,
PJSC provided an update and led a discussion of the process that it had engaged
in on behalf of the Company. At the conclusion of the meeting, the Board
requested that PJSC prepare certain financial analyses with respect to the
Company on a standalone going-concern basis to be delivered in advance of the
next Board meeting.
On April 16, 2002, the Board met by telephone conference to review the
progress of the strategic review process and to consider the two written
indications of interest received from third parties, as well as the financial
analyses prepared by PJSC. At this meeting, the Board discussed with Kirkland &
Ellis its fiduciary duties in the context of a possible sale of the Company and
discussed with PJSC the financial analyses that had been requested by the
Board. PJSC then led a discussion of the indications of interest received from
third parties and Kirkland & Ellis led a discussion of structural issues and
contract issues relating to the implementation of a possible transaction.
At the April 16, 2002 meeting, the Board determined to provide both parties
that had submitted indications of interest, one of which was Parent, with
nonpublic information regarding the Company, and authorized Kirkland & Ellis to
provide each with forms of an acquisition agreement, pursuant to which such
third party would make a cash tender offer for all outstanding shares of Common
Stock to be followed by a merger at the same cash price, and a tender
agreement, whereby Mr. Comer, subject to the conditions set forth therein,
would agree to tender certain of his shares of Common Stock in the tender
offer. The two third parties were asked to submit definitive proposals to the
Company by May 9, 2002.
After more than three weeks of due diligence review of the Company and its
businesses, both third parties that submitted indications of interest made
proposals to the Company on the bid deadline, May 9, 2002. The third party
other than Parent reported to the Company that it was prepared to proceed with
a fully-financed transaction, but not at a higher price than stated in its
previous indication of interest. The highest proposal that the Company received
was made by Parent. Parent submitted a written proposal contemplating a
fully-financed cash tender offer for all outstanding shares of Common Stock for
$61 per share to be followed by a merger at the same cash price and included a
detailed markup of the proposed forms of acquisition agreement and tender
agreement. Parent also requested that Mr. Anderson, and certain trusts and
foundations associated with Mr. Comer, enter into tender agreements, in
addition to Mr. Comer.
On May 10, 2002, the Board met by telephone conference with the Company's
legal and financial advisors to discuss the proposals that had been received.
PJSC reviewed with the Board the proposals and the valuation methodologies it
expected to utilize in evaluating the consideration to be received in a
transaction. PJSC also provided a current update of its previous financial
analyses regarding the Company on a standalone going-concern basis. The Board
then discussed with Kirkland & Ellis its fiduciary responsibilities in the
context of the proposals, and certain revisions to the form of acquisition
agreement requested by Parent. The Board then engaged in a detailed discussion
regarding the proposals and discussed the relative merits of remaining an
independent public company. Following this discussion, the Board authorized
management and its advisors to continue negotiations with Parent as to both
pricing and terms of a definitive acquisition agreement.
On May 11, 2002, representatives of the Company's and Parent's management
teams, and the Company's and Parent's legal and financial advisors, met to
negotiate the terms of a revised draft of the acquisition agreement circulated
by Kirkland & Ellis early that morning. In connection with these negotiations,
the Company requested that Parent increase the consideration it would pay in a
transaction. During the course of the
8
negotiations, the Company and Parent reached satisfactory terms with respect to
the forms of acquisition agreement and tender agreements, and the Parent agreed
to increase the consideration it would pay in the tender offer and second step
merger to $62 per share.
On the afternoon of May 12, 2002, the Board met and considered the revised
offer the Company had received from Parent, and the relative merits of such
offer versus remaining an independent public company. Kirkland & Ellis made a
presentation regarding the Board's fiduciary duties in the context of the
proposed transaction and then reviewed with the Board the terms of the proposed
acquisition agreement and the related transaction documents as negotiated with
Parent and Parent's legal counsel. PJSC reviewed with the Board its financial
analysis of the consideration payable in the Transaction and rendered to the
Board an oral opinion (which opinion was confirmed by delivery of a written
opinion dated May 12, 2002) to the effect that, as of the date of the opinion
and based upon and subject to certain matters stated in such opinion, the $62
per share cash consideration to be received in the Transaction by holders of
Common Stock was fair, from a financial point of view, to such holders. The
Board then received a report of the Compensation Committee regarding the
executive retention agreements and plans described above and engaged in a
general discussion with respect to the merits of the proposed transaction.
After thorough discussion, the Board approved and authorized the Acquisition
Agreement with Parent. The Acquisition Agreement was executed by the Company
and Parent on the evening of May 12, 2002 and publicly announced the following
day.
REASONS FOR THE BOARD'S RECOMMENDATION.
In approving the Acquisition Agreement and the transactions contemplated
thereby, including the Offer and the Merger (the "Transaction"), and
recommending that all holders of Common Stock accept the Offer and tender their
shares of Common Stock pursuant to the Offer, the Board considered a number of
factors, including:
. the financial condition, results of operations and businesses of the
Company, on both a historical and prospective basis;
. the Company's future prospects and alternatives available to the Company
as a stand-alone enterprise;
. the present and prospective value of the Company as a going-concern;
. current industry, economic and market conditions and historical market
prices;
. price to earnings multiples and recent trading patterns of the Common
Stock;
. market prices and financial data relative to other companies engaged in
the same or similar businesses as the Company and the prices and other
terms of recent acquisition transactions in the Company's industry;
. certain challenges facing the Company, including competition in each part
of the Company's business from other industry participants;
. the relationship of the Offer Price to the historical market prices of the
Common Stock, including (i) that the Offer Price represents a 21.5%
premium over the closing price of the Common Stock on the trading day
immediately preceding the announcement of the Transaction, (ii) that the
Offer Price represents a 45.9% premium over the average closing price for
the Common Stock of $42.49 during the 12-month period ended May 10, 2002,
and (iii) that the Common Stock had traded in the range of $28.38 to
$54.69 during the 12-month period ended May 10, 2002;
. the results of the process that had been conducted by the Board, with the
assistance of management and the Company's financial and legal advisors,
to evaluate the Company's strategic alternatives, including the fact that
over 35 potential strategic and financial buyers were contacted and that
the Company did not receive any proposal that offered value superior to
the Offer Price;
. presentations by, and discussions with, senior management of the Company
and representatives of the Company's financial and legal advisors
regarding the Transaction;
. the fact that the Acquisition Agreement provides for a prompt cash tender
offer for all outstanding shares of Common Stock to be followed by the
Merger at the same cash price per share, thereby enabling the Company's
stockholders to obtain the benefits of the Transaction at the earliest
possible time;
9
. the form of consideration to be paid to the Company's stockholders
pursuant to the Offer and the Merger, and the certainty of value of cash
consideration;
. that the Offer is conditioned on the holders of at least two-thirds of the
issued and outstanding Common Stock on a fully-diluted basis tendering
their shares in the Offers, and that each of Mr. Gary C. Comer, certain
trusts and charitable foundations established by Mr. Comer and a trust
associated with Mr. Anderson would enter into agreements to tender in the
Offer an aggregate of approximately 55% of the issued and outstanding
Common Stock (approximately 50.1% on a fully diluted basis), subject to
certain terms and conditions;
. the financial presentation of PJSC and the opinion dated May 12, 2002 of
PJSC as to the fairness, from a financial point of view and as of such
date, of the $62 per share cash consideration to be received in the
Transaction by holders of Common Stock. The full text of PJSC's written
opinion, dated May 12, 2002, which sets forth the assumptions made,
procedures followed, matters considered and limitations on the review
undertaken by PJSC, is attached hereto as Annex A and is incorporated
herein by reference. PJSC'S OPINION IS DIRECTED ONLY TO THE FAIRNESS FROM
A FINANCIAL POINT OF VIEW OF THE $62 PER SHARE CASH CONSIDERATION TO BE
RECEIVED IN THE TRANSACTION BY HOLDERS OF COMMON STOCK AND IS NOT INTENDED
TO CONSTITUTE, AND DOES NOT CONSTITUTE, A RECOMMENDATION AS TO WHETHER ANY
STOCKHOLDER SHOULD TENDER SHARES OF COMMON STOCK PURSUANT TO THE OFFER,
VOTE IN FAVOR OF OR CONSENT TO, IF NECESSARY, THE MERGER, OR AS TO ANY
OTHER ACTIONS TO BE TAKEN BY SUCH STOCKHOLDER IN CONNECTION WITH THE OFFER
OR THE MERGER. HOLDERS OF COMMON STOCK ARE URGED TO READ SUCH OPINION
CAREFULLY IN ITS ENTIRETY;
. that the Offer and the Merger would be taxable to the Company stockholders
and the cash paid to them pursuant to the Offer or the Merger could be
used to satisfy any tax liability resulting from the Offer or the Merger;
. that the Acquisition Agreement permits the Board to withdraw or modify its
recommendation of the Transaction to the extent that the Board determines
in good faith after consultation with its legal counsel that the failure
to withdraw or modify such recommendation would be inconsistent with its
fiduciary duties under applicable law;
. that the withdrawal or modification of the Board's recommendation of the
Transaction would not alter its approval of the Acquisition Agreement or
the Tender Agreements for purposes of Section 203 of the DGCL;
. that the Acquisition Agreement permits the Company to request
clarification from a person or entity that makes an Acquisition Proposal
(as defined in the Acquisition Agreement) to ascertain whether such
Acquisition Proposal is a Superior Proposal (as defined in the Acquisition
Agreement);
. that the Acquisition Agreement permits the Company to participate in
discussions or negotiations with, or furnish information to, any person
that delivers an Acquisition Proposal that, in the good faith judgment of
the Board, is a Superior Proposal and in the good faith judgment of the
Board after consultation with legal counsel, the failure to respond to
such Acquisition Proposal would be inconsistent with the Board's fiduciary
duties;
. that the Acquisition Agreement permits the Company to terminate the
Acquisition Agreement if the Company enters into an agreement with respect
to an Acquisition Proposal under the circumstances contemplated thereby,
provided that the Company pay the Parent a $77.5 million termination fee,
plus documented out-of-pocket expenses not to exceed $4 million;
. that the Tender Agreements terminate upon termination of the Acquisition
Agreement;
. that neither the commencement nor the consummation of the Offer is subject
to the Parent's ability to secure financing commitments;
. the likelihood of obtaining required regulatory approvals; and
. the ability of the Company stockholders who object to the Merger to obtain
"fair value" for their shares of Common Stock if they exercise and perfect
their appraisal rights under Delaware law.
10
The foregoing discussion of information and factors considered and given
weight by the Board is not intended to be exhaustive, but is believed to
include all of the material factors, both positive and negative, considered by
the Board. In evaluating the Transaction, the members of the Board considered
their knowledge of the business, financial condition and prospects of the
Company, and the views of the Company's management and its financial and legal
advisors. In view of the wide variety of factors considered in connection with
its evaluation of the Transaction, the Board did not find it practicable to,
and did not, quantify or otherwise assign relative weights to the specific
factors considered in reaching its determinations and recommendations. In
addition, individual members of the Board may have given different weights to
different factors.
The Board recognized that, while the Transaction gives the Company's
stockholders the opportunity to realize a significant premium over the price at
which the shares of Common Stock were traded prior to the public announcement
of the Transaction, adopting the Acquisition Agreement would eliminate the
opportunity for the Company's stockholders to participate in the future growth
and profits of the Company. The Board also realized that the termination fee
and expense reimbursement required by the terms of the Acquisition Agreement to
be paid by the Company in certain circumstances would make it more costly for
another potential purchaser to acquire the Company. The Board believed that the
loss of the opportunity to participate in the growth and profits of the Company
following the Offer and the risks associated with the termination fee and
expense reimbursement were reflected in the $62 per share price offered by
Parent in the Offer, and that termination fee and expense reimbursement
provisions are customary in transactions of this type.
INTENT TO TENDER
To the best of the Company's knowledge, each executive officer, director,
affiliate or subsidiary of the Company who owns shares of Common Stock intends
to tender all issued and outstanding shares of Common Stock held of record or
beneficially owned by such person to Purchaser in the Offer.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
The Company has retained PJSC to act as its exclusive financial advisor in
connection with the Transaction. Pursuant to the terms of PJSC's engagement,
the Company has agreed to pay PJSC $1,000,000 upon the delivery of PJSC's
fairness opinion, which opinion was delivered by PJSC on May 12, 2002. In
addition, upon consummation of the Transaction, the Company has agreed to pay
PJSC a fee equal to 0.586% of the aggregate consideration to be paid in the
Transaction (including amounts paid to all holders of Common Stock or options
to acquire Common Stock and the principal amount of the Company's long-term
indebtedness), less the $1,000,000 previously paid in connection with the
delivery of PJSC's fairness opinion. The Company also has agreed to reimburse
PJSC for reasonable travel and other expenses, including reasonable fees and
expenses of its legal counsel, and to indemnify PJSC and related parties
against certain liabilities, including liabilities under the federal securities
laws, arising out of PJSC's engagement. In addition, PJSC and its affiliates
may maintain relationships with the Company, Parent and their respective
affiliates. Neither the Company nor any person acting on its behalf has
employed, retained or compensated any other person to make solicitations or
recommendations to stockholders on its behalf concerning the Transactions.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
Other than the contribution of (i) 116,484 shares of Common Stock by the
Gary C. Comer Grantor Annuity Trust to each of (x) the Stephanie Comer
Remainder Trust and (y) the Guy Comer Remainder Trust, on April 4, 2002, (ii)
1,000,000 shares of Common Stock by Mr. Comer to the Comer Charitable Fund on
May 10, 2002 and (iii) 1,317,032 shares of Common Stock by Mr. Comer to the
Comer Science and Education Foundation on May 10, 2002, no transactions in the
Common Stock have been effected during the past 60 days by the Company or any
of its subsidiaries or, to the best of the Company's knowledge, by any
executive officer, director or affiliate of the Company.
11
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
Except as set forth in this Statement and the Offer to Purchase, the Company
is not undertaking or engaged in any negotiations in response to the Offer that
relate to:
. a tender offer for or other acquisition of the Company's securities by the
Company, any subsidiary of the Company or any other person;
. any extraordinary transaction, such as a merger, reorganization or
liquidation, involving the Company or any subsidiary of the Company;
. any purchase, sale, or transfer of a material amount of assets of the
Company or any subsidiary of the Company; or
. any material change in the present dividend rate or policy, or
indebtedness or capitalization of the Company.
Except as set forth in this Statement or the Offer to Purchase, there are no
transactions, resolutions of the Board, agreements in principle, or signed
contracts in response to the Offer that relate to one or more of the events
referred to in this Item 7.
ITEM 8. ADDITIONAL INFORMATION
SECTION 14(f) INFORMATION STATEMENT
The Information Statement attached as Annex B hereto is being furnished in
connection with the possible designation by Parent, pursuant to the Acquisition
Agreement, of certain persons to be appointed to the Board other than at a
meeting of the Company's stockholders.
ANTI-TAKEOVER STATUTE
As the Company is a Delaware corporation, the provisions of Section 203 of
the Delaware General Corporation Law (the "DGCL") by their terms apply to the
approval of the Offer and the Merger. The description of these provisions and
their applicability to the approval of the Offer and the Merger is contained in
Section 16. "Certain Legal Matters; Regulatory Approvals" of the Offer to
Purchase, which is filed herewith as Exhibit (a)(1) and incorporated herein by
reference. At its meeting held on May 12, 2002, the Board approved the
Transaction Agreements and the transactions contemplated thereby, which
approval rendered Section 203 of the DGCL inapplicable to the Transaction
Agreements and the transactions contemplated thereby, including the Offer and
the Merger.
APPRAISAL RIGHTS
For a description of the appraisal rights applicable to the Merger (such
rights not being applicable to the Offer), see Section 16. "Certain Legal
Matters; Regulatory Approvals' of the Offer to Purchase, which section is filed
herewith as Exhibit (a)(1) and incorporated herein by reference.
FINANCIAL FORECASTS
The Company provided to Parent certain non-public business and financial
information in connection with its analysis of the Company. The summary
description of this information in Section 7. "Certain Information Concerning
the Company" of the Offer to Purchase is filed herewith as Exhibit (a)(1) and
incorporated herein by reference.
MERGER PROVISIONS
Under Section 253 of the DGCL, if Purchaser acquires, pursuant to the Offer
or otherwise, at least 90% of the outstanding shares of Common Stock, Purchaser
will be able to effect the Merger after consummation of the
12
Offer without a vote of the Company's stockholders. However, if Purchaser does
not acquire at least 90% of the outstanding shares of Common Stock pursuant to
the Offer or otherwise, a vote or the written consent of the Company's
stockholders is required under Delaware law, and a significantly longer period
of time will be required to effect the Merger.
REGULATORY APPROVALS
Under the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), applicable to the Offer, the purchase of
shares of Common Stock in the Offer may be consummated after the expiration or
termination of the applicable waiting period following the filing by Purchaser
of a Notification and Report Form with respect to the Offer, unless Purchaser
receives a request for additional information or documentary material from the
Antitrust Division of the United States Department of Justice or the Federal
Trade Commission. In addition, the Offer is subject to antitrust approval in
certain foreign jurisdictions. The description of this regulatory approval
process in Section 16. "Certain Legal Matters; Regulatory Approvals" of the
Offer to Purchase is filed herewith as Exhibit (a)(1) and incorporated herein
by reference.
ITEM 9. EXHIBITS
The following Exhibits are filed herewith:
Exhibit
No. Description
------- -----------
(a)(1). Offer to Purchase (incorporated by reference to Exhibit (a)(1)(A) to the Schedule TO filed by Parent on
May 17, 2002).
(a)(2). Opinion of Peter J. Solomon Company Limited, dated May 12, 2002 (included as Annex A to this
Statement).
(a)(3). Joint press release issued by the Company and Parent on May 13, 2002, Q&A to Company employees
and certain other materials issued by the Company on May 13, 2002 (incorporated by reference to the
Schedule 14D-9C filed by the Company on May 13, 2002).
(a)(4) Transcript of conference call held on May 13, 2002 (incorporated by reference to the Schedule 14D-9C
filed by the Company on May 14, 2002).
(a)(5) Press release issued by the Company on May 16, 2002 (incorporated by refrence to the Schedule
14D-9C filed by the Company on May 16, 2002).
(a)(6) Employee news letter issued by the Company on May 16, 2002 (incorporated by reference to the
Schedule 14D-9C filed by the Company on May 16, 2002).
(e)(1). Acquisition Agreement and Agreement and Plan of Merger, dated as of May 12, 2002, among Parent,
Purchaser and the Company (incorporated by reference to Exhibit (d)(1) to the Schedule TO filed by
Parent on May 17, 2002).
(e)(2). Form of Tender Agreement, dated as of May 12, 2002, by and among Parent, Purchaser and, as the case
may be, Gary C. Comer, certain trusts and foundations established by Mr. Comer and a trust associated
with Richard C. Anderson (incorporated by reference to Exhibit (d)(2) to the Schedule TO filed by
Parent on May 17, 2002).
(e)(3). Confidentiality Agreement, dated as of February 26, 2002, by and between Parent and the Company
(incorporated by reference to Exhibit (d)(3) to the Schedule TO filed by Parent on May 17, 2002).
(e)(4). Amended and Restated Agreement, dated as of May 12, 2002, between the Company and David F. Dyer.
(e)(5). Letter Agreement, dated as of May 13, 2002, between Parent and David F. Dyer (incorporated by
reference to Exhibit (d)(4) to the Schedule TO filed by Parent on May 17, 2002).
13
Exhibit
No. Description
------- -----------
(e)(6) Form of Executive Agreement between the Company and each of William
Bass, Lee Eisenberg and Mindy Meads, dated as of May 12, 2002.
(e)(7) Form of Executive Agreement between the Company and each of Lisa
Fitzgerald, Patricia Simigran, Sid Mashburn, Geoffrey Werner, Eric
Kyser, Robert McElroy, Philip Shaecher, Steven McCardell, Donald
Hughes, Frank Giannantonio, Kelly Ritchie, Jeffrey Jones and Samuel
Taylor, dated as of May 12, 2002.
(e)(8) Executive Retention Plan--Group A, dated as of May 12, 2002.
(e)(9) Executive Retention Plan--Group B, dated as of May 12, 2002.
(e)(10) Lands' End Stock Option Plan (incorporated by reference to Appendix A
to the Company's 2002 Proxy Statement).
(e)(11) Non-Employee Director Stock Option Plan (incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year
ended January 26, 2001).
(e)(12) The Information Statement of the Company, dated May 17, 2002
(included as Annex B to this Statement).
14
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
LANDS' END, INC.
/s/ DONALD R. HUGHES
By: __________________________________
Donald R. Hughes
Senior Vice President and Chief
Financial Officer
Dated: May 17, 2002
15
ANNEX A
[PETER J. SOLOMON COMPANY LIMITED LETTERHEAD]
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
May 12, 2002
Board of Directors
Lands' End, Inc.
Lands' End Lane
Dodgeville, WI 53595
Ladies and Gentlemen:
We understand that Lands' End, Inc. (the "Company"), Sears, Roebuck & Co.
("Parent") and Inlet Acquisition Corp. ("Purchaser"), a direct, wholly-owned
subsidiary of Parent, propose to enter into an Acquisition Agreement and
Agreement and Plan of Merger substantially in the form of the draft dated May
12, 2002 (the "Merger Agreement"). The Merger Agreement provides, among other
things and subject to the terms and conditions thereof, for (i) the
commencement by Purchaser of a tender offer (the "Tender Offer") for all of the
issued and outstanding shares of the common stock, par value $0.01 per share,
of the Company (the "Company Common Stock") for $62.00 per share (such price,
or the highest of any price as may be paid in the Tender Offer, the "Offer
Price"), net to the seller in cash, and (ii) the subsequent merger (the
"Merger" and, together with the Tender Offer, the "Transaction") of Purchaser
with and into the Company, with each then issued and outstanding share of
Company Common Stock (other than certain shares specified in the Merger
Agreement) being converted into the right to receive the Offer Price.
You have asked us to advise you with respect to the fairness to the holders
of Company Common Stock from a financial point of view of the consideration to
be received by the holders of Company Common Stock pursuant to the Transaction.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and projections
relating to earnings and cash flow (the "Projections") and other financial
and operating data concerning the Company prepared by the management of the
Company;
(iii) discussed the past and current operations, financial condition and
prospects of the Company with management of the Company;
(iv) reviewed the reported prices and trading activity of the Company
Common Stock;
(v) compared the financial performance and condition of the Company and
the reported prices and trading activity of Company Common Stock with that
of certain other comparable publicly traded companies;
(vi) reviewed publicly available information regarding the financial
terms of certain transactions comparable, in whole or in part, to the
Transaction;
(vii) performed discounted cash flow analyses based on the Projections;
(viii) participated in certain discussions among representatives of each
of the Company and Parent;
A-1
(ix) reviewed the draft Merger Agreement described above and certain
related documents; and
(x) performed such other analyses as we have deemed appropriate.
We have also taken into consideration that at the time of the execution of
the Merger Agreement, Mr. Gary C. Comer, certain affiliated trusts and Mr.
Richard C. Anderson, the holders of approximately 50.1% of the Company Common
Stock on a fully diluted basis, will enter into a Tender Agreement with Parent
and Purchaser, pursuant to which they will agree to tender their shares in the
Tender Offer.
We have assumed and relied upon the accuracy and completeness of the
information reviewed by us for the purposes of this opinion, and we have not
assumed any responsibility for independent verification of such information. We
have further relied on the assurances of management of the Company that they
are not aware of any facts that would make any such information inaccurate or
misleading. With respect to the Projections and other information provided to
us, we have assumed that such Projections and other information were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance of the Company. We have not
assumed any responsibility for any independent valuation or appraisal of the
assets or liabilities of the Company, nor have we been furnished with any such
valuation or appraisal. We have further assumed that the Transaction will be
consummated in accordance with the terms of the Merger Agreement without waiver
of any of the conditions precedent contained in the Merger Agreement and that
the final Merger Agreement will be the same in all material respects as the
draft Merger Agreement described above.
We were not requested to consider, and our opinion does not address, the
relative merits of the Transaction as compared to any alternative business
strategies that might exist for the Company or the effects of any other
transaction in which the Company might engage. Our opinion is necessarily based
on economic, market and other conditions as in effect on, and the information
made available to us as of, May 10, 2002.
We have acted as financial advisor to the Company in connection with this
transaction and will receive a fee for our services, a portion of which is
payable upon the delivery of this opinion.
This letter is solely for the information of the Board of Directors of the
Company and is not on behalf of and is not intended to confer rights or
remedies upon any other entity or persons, and may not be used for any other
purpose without our prior written consent. Notwithstanding the foregoing, the
Company may include this letter in its entirety, and a summary thereof (in a
form reasonably acceptable to us), in any proxy or information statement
required to be circulated to holders of Company Common Stock relating to the
Merger or Tender Offer recommendation on Schedule 14D-9 or other Tender Offer
communications from the Company or Parent or Purchaser to the holders of
Company Common Stock relating to the Transaction. This letter does not
constitute a recommendation to any holder of Company Common Stock as to whether
such holder should tender their shares in the Tender Offer or vote in favor of
the Merger.
Based upon, and subject to, the foregoing, we are of the opinion that on the
date hereof, the consideration to be received by the holders of Company Common
Stock pursuant to the Transaction is fair from a financial point of view to the
holders of Company Common Stock.
Very truly yours,
/s/ PETER J. SOLOMON COMPANY LIMITED
PETER J. SOLOMON COMPANY LIMITED
A-2
ANNEX B
LANDS' END, INC.
ONE LANDS' END LANE
DODGEVILLE, WISCONSIN 53595
-----------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE
ACT OF 1934 AND RULE 14f-1 THEREUNDER
-----------------
This Information Statement is being mailed on or about May 17, 2002 as part
of the Solicitation / Recommendation Statement on Schedule 14D-9 (the
"Statement") of Lands' End, Inc. (the "Company"). You are receiving this
Information Statement in connection with the possible election of persons
designated by Sears, Roebuck and Co., a New York corporation ("Parent"), to at
least two-thirds of the seats on the board of directors of the Company (the
"Board" or the "Board of Directors"). On May 12, 2002, the Company entered into
an Acquisition Agreement and Agreement and Plan of Merger (the "Acquisition
Agreement") with Parent and Inlet Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of Parent ("Purchaser"), pursuant to which Purchaser
is required to commence a tender offer to purchase all outstanding shares of
common stock, par value $0.01 per share, of the Company (the "Common Stock"),
at a price per share of $62, net to the seller in cash (the "Offer Price"),
upon the terms and conditions set forth in Purchaser's Offer to Purchase, dated
May 17, 2002, and in the related Letter of Transmittal (the "Letter of
Transmittal" which, together with the Offer to Purchase and any amendments and
supplements thereto, collectively constitute the "Offer"). Copies of the Offer
to Purchase and the Letter of Transmittal have been mailed to stockholders of
the Company and are filed as Exhibit (a)(1)(A) and (a)(1)(B), respectively, to
the Tender Offer Statement on Schedule TO (as amended from time to time unsold,
the "Schedule TO") filed by Purchaser and Parent with the United States
Securities and Exchange Commission (the "SEC") on May 17, 2002. The Acquisition
Agreement provides that, subject to the satisfaction or waiver of certain
conditions, following completion of the Offer, and in accordance with Delaware
law, Purchaser will be merged with and into the Company (the "Merger").
Following consummation of the Merger, the Company will continue as the
surviving corporation (the "Surviving Corporation") and will be a wholly-owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each issued and outstanding share of Common Stock (other than shares of
Common Stock that are owned by Parent, Purchaser, any of their respective
subsidiaries, the Company or its subsidiaries, and shares held by stockholders
of the Company who do not tender their shares of Common Stock in the Offer and
who have properly demanded and perfected appraisal rights under Section 262 of
Delaware law) will be converted into the right to receive the Offer Price.
The Offer, the Merger, and the Acquisition Agreement are more fully
described in the Statement to which this Information Statement forms Annex B,
which was filed by the Company with the SEC on May 17, 2002 and which is being
mailed to stockholders of the Company along with this Information Statement.
This Information Statement is being mailed to you in accordance with Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Rule 14f-1 promulgated thereunder. The information set forth herein
supplements certain information set forth in the Statement. Information set
forth herein related to Parent, Purchaser or the Parent Designees (as defined
herein) has been provided by Parent. You are urged to read this Information
Statement carefully. You are not, however, required to take any action in
connection with the matters set forth herein.
Pursuant to the Acquisition Agreement, Purchaser commenced the Offer on
Friday, May 17, 2002. The Offer is scheduled to expire at 12:00 p.m. Midnight,
New York City time, on Friday, June 14, 2002, unless extended by Purchaser.
B-1
GENERAL
The Common Stock is the only class of equity securities of the Company
outstanding which is entitled to vote at a meeting of the stockholders of the
Company. Each share of Common Stock is entitled to one vote. As of May 12,
2002, there were 30,012,942 shares of Common Stock outstanding, of which Parent
and Purchaser own no shares.
RIGHTS TO DESIGNATE DIRECTORS AND PARENT'S DESIGNEES
The Board of Directors of the Company
Subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, as soon as practicable following the purchase by
Purchaser pursuant to the Offer of such number of shares of Common Stock,
together with any shares of Common Stock then owned by Parent or any of its
subsidiaries, that represents two-thirds of the then outstanding shares of
Common Stock (on a fully diluted basis): (i) the size of the Board will be
increased to 9; (ii) all current directors will resign, other than 3 of the
current directors who are not employees of the Company or stockholders,
affiliates, associates or employees of Parent or Purchaser (the "Independent
Directors"); and (iii) a number of persons equal to the aggregate vacancies so
created will be designated by Parent and will be elected to fill the vacancies
so created (the "Parent Designees").
After the election of the Parent Designees to the Board and prior to the
Effective Time, the affirmative vote of 8 out of 9 of the Company's directors
(or such other number that would constitute a majority of Independent
Directors) will be necessary to: (i) amend or terminate the Acquisition
Agreement; (ii) exercise or waive any of the Company's rights, remedies or
benefits under the Acquisition Agreement; or (iii) take any other action of the
Company's Board in connection with or under the Acquisition Agreement, which
would adversely affect the rights of the holders of Common Stock.
As of the date of this Information Statement, no determination has been made
as to which directors of the Company will serve as Independent Directors.
Parent has informed the Company that it will choose its designees for
directors of the Company from the directors and executive officers of Purchaser
and executive officers of Parent listed in Schedule I of the Offer to Purchase,
a copy of which is being mailed to stockholders of the Company. The information
provided by Parent and Purchaser with respect to such individuals in Schedule I
is hereby incorporated by reference. Parent has informed the Company that each
of the individuals listed in Schedule I of the Offer to Purchase has consented
to act as a director of the Company, if so designated.
Based solely on the information set forth in Schedule I of the Offer to
Purchase filed by Parent and Purchaser, none of the executive officers and
directors of Purchaser and none of the executive officers of Parent (i) is
currently a director of, or holds any position with, the Company, or (ii) has a
familial relationship with any directors or executive officers of the Company.
The Company has been advised that, to the best knowledge of Parent and
Purchaser, except for Shares which may be deemed to be beneficially owned by
Parent or Purchaser by virture of the Tender Agreements among Parent, Purchaser
and certain stockholders of the Company, none of Purchaser's directors or
executive officers or Parent's executive officers beneficially owns any equity
securities (or rights to acquire such equity securities) of the Company and
none have been involved in any transactions with the Company or any of its
directors, executive officers, affiliates or associates which are required to
be disclosed pursuant to the rules and regulations of the SEC.
Parent has informed the Company that, to the best of its knowledge, none of
the executive officers and directors of Purchaser or executive officers of
Parent has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or has been party to any judicial or
administrative proceeding during the past five years (except for matters that
were dismissed without sanction or settlement) that resulted in a
B-2
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.
It is expected that Parent's designees may assume office at any time
following the purchase by Purchaser of the Shares pursuant to the Offer, which
purchase cannot be earlier than June 14, 2002, and that, upon assuming office,
Parent's designees will thereafter constitute at least two-thirds of the Board.
As of the date of this Information Statement, no determination has been made as
to which of the individuals described in Schedule I of the Offer to Purchase
will be designated to the Board of the Company, if any.
CURRENT DIRECTORS AND EXECUTIVE OFFICERS
Directors
The Board of Directors is currently composed of seven directors. The
directors are divided into three classes, two of which are composed of two
directors each, and one of which is composed of three directors. One class is
elected each year for a three year term. The following information concerns the
current directors of the Company.
RICHARD C. ANDERSON, AGE 72, has been Vice Chairman of the Company since
1984 and served as Chief Executive Officer of the Company from 1990 through
January 1993. In addition, Mr. Anderson served as President and Chief Operating
Officer from 1989 until 1992. He has been a director of the Company since 1979.
From 1977 to 1984, Mr. Anderson was a senior executive of Needham, Harper &
Steers, serving as Executive Vice President in charge of programming and media
from 1981 until 1984.
GARY C. COMER, AGE 74, is the founder of the Company and Chairman of the
Board. Mr. Comer was President of the Company from 1963 until 1989, and served
as Chief Executive Officer from 1963 until 1990. He has been a director of the
Company since 1963. Prior to 1963, Mr. Comer was employed for ten years as a
copywriter at Young & Rubicam.
DAVID F. DYER, AGE 52, has been President, Chief Executive Officer and a
member of the Board since rejoining the Company in October 1998. In 1989, Mr.
Dyer entered the employ of the Company as Managing Director of Home
Furnishings, became Executive Vice President of Merchandising in 1990, and was
named Vice Chairman, Merchandising and Sales in 1993. He was a director of the
Company from 1991 until August 1994. Mr. Dyer was President and Chief Operating
Officer of the Home Shopping Network from August 1994 until August 1995, at
which time he became an independent catalog/retail consultant, most recently
with the Texas Pacific Group and the J. Crew Group. From 1972 to 1989, Mr. Dyer
was employed at Burdine's, a specialty retail chain, where he served as Senior
Vice President of Marketing and General Merchandising Manager of Women's
Apparel, Accessories and Cosmetics. Mr. Dyer is also a director of ADVO, Inc.,
a direct mail marketing services company.
CHERYL A. FRANCIS, AGE 48, has been a director of the Company since May
2001. Ms. Francis served as Executive Vice President and Chief Financial
Officer of R.R. Donnelley & Sons Company from 1995 until spring 2000. Prior to
Donnelley, she was Vice President and Treasurer of FMC Corporation, where she
served in various senior financial management positions since 1982. Ms. Francis
is a current member of the board of directors for Hon Industries Inc.
RICHARD C. MARCUS, AGE 63, has been a director of the Company since January
2001. Mr. Marcus served as Chief Executive Officer of Neiman Marcus from 1979
to 1988. Subsequently, he has been an e-commerce entrepreneur and consultant,
including with the InterSolve Group, a company he co-founded in 1991. From 1994
to 1995, he served as Chief Executive Officer of the Plaid Clothing Group. From
1997 to 2001, Mr. Marcus was a Senior Advisor with the New York-based
investment banking firm, Peter J. Solomon Company. He currently serves on the
board of directors for the Zale Corporation, Michaels Stores, Inc. and
fashionmall.com, Inc.
B-3
PAUL D. SHRAGE, AGE 67, has been a director of the Company since January
2001. Mr. Schrage served as Senior Executive Vice President and Chief Marketing
Officer of McDonald's Corporation and as a member of that company's board of
directors when he retired in 1997. Mr. Schrage joined McDonald's in 1967 as
National Marketing Director, was elected Vice President in 1968, Executive Vice
President in 1970 and Chief Marketing Officer in 1980. Mr. Schrage also serves
on the board of directors of Wolverine World Wide, Inc., the Aid Association
for Lutherans, Lutheran Brotherhood, Compact Industries, Inc. and Foodland
Supermarkets.
ELIOT WADSWORTH, II, AGE 59, has been a director of the Company since March
2001. Mr. Wadsworth has been the owner and Chief Executive Officer of White
Flower Farm, Inc. a mail-order nursery business, since 1975. He was founder of
Boston Common Press, L.P., a niche publishing company, has served as its
Managing Director for the last 10 years and currently serves on its board of
directors. Mr. Wadsworth is also a co-founder and General Partner of Housatonic
Partners, a private equity investment partnership in Boston, founded in 1994.
Executive Officers
All executive officers serve at the pleasure of the Board. The following
information concerns the current executive officers of the Company.
DAVID F. DYER, see "CURRENT DIRECTORS AND EXECUTIVE OFFICERS--Directors."
JEFFREY A. JONES, AGE 55, is Chief Operating Officer. Mr. Jones joined the
company in December 2000. Prior to joining Lands' End, Mr. Jones spent the last
seven years with Shopko Stores, Inc., and its subsidiary, Provantage Health
Service, Inc., both in Wisconsin. He served as Shopko's Senior Vice President
and Chief Financial Officer until 1997. At that time, he was named Chief
Operating Officer and later served as Chief Executive Officer of Provantage,
which was sold to Merck, Inc. Mr. Jones spent 13 years with Arthur Andersen
LLP. His career includes Chief Financial and Chief Operating Officer positions
with various companies, including retail.
LEE EISENBERG, AGE 55, is Executive Vice President and Creative Director
since joining the company in February 1999. Since May 1995, Mr. Eisenberg was
with TIME Magazine as Editor/Creative Development. In this capacity, he was
involved in the launch of TIME for Kids. Mr. Eisenberg began his career at
Esquire magazine in 1970, and went on to serve as their top editor.
MINDY MEADS, AGE 50, is Executive Vice President of Merchandising and
Design, since joining the company in December 1998. Ms. Meads originally joined
the company in 1991 as Vice President and Group Merchandising Manager for the
women's apparel division and, in 1994, the men's and coed groups were added to
her responsibilities. In January 1995, she was named Senior Vice President,
Merchandising and Design. She left the company in 1996 to join Gymboree
Corporation in San Francisco as their Senior Vice President and General
Merchandise Manager. Before first joining Lands' End, Ms. Meads was Merchandise
Manager for The Limited. Before The Limited, she had a 12-year tenure with R.
H. Macy & Company of New York where she rose to Senior Vice President,
Merchandise.
DONALD R. HUGHES, AGE 41, is Senior Vice President and Chief Financial
Officer. Mr. Hughes joined Lands' End in 1987 as Senior Staff Accountant.
During his 15-year tenure with the Company, he has served in various positions
of increasing responsibility, including Controller, Director of Financial
Services, and from 1996 to February 2001, Vice President of Finance. Prior to
Lands' End, Mr. Hughes spent two years with Arthur Andersen LLP in Milwaukee,
as an auditor in their Small Business Division.
FRANCIS P. SHAECHER, AGE 54, is Senior Vice President of Operations. Mr.
Schaecher joined the company in 1982 as Operations Manager. He served as Vice
President of Operations from 1983 until 1990, at which time he assumed his
present position.
B-4
WILLIAM BASS, AGE 39, is Senior Vice President, E-commerce and
International. Mr. Bass joined Lands' End in May 1999 as Vice President,
E-commerce, and was promoted to his current position in January 2000. From 1996
until joining the company, Mr. Bass was with Forrester Research in Cambridge,
Massachusetts, where he was Group Director, Research, supervising research in
consumer e-commerce and new media. Before that, he spent a year as Development
Director for Boston.com, The Boston Globe's Internet company, and three years
as Strategic Initiatives Manager with Knight-Ridder in Lexington, Kentucky, and
Miami, Florida. Prior to his business career, Mr. Bass spent six years in the
U.S. Army, where he rose to the rank of Captain.
KELLY A. RITCHIE, AGE 39, is Senior Vice President, Employee Services. Ms.
Ritchie has spent her entire career at Lands' End, having joined the company in
1985. For the first 10 years with the company, Ms. Ritchie held various
positions in recruitment and other employee relations functions, including
Manager of the company's Cross Plains, Wisconsin, phone center. Ms. Ritchie was
appointed Vice President, Employee Services, in 1995, and promoted to her
current position in January 2000.
FRANK GIANNANTONIO, AGE 56, is Senior Vice President and Chief Information
Officer. Mr. Giannantonio joined the company in February 2002. Prior to joining
Lands' End, he spent five years with The Limited, Inc. in Columbus, Ohio, most
recently as their Vice President, Direct Marketing Systems, and including three
years as Chief Information officer of Victoria's Secret Direct, a subsidiary of
The Limited, Inc. Mr. Giannantonio's career includes eight years with Time
Warner in New York, as Vice President, Information Systems, Book of the Month
Club, Inc. and 15 years with Avon Products, Inc. in New York, where he rose to
the position of Director, Corporate Management Information Systems.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows certain information concerning the number of
shares of Common Stock beneficially owned, directly or indirectly, by each
director and nominee for director of the Company, the Chief Executive Officer
and each of the other most highly compensated executive officers of the
Company, and the directors and executive officers as a group. The following
table also sets forth information concerning each person known to the Company
as of March 29, 2002 to be the ''beneficial owner'' (as defined in Rule 13d-3
of the Securities Exchange Act of 1934, as amended) of more than 5% of the
Company's Common Stock. Unless otherwise indicated, the persons named in the
table have sole voting and investment power with respect to all shares shown as
beneficially owned by them. Except as described in the notes below, all
information in the table and the accompanying footnotes is given as of March
29, 2002 and has been supplied by each of the persons included in the table.
Percent
Beneficial Owners Amount of Class
----------------- ---------- --------
Gary C. Comer(1)............................................... 15,648,309 52.15%
Address: 20875 Crossroads Circle, Suite 100;
Waukesha, WI 53186
Richard C. Anderson(2)......................................... 1,151,010 3.83%
Cheryl Francis................................................. 4,000 *
Richard C. Marcus.............................................. 4,000 *
Paul D. Schrage................................................ 4,000 *
Eliot Wadsworth................................................ 54,000 *
David F. Dyer(3)............................................... 463,431 *
Jeffrey A. Jones............................................... -0- *
Mindy C. Meads(4).............................................. 112,500 *
Lee Eisenberg(5)............................................... 102,500 *
Francis P. Schaecher(6)........................................ 94,000 *
All directors and executive officers as a group (11 persons)(7) 17,637,750 57.39%
B-5
--------
*Lessthan 1%.
(1)See the description of certain contributions by Mr. Comer and related trusts
set forth in Item 6. "Interest in Securities of the Subject Company" of the
Statement. Share amount shown includes (i) 232,968 shares of the Company's
Common Stock held by a trust for the benefit of Mr. Comer and his family as
to which he disclaims beneficial ownership except to the extent of his
pecuniary interest therein and (ii) 1,942,933 shares of the Company's Common
Stock held by trusts for the benefit of Mr. Comer's family as to which he
disclaims beneficial ownership.
(2)Share amount shown includes (i) exercisable options for 25,000 shares of
Company Common Stock granted to Mr. Anderson under the DSOP, (ii) 20,084
shares of the Company's Common Stock held by a trust for the benefit of Mr.
Anderson and his family as to which he disclaims beneficial ownership except
to the extent of his pecuniary interest therein, (iii) 87,916 shares of the
Company's Common Stock held by a trust for the benefit of Mr. Anderson's
family as to which he disclaims beneficial ownership and (iv) 205,105 shares
of the Company's Common Stock held by a trust for the benefit of Mr.
Anderson's family as to which he disclaims beneficial ownership.
(3)Share amount shown includes exercisable options for 450,000 shares of
Company Common Stock granted to Mr. Dyer under the Stock Option Plan.
(4)Share amount shown includes exercisable options for 112,500 shares of
Company Common Stock granted to Ms. Meads under the Stock Option Plan.
(5)Share amount shown includes exercisable options for 101,000 shares of
Company Common Stock granted to Mr. Eisenberg under the Stock Option Plan.
(6)Share amount shown includes exercisable options for 34,000 shares of Company
Common Stock granted to Mr. Schaecher under the Stock Option Plan.
(7)Share amount shown includes exercisable options for 722,500 shares of
Company Common Stock granted to certain executive officers under the Stock
Option Plan and certain directors under the DSOP.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)of the Securities Exchange Act of 1934 requires the Company 's
officers and directors, and persons who own more than ten percent of the
Company 's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Officers, directors and greater than ten-percent
beneficial owners are required by Securities and Exchange Commission regulation
to furnish the Company with copies of all Section 16(a)forms they file.
To the best of the Company's knowledge, based solely on its review of the
copies of such forms received by it,or written representations from certain
reporting persons that no Section 16(a)forms were required for those persons,
except as described below, all Section 16(a)filing requirements applicable to
its officers, directors and greater than ten-percent beneficial owners were
complied with during the fiscal year ended February 1,2002.
Richard C. Anderson, a member of the Board of Directors, inadvertently
failed to file a Form 4 by December 10, 2001, regarding the transfer of shares
of Common Stock in November 2001 from one trust for the benefit of Mr.
Anderson's family to another trust for the benefit of his family as an annuity
payment pursuant to the applicable trust instrument. Upon learning of the
error, Mr. Anderson filed a Form 4 on April 8, 2002.
MEETINGS AND COMPENSATION OF DIRECTORS
The Board of Directors held thirteen formal meetings during the fiscal year
ended February 1, 2002. All directors attended at least 75% of the total number
of meetings of the Board and committees of which they were members. Directors
who are not salaried officers or employees of the Company are eligible to
receive compensation as described in the following paragraphs. In addition, the
reasonable expenses incurred by each director in connection with his or her
duties as a director are reimbursed by the Company. Each director who is a
salaried officer or employee of the Company earns no additional compensation
for service as a director.
B-6
Several new directors joined the Board early in fiscal 2002. At that time,
Mr. Dyer and Mr. Comer, who have served as a special Board committee dealing
with non-employee director compensation, made recommendations to the Board
after discussions with the independent consulting firm that regularly advises
the Compensation Committee. Based on this recommendation, the Board approved an
increase in the cash retainer from $20,000 to $30,000 per year, without the
option of deferral. In addition, the Board amended the Non-Employee Director
Stock Option Plan (the "DSOP") to provide that no further stock options would
be issued thereunder, although outstanding stock options will continue in
accordance with their terms. Accordingly, 277,083 of the stock options
previously authorized but unissued under the DSOP will no longer be available
for issuance. In light of the foregoing action, upon the recommendation of the
committee, the Board adopted a new plan for non-employee directors, known as
the Director Stock Grant Plan (the "DSGP"), effective as of the beginning of
fiscal 2002. The DSGP provides that each new non-employee director will receive
an initial grant of 2,000 shares of the Company's Common Stock sixty days after
joining the Board and that each non-employee director will receive an annual
grant of 2,000 shares on the date of each Annual Meeting (or, if later than the
Annual Meeting, sixty days after joining the Board). All such grants will vest
immediately. The Company has reserved 100,000 shares of Common Stock for
issuance under the DSGP. During fiscal 2002, Messrs. Marcus and Schrage each
received an initial grant of 2,000 shares with a grant value of $28.31 per
share, Mr. Wadsworth received an initial grant of 2,000 shares with a grant
value of $33.95 per share, and Ms. Francis received an initial grant of 2,000
shares with a grant value of $41.60 per share. In addition, Messrs. Anderson,
Marcus, Schrage and Wadsworth each received an annual grant of 2,000 shares
with a grant value of $34.25 per share, and Ms. Francis received an annual
grant of 2,000 shares with a grant value of $41.60 per share. Each of Messrs.
Anderson, Schrage, Marcus and Wadsworth and Ms. Francis will receive 2000
shares of the Company's Common Stock on the date of the Annual Meeting to be
held on May 22, 2002. Mr. Comer has waived his eligibility to receive the cash
retainer and to participate in the DSGP.
BOARD COMPOSITION AND COMMITTEES
The Board has three current standing committees: the Audit Committee, the
Compensation Committee and the Nominating Committee.
Audit Committee
The members of the Audit Committee are Cheryl Francis (chair), Richard
Marcus and Eliot Wadsworth. The functions of the Audit Committee are described
in the Audit Committee Charter, which was included in the 2001 Proxy Statement.
These functions include, among other things, evaluating and recommending
annually to the Board of Directors the firm to be employed by the Company as
its external auditors, consulting with the internal audit department and the
external auditors regarding matters such as the plan of audit, the adequacy of
internal accounting controls and systems, and the review of financial
statements and reports to be included in quarterly and annual reports. However,
the Audit Committee is not expected to audit the Company, to define the scope
of the audit, to control the Company's accounting practices, or to define the
standards to be used in preparation of the Company's financial statements. The
Audit Committee held nine formal meetings during fiscal year 2002.
Compensation Committee
The members of the Compensation Committee are Paul Schrage (chair), Cheryl
Francis, and Richard Marcus. The Compensation Committee is responsible for,
among other things, monitoring and approving compensation and other employment
terms, administering the Stock Option Plan, including the grant of options
thereunder, and administering the Company's non-stock based compensation plans.
The Compensation Committee held five formal meetings during fiscal year
2002. Except for the DSGP described above, none of the members of the
Compensation Committee is or has been, for a period of at least one year prior
to appointment, eligible to receive a benefit under any plans of the Company
entitling participants to acquire Common Stock, stock options or stock
appreciation rights.
B-7
Nominating Committee
The Nominating Committee consists of all non-employee directors of the
Company, currently Ms. Francis and Messrs. Comer, Anderson, Marcus, Schrage and
Wadsworth. The Nominating Committee has responsibility for selecting any new
Chief Executive Officer for the Company and for selecting prospective directors
to fill vacancies on the Board of Directors that occur from time to time due to
retirement or resignation. In addition, prior to each annual meeting, those
members of the Nominating Committee whose director term will not expire at the
annual meeting will determine the slate of directors proposed for election at
the annual meeting. Prior to the mailing of the 2002 Proxy Statement, the
Nominating Committee nominated Ms. Francis and Messrs. Dyer and Marcus, in
accordance with the foregoing nominating procedure, for election to the Board
of Directors at the 2002 annual meeting. The Nominating Committee held three
formal meetings during fiscal 2002.
The Nominating Committee will consider nominees recommended by shareholders,
provided that such recommendations are in writing and are received by the
Director of Investor Relations not later than December 23, 2002.
Performance Compensation Committee
The Performance Compensation Committee administered the Stock Option Plan,
established the terms of any options granted thereunder and administered the
Company's non-stock based compensation plans prior to the reorganization of
this Committee into the Compensation Committee in early fiscal 2002. The
Performance Compensation Committee held one formal meeting during fiscal year
2002. The members of the Performance Compensation Committee were Richard Marcus
(chair) and John N. Latter. Mr. Latter ceased to be a member of this Committee
and the Board as of the 2001 Annual Meeting.
Notwithstanding anything to the contrary, the following report of the Audit
Committee, the report of the Compensation Committee under the section entitled
"EXECUTIVE COMPENSATION" and the stock performance graph under the section
entitled "PERFORMANCE GRAPH" shall not be deemed incorporated by reference by
any general statement incorporating by reference this Information Statement
into any filing under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates such information by reference, and shall not
otherwise be deemed filed under such Acts.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Audit Committee") is
currently comprised of three independent directors and acts under a written
Audit Committee Charter adopted by the Board of Directors in fiscal 2001. The
Audit Committee Charter, which is subject to change from time to time by the
Board of Directors, was included in the 2001 Proxy Statement. Each of the
members of the Audit Committee is independent, as defined by the Audit
Committee Charter and the listing standards of the New York Stock Exchange.
Management has primary responsibility for the financial statements, the
reporting process and assurance for the adequacy of controls. The Company's
independent auditors are responsible for expressing an opinion on the
conformity of the Company's audited financial statements to generally accepted
accounting principles. The Audit Committee is responsible for monitoring and
overseeing these processes on behalf of the Board of Directors.
In this context, the Audit Committee reviewed and discussed the Company's
audited financial statements for fiscal 2002 with management and the
independent auditors. The independent auditors for fiscal 2002 were Arthur
Andersen LLP. The Audit Committee discussed with Arthur Andersen LLP the
matters required to be discussed by Statement on Auditing Standards No. 61 (SAS
61). SAS 61 requires independent auditors to
B-8
communicate matters related to the conduct of the audit to audit committees.
Arthur Andersen LLP reported to the Audit Committee that, based on its
inquiries, to its knowledge, the Company's internal controls are adequate and
sufficient.
In addition, the Audit Committee received from Arthur Andersen LLP the
written disclosures required by Independence Standards Board Standard No. 1,
which requires the written disclosure of all relationships between the Company
and its independent auditors that, in the independent auditors' professional
judgment, may reasonably be thought to bear on independence and confirmation
that, in its professional judgment, it is independent of the company that it is
auditing.
During fiscal year 2002, the Company retained Arthur Andersen LLP to provide
services as follows:
Financial Information Systems
Audit Fees Design and Implementation Fees All Other Fees
---------- ------------------------------ --------------
$135,000 $0 $930,000
The category of "all other fees" consists primarily of services provided for
tax, forecasting and other miscellaneous projects. The Audit Committee has
considered whether Arthur Andersen LLP's provision of services other than audit
services was compatible with maintaining auditor independence and has concluded
that it was.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended February 1, 2002, for filing with the Securities and Exchange
Commission, and the Board of Directors accepted such recommendation. In early
fiscal 2003, the Audit Committee considered various matters related to the
engagement of Arthur Andersen LLP, as described in the 2002 Proxy Statement. On
March 25, 2002, the Board of Directors and the Audit Committee dismissed Arthur
Andersen LLP as the Company's independent auditors and engaged Ernst & Young
LLP, subject to shareholder ratification, as the Company's independent auditors
for fiscal year 2003.
Submitted by the Audit Committee
of the Board of Directors
Cheryl Francis, Chair
Richard Marcus
Eliot Wadsworth
EXECUTIVE COMPENSATION
Compensation Committee Report On Executive Compensation
Overview
Our goal as a Compensation Committee is to provide a compensation framework
for recruiting, motivating, rewarding and retaining the Company's employees,
including its executive officers. We endeavor to provide leadership by using
compensation to tie executives' financial interests to those of the
shareholders in order to help achieve the Company's vision and goals. We
regularly engage a nationally recognized compensation consulting firm to assist
our Committee in developing an overall perspective on base and incentive
compensation and benefit practices and to advise on specific issues relating to
the Company's compensation practices. Representatives of the consulting firm
meet with us (sometimes with other Board members in attendance) on a regular
basis and have other informal discussions with members of our Committee.
B-9
Components of Fiscal Year 2002 Compensation
The principal elements of compensation for the Company's executive officers
currently consist of base salary, bonuses under the Annual Incentive Plan,
awards under the Stock Option Plan and discretionary bonuses based on
individual performance. The Company's Chief Executive Officer and the four
other most highly compensated executive officers are referred to in this
Information Statement as the "Named Executive Officers." With respect to fiscal
2002, the Company awarded discretionary bonuses of $50,000 to Ms. Meads and
$25,000 to each of Messrs. Jones, Eisenberg and Schaecher.
Base Salary. In determining and reviewing base salary levels, the
Compensation Committee considers the size and responsibility of the
individual's position, the individual's overall performance, the base salaries
paid by competitors for comparable positions and, in the case of new hires, the
amount of the individual's prior compensation and the need to induce the
individual to enter the employ of the Company. In making salary decisions with
respect to senior executives and overseeing other salary decisions made by
management, the Committee exercises its discretion and judgment based on the
foregoing factors, without applying a specific formula to determine the weight
of each factor considered.
Annual Incentive Plan. The Annual Incentive Plan (bonus) provides for
participation by most of the Company's salaried employees (currently
approximately 881 individuals). Pursuant to this plan, each participant is
granted an annual incentive award at or about the beginning of each fiscal
year. Each annual incentive award consists of the right to be eligible to
receive a cash bonus, part of which is paid in December or January of the
fiscal year to which the grant relates and the balance of which is paid in the
month of March following such fiscal year, provided that the participant
remains employed by the Company at the end of such fiscal year.
Other than participants employed by international subsidiaries of the
Company, each participant's bonus eligibility amount is 10% of base salary,
provided that the Compensation Committee has the right to approve higher levels
for certain participants on an individual basis. For fiscal 2002 and prior
years, participants earned bonuses equal to their bonus eligibility amount
multiplied by a factor of 0% to 200%, depending on financial results based on
the Company's annual pre-tax margin, with a factor of 100% (that is, no
adjustment) being applied if the Company achieves a pre-tax income divided by
net merchandise sales of 8%. For fiscal 2002, the bonus eligibility amounts for
most of the Company's salaried employees were 10% of base salary. The bonus
eligibility amounts for fiscal 2002 were 100% for Mr. Dyer, 80% for Mr. Jones,
70% for Ms. Meads and 60% for the other Named Executive Officers.
Stock Option Plan. The Company's Stock Option Plan was administered by the
Performance Compensation Committee until May 2001 and by the Compensation
Committee thereafter. A total of 145,000 stock options were awarded to a total
of 9 recipients under the Company's Stock Option Plan in fiscal year 2002. None
of the options were granted to a Named Executive Officer. The number of options
awarded and the number of recipients were lower in fiscal 2002 than in the
previous fiscal year due to the timing of committee meetings, with the result
that some options that would have been awarded in early fiscal 2002 were in
fact awarded in late fiscal 2001. In early fiscal 2003, the Compensation
Committee awarded a total of 557,500 stock options to a total of 117
recipients, which the Committee believes reflects a more normalized annual rate
at which it expects to award stock options in the future, assuming that the
amendment to increase the number of shares eligible for options is approved as
described in the 2002 Proxy Statement.
The stock option awards made in early fiscal 2003 utilized approximately all
of the shares of Common Stock available for issuance under the Stock Option
Plan. As a result, the Compensation Committee recommended to the Board of
Directors, and the Board of Directors approved, an increase in the total number
of shares of Common Stock that may be issued under the Stock Option Plan.
Chief Executive Officer Compensation
David F. Dyer's base salary for the 53-week fiscal 2002 was $458,654, which
is the level established when Mr. Dyer rejoined the Company as Chief Executive
Officer in 1998. At a meeting in March 2002, after the end of
B-10
fiscal 2002, the Compensation Committee determined to make certain changes to
Mr. Dyer's compensation package in light of the financial results that had been
achieved for fiscal 2002 and the Committee's judgment as to Mr. Dyer's
contribution to the Company's success. On this basis, the Committee recommended
that the Board of Directors increase Mr. Dyer's annual base salary to $550,000
for fiscal 2003 and award Mr. Dyer a discretionary bonus of $100,000 to be paid
in fiscal 2003 in recognition of his strong performance, which recommendation
was accepted by the Board of Directors at a subsequent meeting. The Committee
also increased his bonus eligibility amount to 120%.
The Company entered into an Amended and Restated Agreement with Mr. Dyer,
dated as of May 12, 2002, which amends his previous agreement with the Company
dated December 11, 1998. A summary of the Amended and Restated Agreement
contained in Item 3. "PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS"
of the Statement is incorporated herein by reference. Such summary is qualified
in its entirety by reference to the Amended and Restated Agreement, which is
filed as Exhibit (e)(4) to the Statement and incorporated herein by reference.
Tax Matters
The Compensation Committee and the Board have considered the provisions of
Section 162(m) of the Internal Revenue Code, which impose an annual limit of $1
million on the deductibility of compensation payments to a company's Chief
Executive Officer and the four other most highly compensated executive officers
for whom proxy statement disclosure is required and who are employed at the end
of such company's taxable year. ''Performance-based compensation'' (as defined
in the Code) is excluded from this limit. It is the Company's intention to
preserve the deductibility of compensation paid to its employees, including
gains realized upon the exercise of non-qualified stock options, to the extent
feasible and consistent with the Company's overall compensation philosophy.
Notwithstanding the foregoing, the Compensation Committee believes that the
Company's compensation philosophy is appropriate and consistent with the
long-term interests of the Company, without regard to tax considerations. In
the event of changes in the tax law or other circumstances that might affect
tax treatment, we would not currently anticipate that fundamental changes would
be made in the Company's overall compensation policies and practices.
Submitted by the Compensation
Committee
of the Board of Directors
Paul Schrage, Chair
Richard Marcus
Cheryl Francis
B-11
Summary Compensation Table
Set forth below is certain information concerning the compensation for each
of the Named Executive Officers for the fiscal year ended February 1, 2002 (a
53-week fiscal year):
Long-Term
Annual Compensation Compensation Awards
-------------------------------- -------------------
Restricted
Other Annual Stock Stock All Other
Fiscal Salary Bonus Compensation Awards Options Compensation
Name and Principal Position Year ($) ($) ($) ($) (#) ($)(1)
--------------------------- ------ ------- ------- ------------ ---------- ------- ------------
David F. Dyer.............. 2002 458,654 401,322 -0- -0- -0- 96,161(2)
President and Chief 2001 450,000 112,500 -0- -0- -0- 285,185
Executive Officer 2000 450,000 202,500 -0- -0- -0- 117,469
Jeffrey A. Jones........... 2002 407,692 310,385 -0- -0- -0- 158,079(3)
Chief Operating Officer 2001 53,846 -0- 150,000(4) -0- 300,000 -0-
Mindy C. Meads............. 2002 394,519 283,044 -0- -0- -0- 31,832
Executive Vice President, 2001 361,250 54,187 -0- -0- 50,000 23,083
Merchandising and Design 2000 350,000 94,500 -0- -0- -0- 142,417
Lee Eisenberg.............. 2002 387,019 228,185 -0- -0- -0- 51,414(5)
Executive Vice President, 2001 361,250 54,187 50,000(6) -0- 50,000 33,608
Creative Director 2000 329,808 89,048 200,000(7) -0- 200,000 74,266
Francis P. Schaecher....... 2002 253,461 158,067 -0- -0- -0- 21,928(8)
Senior Vice President, 2001 242,500 36,375 -0- -0- 25,000 16,373
Operations 2000 235,000 63,450 -0- -0- -0- 16,304
--------
(1)For fiscal year 2002, these amounts represent, except as otherwise noted,
the taxable portion of premiums on Company-provided life insurance, the
Company's contributions to the Retirement Plan and the Company's
contributions to the Deferred Compensation and Excess Benefit Plan, in the
following amounts: Mr. Dyer $1,688, $15,752, $20,545, respectively; Mr
Jones, $2,020, $8,085, $13,757, respectively; Ms. Meads, $1,101, $15,997,
$14,734, respectively; Mr. Eisenberg $2,491, $15,563, $13,500; Mr.
Schaecher, $1,678, $14,240, $4,931, respectively.
(2)Of the $96,161 in fiscal year 2002, $58,176 is for personal use of Company
planes and the remainder is described in footnote (1) above.
(3)Of the $158,079 in fiscal year 2002, $12,952 is for personal use of Company
planes, $64,816 is for relocation expenses, $56,449 is for reimbursement for
his income tax liability on the relocation expenses paid on his behalf and
the remainder is described in footnote (1) above.
(4)In fiscal year 2001, Mr. Jones received a signing bonus of $150,000 from the
Company pursuant to the terms of his appointment as Chief Operating Officer
effective December 1, 2000.
(5)Of the $51,414 in fiscal year 2001, $19,860 is for personal use of Company
planes and the remainder is described in footnote (1) above.
(6)In fiscal year 2001, Mr. Eisenberg received the final portion of his signing
bonus of $50,000 from the Company. Mr. Eisenberg deferred this portion of
his signing bonus as part of his employment agreement.
(7)In fiscal year 2000, Mr. Eisenberg received a signing bonus of $200,000 from
the Company pursuant to the terms of his appointment as Executive Vice
President, Creative Director effective February 1, 1999.
(8)Of the $21,928 in fiscal year 2001, $1,079 is for personal use of Company
planes and the remainder is described in footnote (1) above.
Stock Option Grants in Fiscal Year 2002
The Company did not grant options to acquire Common Stock to any Named
Executive Officer during the fiscal year ended February 1, 2002.
B-12
Stock Option Exercises and Fiscal Year-End Value Table
Set forth below is certain information relating to options to acquire Common
Stock exercised by each Named Executive Officer during the fiscal year ended
February 1, 2002, and options to acquire Common Stock held by each Named
Executive Officer as of such date.
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Value Stock Options at In-the-Money Stock
on Realized FY-End (#) Options at FY-End ($)
Name Exercise (#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable(2)
---- ------------ ---------- ------------------------- ----------------------------
David F. Dyer....... 500,000 10,887,001 450,000/ 0 $13,734,000/ 0
Jeffrey A. Jones.... 90,000 1,191,182 0/210,000 0/4,853,100
Mindy C. Meads...... 92,500 1,912,695 112,500/ 45,000 3,163,850/1,055,700
Lee Eisenberg....... 76,000 1,063,068 101,000/ 45,000 1,907,220/1,055,700
Francis P. Schaecher 12,000 243,000 34,000/ 41,000 556,061/ 824,251
--------
(1)Upon exercise of an option, an individual does not receive cash equal to the
amount contained in the Value Realized column of this table. Instead, the
amounts contained in the Value Realized column reflect the increase in the
price of the Company's Common Stock from the option award date to the option
exercise date. No cash is realized until the shares received upon exercise
of an option are sold.
(2)Calculated based upon the closing price of the Company's Common Stock
($49.02) on the New York Stock Exchange on February 1, 2002.
EMPLOYMENT AGREEMENTS AND SEVERANCE AGREEMENTS
The discussion set forth in Item 3. "PAST CONTACTS, TRANSACTIONS,
NEGOTIATIONS AND AGREEMENTS" of the Statement is incorporated herein by
reference.
B-13
STOCK PERFORMANCE GRAPH
The following graph presents the cumulative total shareholder return of the
Company, the Value Line Retail Index and the Standard & Poor's MidCap 400 Index
for a five year period. Cumulative total shareholder return is defined as share
price appreciation assuming reinvestment of dividends. The Company's Common
Stock is included in both the Value Line Retail Index and the Standard & Poor's
MidCap 400 Index. In addition to the Company, 39 retailers (including catalog
companies) comprise the Value Line Retail Index. The dollar amounts shown on
the following graph assume that $100 was invested on February 1, 1997 in
Company Common Stock, stocks constituting the Value Line Retail Index and
stocks constituting the Standard and Poor's MidCap 400 Index with all dividends
being reinvested. The January 31st dates shown on the following graph do not
correspond exactly with the last day of the Company's fiscal year in calendar
years 1998, 1999, 2000, 2001 and 2002.
Comparison of Five-Year Total Return
Among Lands' End, Inc., Value Line Retail Index and S&P MidCap 400 Index
[CHART]
Land's End, Inc. Value Line Retail Index S&P MidCap 400 Index
1/31/1998 139 109 125
1/31/1999 114 137 146
1/31/2000 121 120 169
1/31/2001 105 146 209
1/31/2002 173 205 202
Value of $100 invested on February 1, 1997 at
---------------------------------------------
1/31/98 1/31/99 1/31/00 1/31/01 1/31/02
------- ------- ------- ------- -------
Lands' End, Inc........ $139 $114 $121 $105 $173
Value Line Retail Index 109 137 120 146 205
S&P MidCap 400 Index... 125 146 169 209 202
B-14
Exhibit
No. Index to Exhibits
------- -----------------
(a)(1) Offer to Purchase (incorporated by reference to Exhibit (a)(1)(A) to
the Schedule TO filed by Parent on May 17, 2002).
(a)(2) Opinion of Peter J. Solomon Company Limited, dated May 12, 2002
(included as Annex A to this Statement).
(a)(3) Joint press release issued by the Company and Parent on May 13, 2002,
Q&A to Company employees and certain other materials issued by the
Company on May 13, 2002 (incorporated by reference to the Schedule
14D-9C filed by the Company on May 13, 2002).
(a)(4) Transcript of conference call held on May 13, 2002 (incorporated by
reference to the Schedule 14D-9C filed by the Company on May 14,
2002).
(a)(5) Press release issued by the Company on May 16, 2002 (incorporated by
refrence to the Schedule 14D-9C filed by the Company on May 16, 2002).
(a)(6) Employee news letter issued by the Company on May 16, 2002
(incorporated by reference to the Schedule 14D-9C filed by the
Company on May 16, 2002).
(e)(1) Acquisition Agreement and Agreement and Plan of Merger, dated as of
May 12, 2002, among Parent, Purchaser and the Company (incorporated
by reference to Exhibit (d)(1) to the Schedule TO filed by Parent on
May 17, 2002).
(e)(2) Form of Tender Agreement, dated as of May 12, 2002, by and among
Parent, Purchaser and, as the case may be, Gary C. Comer, certain
trusts and foundations established by Mr. Comer and a trust
associated with Richard C. Anderson (incorporated by reference to
Exhibit (d)(2) to the Schedule TO filed by Parent on May 17, 2002).
(e)(3) Confidentiality Agreement, dated as of February 26, 2002, by and
between Parent and the Company (incorporated by reference to Exhibit
(d)(3) to the Schedule TO filed by Parent on May 17, 2002).
(e)(4) Amended and Restated Agreement, dated as of May 12, 2002, between the
Company and David F. Dyer.
(e)(5) Letter Agreement, dated as of May 13, 2002, between Parent and David
F. Dyer (incorporated by reference to Exhibit (d)(4) to the Schedule
TO filed by Parent on May 17, 2002).
(e)(6) Form of Executive Agreement between the Company and each of William
Bass, Lee Eisenberg and Mindy Meads, dated as of May 12, 2002.
(e)(7) Form of Executive Agreement between the Company and each of Lisa
Fitzgerald, Patricia Simigran, Sid Mashburn, Geoffrey Werner, Eric
Kyser, Robert McElroy, Philip Shaecher, Steven McCardell, Donald
Hughes, Frank Giannantonio, Kelly Ritchie, Jeffrey Jones and Samuel
Taylor, dated as of May 12, 2002.
(e)(8) Executive Retention Plan--Group A, dated as of May 12, 2002.
(e)(9) Executive Retention Plan--Group B, dated as of May 12, 2002.
(e)(10) Lands' End Stock Option Plan (incorporated by reference to Appendix A
to the Company's 2002 Proxy Statement).
(e)(11) Non-Employee Director Stock Option Plan (incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year
ended January 26, 2001).
(e)(12) The Information Statement of the Company, dated May 17, 2002
(included as Annex B to this Statement).