I am pleased to extend to you my personal
invitation to attend the 2016 Annual Meeting of Stockholders of Lakeland Industries, Inc. (the “Company”) on Wednesday,
June 15, 2016 at 10:00 a.m. at the Hilton Garden Inn, 3485 Veterans Memorial Highway, Ronkonkoma, NY 11779.
The accompanying Notice of Annual Meeting
and Proxy Statement contain a description of the formal business to be acted upon by the stockholders. At the meeting, we intend
to discuss our performance for the fiscal year ended January 31, 2016 and our plans for the current fiscal year. Certain officers
of the Company will be available to answer any questions you may have.
While I am looking forward to seeing you
at the meeting, it is very important that those of you who cannot personally attend assure your shares are represented. I urge
you therefore to sign and date the enclosed form of proxy and return it promptly in the accompanying envelope. If you attend the
meeting, you may, if you wish, withdraw any proxy previously given and vote your shares in person.
To Our Stockholders:
WHAT:
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Our 2016 Annual Meeting of Stockholders
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WHEN:
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Wednesday, June 15, 2016, at 10:00 a.m., local time
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WHERE:
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Hilton Garden Inn
3485 Veterans Memorial Highway
Ronkonkoma, NY 11779
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PURPOSE:
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At this meeting, you will be asked to:
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1.
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Elect two directors to serve for a term of three years or until
his successor has been duly elected and qualified;
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2.
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Ratify the selection of WeiserMazars LLP as our independent registered
public accounting firm for the fiscal year ending January 31, 2017; and
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3.
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Transact any other business as may properly come before the Annual
Meeting of Stockholders or any adjournments, postponements or rescheduling of the Annual
Meeting of Stockholders
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Only stockholders
of record at the close of business on April 21, 2016 and owners of restricted stock granted pursuant to our stock plans will receive
notice of, and be eligible to vote at, the Annual Meeting of Stockholders or any adjournment thereof. The foregoing items of business
are more fully described in the Proxy Statement accompanying this notice.
Your
vote is important. Please read the Proxy Statement and the voting instructions on the enclosed proxy card. Then, whether or not
you plan to attend the Annual Meeting of Stockholders in person, and no matter how many shares you own, please sign, date and
promptly return the enclosed proxy card in the enclosed envelope, which requires no additional postage if mailed in the United
States.
INTERNET AVAILABILITY
OF PROXY MATERIALS
Important Notice
Regarding the Availability of Proxy Materials for the 2016 Annual Meeting of Stockholders to be held on Wednesday, June 15, 2016
at 10:00 a.m.
Pursuant to Securities and Exchange Commission rules we have elected to utilize the “notice and access”
option of providing proxy materials to our stockholders whereby we are delivering to all stockholders electronic copies of all
of our proxy materials, including a proxy card, as well as providing access to our proxy materials on a publicly assessable website.
Lakeland’s Notice of Annual Meeting, Proxy Statement and Annual Report to Stockholders for the fiscal year ended January
31, 2016 are available on the Internet at www.proxyvote.com.
This Notice and Proxy
Statement are first being sent or given to stockholders of record on or shortly after May 6, 2016.
Ronkonkoma, New York
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By Order of the Board of Directors,
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May 6, 2016
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Christopher J. Ryan
Secretary
Lakeland
Industries, Inc.
3555 Veterans
Memorial Highway, Suite C
Ronkonkoma,
New York 11779
(631) 981-9700
PROXY STATEMENT
Annual Meeting of
Stockholder to be Held on Wednesday, June 15, 2016
GENERAL INFORMATION
This proxy statement
and accompanying proxy are being furnished in connection with the solicitation by the Board of Directors (the “Board”)
of Lakeland Industries, Inc., a Delaware corporation (referred to as “Lakeland,” the “Company,” “we,”
“our,” or “us”), of proxies to be used at the annual meeting of stockholders of Lakeland to be held on
Wednesday, June 15, 2016, which we refer to as the Annual Meeting, and at any adjournment or postponement thereof. Lakeland will
bear the costs of this solicitation. This proxy statement and accompanying proxy are first being sent or given to our stockholders
on or about May 6, 2016.
Who may vote
Stockholders of Lakeland
recorded in our stock register on April 21, 2016 and holders of restricted shares of our common stock may vote at the meeting.
As of that date, Lakeland had 7,363,425 shares of common stock issued and outstanding. Each share is entitled to one vote on each
matter submitted to the stockholders at the Annual Meeting.
How proxies work
Lakeland’s Board is asking for your
proxy. Giving us your proxy means you authorized us to vote your shares at the Annual Meeting in the manner you direct. You may
vote or withhold your vote in respect of each of our director nominees. You may also vote for or against each of the other proposals
or abstain from voting.
All proxies properly signed will, unless
a different choice is indicated, be voted “FOR” the election of the two nominees for director proposed by our Nominating
and Corporate Governance Committee and “FOR” the ratification of WeiserMazars LLP (“WeiserMazars”) as
our independent registered public accounting firm for fiscal year ending January 31, 2017.
You may receive more than one proxy or
voting card depending on how you hold your shares. Shares registered in your name are covered by one card. If you hold shares
through someone else, such as a stockbroker or bank, you may get material from them asking how you want to vote. Specifically,
if your shares are held in the name of your stockbroker or bank and you wish to vote in person at the meeting, you should request
your stockbroker or bank to issue you a proxy covering your shares.
If any other matters come before the meeting
or any postponement or adjournment, each proxy will be voted in the discretion of the individuals named as proxies on the card.
Revoking a proxy
You may revoke your proxy at any time
before the vote is taken by submitting a new proxy with a later date, by voting via the Internet or by telephone at a later time,
by voting in person at the meeting or by notifying Lakeland’s Secretary in writing at the address under “Questions”
on page 27.
Quorum
In order to carry on the business of the
meeting, we must have a quorum. This means at least a majority of the outstanding shares eligible to vote must be represented
at the meeting, either by proxy or in person.
Attending in Person
Only stockholders, their proxy holders
and Lakeland guests, each of which must be properly registered as described in the Notice, may attend the Annual Meeting.
What vote is required to approve each
proposal?
Proposal No. 1,
the election of two directors requires a plurality of the votes cast. The two nominees receiving the most “For” votes
will be elected. Only votes “For” will affect the outcome. Abstentions or broker non-votes, as described below, will
have no effect on the outcome of the vote on Proposal No. 1.
Proposal No. 2, the
ratification of the appointment of WeiserMazars as our independent registered public accounting firm, requires a “For”
vote by the majority of the shares present in person or represented by proxy and entitled to vote thereon. In determining whether
the proposal has received the requisite number of votes, abstentions will be counted as a vote against this proposal.
How votes are counted
and how are brokers non-votes treated?
Votes will be counted
by the inspector of election appointed for the Annual Meeting, who will separately count “For” votes, “Against”
votes, abstentions, withheld votes and broker non-votes.
A “broker non-vote”
is when a broker, bank or other nominee has not received voting instructions from the beneficial owner of shares held in “street
name” and the broker, bank or other nominee does not have, or declines to exercise, discretionary authority to vote on a
particular matter. Brokers, banks or other nominees only have discretionary authority to vote your uninstructed shares on “routine”
matters, but will not be allowed to vote your uninstructed shares with respect to certain “non-routine” matters. Under
current Nasdaq Stock Market rules, the ratification of the appointment of independent registered public accountants (Proposal
No. 2) is considered routine and your broker, bank or other nominee will be able to vote on that proposal even if it does not
receive instructions from you. The election of two directors (Proposal No. 1) is a “non-routine” matter. This means
that if you hold your shares through a broker, bank or other nominee in “street name” and do not provide voting instructions,
the broker, bank or other nominee will have the discretion to vote your shares on Proposal No. 2 but not on Proposal
No. 1.
How can I find out the results of the
voting at the Annual Meeting?
Preliminary voting results
will be announced at the Annual Meeting. Final voting results will be published in a Current Report on Form 8-K to be filed with
the Securities and Exchange Commission (“SEC”) within four business days following the conclusion of our Annual Meeting.
Householding
of proxy material.
Some banks, brokers and other nominee
record holders may be participating in the practice of “householding,” which the SEC has approved. Under this procedure,
you may only receive one copy of the Notice of Internet Availability of Proxy Materials and, if applicable, this Proxy Statement
and our annual report, for multiple stockholders in your household. Upon written or oral request, we will deliver promptly another
copy of the Notice of Internet Availability of Proxy Materials and, if applicable, this Proxy Statement and our annual report
to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy,
please contact the Secretary, Lakeland Industries, Inc., 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York, 11779,
by mail. If you want to receive separate copies of our proxy statements and annual reports in the future, or if you are receiving
multiple copies and would like to receive only one copy for your household, you should contact your bank, broker, or other nominee
record holder.
Has the Lakeland Board made a recommendation
regarding the matters to be acted upon at the Annual Meeting?
Lakeland Board recommends
that you vote “FOR” the election of the two directors proposed by the Nominating and Governance Committee and “FOR”
the ratification of WeiserMazars LLP as our independent registered public accounting firm for the fiscal year ended January 31,
2017.
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
General
Our Bylaw’s provide
for a Board of Directors consisting of at least five and not more than seven directors, classified into three classes as nearly
equal in number as possible. Our Board of Directors now consists of five directors. As indicated below, Mr. Thomas McAteer, a
director in Class III and Mr. James Jenkins, are nominated for election at this Annual Meeting of Stockholders to hold office
for a three-year term, which will expire at the 2019 Annual Meeting of Stockholders, or until their successors are duly elected
and qualified or until such director’s earlier resignation or removal. Our Nominating and Governance Committee considered
the qualifications of Mr. McAteer and Mr. Jenkins for election prior to the Annual Meeting, and unanimously recommended that they
be nominated for election to the Board. Following the election, our Board will continue to consist of five directors consisting
of (i) two directors serving in Class I, (ii) one director serving in Class II, and (iii) two directors serving in Class III,
as further set forth below.
Vote
Required
Directors are elected by a plurality of
the votes properly cast in person or by proxy. Shares represented by executed proxy cards will be voted, if authority to do so
is not withheld, for the election of the nominees named below. Abstentions and broker non-votes will have no effect on the outcome.
If any Board nominee becomes unavailable for election as a result of an unexpected occurrence, your shares will be voted for the
election of a substitute nominee determined by our Board. Each person nominated by the Board for election has agreed to serve
if elected. We have no reason to believe that any Board nominee will be unavailable or, if elected, will decline to serve.
NOMINEE DIRECTORS
- CLASS III
Terms Expiring in
2019
Name
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Age
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Position
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Director Since
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Thomas McAteer
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63
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Director
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2011
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James M. Jenkins
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51
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Director
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2015
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Thomas
J. McAteer
has served as a director since 2011. Mr. McAteer has served as Executive Vice President of Management
Development and Strategic Initiatives of Suffolk Transportation since March 2013 and Chairman of the Board of New World Medical
Network, a private healthcare organization, since 2015. He also served as the Vice Chair of the Board and Chair of the Compensation
and Personnel Committee for the Long Island Power Authority since December 2014. He served as the Senior Vice President and Regional
Market Head for Aetna's Medicaid Division from March 2007 until March 2013. Prior to joining Aetna Medicaid, Mr. McAteer served
as the President and CEO of Vytra Health Plans. In a thirteen year career at Vytra, Mr. McAteer played an executive leadership
role in growing Vytra from annual revenues of $70 million in 1993 to over $375 million in 2005. In 2001, Mr. McAteer facilitated
the sale of Vytra to HIP Health Plans and, thereafter assumed the additional responsibilities of Executive Vice President for
Brand Leadership, as well as joining the Executive Committee of the enterprise. Before joining Vytra, Mr. McAteer served as the
Chief Deputy County Executive in Suffolk County, New York and prior to that as the Director of Human Resources for the Metropolitan
Transportation Authority. Mr. McAteer's qualifications to serve on our Board include his business experience and multiple prior
executive positions.
James M. Jenkins
is a
partner at Harter Secrest & Emery LLP, a regional law firm located in Western New York. Mr.
Jenkins’s practice is in focused the areas of corporate governance and general corporate law matters, including initial
and secondary public offerings, private placements, mergers and acquisitions, and securities law compliance. Mr. Jenkins joined
the firm in 1989 as an associate and was elected a partner effective January 1, 1997. He has served as the Chair of the
firm's Securities Practice Group since 2001 and served as a member of the firm’s Management Committee from January 2007
to January 2013. He was recently named the Partner in Charge of the firm's New York City office. Mr. Jenkins holds a B.A from
Virginia Military Institute and a J.D. from West Virginia University College of Law. Mr. Jenkins previously served on our Board
from 2012 to 2015 where he also was a member of our Audit and Corporate Governance Committees. Mr. Jenkins’s qualifications
to serve on our Board include his corporate governance experience as well his current business-related experience.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR”
EACH OF THE NOMINEES FOR DIRECTOR
INCUMBENT DIRECTOR
- CLASS II
Term Expiring in 2018
Name
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Age
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Position
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Director Since
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Stephen M. Bachelder
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65
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COO, Director
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2004
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Stephen M.
Bachelder
has served as our Chief Operating Officer since November 2012 and a director since 2004. From February
2011 to November 2012, he served as Chairman of our Board of Directors. From March 2011 until November 2012 he served as our National
Sales Manager. Mr. Bachelder was an executive and President of Swiftview, Inc., a Portland, Oregon based software company,
from 1999 to 2007. Swiftview, Inc. was sold to a private equity firm in October 2006. From 1991 to 1999 Mr. Bachelder operated
a consulting firm advising technology companies in the Pacific Northwest. Mr. Bachelder was the president and owner of an
apparel company, Bachelder Imports, from 1982 to 1991 and worked in executive positions for Giant Foods, Inc. and Pepsico, Inc.
between 1976 and 1982. Mr. Bachelder is a graduate of the Harvard Business School. Mr. Bachelder’s qualifications
to serve on our Board include his business education and multiple prior executive positions at a number of companies, including
Lakeland.
INCUMBENT DIRECTORS - CLASS I
Terms Expiring in 2017
Name
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Age
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Position
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Director Since
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Christopher J. Ryan
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64
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Chief Executive Officer, President, Secretary and Director
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1986
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A. John Kreft
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65
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Director
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2004
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Christopher
J. Ryan
has served as our Chief Executive Officer and President since November 2003, Secretary since April 1991, and a
director since May 1986. Mr. Ryan was our Executive Vice President - Finance from May 1986 until becoming our President in November
2003. Mr. Ryan also worked as a Corporate Finance Partner at Furman Selz Mager Dietz & Birney, Senior Vice President-Corporate
Finance at Laidlaw Adams & Peck, Inc., Managing-Corporate Finance Director of Brean Murray Foster Securities, Inc. and Senior
Vice President-Corporate Finance of Rodman & Renshaw, respectively, between 1983-1991. Mr. Ryan served as a Director of Lessing,
Inc., a privately held restaurant chain based in New York, from 1995-2008. Mr. Ryan received his BA from Stanford University,
his MBA from Columbia Business School and his J.D. from Vanderbilt Law School. Mr. Ryan’s qualifications to serve on our
board include his business and legal education as well as his lengthy experience as a director at our Company and at other companies.
A. John Kreft
has served as a director since 2004. Mr. Kreft has been President of Kreft Interests, a
Houston based private investment firm, since 2001. Between 1998 and 2001, he was the Chief Executive Officer of Baker Kreft Securities,
LLC, a NASD broker-dealer. From 1996 to 1998, Mr. Kreft was a co-founder and manager of TriCap Partners, a Houston based venture
capital firm. From 1994 to 1996 he was employed as a director at Alex Brown and Sons. Mr. Kreft has also held senior positions
at CS First Boston, including as a managing director from 1989 to 1994. Mr. Kreft received his MBA from the Wharton School of
Business. Mr. Kreft’s qualifications to serve on our board include his extensive capital markets experience with debt and
equity financings and bank facilities. In addition, his familiarity with acquisition due diligence and integration issues assists
him in his directorship of our company.
DIRECTOR COMPENSATION
Non-employee directors
each received $4,000 quarterly and a fee of $500 for each Board or committee meeting attended for the first quarter of the fiscal
year ended January 31, 2016 (sometimes referred to in this proxy statement as “FY16”). As of the second quarter of
FY16, the fee was revised to $33,750 quarterly as compensation for serving as a member of the Board and on its committees. Two
of the three independent directors chose to receive a percentage of their compensation in company restricted stock rather than
all cash compensation. Members of the Board of Directors are reimbursed for all travel related expenses to and from meetings of
the Board and committees. Directors who are also officers of the Company are not compensated for their duties as directors. In
its deliberations relating to directors’ compensation, the Compensation Committee reviewed a study conducted by The Conference
Board, entitled “Director Compensation and Board Practices 2013 Edition.”
The following table
sets forth compensation paid by the Company to non-employee directors during FY16. Disclosures relating to the compensation of
Christopher J. Ryan and Stephen M. Bachelder can be found in the “Executive Officer Compensation” section below.
DIRECTOR COMPENSATION - FISCAL 2016
Name
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Fees Earned
or Paid in
Cash
($)
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Stock
Awards
(1)
($)
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Option
Award
($)
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Non-
Equity
Incentive
Plan
Compen-
sation
($)
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Nonqualified
Deferred
Compensation
Earnings
($)
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All
Other
Compen
-sation
($)
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Total
($)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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Duane W. Albro
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106,750.00
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—
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—
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—
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—
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—
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106,750.00
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A. John Kreft
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84,150.93
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25,312.50
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(2)
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—
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—
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—
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—
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109,463.43
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Thomas McAteer
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55,625.00
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50,625.00
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(3)
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—
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—
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—
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—
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106,250.00
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Douglas Benedict
(4)
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10,500.00
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—
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—
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—
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—
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—
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10,500.00
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James Jenkins
(4)
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10,500.00
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—
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—
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—
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—
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—
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10,500.00
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Represents the aggregate grant
date fair value of restricted stock granted to the director during FY16. The amounts in this column do not necessarily correspond
to the actual value that will be realized by the director. The assumptions used to calculate the fair value are set forth in the
Footnotes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January
31, 2016 as filed with the SEC. As of January 31, 2016, none of the directors, other than Messrs. McAteer and Kreft, held outstanding
shares of restricted stock or options. As of January 31, 2016, Mr. McAteer had outstanding 21,972 shares of restricted stock and
an outstanding option to acquire 5,000 shares of common stock and Mr. Kreft had outstanding 8,819 shares of restricted stock.
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(2)
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Mr. Kreft
was paid a percentage of his fees in restricted stock totaling $25,312.50 for FY16, subject
to two-year vesting.
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(3)
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Mr. McAteer was paid a
percentage of his fees in restricted stock totaling $50,625.00 for FY16, subject to two-year
vesting.
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(4)
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Was a director during the
FY16 from February 1, 2015 through July 8, 2015.
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RATIFICATION OF SELECTION OF WEISERMAZARS,
LLP (WeiserMazars)
AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
(
Item
2 on the Proxy Card
)
The Audit Committee
of our Board (“Audit Committee”) has selected WeiserMazars LLP (“Weiser Mazars”) as our independent registered
public accounting firm to audit our consolidated financial statements for the fiscal year ending January 31, 2017, and has
directed that management submit the selection of WeiserMazars as our independent registered public accounting firm for ratification
by the stockholders at the Annual Meeting.
WeiserMazars was retained
as our independent auditors on July 16, 2014. A representative of WeiserMazars is expected to be present or available by phone
at the Annual Meeting and will be available to respond to appropriate questions from our stockholders and will be given an opportunity
to make a statement if he or she desires to do so.
The affirmative vote
of the holders of a majority of the shares present or represented by proxy and entitled to vote will be required to ratify the
selection of WeiserMazars as our independent registered public accounting firm once a quorum is present. Abstentions will be counted
toward the tabulation of votes cast on this proposal and will have the same effect as a vote against this proposal.
Stockholder
ratification of the selection of WeiserMazars as our independent registered public accounting firm is not required by our Bylaws
or otherwise. However, the Audit Committee is submitting the selection of WeiserMazars to the stockholders for ratification as
a matter of good corporate governance. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether
or not to retain that firm. Even if the selection is ratified, the Audit Committee may in its discretion direct the appointment
of different independent registered public accountants at any time during the year if they determine that such a change would
be in the best interests of the Company and its stockholders.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THIS PROPOSAL
Change in independent registered public accountants
United States
As reported in the Company’s Current
Report on Form 8-K filed on July 21, 2014, we engaged WeiserMazars as our independent registered public accountants on July 16,
2014. On the same date, the Company dismissed Warren Averett, LLC (“Warren Averett”) as its independent registered
public accountants, effective immediately. This change of independent registered public accountants was approved by our Audit
Committee.
During the fiscal years ended January
31, 2013 and January 31, 2014, the Company had a disagreement with Warren Averett relating to the question of the classification
of the following items as material weaknesses: (i) failure of internal controls over the international division (2013), (ii) failure
to identify related party transactions (2014) and (iii) failure of entity level controls regarding international divisions (2014),
each of which was resolved to the former accountant’s satisfaction. The Audit Committee discussed such disagreement with
Warren Averett and the Company authorized Warren Averett to respond fully to the inquiries of the Company’s successor accountant,
WeiserMazars, concerning the subject matter of such disagreement. There were no other disagreements with Warren Averett on any
matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s),
if not resolved to the satisfaction of Warren Averett, would have caused it to make reference to the subject matter of the disagreement(s)
in connection with its reports. In addition, during that time there were no “reportable events” as that term is defined
in Item 304(a)(1)(v) of Regulation S-K.
The audit report of Warren Averett on
the Company’s consolidated financial statements for the fiscal year ended January 31, 2014 did not contain an adverse opinion
or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles. The audit
report of Warren Averett on the Company’s consolidated financial statements for the fiscal year ended January 31, 2014 contained
an unqualified opinion with an emphasis of a matter. The audit report of Warren Averett on the Company’s consolidated financial
statements for the fiscal year ended January 31, 2013 contained an opinion with an emphasis of a matter regarding the Company’s
ability to continue as a going concern, which opinion was subsequently amended to remove such emphasis.
Warren Averett furnished the Company with
a letter addressed to the SEC indicating that it agrees with the foregoing statements, except for certain statements with respect
to which Warren Averett is not in a position to agree or disagree. A copy of this letter was filed as Exhibit 16.1 to the Company’s
Current Report on Form 8-K filed on July 21, 2014.
During the fiscal years ended January
31, 2013 and January 31, 2014, neither the Company, nor anyone on its behalf, consulted with WeiserMazars regarding either: (i)
the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion
that might be rendered on the Company’s consolidated financial statements, in connection with which either a written report
or oral advice was provided to the Company that WeiserMazars concluded was an important factor considered by the Company in reaching
a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either subject of a “disagreement”
(as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as described
in Item 304(a)(1)(v) of Regulation S-K).
Brazil
As reported by the Company’s Current
Report on Form 8-K filed on July 28, 2014, on July 23, 2014, ACAL Consultoria e Auditoria S/S Ltda. (“ACAL”), the
independent registered public accounting firm for the Company’s former Brazilian subsidiary, Lake do Brasil Industria E
Comercio de Roupas E Equipamentos de Protecao Individual LTDA (“Lakeland Brazil”), resigned effective with the engagement
of Mazars Auditores Independentes S.S (“Mazars Brazil”) on the same date as Lakeland Brazil’s new independent
registered public accounting firm. This change of independent registered public accountants was approved by our Audit Committee.
During the fiscal years ended January
31, 2013 and January 31, 2014, there were no disagreements with ACAL on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of ACAL, would
have caused it to make reference to the subject matter of the disagreement(s) in connection with its report. In addition, during
that time there were no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
The audit report of ACAL on Lakeland Brazil’s
financial statements for the fiscal year ended January 31, 2014 did not contain an adverse opinion or disclaimer of opinion, nor
was it qualified or modified as to uncertainty, audit scope, or accounting principles. The audit report of ACAL on the Lakeland
Brazil’s financial statements for the fiscal year ended January 31, 2014 contained an unqualified opinion with an emphasis
of a matter regarding certain tax matters. The audit report of ACAL on the Lakeland Brazil’s financial statements for the
fiscal year ended January 31, 2013 contained an unqualified opinion with an emphasis of a matter regarding Lakeland Brazil’s
ability to continue as a going concern.
ACAL furnished the Company with a letter
addressed to the SEC indicating that it agrees with the foregoing statements, except for certain statements with respect to which
ACAL is not in a position to agree or disagree. A copy of this letter was filed as Exhibit 16.1 to the Company’s current
report on Form 8-K filed on July 28, 2014.
During the fiscal years ended January
31, 2013 and January 31, 2014, neither the Company, nor anyone on its behalf, consulted with Mazars Brazil regarding either: (i)
the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion
that might be rendered on Lakeland Brazil’s financial statements, in connection with which either a written report or oral
advice was provided to the Company that Mazars Brazil concluded was an important factor considered by the Company in reaching
a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either subject of a “disagreement”
(as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as described
in Item 304(a)(1)(v) of Regulation S-K).
China
As reported by the Company in its Current
Reports on Form 8-K filed on each of February 5, 2015 and March 26, 2015, Lakeland was informed by RSM China (Shanghai) (“RSM
China”), the former auditors of the Company’s China subsidiary Weifang Lakeland Safety Products Co., Ltd. (“Lakeland
China”), that RSM China has merged its practice with Ruihua Certified Public Accountants (“Ruihua CPA”). As
a result of the merger, Ruihua CPA, as the successor to RSM China, became the auditors for Lakeland China on whom the Company’s
independent registered public accounting firm has expressed reliance in its report.
During the fiscal years ended January
31, 2013 and January 31, 2014, and thereafter prior to the merger, neither the Company, nor anyone on its behalf, consulted with
Ruihua CPA regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the Company’s consolidated financial statements or Lakeland China’s
financial statements, in connection with which either a written report or oral advice was provided to the Company that Ruihua
CPA concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial
reporting issue; or (ii) any matter that was either the subject of a “disagreement” (as defined in Item 304(a)(1)(iv)
of Regulation S-K and the related instructions) or a “reportable event” (as described in Item 304(a)(1)(iv) of Regulation
S-K).
On March 3, 2015, the Company was advised
by Ruihua CPA that the firm’s policy (the “Policy”) prohibited a principal accountant from placing reliance
on Ruihua CPA’s work, making reference to that effect in the principal accountants’ report and filing Ruihua CPA’s
separate report in an annual report on Form 10-K or any other public filing.
As a result of this Policy, on March 20,
2015, the Company dismissed Ruihua CPA as the auditors for Lakeland China. The decision to dismiss Ruihua CPA was made and approved
by the Audit Committee. In light of the abbreviated period of time for which Ruihua CPA was the auditors of Lakeland China, Ruihua
CPA did not audit the financial statements of Lakeland China or issue any report for the fiscal year ended January 31, 2015. Ruihua
CPA, as the successor firm to RSM China (Shanghai), has reissued its report for the fiscal year ended January 31, 2014.
During the fiscal years ended January
31, 2013 and January 31, 2014 and during the period from February 1, 2015 to the date of dismissal, there were no disagreements
with Ruihua CPA or RSM China (Shanghai) on any matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Ruihua CPA or RSM China (Shanghai),
would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report. In addition,
during that time there were no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
Ruihua CPA furnished the Company with
a letter addressed to the SEC indicating that it agrees with the foregoing statements, except for certain statements with respect
to which Ruihua CPA is not in a position to agree or disagree. A copy of this letter was filed as Exhibit 16.1 to the Company’s
Current Report on Form 8-K filed on March 25, 2015.
Effective as of March 20, 2015, the Audit
Committee engaged Shanghai Mazars Certified Public Accountants (“Mazars China”) as the new independent registered
public accountants of Lakeland China and Lakeland (Beijing) Safety Products Co., Ltd (“Beijing”).
During the fiscal years ended January
31, 2013 and January 31, 2014 and through the interim period preceding the engagement of Mazars China, neither the Company, nor
anyone on its behalf, consulted with Mazars China regarding either: (i) the application of accounting principles to a specified
transaction, either completed or proposed; or the type of audit opinion that might be rendered on Lakeland China’s and Beijing’s
financial statements, in connection with which either a written report or oral advice was provided to the Company that Mazars
China concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial
reporting issue; or (ii) any matter that was either the subject of a “disagreement” (as defined in Item 304(a)(1)(iv)
of Regulation S-K and the related instructions) or a “reportable event” (as described in Item 304(a)(1)(v) of Regulation
S-K).
AUDIT COMMITTEE REPORT
The following is the
report of the Audit Committee of the Board of Directors of Lakeland Industries, Inc., describing the Audit Committee’s responsibilities
and practices, specifically with respect to matters involving Lakeland’s accounting, auditing, financial reporting and internal
control functions. Among other things, the Audit Committee reviews and discusses with management and with Lakeland’s independent
registered public accounting firm the results of Lakeland’s year-end audit, including the audit report and audited financial
statements. The members of the Audit Committee of the Board are presenting this report for the fiscal year ended January 31,
2016.
The Audit Committee
acts pursuant to a written charter that was originally adopted by the Board in 2001. The Nominating and Governance Committee and
the Board consider membership of the Audit Committee annually. The Audit Committee reviews and assesses the adequacy of its charter
annually. The Audit Committee held six meetings during the fiscal year ended January 31, 2016.
All members of the Audit
Committee are independent directors, qualified to serve on the Audit Committee pursuant to the applicable Nasdaq Marketplace Rules.
In accordance with its charter, the Audit Committee oversees accounting, financial reporting, internal control over financial
reporting, financial practices and audit activities of Lakeland and its subsidiaries. The Audit Committee provides advice, counsel,
and direction to management and the independent registered public accounting firm, based on the information it receives from them.
The
Audit Committee relies, without independent verification, on the information provided by Lakeland and on the representations made
by management that the financial statements have been prepared with integrity and objectivity, on the representations of management,
and the opinion of the independent registered public accounting firm that such financial statements have been prepared in conformity
with accounting principles generally accepted in the United States, or GAAP.
In connection with its
review of Lakeland’s audited financial statements for the fiscal year ended January 31, 2016, the Audit Committee reviewed
and discussed the audited financial statements with management and discussed with WeiserMazars, Lakeland’s independent registered
public accounting firm, the matters required to be discussed by PCAOB standards. The Audit Committee received the written disclosures
and the letter from WeiserMazars required by the applicable requirements of the PCAOB and discussed with WeiserMazars its independence
from Lakeland. The Audit Committee has also considered whether the provision of certain permitted non-audit services by WeiserMazars
is compatible with their independence.
Based on the reviews
and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements
be included in Lakeland’s Annual Report on Form 10-K for its fiscal year ended January 31, 2016 for filing with
the SEC.
During fiscal 2016,
the Audit Committee met with management and Lakeland’s independent registered public accountants and received the results
of the audit examination, evaluations of Lakeland’s internal controls and the overall quality of Lakeland’s financial
organization and financial reporting. The Audit Committee also meets at least once each quarter with Lakeland’s independent
registered public accountants and management to review Lakeland’s interim financial results before the publication of Lakeland’s
quarterly earnings press releases. The Audit Committee believes that a candid, substantive and focused dialogue with the independent
registered public accountants is fundamental to the committee’s responsibilities. To support this belief, the Audit Committee
meets separately with the independent registered public accountants without the members of management present on at least an annual
basis.
The Audit Committee
has established procedures for the receipt, retention and treatment of complaints received by Lakeland regarding accounting, internal
accounting controls, or auditing matters, including the confidential, anonymous submission by Lakeland employees, received through
established procedures, of concerns regarding questionable accounting or auditing matters. We have established a confidential
email and hotline for employees to report violations of Lakeland’s Code of Ethics or other company policies and to report
any ethical concerns.
The information contained
in this report shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such
information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that Lakeland specifically incorporates it by reference into such filing.
The Audit Committee:
A. John Kreft (Chairman)
INDEPENDENT AUDITOR
FEE INFORMATION
The Audit Committee
appointed WeiserMazars as the independent registered public accounting firm to audit the fiscal 2016 financial statements.
Fees billed for services
by WeiserMazars in fiscal 2016 and 2015 are as follows:
|
|
WeiserMazars LLP
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|
|
WeiserMazars LLP
|
|
|
|
Fiscal 2016
|
|
|
Fiscal 2015
|
|
Audit Fees
|
|
$
|
500,896
|
|
|
$
|
147,871
|
|
Audit-Related Fees
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|
|
—
|
|
|
|
—
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|
Tax Fees
|
|
|
—
|
|
|
|
—
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
Total
|
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$
|
500,896
|
|
|
$
|
147,871
|
|
Audit Fees
Includes fees billed for professional
services rendered for audit of our annual financial statements in compliance with Section 404 of the Sarbanes-Oxley Act of 2002
and review of financial statements included in our Forms 10-Q and other filings with the SEC.
Audit-Related Fees
Includes certain services that are reasonably
related to the performance of the audit or review of Lakeland’s consolidated financial statements. There were no such fees
in fiscal 2016 or 2015.
Tax Fees
Includes tax preparation including audits,
quarterly estimates and resolutions of various notices from taxing authorities. There were no such fees in fiscal 2016 or 2015.
All Other Fees
Includes fees billed for services not
classified in any of the above categories. There were no such fees in fiscal 2016 or 2015.
Audit Committee Pre-Approval Policy
In accordance with applicable
laws and regulations, the Audit Committee reviews and pre-approves any non-audit services to be performed by our independent registered
public accounting firm to ensure that the work does not compromise their independence in performing their audit services. The
Audit Committee generally also reviews and pre-approves all audits, audit related, tax and all other fees, as applicable. In some
cases, pre-approval may be provided by the full committee for up to a year, and relates to a particular category or group of services
and is subject to a specific budget and SEC rules. In other cases, the chairman of the Audit Committee has the delegated authority
from the committee to pre-approve additional services, and such pre-approvals are then communicated to the full Audit Committee
at its next meeting.
CORPORATE GOVERNANCE
Director Independence
Our Board is currently
composed of five directors. Effective July 8, 2015, we reduced our Board from seven to five directors to save costs. The Board
believes that has operated efficiently and can continue to operate effectively at this new size. As required under the Marketplace
Rules of the Nasdaq Stock Market LLC (“Nasdaq”), a majority of the members of a Nasdaq listed company’s board
of directors must qualify as “independent,” as affirmatively determined by our Board. Our Board consults with our
counsel, as necessary, to ensure that the Board’s determinations are consistent with all relevant securities and other laws
and regulations regarding the definition of “independent,” including those set forth in pertinent Nasdaq Marketplace
Rules, as in effect from time to time.
Consistent with these
considerations, after review of all relevant transactions or relationships with each director, or any of his or her family members,
our Board has affirmatively determined that, other than Christopher J. Ryan, our Chief Executive Officer, President and Secretary,
and Stephen M. Bachelder, our Chief Operating Officer, each member of our Board is an independent director for purposes of the
Nasdaq Marketplace Rules. The Board has also determined that Mr. James M. Jenkins, who is nominated for election at the Annual
Meeting, meets the independence criteria of the Nasdaq Marketplace Rules. In making this determination, the Board found that none
of these directors or nominees for director has a direct or indirect material or other disqualifying relationship with us, which,
in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of
a director.
The Board holds executive
sessions of its independent directors when it deems necessary but at least once per year.
Board and Committee Meetings and Attendance
The Board has three standing committees:
an Audit Committee, a Compensation Committee, and a Nominating and Governance Committee. Each of these committees operates under
a written charter adopted by the Board. Copies of these charters are available on our website at
www.lakeland.com
under
the headings Investor Relations-Financial Information-“Lakeland Board Committee Charters and Governance Guidelines.”
Board committee charters are also available in print to stockholders upon written request, addressed to the Corporate Secretary,
at 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779.
During the fiscal year ended January 31,
2016, there were nine (9) meetings of the Board of Directors; six (6) meetings of the Audit Committee; one (1) meetings of the
Compensation Committee; and one (1) meeting of the Nominating and Governance Committee. Each director attended at least 75% of
the aggregate number of meetings of the Board and all committees on which he served during the period for which he was a director
or committee member, respectively, during fiscal year ended January 31, 2016.
Audit Committee
During fiscal 2016,
our Audit Committee consisted of A. John Kreft (Chairman), Duane Albro and Thomas McAteer. The Board annually reviews the definition
of independence for Audit Committee members and has determined that all members of our Audit Committee are independent (as independence
is currently defined under applicable Nasdaq Marketplace Rules). Our Board has determined that Mr. Kreft is an “audit
committee financial expert,” as such term is defined in applicable rules of the SEC based upon, among other things, his
MBA in finance from the Wharton School of Business, four and a half years’ experience with two “Big 4” accounting
firms, eighteen years of investment banking, underwriting and advisory services experience with several brokerage firms such as
Credit Suisse and Alex Brown and three years as Chief Executive Officer of a NASD broker dealer. Mr. Kreft has held five levels
of security licenses at various times including General Securities Principal.
The formal report of
our Audit Committee is included in this proxy statement. The Audit Committee’s responsibilities include, among other things:
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·
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the
oversight of the quality of our consolidated financial statements and our compliance
with legal and regulatory requirements;
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·
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the
selection, evaluation and oversight of our independent registered public accountants,
including conducting a review of their independence, determining their fees, overseeing
their audit work, and reviewing and pre-approving any non-audit services that may be
performed by them;
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·
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the
oversight of annual audit and quarterly reviews, including review of our consolidated
financial statements, our critical accounting policies and any material related-party
transactions and the application of accounting principles; and
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·
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the
oversight of financial reporting process and internal controls, including a review of
the adequacy of our accounting and internal controls and procedures.
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Compensation Committee
During fiscal 2016,
our Compensation Committee consisted of Thomas McAteer (Chairman), Duane Albro and A. John Kreft, each of whom is an independent
director (as independence is currently defined under applicable Nasdaq Marketplace Rules). Our Compensation Committee’s
role includes setting and administering the policies governing the compensation of executive officers, including cash compensation
and equity incentive programs, and reviewing and establishing the compensation of the Chief Executive Officer and other executive
officers. Our Compensation Committee’s principal responsibilities, which have been authorized by the Board, are:
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approving
the compensation for the Chief Executive Officer and other executive officers (after
considering the recommendation of our Chief Executive Officer with respect to the form
and amount of compensation for executive officers other than the Chief Executive Officer);
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·
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evaluating
the level and form of compensation for Board of Director and committee service by non-employee
members of our Board and recommending changes when appropriate;
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·
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approving
the amount of and vesting of equity awards;
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·
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advising
the Board on our compensation and benefits matters, including making recommendations
and decisions where authority has been granted regarding our equity-based compensation
plans and benefit plans generally, including employee bonus and retirement plans and
programs; and
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·
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evaluating
the need for, and provisions of, any employment contracts/severance arrangements for
the Chief Executive Officer and other executive officers.
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Our Compensation Committee
does not delegate any of its responsibilities to other committees or persons. Participation by executive officers in the recommendation
or determination of compensation for executive officers or directors is limited to recommendations by our Chief Executive Officer
to our Compensation Committee regarding the compensation of executive officers other than with respect to himself and (ii) our
Chief Executive Officer’s participation in Board determinations of compensation for the non-employee directors.
Nominating and Governance Committee
During fiscal 2016,
our Nominating and Governance Committee consisted of Duane Albro (Chairman), A. John Kreft and Thomas McAteer, each of whom is
an independent director (as independence is currently defined in the applicable Nasdaq Marketplace Rules). The purpose of the
Nominating and Governance Committee is to identify, screen and recommend to the Board qualified candidates to serve as directors,
to develop and recommend to the Board a set of corporate governance principles applicable to Lakeland, and to oversee corporate
governance and other organizational matters. The Nominating and Governance Committee’s responsibilities include, among other
things:
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·
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reviewing
qualified candidates to serve as directors;
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·
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aiding
in attracting qualified candidates to serve on the Board;
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considering,
reviewing and investigating (including with respect to potential conflicts of interest
of prospective candidates) and either accepting or rejecting candidates suggested by
our stockholders, directors, officers, employees and others;
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·
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recommending
to the full Board nominees for new or vacant positions on the Board and providing profiles
of the qualifications of the candidates;
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monitoring
our overall corporate governance and corporate compliance program;
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reviewing
and adopting policies governing the qualification and composition of the Board;
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reviewing
and making recommendations to the Board regarding Board structure, including establishing
criteria for committee membership, recommending processes for new Board member orientation,
and reviewing and monitoring the performance of incumbent directors;
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·
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recommending
to the Board action with respect to implementing resignation, retention and retirement
policies of the Board;
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·
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reviewing
the role and effectiveness of the Board, the respective Board committees and the directors
in our corporate governance process; and
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·
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reviewing
and making recommendations to the Board regarding the nature and duties of Board committees,
including evaluating the committee charters, recommending appointments to committees,
and recommending the appropriate chairperson for the Board.
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Director Nomination Procedures
The
Nominating and Governance Committee will consider director candidates recommended by stockholders. In considering candidates submitted
by stockholders, the Nominating and Governance Committee will take into consideration the needs of the Board and the qualifications
of the candidate. The Nominating and Corporate Governance Committee may also take into consideration the number of shares held
by the recommending stockholder and the length of time that such shares have been held. To have a candidate considered by the
Nominating and Governance Committee, a stockholder must submit the recommendation in writing and must include the following information:
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the
name of the stockholder and evidence of the person’s ownership of our stock, including
the number of shares owned and the length of time of ownership;
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the name of
the candidate, the candidate’s written detailed resume and a listing of his or
her qualifications to be a director of the Company;
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the
written consent of the proposed candidate to be named as a nominee and to serve as a
director if elected; and
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·
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such
other information as is required by the By-Laws of the Company.
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The stockholder recommendation
and information described above must be sent to the Corporate Secretary at 3555 Veterans Memorial Highway, Suite C, Ronkonkoma,
New York 11779 and must be delivered to, or mailed and received by the Corporate Secretary not earlier than the one hundred fiftieth
(150
th
) calendar day, and not later than the close of business on the one hundred twentieth (120
th
) calendar
day, prior to the first anniversary of the immediately preceding year’s Annual Meeting of Stockholders.
The Nominating and Governance
Committee believes that the minimum qualifications for serving as a director are that a nominee demonstrate, by significant accomplishment
in his or her field, an ability to make a meaningful contribution to the Board’s oversight of the business and affairs of
Lakeland and have an impeccable record and reputation for honesty and ethical conduct in both his or her professional and personal
activities. In addition, the Nominating and Governance Committee examines a candidate’s specific experiences and skills,
relevant industry background and knowledge, time availability in light of other commitments, potential conflicts of interest,
interpersonal skills and compatibility with the Board, and independence from management and the Company. The Nominating and Governance
Committee also seeks to have the Board represent a diversity of backgrounds and experience. The Nominating and Governance Committee
does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective
nominees. The Nominating and Governance Committee believes that the backgrounds and qualifications of the directors, considered
as a group, should provide a composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities.
The Nominating and Governance
Committee identifies potential nominees through independent research and through consultation with current directors and executive
officers and other professional colleagues. The Nominating and Governance Committee looks for persons meeting the criteria above,
and takes note of individuals who have had a change in circumstances that might make them available to serve on the Board, for
example, retirement as a Chief Executive Officer or Chief Financial Officer of a company. The Nominating and Governance Committee
also, from time to time, may engage firms that specialize in identifying director candidates. As described above, the Nominating
and Governance Committee will also consider candidates recommended by stockholders.
Once a person has been
identified by the Nominating and Governance Committee as a potential candidate, the committee may collect and review publicly
available information regarding the person to assess whether the person should be considered further. If the Nominating and Governance
Committee determines that the candidate warrants further consideration by the committee, the Chairman or another member of the
committee will contact the person. Generally, if the person expresses a willingness to be considered and to serve on the Board,
the Nominating and Governance Committee requests a resume and other information from the candidate, reviews the person’s
accomplishments and qualifications, including in light of any other candidates that the committee might be considering. The Nominating
and Governance Committee may also conduct one or more interviews with the candidate, either in person, telephonically or both.
In certain instances, Nominating and Governance Committee members may conduct a background check, may contact one or more references
provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand
knowledge of the candidate’s accomplishments. The Nominating and Governance Committee’s evaluation process does not
vary based on whether or not a candidate is recommended by a stockholder, although, as stated above, the committee may take into
consideration the number of shares held by the recommending stockholder and the length of time that such shares have been held.
Interested Party Communications
The Board has established
a process to receive communications from stockholders and other interested parties. Stockholders and other interested parties
may contact any member (or all members) of the Board by mail. To communicate with the Board, any individual director or any group
or committee of directors, correspondence should be addressed to the Board or any such individual director or group or committee
of directors by either name or title. All such correspondence should be sent c/o Corporate Secretary, 3555 Veterans Memorial Highway,
Suite C, Ronkonkoma, New York 11779.
All communications received
as set forth in the preceding paragraph will be opened by the office of our Corporate Secretary for the sole purpose of determining
whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions
of a product or service, or patently offensive material will be forwarded promptly to the addressee. In the case of communications
to the Board or any group or committee of directors, the Corporate Secretary’s office will make sufficient copies of the
contents to send to each director who is a member of the group or committee to which the envelope is addressed.
Director Attendance at Annual Stockholder
Meetings
We expect that each
of our directors attend our Annual Stockholder Meetings, as provided in our Corporate Governance Guidelines. All of our directors
were in attendance at the July 8, 2015 Annual Meeting of Stockholders.
Corporate Governance Guidelines and
Practices
We
are committed to good corporate governance practices and as such we have adopted formal Corporate Governance Guidelines. A copy
of the Corporate Governance Guidelines may be found on our website at
www.lakeland.com
under the headings Investor Relations-Financial
Information—“Lakeland Board Committee Charters and Governance Guidelines.” Below are some highlights of our
corporate governance guidelines and practices:
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Board
Independence
.
We believe that the Board should be comprised of
a majority of independent directors and that no more than two management executives may
serve on the Board at the same time. Currently, the Board has five directors, three of
whom are independent directors under the applicable Nasdaq Marketplace Rules and two
of whom are active members of management.
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Board
Committees
.
All of our Board committees consist entirely of independent
directors as defined under the applicable Nasdaq Marketplace Rules.
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o
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Chairman,
CEO and Position Separation; Leadership Structure
.
The Board separated
the positions of Chairman of the Board and Chief Executive Officer in 2003, and elected
Christopher J. Ryan as President and Chief Executive Officer. Raymond Smith retired as
Chairman of the Board on February 25, 2011 and was succeeded by Stephen M. Bachelder.
In October 27, 2012, Mr. Bachelder stepped down from Chairman of the Board to become
the Company’s Chief Operating Officer. Mr. Duane Albro was elected to fill the
position of Chairman of the Board on October 27, 2012. Separating these positions allows
for the Chief Executive Officer to focus on day-to-day business operations of the Company,
while allowing the Chairman of the Board to lead the Board in its fundamental role of
providing advice to management. The Board recognizes the time, effort, and energy that
our Chief Executive Officer is required to devote to his position in the current business
environment, as well as the commitment required to serve as Chairman, particularly as
the Board’s oversight responsibilities continue to grow. While the Company bylaws
and corporate governance guidelines do not require that the Chairman and Chief Executive
Officer positions be separate, the Board believes that having separate positions is the
appropriate leadership structure for the Company at this time and demonstrates its commitment
to good corporate governance.
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o
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Executive
Session of Independent Directors
.
The Board’s current practice
is to hold an executive session of its independent directors at least once a year. In
fiscal 2016, the independent members of our Board met in executive session four times.
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o
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Independent
Advisors
.
The Board and each committee have the power to hire independent
legal, financial or other advisors at any time as they deem necessary and appropriate
to fulfill their Board and committee responsibilities.
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o
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Directors
Are Subject to our Code of Conduct
.
Board members must act at all
times in accordance with the requirements of our Code of Conduct. This obligation includes
adherence to our policies with respect to conflicts of interest, ethical conduct in business
dealings and respect for and compliance with applicable law. Any requested waiver of
the requirements of the Code of Conduct with respect to any individual director or executive
officer must be reported to, and subject to, the approval of the Board, or the Audit
Committee.
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o
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Board
Engagement
.
The Board has regularly scheduled presentations from
our finance and major business operations personnel.
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o
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No
Corporate Loans
.
Our stock plans and practices prohibit us from
making corporate loans to employees for the exercise of stock options or for any other
purpose.
|
Risk Oversight
Management is responsible for the day-to-day
management of risks for Lakeland, while our Board of Directors, as a whole and through its committees, is responsible for the
oversight of risk management. The Board sets our overall risk management strategy and our risk appetite and ensures the implementation
of our risk management framework. Specific committees of the Board are responsible for overseeing specific types of risk. Our
Audit Committee periodically discusses risks as they relate to the Company’s financial statements, the evaluation of the
effectiveness of internal control over financial reporting, compliance with legal and regulatory requirements including Sarbanes-Oxley
Act, and related party transactions, among other responsibilities set forth in the Audit Committee’s charter. Our Audit
Committee also periodically may review our tax exposures and our internal processes to ensure compliance with applicable laws
and regulations. The Board of Directors monitors risks as they may be related to financing matters such as acquisitions and dispositions,
our capital structure, credit facilities, equity issuances, and liquidity. Our Compensation Committee establishes our compensation
policies and programs in such a manner that our executive officers are not incentivized to take on an inappropriate level of risk.
Our Audit Committee Chairman reviews any employee reports regarding suspected violations of our Code of Conduct. Each of our board
committees delivers periodic reports to the Board, in order to keep the Board of Directors informed about what transpires at committee
meetings. In addition, if a particular risk is material or where otherwise appropriate, the full Board may assume oversight over
such risk, even if the risk was initially overseen by a committee.
Code of Ethics
The Board adopted our
Code of Ethics, as amended, on June 19, 2015 that applies to all officers, directors and employees. The Code of Ethics sets forth
information and procedures for employees to report ethical or accounting concerns, misconduct or violations of the Code in a confidential
manner. The Code of Ethics is available on our website at
www.lakeland.com
under the headings Investor Relations-Financial
Information-Code of Ethics Policy 2015. Amendments to, and waivers from, the Code of Ethics will be disclosed at the same website
address provided above and in such filings as may be required pursuant to applicable law or listing standards. We intend to satisfy
the disclosure requirement under Item 5.05(c) of Form 8-K regarding certain amendments to, or waivers from a provision of this
code of ethics by posting such information on our website at
www.lakeland.com
under the headings Investor Relations-Financial
Information-Code of Ethics Policy 2015.
Compensation Committee Interlocks and
Insider Participation
The members of our Compensation Committee
during fiscal 2016 were Mr. McAteer (Chairman), Mr. Kreft and Mr. Albro. None of these members is an officer or employee of Lakeland,
and none of our executive officers serves as a member of a Compensation Committee of any entity that has one or more executive
officers serving as a member of our Compensation Committee.
EXECUTIVE OFFICERS
Our Executive Officers
are appointed by our Board and serve at its discretion. Set forth below is information regarding our current Executive Officers:
NAME
|
|
POSITION
|
|
AGE
|
Christopher J. Ryan
|
|
Chief Executive Officer, President and Secretary
|
|
64
|
Teri W. Hunt
|
|
Chief Financial Officer
|
|
54
|
Stephen M. Bachelder
|
|
Chief Operating Officer
|
|
64
|
Charles D. Roberson
|
|
Senior Vice President, International Sales
|
|
53
|
Biographical information
for Teri W. Hunt and Charles D. Roberson can be found in our Annual Report on Form 10-K for the fiscal year ended January 31,
2016.
Mr. Gary Pokrassa retired
as Chief Financial Officer effective July 17, 2015.
EXECUTIVE OFFICER COMPENSATION
We currently qualify
as a “smaller reporting company” as such term is defined in Rule 405 of the Securities Act of 1933, as amended, and
Item 10(f) of Regulation S-K. Accordingly, and in accordance with relevant Securities and Exchange Commission rules and guidance,
we have elected, with respect to the disclosures required by Item 402 (Executive Compensation) of Regulation S-K, to comply, in
some cases, with the requirements applicable to larger companies and, in other cases, with the disclosure requirements applicable
to smaller reporting companies. The following Executive Compensation Overview is not comparable to the “Compensation Discussion
and Analysis” that is required of SEC reporting companies that are not smaller reporting companies.
executive
compensation overview
Compensation Committee
.
The Compensation Committee of our Board of Directors (the “Committee”) assists the Board in discharging its responsibilities
relating to compensation of the Company’s executive officers and supervision of the Company’s stock plans and 401(k)
Plans. The Committee reports to the Board of Directors and is responsible for:
|
§
|
Reviewing
and recommending the Company’s goals and objectives relevant to executive officer
compensation;
|
|
§
|
Evaluating
the executive officers’ performance in light of these goals and objectives;
|
|
§
|
Approving
the compensation for the Chief Executive Officer and other executive officers (after
considering the recommendation of our Chief Executive Officer with respect to the form
and amount of compensation for executive officers other than the Chief Executive Officer);
and
|
|
§
|
Making
recommendations to the Board of Directors regarding the management contracts of executive
officers when they are proposed or renewed.
|
Compensation Philosophy
and Objectives
.
The Company seeks to pay its executive officers total compensation that is competitive with other companies
of comparable size and complexity. Generally, the types of compensation and benefits provided to the Chief Executive Officer and
other executive officers are comparable to those provided to other executive officers of small cap, publicly-traded and similarly
sized companies in the industry in which the Company operates.
The compensation
policies of the Company are designed to:
|
§
|
Increase stockholder
value;
|
|
§
|
Increase the
overall performance of the Company;
|
|
§
|
Attract, motivate
and retain experienced and qualified executives; and
|
|
§
|
Incentivize
the executive officers to achieve the highest level of Company financial performance.
|
While the Company seeks
to maintain competitive compensation arrangements for its executives, it also strongly believes that the competitiveness of the
compensation packages should be based on the total compensation achievable by the executive officers and that a portion of that
compensation should be linked to the performance of the Company. Accordingly, the executive compensation packages provided to
the Chief Executive Officer and the other executive officers are structured to include, among other things and in addition to
base salary and benefits, equity incentives. A reasonable portion of the compensation packages for executive officers is in the
form of restricted stock grants, which are intended to provide incentives to executive officers to achieve long-term growth in
the price of the Company’s common stock and additional annual cash bonus opportunities, which are intended to reward executive
officers for meeting annual financial performance goals. Overall compensation levels are set such that, for executive officers
to achieve a competitive compensation level, there must be both growth in the market price of the Company’s common stock
and growth in the Company’s earnings and revenues. The determination that such goals have been met and merit pay-outs pursuant
to the incentive portion of the overall compensation rests with the Committee.
The Committee believes
that executive officer compensation should seek to align the interests of executives with those of the Company’s stockholders,
by seeking to reward long-term growth (not short-term) in the value of the Company’s common stock and to reward the achievement
of annual financial goals by the Company. The incentive components of compensation restricted stock grants and annual cash bonuses
for executive officers are linked to corporate financial performance. This is intended to keep the executive team focused on the
core goal of overall long-term corporate performance.
When setting or recommending
compensation levels, the Committee considers the overall performance of the Company, the individual performance of each of the
executive officers, and their individual contributions to and ability to influence the Company’s performance, and also seeks
to encourage teamwork amongst the executives. The Committee believes that the level of total compensation, including base salary,
bonus, restricted stock grants and benefits of executives should generally be maintained to compete with other public and private
companies of comparable size and complexity. The Committee bases its determinations on a variety of factors, including the personal
knowledge of market conditions that each member of the Committee has gained in his own experience managing businesses, salary
surveys available to the Company, the knowledge of the Chief Executive Officer and other executives as to local market conditions,
and information learned regarding the compensation levels at other small cap companies in the industrial apparel industry and
other similarly sized businesses. The Committee periodically evaluates the types and levels of compensation paid by the Company
to ensure that it is able to attract and retain qualified executive officers and that their compensation remains comparable to
compensation paid to similarly situated executives in comparable companies.
The following describes
in more specific terms the elements of compensation that implement the compensation philosophy and objectives described above,
with specific reference to compensation earned by the named executive officers for the fiscal year ended January 31, 2016. “Named
executive officers” refers to those executive officers named in the Summary Compensation Table that immediately follows
this discussion.
Base Salaries
.
The base salary of each of our named executive officers is fixed pursuant to the terms of their respective employment agreements
with us at the time a person initially becomes an executive officer by evaluating the responsibilities of the position, the experience
and knowledge of the individual and the competitive marketplace at that time for executive talent, including a comparison to base
salaries for comparable positions (considered in the context of the total compensation paid by such companies). Salaries are reviewed
from time to time thereafter, generally in connection with the expiration of employment agreements or when other considerations
warrant such review in the discretion of the Committee and Board of Directors, considering the foregoing factors as well as the
executive’s performance and the other factors considered in setting total compensation described above.
When salary adjustments
are considered, they are made in the context of the total compensation for executive officers, consistent with the core principles
discussed above. In each case, the participants involved in recommending and approving salary adjustments consider the performance
of each executive officer, including consideration of new responsibilities and the previous year’s corporate performance.
Individual performance evaluations take into account such factors as achievement of specific goals that are driven by the Company’s
strategic plan and attainment of specific individual objectives. The factors impacting base salary levels are not assigned specific
weights but are considered as a totality, against the backdrop of the Company’s overall compensation philosophy, and salary
adjustments are determined in the discretion of the Committee and the Board of Directors. The base salaries paid in fiscal 2016
were set in prior years with the exception of Ms. Hunt whose salary was raised when she became Sr. Vice President of Finance.
Bonuses
. There
were bonuses paid to our three named executive officers for fiscal 2016. The Company has historically made its annual bonuses
eligible for executive officers based on corporate performance, as measured by reference to factors which the Committee believes
reflect objective performance criteria over which management generally has the ability to exert some degree of control. The employment
agreements for each of the named executive officers contain specific provision as to the determination of annual bonuses, as described
under “Narrative to Compensation Table”.
Restricted Stock
Grants
. A third component of executive officers’ compensation is grants of restricted shares of common stock issued
pursuant to our stock plans then in effect. The Committee or the full Board of Directors grants restricted stock to the Company’s
executives in order to align their interests with the interests of the stockholders. Restricted stock grants are considered by
the Company to be an effective long-term incentive because the executives’ gains are linked to increases in stock value,
which in turn provides stockholder gains. Restricted stock was granted to executive officers in accordance with the terms of our
2015 and 2012 Stock Plans. These restricted stock grants “cliff” vest at the end of three years, which the Company
believes makes the grants a more effective retention incentive, subject to the performance evaluation made by the Board of Directors
in their sole discretion, at the end of the three-year performance period. Restricted stock grants made to the executive officers
pursuant to our stock plans reflect the significant individual contributions the Committee expects the executive officers will
make to the Company’s operations and implementation of the Company’s development and growth programs, and the amounts
of such grants were determined based on the same considerations discussed above in the context of setting salaries and annual
bonuses. The number of shares of restricted stock granted is not tied to a formula or comparable company target ranges, but rather
determined at the end of the three-year performance period or such other vesting period established in the discretion of the Committee
and the Board of Directors consistent with the compensation philosophy described above. At the end of the applicable performance
period, the number of shares (baseline, maximum or zero) determined by the Board of Directors, in its discretion, will then vest.
Setting Executive
Compensation
.
Base salaries and other compensation for the Chief Executive Officer and other executive officers are
set by the Committee and reflect a number of elements including recommendations by our Chief Executive Officer, Christopher J.
Ryan, as to the other executive officers based on evaluation of their performance and the other factors described above. The Committee
works closely with Mr. Ryan in establishing compensation levels for the other executive officers. Mr. Ryan and the individual
executive typically engage in discussions regarding the executive’s salary, and Mr. Ryan reports on such discussions
and makes his own recommendations to the Committee. The Committee will separately discuss with Mr. Ryan any proposed adjustment
to his own compensation. The Committee reports to the Board of Directors on all proposed changes in executive compensation after
it has formed a view on appropriate adjustments, and makes recommendations for consideration of the Board for the Chief Executive
Officer and the other executive officers. The Committee considers such recommendations and, thereafter, sets the compensation
level for Mr. Ryan, and for the other executive officers. Salary levels and other aspects of compensation for executive officers
historically have been set forth in employment agreements having terms of two to five years.
The Committee is charged
with the responsibility for approving the compensation package for the Chief Executive Officer. The Chief Executive Officer is
not present during voting or deliberation on his performance or compensation.
Retirement Benefits
.
The Company does not provide any retirement benefits to its executive officers, other than matching from time to time a portion
of employee contributions to the Company’s 401(k) plan. In August 2009, the Board of Directors determined to suspend the
Company’s 401(k) match which it reinstated effective as of May 1, 2015.
Employment Agreements
.
The Company enters into employment agreements with certain of its executive officers because it generally believes that, in respect
of key executive officers, there is a significant value in its competitive markets to setting out compensation and benefit expectations
in writing, maintaining appropriate non-competition, non-solicitation of employees and confidentiality agreements with key executives,
and agreeing in advance on post-termination payments and other obligations. These employment agreements are described in more
detail under the caption “Narrative to Compensation Table” below.
Taxation and Accounting Matters
.
Section 162(m) of the Internal Revenue Code may impose a limit on the amount of compensation we may deduct in any one year
with respect to certain specified employees. Section 162(m) of the Code denies a federal income tax deduction for certain compensation
in excess of $1.0 million per year paid to the chief executive officer and the three other most highly-paid executive officers
(other than the chief financial officer) of a publicly-traded corporation. Certain types of compensation, including compensation
based on performance criteria that are approved in advance by stockholders, are excluded from the deduction limit. We believe
that Section 162(m) of the Code will not limit our tax deductions for executive compensation for fiscal year 2016. The Committee’s
policy is to qualify compensation paid to our executive officers for deductibility for federal income tax purposes to the extent
feasible. However, to retain highly skilled executives and remain competitive with other employers, the Committee has the right
to authorize compensation that would not otherwise be deductible under Section 162(m) or otherwise.
summary
compensation table
The table below sets forth all salary,
bonus and other compensation paid to our principal executive officer and each of the two highest paid executive officers other
than the principal executive officer (our “named executive officers”) for the fiscal years ended January 31, 2016
and 2015. As used in this Proxy Statement, FY refers to a fiscal year ended January 31. For example, FY16 refers to the fiscal
year ended January 31, 2016.
Name and Principal
Position
|
|
Fiscal
Year
|
|
Salary
($)
|
|
|
Bonus ($)
|
|
|
Stock
Awards
(1)
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
All other
Compensation
($)
|
|
|
Total
($)
|
|
Christopher J. Ryan
|
|
2016
|
|
|
400,000
|
|
|
|
150,000
|
(2)
|
|
|
90,510
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34,000
|
(3)
|
|
|
674,510
|
|
Chief Executive Officer
|
|
2015
|
|
|
400,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34,000
|
(3)
|
|
|
434,000
|
|
Teri W. Hunt
|
|
2016
|
|
|
215,000
|
|
|
|
60,573
|
(4)
|
|
|
99,716
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
375,289
|
|
*Chief Financial Officer
|
|
2015
|
|
|
155,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
155,000
|
|
Stephen M. Bachelder
|
|
2016
|
|
|
290,000
|
|
|
|
85,000
|
(5)
|
|
|
134,498
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,251
|
(6)
|
|
|
534,749
|
|
Chief Operating Officer
|
|
2015
|
|
|
270,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,251
|
(6)
|
|
|
295,251
|
|
|
(1)
|
“Stock Awards”
includes the value of restricted stock awarded based on the aggregate grant date fair
value of the awards. The assumptions used to calculate the fair value are set forth in
Footnote 1 to the Consolidated Financial Statements included in our Annual Report on
Form 10-K for the fiscal year ended January 31, 2016 as filed with the SEC. At grant
date, we had estimated that the maximum level of shares would vest over a two-year cycle
pursuant to the 2015 Stock Plan based on the stock price at date of grant (approximately
$12.93 per share), as reflected in the fair value above. The amounts in this column do
not necessarily correspond to the actual value that will be realized by the named executive
officer. The level of award (zero, target or maximum) and final vesting is based on the
Board of Director’s opinion as to the performance of the Company and management
in the entire two-year cycle.
|
|
(2)
|
Represents a combined
discretionary and contractual performance bonus.
|
|
(3)
|
Represents $25,000
in life insurance premiums paid by the Company and a $9,000 per annum auto allowance.
|
|
(4)
|
Represents discretionary
performance bonuses of $20,000 and $5,573 and a contractual performance bonus of $35,000.
|
|
(5)
|
Represents a contractual
performance bonus.
|
|
(6)
|
Represents amount
reimbursement for healthcare expenses, as Mr. Bachelder does not participate in the Company
medical plan.
|
|
*
|
Mr. Gary Pokrassa retired as Chief Financial Officer
of the Company effective July 17, 2015, whereupon Ms. Teri Hunt assumed the position of Acting Chief Financial Officer. On November
10, 2015, the Board of Directors appointed Ms. Hunt the position of Chief Financial Officer of the Company.
|
narrative
to summary compensation table
We are party to employment agreements
with our named Executive Officers, a summary of the terms of which are set forth below.
Christopher
J. Ryan
serves as Chief Executive Officer, President and Secretary of the Company. Mr. Ryan also serves as President and
Chief Operating Officer or Director and Secretary/Assistant Secretary of all of the Company’s subsidiaries. Mr. Ryan is
party to an employment agreement with the Company, effective as of April 16, 2010, which agreement automatically renews for successive
two year periods, unless notice not to renew is provided by either party pursuant to the terms of the employment agreement. Pursuant
to the agreement, Mr. Ryan was paid an annual base salary of $400,000 in each of FY15 and FY16. Pursuant to the agreement, Mr.
Ryan is eligible to receive an incentive bonus payment based upon increases in earnings per share (“EPS”) as set by
the Compensation Committee, in its discretion, and be paid an annual bonus calculated based upon $3,000 per each penny of EPS
over a predetermined amount set by the Board at the beginning of each fiscal year, subject to certain limitations. For FY16, Mr.
Ryan was paid a combined discretionary and contractual performance bonus of $150,000. Mr. Ryan was not paid a bonus for FY15.
During fiscal 2016, the Board of Directors determined that a performance-based restricted stock award made to Mr. Ryan during
fiscal 2013 under the 2012 Stock Incentive Plan was earned at the maximum level; accordingly, during fiscal 2016, Mr. Ryan was
issued 41,719 shares of common stock. Mr. Ryan also received, during fiscal 2016, under the 2015 Stock Plan, a performance-based
award of up to 7,000 restricted shares based on maximum performance level, subject to vesting in fiscal 2018. Mr. Ryan participates
in the Company’s benefit plans and is entitled to the benefits available to all other senior executives, including, without
limitation, health insurance coverage, disability and life insurance, and an annual car allowance. Pursuant to his employment
agreement, Mr. Ryan is subject to non-compete and confidentiality restrictions which, in this case of non-compete, cover the term
of his employment and for a period of one year thereafter. Potential payments to Mr. Ryan in connection with any termination or
change of control are discussed below under “Potential Payments Upon Termination.”
Teri W. Hunt
serves as Chief Financial Officer of the Company. Pursuant to the terms of her employment agreement with the Company,
Ms. Hunt’s term of employment is for a period of three years commencing on November 10, 2015 and will expire on November
9, 2018, unless earlier terminated pursuant to the terms of the agreement. Ms. Hunt was paid an annual base salary of $215,000
in FY16 and $155,000 in FY15. Pursuant to her agreement, Ms. Hunt is also eligible to receive an annual bonus under an incentive
compensation plan as finally determined by the Compensation Committee. The annual bonus is between 80% and 120% of Ms. Hunt’s
target bonus amount of $35,000, subject to adjustment from time to time by the Compensation Committee, and calculated based upon
the Company’s actual EPS as compared with an EPS target for such year established by the Board of Directors of the Company
with Ms. Hunt’s input. For fiscal 2016, Ms. Hunt earned the target bonus of $35,000. Ms. Hunt also was paid discretionary
performance bonuses of $20,000 and $5,573 in FY16. No bonus was earned for FY15. During fiscal 2016, the Board of Directors determined
that a performance-based restricted stock award made to Ms. Hunt during fiscal 2013 under the 2012 Stock Incentive Plan was earned
at the maximum level; accordingly, during fiscal 2016, Ms. Hunt was issued 11,000 shares of common stock. Ms. Hunt also received,
during fiscal 2016, under the 2015 Stock Plan, a performance-based award for up to 7,712 restricted shares based on maximum performance
level, subject to vesting in fiscal 2018. Ms. Hunt participates in Company’s benefit plans and is entitled to the benefits
available to all other senior executives, including health insurance coverage, disability and life insurance. Pursuant to her
employment agreement, Ms. Hunt is subject to non-compete and confidentiality restrictions which, in the case of non-compete, cover
the term of her employment and for a period of one year thereafter. The potential payments to Ms. Hunt in connection with any
termination are discussed below under “Potential Payments Upon Termination.”
Stephen M.
Bachelder
serves as Chief Operating Officer of the Company. Pursuant to the terms of his employment agreement with the
Company, Mr. Bachelder’s term of employment is for a period of three years commencing on March 1, 2014 and will expire on
March 1, 2017, unless earlier terminated pursuant to the terms of the agreement. Mr. Bachelder was paid an annual base salary
of $270,000 in FY15 and $290,000 in FY16. Mr. Bachelder is also eligible to receive an annual bonus under an incentive compensation
plan as finally determined by the Compensation Committee. The annual bonus is between 80% and 120% of Mr. Bachelder’s target
bonus amount of $85,000, subject to adjustment by the Compensation Committee from time to time, and calculated based upon the
Company’s EPS as compared with an EPS target for such year established by the Compensation Committee with Mr. Bachelder’s
input. For fiscal 2016, Mr. Bachelder earned the target bonus of $85,000. No bonus was earned for FY15. During fiscal 2016, the
Board of Directors determined that a performance-based restricted stock award made to Mr. Bachelder during fiscal 2013 under the
2012 Stock Incentive Plan was earned at the maximum level; accordingly, during fiscal 2016, Mr. Bachelder was issued 37,672 shares
of common stock. Mr. Bachelder also received, during fiscal 2016, under the 2015 Stock Plan, a performance-based award for up
to 10,402 shares based on maximum performance level, subject to vesting in fiscal 2018. Mr. Bachelder participates in benefit
plans and is entitled to the other benefits available to all other senior executives, including health insurance coverage, disability
and life insurance. Pursuant to his employment agreement, Mr. Bachelder is subject to non-compete and confidentiality restrictions
during the term of his employment and for a period of 18 months and five years, respectively, thereafter. The potential payments
to Mr. Bachelder in connection with any termination are discussed below under “Potential Payments Upon Termination.”
OUTSTANDING EQUITY
AWARDS AT FISCAL 2016 YEAR-END
The following table
sets forth information with respect to outstanding equity-based awards at January 31, 2016 for our Named Executive Officers.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Un-
exercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
or Units
of Stock
that
have
not
Vested
(#)
(1)
|
|
|
Market
Value of
Shares or
Units of
Stock that
have not
Vested ($)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights that
have not
Vested
(#)
(2)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout of
Unearned
Shares,
Units or
Other
Rights that
have not
Vested
($)
(2)
|
|
Christopher J. Ryan,
CEO
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
0
|
|
|
|
7,000
|
|
|
$
|
90,510
|
|
Teri W. Hunt,
CFO
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
0
|
|
|
|
7,712
|
|
|
$
|
99,716
|
|
Stephen M. Bachelder,
COO
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,000
|
|
|
$
|
38,790
|
|
|
|
10,402
|
|
|
$
|
134,498
|
|
|
(1)
|
Number
of unvested shares granted and outstanding at January 31, 2016 pursuant to matching program
pursuant to the 2012 Stock Incentive Plan.
|
|
(2)
|
Shares
and their values are reported under SEC rules in this chart reflect the total over the
two-years of the 2015 Stock Plan at the stock price at January 31, 2016 of $12.93, and
at the maximum possible level for the plan. The level of award (zero, target or maximum)
and final vesting is based on the Board of Director’s opinion as to the performance
of the Company and management in the entire two-year cycle. Actual total number of shares
awarded may be less, and the awards are spread over the two-year vesting period of the
plan, not just one, as implied by the chart.
|
POTENTIAL PAYMENTS UPON TERMINATION
Christopher J. Ryan
Pursuant to the terms
of his employment agreement, if Mr. Ryan is terminated by the Company without cause (as defined in the employment agreement) or
he terminates his employment for “good reason” (as defined in the employment agreement), the Company is obligated
to pay him, (a) within 30 days after the date of termination, his accrued and unpaid annual base salary through the date of termination,
and accrued benefits payable under compensation plans, programs or arrangements, and accrued vacation pay (collectively, the “Accrued
Obligations”), (b) at the time incentive bonuses are paid to other executives, his pro rata share of the Current Target
Bonus (as defined in the employment agreement), if any, payable during the year of his termination, and (c) his base salary and
Current Target Bonus as though he had remained in the Company’s employ for the remainder of the Employment Period (as defined
in the employment agreement) or for a period beginning on the date of termination and ending two years thereafter, whichever is
longer. The Company may elect to make the balance of such payments then remaining in a lump sum discounted to present value. In
addition, Mr. Ryan would be entitled to a continuation of his medical and health benefits for a period of two years beginning
on the date of termination.
In the event a Triggering
Transaction” (defined as a “change of control,” as defined in the employment agreement) occurs during the term
of his employment agreement and within four years after the Triggering Transaction, the Company terminates Mr. Ryan without cause
or Mr. Ryan terminates his employment for good reason, or if one of the aforementioned terminations occurs within six months prior
to the earlier of (i) a Triggering Transaction or (ii) the execution of an agreement which eventually results in a Triggering
Transaction, then Mr. Ryan shall be entitled to, as of the date of termination or the date of the Triggering Transaction, as applicable,
(i) the Accrued Obligations, (ii) his pro rata share of the Current Target Bonus, if any, payable during the year of his termination,
and (iii) a severance amount equal to 3.99 times an amount equal to his then current annual base salary and Current Target Bonus.
If any of these payments provided to Mr. Ryan would be subject to the excise tax imposed by Section 4999 of the Code, Mr. Ryan
shall be entitled to a Gross-up Payment (as defined in the employment agreement). In addition, all stock options held by Mr. Ryan
shall immediately vest and be exercisable.
In
the event Mr. Ryan’s employment is terminated as a result of his death or disability (as defined in the employment agreement)
or if Mr. Ryan terminates his employment other than for good reason, the employment agreement shall immediately terminate and
Mr. Ryan or his representatives or beneficiaries shall be entitled to all Accrued Obligations and all other accrued amounts, if
any, to which he is entitled as of the date of termination in connection with any benefits or under any incentive compensation
plan or programs.
Teri W. Hunt
Pursuant to the terms of Ms. Hunt’s
employment agreement, if Ms. Hunt’s employment is terminated “for cause” (as defined in the employment agreement),
her employment agreement would terminate immediately and she would be paid her accrued and unpaid base salary through the date
of termination, any annual bonus earned for the year prior to the year of termination but not yet paid and any other employee
benefits generally paid by the Company through the date of termination (collectively, the “TH Accrued Obligations”).
In the event Ms. Hunt terminates her employment for “good reason” (as defined in the employment agreement) or she
is terminated by the Company without cause, Ms. Hunt is entitled to be paid (a) the TH Accrued Obligations, (b) an additional
twelve months of her then current base salary payable in equal monthly installments, and (c) a pro rata portion of any annual
bonus earned for the year of termination through the date of termination, as determined in good faith by the Compensation Committee.
In the event Ms. Hunt is terminated without cause or if she terminates for good reason within 24 months after a change in control
(as defined in the employment agreement), the Company is obligated to pay her (a) the TH Accrued Obligations, (b) a lump sum amount
equal to 24 months of base salary as in effect at termination or during the year immediately prior to the change in control, whichever
is greater, and (c) two times the Target Bonus Amount (as defined in the employment agreement) in effect at termination or the
year immediately prior to the change in control, whichever is greater. In the event of Ms. Hunt’s death or disability (as
defined in the employment agreement), Ms. Hunt or her beneficiary or estate is entitled to receive the Accrued Obligations and
a pro-rata portion of her annual bonus, if any, for the year of termination through the date of termination. Ms. Hunt has the
right to terminate her agreement at any time on 60 days written notice, in which event she will be entitled to the TH Accrued
Obligations.
Stephen M. Bachelder
Pursuant to the terms of Mr. Bachelder’s
employment agreement, if Mr. Bachelder’s employment is terminated “for cause” (as defined in the employment
agreement), his employment agreement would terminate immediately and he would be paid his accrued and unpaid annual base salary
through the date of termination, any annual bonus earned for the year prior to the year of termination but not yet paid and any
other employee benefits generally paid by the Company through the date of termination (collectively, the “SB Accrued Obligations”).
In the event Mr. Bachelder terminates his employment for “good reason” (as defined in the employment agreement) or
he is terminated by the Company without cause, Mr. Bachelder is entitled to be paid (a) the SB Accrued Obligations, (b) an additional
twelve months of his then current base salary payable in equal monthly installments, and (c) a pro rata portion of any annual
bonus earned for the year of termination through the date of termination, as determined in good faith by the Compensation Committee.
In the event Mr. Bachelder is terminated without cause or if he terminates for good reason within 24 months after a change in
control (as defined in the employment agreement), the Company is obligated to pay him (a) the SB Accrued Obligations, (b) a lump
sum amount equal to 24 months of base salary as in effect at termination or during the year immediately prior to the change in
control, whichever is greater, and (c) two times the Target Bonus Amount (as defined in the employment agreement) in effect at
termination or the year immediately prior to the change in control, whichever is greater. In the event of Mr. Bachelder’s
death or disability (as defined in the employment agreement), Mr. Bachelder or his beneficiary or estate is entitled to receive
the SB Accrued Obligations and a pro-rata portion of his annual bonus, if any, for the year of termination through the date of
termination. Mr. Bachelder has the right to terminate his agreement at any time on 60 days written notice, in which event he will
be entitled to the SB Accrued Obligations.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table
sets forth certain information regarding the beneficial ownership of the Company’s outstanding common stock as of April
21, 2016, the record date, including shares as to which a right to acquire ownership within 60 days of the record date exists
(for example, through the exercise of stock options) within the meaning of Rule 13d-3(d)(1) under the Exchange Act of 1934, by:
(i) each person who is known by the Company to beneficially own more than 5% of the Common Stock; (ii) each of the named executive
officers of the Company; (iii) each director and nominee for director of the Company; and (iv) all directors and executive officers
of the Company as a group.
Except as otherwise
noted, the persons named in the table have sole voting and investment power with respect to their shares of Common Stock shown
as beneficially owned by them and the address for each beneficial owner, unless otherwise noted, is c/o Lakeland Industries, Inc.
3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779.
Directors
and Officers
Name
|
|
#
of Common
Shares
Beneficially Owned
(1)
|
|
|
Percent
of
Class
|
|
|
Title
|
Christopher J. Ryan
|
|
|
428,518
|
|
|
|
5.9
|
%
|
|
CEO, President, Secretary and Director
|
Stephen M. Bachelder
|
|
|
64,748
|
|
|
|
*
|
|
|
COO, Director
|
A. John Kreft
|
|
|
34,663
|
(2)
|
|
|
*
|
|
|
Director
|
Duane W. Albro
|
|
|
11,704
|
|
|
|
*
|
|
|
Chairman of the Board
|
Thomas McAteer
|
|
|
61,344
|
(3)
|
|
|
*
|
|
|
Director
|
Teri W. Hunt
|
|
|
9,058
|
|
|
|
*
|
|
|
Chief Financial Officer
|
James M. Jenkins
|
|
|
0
|
|
|
|
*
|
|
|
Director Nominee
|
All officers and directors as
a group (7 persons)
|
|
|
623,463
|
|
|
|
8.6
|
%
|
|
|
|
(1)
|
Table does not include
performance-based restricted stock grants under the Company’s 2015 Stock Plan (performance
vesting at end of two years, date of grant July 2015) at baseline or maximum, as the
number of restricted shares to be awarded is not determinable at the time of grant and
the recipients do not have the right to vote or other elements of beneficial ownership.
Unvested shares of restricted stock included in the footnotes are deemed beneficially
owned because the respective holders thereof have the right to vote such shares.
|
|
(2)
|
Includes 8,810 restricted
shares issued pursuant to the 2015 Stock Plan, subject to a two-year vesting.
|
|
(3)
|
Includes 5,000 shares underlying
options granted February 25, 2011 and 21,972 restricted shares issued pursuant to the
Director fee in stock program which vest quarterly from April 30, 2016 to July 31, 2017.
|
Security Ownership of Certain Beneficial Owners
|
|
Amount and
Nature of
Beneficial Ownership
|
|
|
Percent of
Shares of
Common Stock
Outstanding
|
|
Wellington Management Group, LLC
c/o
Wellington Management Company LLP
280 Congress Street,
Boston, MA 02210
|
|
|
598,676
|
(4)
|
|
|
8.3
|
%
|
Renaissance Technologies LLC
800 Third
Avenue
New York, NY 10022
|
|
|
421,602
|
(5)
|
|
|
5.8
|
%
|
Dimensional Fund Advisors LP
6300 Bee
Cave Road, Bldg #1
Austin, Texas 78746
|
|
|
402,839
|
(6)
|
|
|
5.6
|
%
|
|
(4)
|
Based on the Schedule 13G/A
filed with the Securities and Exchange Commission on February 11, 2016;
|
|
(5)
|
Based on the Schedule 13G/A
filed with the Securities and Exchange Commission on February 11, 2016;
|
|
(6)
|
Based on the Schedule 13G/A
filed with the Securities and Exchange Commission on February 09, 2016;
|
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
It is the Company’s
policy that any material transaction involving our directors, executive officers and any other person that is a “related
person” within the meaning of SEC regulations is required to be reported to our Chief Executive Officer. In addition, pursuant
to Nasdaq Rule 5630(a), all related party transactions are required to be reported to the Audit Committee, which, with the assistance
of legal counsel and such other advisors as it deems appropriate, is responsible for reviewing, approving or ratifying any such
related party transaction. The Audit Committee shall approve only those related party transactions that it believes are in, or
not inconsistent with, the best interests of the Company. A written policy to this effect has been adopted by our Board of Directors.
In addition, the Audit
Committee generally conducts an annual review of all such transactions. In addition, every quarter, a report maintained by the
Company’s accounting staff is reviewed and approved by the Chief Executive Officer and Chief Financial Officer.
There were no related party transactions
entered into, or proposed, for either fiscal 2016 or fiscal 2015, except that the Company paid approximately $520,000 in FY15,
to a company owned in part by managers of the Company for certain printing services, which management believes were at fair market
value.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16 (a) of the Exchange Act requires
the Company’s directors, officers and beneficial owners of more than 10% of the Common Stock (“Reporting Persons”)
to file with the SEC initial reports of ownership of the Company’s equity securities and to file subsequent reports when
there are changes in such ownership. Reporting Persons are required by SEC regulations to furnish the Company with copies of all
Section 16(a) reports they file. Based solely upon our review of the copies of all Forms 3, 4 and 5 and amendments to these forms,
we believe that all Reporting Persons complied on a timely basis with all filing requirements applicable to them with respect
to our fiscal year ended January 31, 2016, except for one Form 4 (reporting three transactions) filed late by Mr. Ryan, one Form
4 (reporting one transaction) filed late by Mr. Kreft, two Form 4’s (reporting two transactions) filed late by Mr. McAteer,
one Form 4 (reporting one transaction) filed late by Mr. Albro, two Form 4’s (reporting four transactions) filed late by
Mr. Pokrassa, two Form 4’s (reporting two transactions) file late by Mr. Jenkins, three Form 4’s (reporting five transactions)
filed late by Mr. Bachelder, one Form 4 (reporting one transaction) filed late by Mr. Roberson and one Form 4 (reporting one transaction)
filed late by Mr. Benedict.
STOCKHOLDER PROPOSALS – 2017
ANNUAL MEETING
Pursuant to the proxy rules promulgated
under the Exchange Act, Lakeland stockholders are notified that the deadline for providing Lakeland with timely notice of any
stockholder proposal intended to be included in the proxy materials for Lakeland’s Annual Meeting to be held in 2017 (the
“2017 Annual Meeting”) will be January 6, 2017, 120 calendar days prior to the first anniversary of the date of the
Company’s proxy statement for its 2016 annual meeting. Such proposal must be submitted in writing to Lakeland’s Corporate
Secretary at the principal executive offices of Lakeland located at 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York
11779
.
If you wish to submit a proposal outside
of the process of Rule 14a-8 under the Exchange Act, in order for such proposal to be considered “timely” for the
purposes of Rule 14a-4(c) under the Exchange Act, the proposal must be received at the above address not later than February 15,
2017, the 120th calendar day prior to the first anniversary of the immediately preceding year’s annual meeting of stockholders.
Pursuant to Lakeland’s
amended and restated bylaws, in order for a stockholder to bring a proposal before, or make a nomination at, the 2017 Annual Meeting,
such stockholder must deliver a written notice of such proposal and/or nomination to, or it must be mailed and received by, Lakeland’s
Corporate Secretary at the principal executive offices of Lakeland located at 3555 Veterans Memorial Highway, Suite C, Ronkonkoma,
New York 11779, no earlier than the close of business on January 16, 2017, the 150
th
calendar day, prior to the first
anniversary of the immediately preceding year’s annual meeting of stockholders, and not later than the close of business
on February 15, 2017, the 120
th
calendar day prior to the first anniversary of the immediately preceding year’s
annual meeting of stockholders. Stockholders are also advised to review Lakeland’s amended and restated bylaws, as they
may be amended from time to time, for additional requirements and deadlines applicable to the submission of stockholder proposals,
including, but not limited to, proposals relating to the nomination of one or more candidates for election to the Lakeland Board
of Directors.
OTHER MATTERS
The Board of Directors
knows of no matters other than those described above that have been submitted for consideration at this Annual Meeting. As to
other matters, if any, that properly may come before the Annual Meeting, the Board of Directors intends that the proxy cards will
be voted in respect thereof in accordance with the judgment of the person or persons named thereon.
QUESTIONS
For information about
your record holding, call Computershare at (800) 368-5948. We also invite you to visit Lakelands’ Internet site at
www.Lakeland.com
,
under the headings Investor Relations-Financial Information–SEC filings. Internet site materials are for your general information
and are not part of this proxy solicitation. If your shares are held by your broker or bank as a nominee or agent, you should
follow the instructions provided by your broker or bank.
If you have questions or need more information
about the annual meeting write to be address below. Any written notice of revocation, or later dated proxy card, should be delivered
to:
Lakeland Industries,
Inc.
3555 Veterans Memorial
Highway, Suite C,
Ronkonkoma, New York
11779
Attention: Christopher
J. Ryan, Secretary
Lakeland makes available, free of charge
on its website, all of its filings that are made electronically with the Securities and Exchange Commission (“SEC”),
including Forms 10-K, 10-Q and 8-K. These filings are also available on the SEC’s website (
www.sec.gov
). To access
these filings, go to our website (
www.lakeland.com
) and click on the heading Investor Relations-Financial Information–SEC
filings. Copies of Lakeland’s Annual Report on Form 10-K for the fiscal year ended January 31, 2016, including financial
statements and schedules thereto, filed with the SEC, are also available without charge to stockholders upon written request addressed
to:
Christopher J. Ryan,
Secretary
President, Chief Executive
Officer and Secretary
Lakeland Industries,
Inc.
3555 Veterans Memorial
Highway, Suite C,
Ronkonkoma, New York
11779
By Order of the Board of Directors,
Christopher J. Ryan
Corporate Secretary
May 6, 2016
Ronkonkoma, New York
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