DEF 14A 1 file1.htm DEFINITIVE PROXY STATEMENT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

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THE WARNACO GROUP, INC.
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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THE WARNACO GROUP, INC.
501 Seventh Avenue
New York, New York 10018

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 2008

To the Stockholders of
THE WARNACO GROUP, INC.:

NOTICE IS HEREBY GIVEN that the 2008 Annual Meeting of Stockholders of The Warnaco Group, Inc., a Delaware corporation, will be held at Warnaco’s offices, 501 Seventh Avenue, New York, New York 10018, on Wednesday, May 14, 2008, at 10:00 a.m., local time, or at any adjournments or postponements thereof (the ‘‘Annual Meeting’’), for the following purposes:

1.  To elect nine Directors to serve until the next annual meeting and until their successors have been elected and qualified;
2.  To approve the amendment and restatement of The Warnaco Group, Inc. 2005 Stock Incentive Plan;
3.  To approve The Warnaco Group, Inc. Incentive Compensation Plan;
4.  To ratify the appointment of Deloitte & Touche LLP as Warnaco’s independent registered public accounting firm for the fiscal year ending January 3, 2009; and
5.  To transact such other business as may properly come before the Annual Meeting.

The attached proxy statement describes the matters to be considered at the Annual Meeting. The Board of Directors has fixed the close of business on Thursday, March 20, 2008, as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting. A list of stockholders entitled to vote at the Annual Meeting will be available at Warnaco’s principal executive offices located at 501 Seventh Avenue, New York, New York, 10018 for at least ten days prior to the Annual Meeting and will also be available for inspection at the Annual Meeting.

Whether or not you expect to attend, WE URGE YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE OR VOTE BY TELEPHONE OR INTERNET IN ACCORDANCE WITH THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD. If you attend the Annual Meeting, you may vote your shares in person which will revoke any previously provided proxy.

If your shares are held of record by a broker, bank or other nominee and you wish to attend the Annual Meeting, you must obtain a letter from the broker, bank or other nominee confirming your beneficial ownership of the shares and bring it to the Annual Meeting. In order to vote such shares at the Annual Meeting, you must obtain from the record holder a proxy issued in your name.

Regardless of how many shares you own, your vote is very important. Please COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD OR VOTE BY TELEPHONE OR INTERNET TODAY.

By Order of the Board of Directors
Joseph R. Gromek
President & Chief Executive Officer

New York, New York
April 11, 2008





THE WARNACO GROUP, INC.
501 Seventh Avenue
New York, New York 10018

P R O X Y    S T A T E M E N T

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 2008

INTRODUCTION

This proxy statement (the ‘‘Proxy Statement’’) and the accompanying proxy are being furnished in connection with the solicitation of proxies on behalf of the Board of Directors of The Warnaco Group, Inc., a Delaware corporation, for use at the 2008 Annual Meeting of Stockholders to be held at Warnaco’s offices, 501 Seventh Avenue, New York, New York 10018, on Wednesday, May 14, 2008, at 10:00 a.m., local time, or at any adjournments or postponements thereof (the ‘‘Annual Meeting’’), for the purposes set forth in the accompanying Notice of Annual Meeting. The Notice of Annual Meeting, Proxy Statement and accompanying proxy are first being mailed on or about April 11, 2008 to stockholders of record as of the close of business on March 20, 2008.

If your shares are held of record by a broker, bank or other nominee, please refer to the information provided by that entity for instructions on how to vote your shares. In addition, if your shares are held by a broker, bank or other nominee, and you wish to attend, and vote at, the Annual Meeting, you must (a) obtain a letter from the broker, bank or other nominee confirming your beneficial ownership of the shares, (b) obtain a proxy issued in your name from such record holder and (c) bring both the letter and the proxy to the Annual Meeting.

If you are a registered stockholder holding shares in Warnaco directly in your own name, you can ensure that your shares are voted at the Annual Meeting by (1) completing, signing, dating and promptly returning the enclosed proxy in the envelope provided; (2) voting by telephone as instructed on the enclosed proxy; or (3) voting by Internet as instructed on the enclosed proxy. Sending in a signed written proxy or voting by telephone or Internet will not affect your right to attend the Annual Meeting and vote in person.

You may revoke your proxy at any time before it is voted at the Annual Meeting by (1) sending written notice to the attention of the Secretary of the Company at our principal executive offices at 501 Seventh Avenue, New York, New York 10018; (2) providing us with a subsequent properly executed written proxy; (3) subsequently voting by telephone or Internet; or (4) attending the Annual Meeting and voting in person.

You may contact Morrow & Co., LLC at (800) 607-0088 to obtain directions to the site of the Annual Meeting.

Our principal executive offices are located at 501 Seventh Avenue, New York, New York 10018.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 14, 2008: This Proxy Statement and our 2007 Annual Report are available on the internet at ww3.ics.adp.com/streetlink/wrnc.

Voting Of Proxies

All properly executed written proxies, and all properly completed proxies submitted by telephone or Internet, received prior to the Annual Meeting, will be voted in accordance with the instructions specified therein. As to any matter for which no choice has been specified in a properly executed written proxy or properly completed proxy submitted by telephone or Internet, the shares represented thereby will be voted ‘‘FOR’’ the election of all nine nominees for the Board of Directors, ‘‘FOR’’ the approval of the amendment and restatement of The Warnaco Group, Inc. 2005 Stock Incentive Plan (the ‘‘Amended and

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Restated 2005 Stock Incentive Plan’’), ‘‘FOR’’ the approval of The Warnaco Group, Inc. Incentive Compensation Plan (the ‘‘Incentive Compensation Plan’’) and ‘‘FOR’’ the ratification of the appointment of Deloitte & Touche LLP (‘‘Deloitte & Touche’’) as our independent registered public accounting firm for the fiscal year ending January 3, 2009, and in the discretion of the persons named in the proxy in connection with any other business that may properly come before the Annual Meeting. The Board of Directors knows of no other business to come before the Annual Meeting; however, if other matters properly come before the Annual Meeting, it is intended that the persons named in the proxy will vote thereon in accordance with their best judgment.

Quorum; Vote Required

The presence, in person or by properly executed written proxy or properly completed proxy submitted by telephone or Internet, of the holders of a majority of the total number of votes of the issued and outstanding shares of our common stock, par value $0.01 per share (the ‘‘Common Stock’’), entitled to vote at the Annual Meeting is necessary to constitute a quorum in order to transact business. Abstentions and broker non-votes, if any, will be included in the calculation of the number of shares present at the Annual Meeting for purposes of determining a quorum.

In January 2008, the Board of Directors of the Company approved the amendment and restatement of the Company’s then existing Amended and Restated By-laws to change the voting standard for the election of directors in uncontested elections from a plurality to a majority voting standard. Accordingly, nominees for director shall be elected to the Board of Directors if the votes cast ‘‘for’’ such nominee’s election exceed the votes cast ‘‘against’’ such nominee’s election. The Company’s Corporate Governance Guidelines (available on the corporate governance page of our Internet website located at www.warnaco.com) provide that an incumbent director who fails to receive the required number of votes for re-election will tender his or her written resignation for consideration by the Board of Directors in accordance with the procedures set forth in the Corporate Governance Guidelines. In determining whether director nominees have received the requisite votes, abstentions and broker non-votes, if any, will have no effect on the outcome of the vote.

Approval of the amendment and restatement of The Warnaco Group, Inc. 2005 Stock Incentive Plan, approval of The Warnaco Group, Inc. Incentive Compensation Plan and approval of the ratification of the appointment of Deloitte & Touche as our independent registered public accounting firm each requires the affirmative vote of a majority of the shares of Common Stock present at the Annual Meeting, in person or by properly executed written proxy or properly completed proxy submitted by telephone or Internet, and entitled to vote. In determining whether any such proposal has received the requisite number of affirmative votes, abstentions and broker non-votes, if any, will be counted and will have the same effect as a vote against the proposal.

Outstanding Voting Securities

As of the close of business on March 20, 2008, the record date for determining stockholders entitled to vote at the Annual Meeting, there were outstanding and entitled to vote 45,295,204 shares of Common Stock. Each share of Common Stock is entitled to one vote per share. Only stockholders of record as of the close of business on March 20, 2008 will be entitled to notice of, and to vote at, the Annual Meeting.

Solicitation Of Proxies

The cost of soliciting proxies for the Annual Meeting will be borne by us. In addition to solicitation by mail, solicitations may also be made by personal interview, facsimile transmission, telegram, telephone and other methods of communication. We are using the services of Morrow & Co., Inc. to assist in soliciting proxies. We expect that the fees and expenses to be paid by us for such services will not exceed $10,000. Arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to forward proxy materials to their beneficial owners, and we will reimburse them for their reasonable expenses incurred in connection therewith. Directors, officers and other regular employees of Warnaco, as yet undesignated, may also request the return of proxies by telephone, telegram, personal visit or otherwise.

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PROPOSAL NO. 1 — ELECTION OF DIRECTORS

At the Annual Meeting, nine Directors are to be elected to serve until the next annual meeting and until their successors have been elected and qualified. The nine nominees for Director (each of whom is currently a member of the Board of Directors) are David A. Bell, Robert A. Bowman, Richard Karl Goeltz, Joseph R. Gromek, Sheila A. Hopkins, Charles R. Perrin, Nancy A. Reardon, Donald L. Seeley and Cheryl Nido Turpin. Certain biographical information regarding each of the nine nominees is set forth below.

All properly executed written proxies and properly completed proxies submitted by telephone or Internet will be voted ‘‘FOR’’ the election of the Board of Directors’ nominees unless contrary instructions are given. If one or more of the Board of Directors’ nominees is unable to serve, which is not anticipated, the persons named as proxies intend to vote, unless the number of Directors is reduced by the Board of Directors, for such other person or persons as the Board of Directors may designate.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE ‘‘FOR’’ THE ELECTION OF ITS NOMINEES, WHICH IS DESIGNATED AS ITEM NO. 1 ON THE ENCLOSED PROXY CARD.

BIOGRAPHICAL INFORMATION

Set forth below are the name, age (as of March 20, 2008), positions and offices with Warnaco, if applicable, and other selected biographical information of each (1) Director nominee and (2) non-Director Executive Officer of Warnaco.

Biographical Information of the Director Nominees

Charles R. Perrin, 62, has been a Director of Warnaco since April 2003 and has served as our Non-Executive Chairman since March 2004. Mr. Perrin served as Acting Non-Executive Chairman from January 2004 until March 2004. Mr. Perrin served as Chairman of Avon Products, Inc. (‘‘Avon’’) from May 1999 to November 1999 and Chief Executive Officer of Avon from July 1998 to November 1999. He served as Avon’s Vice Chairman from January 1998 to May 1999 and Avon’s Chief Operating Officer from January 1998 to July 1998. Mr. Perrin served as Chairman and Chief Executive Officer of Duracell International, Inc. from 1994 to 1996. He is a trustee of Trinity College and Save the Children, Chairman of Clearpool, Inc., a Director of Campbell Soup Company and Eastern Mountain Sports and Co-Founder and Trustee of the Perrin Family Foundation.

David A. Bell, 64, has been a Director of Warnaco since April 2003. Since March 16, 2006, Mr. Bell has served as Chairman Emeritus of The Interpublic Group of Companies (‘‘Interpublic’’), a provider of advertising, specialized marketing and communication services. Previously, he served as Interpublic’s Co-Chairman from January 2005 until March 15, 2006, Chairman and Chief Executive Officer from February 2003 to January 2005 and Vice Chairman from June 2001 to February 2003. From March 1999 to 2001, Mr. Bell served as Chairman and Chief Executive Officer of True North Communications, Inc., a provider of advertising and marketing communication services. From 1992 to March 1999, he served as Chairman and Chief Executive Officer of Bozell Worldwide. Mr. Bell serves on the Board of Directors of Primedia, Inc. and DHB Industries Inc. Mr. Bell is currently an operating advisor of Pegasus Capital Advisors, L.P., Chairman of PRO-AD PAC (the advertising industry’s political action committee), and is the Chairman of the Board of Directors of The National Forest Foundation and Co-Chairman of the Advertising Council Advisory Group.

Robert A. Bowman, 53, has been a Director of Warnaco since January 2004. He currently serves as President and Chief Executive Officer of Major League Baseball Advanced Media (‘‘MLB.com’’), the Internet and interactive media unit of Major League Baseball. Prior to joining MLB.com in November 2000, Mr. Bowman was President and Chief Executive Officer of Cyberian Outpost, Inc., an online retailer of computers and electronics. Before he joined Cyberian Outpost in September 1999, Mr. Bowman held several senior management positions at ITT Corporation, including President, Chief Operating Officer and Chief Financial Officer. Earlier in his career, Mr. Bowman served for eight years as Treasurer of the State of Michigan. Mr. Bowman is currently a Director of World Wrestling Entertainment, Inc., Blockbuster, Inc. and Take-Two Interactive Software Inc.

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Richard Karl Goeltz, 65, has been a Director of Warnaco since July 2002. From 1996 to 2000, Mr. Goeltz served as Vice Chairman and Chief Financial Officer of the American Express Company, a provider of travel, payment, financial advisory and international banking services. Previously, Mr. Goeltz was Group Chief Financial Officer and a member of the Board of Directors of NatWest Group (‘‘NatWest’’), the parent company of National Westminister Bank PLC. Prior to joining NatWest, Mr. Goeltz served The Seagram Company for over 20 years in a variety of management positions, including Executive Vice President — Finance. Mr. Goeltz is a Director of Federal Home Loan Mortgage Corporation (‘‘Freddie Mac’’), Delta Air Lines, the New Germany Fund and Aviva plc, a member of the Board of Overseers of Columbia Business School, a member of the Council on Foreign Relations and a member of the Court of Governors and the Council of the London School of Economics and Political Science.

Joseph R. Gromek, 61, has served as President and Chief Executive Officer of Warnaco since April 2003, at which time he was also elected to the Board of Directors. From 1996 to 2002, Mr. Gromek served as President and Chief Executive Officer of Brooks Brothers, Inc., a clothing retailer. From January 2002 until he joined Warnaco in April 2003, Mr. Gromek worked as an independent consultant. Over the last 25 years, Mr. Gromek has held senior management positions with Saks Fifth Avenue, Limited Brands, Inc. and AnnTaylor Stores Corporation. Mr. Gromek is a member of the Board of Directors of Volunteers of America and a member of the Board of Governors of the Parsons School of Design.

Sheila A. Hopkins, 52, has been a Director of Warnaco since July 2003. Ms. Hopkins currently serves as Vice President and General Manager, Professional Oral Care, N.A. at Colgate-Palmolive Company, a consumer products company. From January 2004 to January 2007, she served as Vice President — Palmolive Equity Global Business Development and from September 1997 to January 2004, she served as Vice President, General Manager of Personal Care. Previously she served as Vice President of U.S. Marketing at Tambrands and in various marketing positions at Procter & Gamble Company. Ms. Hopkins currently is a member of the Board of Directors of Volunteers of America and the ADA Foundation.

Nancy A. Reardon, 55, has been a Director of Warnaco since July 2006. Ms. Reardon currently serves as Senior Vice President and Chief Human Resources and Communications Officer at Campbell Soup Company, a global manufacturer of soup, beverage and prepared food products. Prior to joining Campbell Soup Company, from 2002 to 2004, Ms. Reardon served as Executive Vice President of Human Resources for Comcast Cable Communications, Inc., a provider of cable television and communication services. Previously, from 1996 to 2002, she served as Partner and Executive Vice President, Human Resources and Corporate Affairs, Borden Capital Management Partners, a provider of private equity investments, corporate governance, mergers and acquisitions and strategic partnering expertise. Ms. Reardon is currently a member of the Board of Directors of The Mann Center for the Performing Arts in Philadelphia.

Donald L. Seeley, 64, has been a Director of Warnaco since July 2005. Since April 2000 Mr. Seeley has been an adjunct lecturer and the Director of the Applied Investment Management Program at the University of Arizona. From July 1997 to March 2000, Mr. Seeley was Vice Chairman and Chief Financial Officer of True North Communications. Earlier, he was President and Chief Executive Officer of the Alexander Consulting Group. He currently is a member of the Board of Trustees of William Blair Mutual Funds.

Cheryl Nido Turpin, 60, has been a Director of Warnaco since April 2004. From June 1994 to August 1997, Ms. Turpin served as President and Chief Executive Officer of The Limited Stores. She was President and Chief Executive Officer of Lane Bryant, a subsidiary of The Limited Stores, Inc., from January 1990 to June 1994. Ms. Turpin is a Director of Footlocker, Inc.

Biographical Information of the Non-Director Executive Officers

Lawrence R. Rutkowski, 50, currently serves as the Company’s Executive Vice President and Chief Financial Officer. From September 2003 until March 2005, Mr. Rutkowski served as our Senior Vice President and Chief Financial Officer. From December 1999 to June 2003, he served as Executive Vice

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President and Chief Financial Officer at Primedia, Inc., a targeted media company. From November 1993 to December 1999, he served at National Broadcasting Company/General Electric as Senior Vice President and Chief Financial Officer — Strategic Business Development and Controller of Corporate Finance. Previously, Mr. Rutkowski held a senior management position at Walt Disney Studios.

Helen McCluskey, 52, joined the Company in July 2004 as Group President-Intimate Apparel and, in June 2007, also assumed global responsibility for our Swimwear brands. She is responsible for all aspects of our intimate apparel and swimwear brands including Calvin Klein underwear and swimwear, Warner’s, Olga, Body Nancy Ganz and Speedo. Prior to joining the Company, Ms. McCluskey served as Group President of the Moderate Women’s Sportswear division of Liz Claiborne Corporation from August 2001 to June 2004. Previously, she spent 18 years at Sara Lee Corporation’s intimate apparel units where she held executive positions in marketing, operations and general management, including President of Playtex Apparel from 1999 to 2001.

Frank Tworecke, 61, joined the Company as Group President-Sportswear in May 2004. From 1999 to April 2004, Mr. Tworecke served at Bon-Ton Stores, a department store operator — from June 2000 to April 2004 as President and Chief Operating Officer and from November 1999 to June 2000 as Vice Chairman. Previously, he was President and Chief Operating Officer of Jos. A. Bank. Mr. Tworecke has also held senior management positions with other specialty and department store retailers including MGR, Inc., Rich’s Lazarus Goldsmith (now known as the Macy’s Central division of Federated Department Stores), and John Wanamaker.

Dwight Meyer, 55, currently serves as the Company’s President-Global Sourcing, Distribution and Logistics. Mr. Meyer is responsible for all aspects of our worldwide sourcing, distribution and logistics operations. From April 2005 until March 2007, Mr. Meyer served as our President-Global Sourcing. Prior to joining the Company, Mr. Meyer served as Executive Vice President of Global Sourcing of AnnTaylor Stores Corporation, a specialty clothing retailer of women’s apparel, shoes and accessories, from 1996 until April 2005. Previously, he served as President and Chief Operating Officer of C.A.T. (a joint venture between AnnTaylor Stores Corporation and Cygne Design) and Vice President, Sourcing for the Abercrombie & Fitch division of M.A.S.T. Industries.

Stanley P. Silverstein, 55, currently serves as the Company’s Executive Vice President-International Strategy and Business Development. From March 2005 until January 2006, Mr. Silverstein served as our Executive Vice President-Corporate Development. From March 2003 to March 2005, Mr. Silverstein served as our Senior Vice President-Corporate Development and served as our Chief Administrative Officer from December 2001 until January 2006. Mr. Silverstein served as the Company’s Vice President and General Counsel from December 1990 until February 2003 and as its Secretary from January 1987 until May 2003. In May 2004, Mr. Silverstein, without admitting or denying the findings, entered into a settlement with the Securities and Exchange Commission (‘‘SEC’’) pursuant to which the SEC found that Mr. Silverstein had willfully aided and abetted and caused certain violations by the Company of the federal securities laws and issued an administrative order requiring that Mr. Silverstein cease and desist from causing any violations and any future violations of such laws. The order, which did not impose any fines or monetary penalties on Mr. Silverstein, censured him pursuant to the SEC’s Rules of Practice and required that he disgorge certain incentive compensation for 1998, with interest. In addition, the order provided that until May 11, 2006, Mr. Silverstein not sign documents to be filed with the SEC by or on behalf of the Company or participate in or be responsible for the preparation or review of such filings, except under limited circumstances.

Elizabeth Wood, 46, joined the Company as Senior Vice President-Human Resources in September 2005. From May 2002 to August 2005, Ms. Wood served as a consultant for The Breakthrough Group, a consulting company that focuses on executive and employee training and development. From May 1996 to February 2002, Ms. Wood served as the Executive Vice President of Human Resources of Brooks Brothers, Inc. Previously, Ms. Wood served as Corporate Human Resources Director of Marks and Spencer Group, plc.

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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Board of Directors

The Board of Directors has determined that Messrs. Bell, Bowman, Goeltz, Perrin and Seeley and Mmes. Hopkins, Reardon and Turpin (comprising a majority of Warnaco’s Board of Directors) are independent directors as defined in the NASDAQ listing standards.

The Board of Directors has adopted Corporate Governance Guidelines, a Code of Ethics for Principal Executive and Senior Financial Officers and an Employee Code of Business Conduct and Corporate Ethics Policy (‘‘Code of Conduct’’), all of which are posted, along with our Charter, By-Laws and Committee Charters, on the corporate governance page of our Internet website located at www.warnaco.com. Our website address is provided throughout this Proxy Statement as an inactive textual reference only. The information provided on our website is not part of this Proxy Statement and is not incorporated by reference. Any amendment to, or waiver of, the Code of Ethics for Principal Executive and Senior Financial Officers will be disclosed on our website. We do not currently expect to make any such waivers.

The Board of Directors held eight meetings in the fiscal year ended December 29, 2007 (‘‘Fiscal 2007’’). During Fiscal 2007, all of the Directors attended at least 75% of the meetings of the Board of Directors and the respective committees of the Board of Directors of which they were a member. Warnaco strongly encourages, but does not require, members of the Board of Directors to attend annual stockholder meetings. All of our then-sitting Directors attended last year’s annual meeting. Our Corporate Governance Guidelines provide that independent Directors will meet without management at regularly scheduled executive sessions at least quarterly, in conjunction with regularly scheduled Board meetings, and at such other times as they deem appropriate.

The Board of Directors has adopted certain processes for receiving communications from stockholders. Our stockholders may contact any member (or all members) of the Board of Directors (including, without limitation, any committee of the Board or any chair of any such committee) by mail or electronically. To communicate with the Board of Directors, any individual Director or any group or committee of Directors, stockholders may address correspondence to the Board of Directors or any such individual Directors or group or committee of Directors by either name or title. All such correspondence should be sent to us ‘‘c/o Corporate Secretary’’ at The Warnaco Group, Inc., 501 Seventh Avenue, New York, New York 10018. This contact information is also available on the corporate governance page of our Internet website at www.warnaco.com. On the corporate governance page, stockholders will find an on-line form that may be used for writing an electronic message to the Board of Directors, any individual Director, or any group or committee of Directors. The website includes instructions for sending such message. Stockholders may also communicate with such persons by sending an e-mail to board@warnaco.com. All communications received from stockholders will be opened by 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 or promotions of a product or service will be forwarded promptly to the addressees. Communications which consist of stockholder proposals must instead follow the procedures set forth under ‘‘Stockholder Proposals’’ below and, in the case of recommendations for Director candidates, the procedures set forth under ‘‘Nominating and Corporate Governance Committee’’ below.

In Fiscal 2007, the Board of Directors had the following standing committees: Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee.

Audit Committee

The Audit Committee, which met 11 times in Fiscal 2007, is primarily responsible for: (1) monitoring the quality and integrity of Warnaco’s financial statements and related disclosure and systems of internal controls regarding risk management, finance and accounting; (2) monitoring all material matters relating to Warnaco’s capital structure, financial policies, capital investments, and related matters; (3) appointing and overseeing the independent auditors and approving in advance the independent auditors’ fee arrangements, other terms of service and scope of audit; (4) monitoring the independent auditors’

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qualifications and independence; (5) approving in advance any non-audit services to be provided by the independent auditors; (6) in consultation with management, overseeing the appointment, compensation, performance, replacement, reassignment or dismissal of the principal internal auditor; (7) reviewing the scope, planning and staffing of the proposed annual internal audit plan; (8) providing an avenue of communication among the independent auditors, management, the internal auditing department and the Board of Directors; (9) monitoring Warnaco’s compliance with legal and regulatory requirements; (10) reviewing and approving related party transactions pursuant to Warnaco’s policy governing such transactions (which policy, adopted by the Committee on March 6, 2007, codified Warnaco’s existing practices); (11) managing the administration and operation of Warnaco’s Employee Retirement Plan; and (12) issuing the report required by the SEC to be included in Warnaco’s annual proxy statement.

In Fiscal 2007, the members of the Audit Committee were Mr. Bowman, Mr. Goeltz, Chairman, Ms. Hopkins, Ms. Reardon (as of January 10, 2007), Mr. Perrin and Mr. Seeley. Mr. Goeltz ceased to serve on the Audit Committee as of May 15, 2007, at which time Mr. Seeley was appointed Chairman of the Audit Committee. Each of Mr. Bowman, Ms. Hopkins, Ms. Reardon, Mr. Perrin and Mr. Seeley continues to serve on the Audit Committee as of the date of this Proxy Statement. Each member of the Audit Committee during Fiscal 2007 was, and each member currently is, an independent director under the NASDAQ listing standards and qualified pursuant to the additional NASDAQ requirements for audit committee members, in each case, as determined by the Board of Directors. The Board of Directors has determined that Mr. Seeley is an ‘‘audit committee financial expert’’ as that term is defined in the applicable SEC rules and in satisfaction of the applicable audit committee requirements of the NASDAQ listing standards; however, he is not an auditor or accountant for Warnaco, he does not perform field work and is not an employee of Warnaco. In accordance with the SEC’s safe harbor relating to audit committee financial experts, a person designated or identified as an audit committee financial expert will not be deemed an ‘‘expert’’ for any purpose, including without limitation for purposes of Section 11 of the Securities Act of 1933, as amended. In addition, such designation or identification does not impose on such person any duties, obligations or liabilities that are greater than that imposed on such person as a member of the Audit Committee and Board of Directors in the absence of such designation or identification and does not affect the duties, obligations or liabilities of any other member of the Audit Committee or Board of Directors.

The Audit Committee has established procedures for: (a) the receipt, retention and treatment of complaints received by Warnaco regarding accounting, internal accounting controls, misuse or inappropriate use of corporate assets or auditing matters or potential violations of law; and (b) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters or potential violations of law. Such procedures are described in the Audit Committee’s written charter referred to below.

The Audit Committee operates under a written charter which is available on the corporate governance page of our Internet website located at www.warnaco.com. The Audit Committee reviews its charter annually and amends it as necessary. In addition, the Audit Committee undertakes an annual self-evaluation of its practices and operations to ensure that all members of the Committee are satisfied with the manner in which the Committee is executing its duties. The self-evaluation results are reviewed by our Nominating and Corporate Governance Committee and our Board of Directors.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee, which met six times in Fiscal 2007, has as its primary purposes: (1) assisting the Board of Directors by actively identifying individuals qualified to become Directors; (2) recommending to the Board of Directors the Director nominees for election at annual meetings of stockholders; (3) recommending to the Board of Directors nominees to serve on committees of the Board of Directors and members of each committee to serve as Chair of that committee; (4) recommending to the Board of Directors compensation amounts (including cash and equity compensation) for Directors; (5) monitoring significant developments in the law and practice of corporate governance and of the duties and responsibilities of directors of public companies; (6) leading the Board of Directors, each committee of the Board of Directors and management in its annual performance self-evaluation, including establishing criteria to be used in connection with such evaluation;

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(7) overseeing compliance with our Code of Conduct; and (8) developing, recommending to the Board of Directors and administering our Corporate Governance Guidelines.

In Fiscal 2007, the members of the Nominating and Corporate Governance Committee were Mr. Bell, Mr. Goeltz, Mr. Perrin, Chairman, Mr. Seeley and Ms. Turpin (each of whom continues to serve on the Nominating and Corporate Governance Committee as of the date of this Proxy Statement). Each member of the Nominating and Corporate Governance Committee during Fiscal 2007 was, and each member currently is, an independent director under the NASDAQ listing standards as determined by the Board of Directors.

The Nominating and Corporate Governance Committee has adopted a policy to generally ensure that the minimum qualifications for serving as a Director of Warnaco are that a nominee: (1) demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board of Directors’ oversight of the business and affairs of Warnaco; and (2) be a person of the highest integrity and have an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities. In addition, the Nominating and Corporate Governance Committee examines candidates’ specific experiences and skills in light of: (1) the needs of Warnaco and the Board of Directors; (2) time availability in light of other commitments; (3) potential conflicts of interest; and (4) independence from management and Warnaco. The Nominating and Corporate Governance Committee identifies potential nominees by asking current Directors and Executive Officers to notify the Committee if they become aware of persons meeting the criteria described above, who might be available to serve on the Board of Directors. From time to time, the Nominating and Corporate Governance Committee engages firms that specialize in identifying Director candidates.

The Nominating and Corporate Governance Committee will also consider Director candidates recommended by stockholders. In order to have a candidate considered by the Nominating and Corporate Governance Committee, stockholders must submit the following information: (1) the name of the stockholder and evidence of the stockholder’s ownership of Common Stock, including the number of shares owned and the length of time of ownership and (2) the name of the candidate, the candidate’s resume or a listing of his or her qualifications to be a Director of Warnaco and the candidate’s consent to be named as a Director if selected by the Nominating and Corporate Governance Committee and nominated by the Board of Directors. The stockholder recommendation and information described above must be sent to the Nominating and Corporate Governance Committee ‘‘c/o Corporate Secretary’’ at The Warnaco Group, Inc., 501 Seventh Avenue, New York, New York 10018. The Nominating and Corporate Governance Committee will accept recommendations of Director candidates throughout the year; however, in order for a recommended Director candidate to be considered for nomination to stand for election at an upcoming annual meeting of stockholders, the recommendation must be received by our Corporate Secretary not less than 120 days prior to the anniversary date of our most recent annual meeting of stockholders. This information regarding the procedure for submitting stockholder nominations to the Board of Directors also can be found on the corporate governance page of our Internet website located at www.warnaco.com.

In considering Board of Director candidates, the Nominating and Corporate Governance Committee will take into consideration the needs of Warnaco and the Board of Directors as well as 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.

Once a person has been identified by the Nominating and Corporate 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 Corporate Governance Committee determines that the candidate warrants further consideration, the Chairman or another member of the Committee will contact the candidate directly. Generally, if the candidate expresses a willingness to be considered and to serve on the Board of Directors, the Nominating and Corporate Governance Committee will request further information from the candidate, review the person’s accomplishments and qualifications, including in light of any other candidates that the Committee might be considering, and conduct one or more interviews with the candidate. In certain

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instances, Nominating and Corporate Governance Committee members 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 to assist in the evaluation process. The Committee’s evaluation process shall not vary based on whether a candidate is recommended by a stockholder, although, as stated above, the Committee may take into consideration the number of shares held by a recommending stockholder and the length of time such shares have been held.

The Nominating and Corporate Governance Committee operates under a written charter which is available on the corporate governance page of our Internet website located at www.warnaco.com. The Nominating and Corporate Governance Committee reviews its charter annually and amends it as necessary. In addition, the Nominating and Corporate Governance Committee undertakes an annual self-evaluation of its practices and operations to ensure that all members of the Committee are satisfied with the manner in which the Committee is executing its duties. The self-evaluation results are reviewed by our Board of Directors.

As noted below, the Nominating and Corporate Governance Committee is also advised by Towers Perrin with respect to Director compensation.

Compensation Committee

The primary purpose of Warnaco’s Compensation Committee, which met 10 times in Fiscal 2007, is to discharge the responsibilities of the Board of Directors relating to all compensation, including equity compensation, of Warnaco’s Executive Officers. The Compensation Committee also oversees Warnaco’s broad-based benefit programs. The Compensation Committee has overall responsibility for evaluating and making recommendations to the Board of Directors regarding (1) the performance and compensation of Warnaco’s Executive Officers and (2) Warnaco’s equity-based and incentive compensation plans, policies and programs. In addition, the Compensation Committee undertakes regular review of Warnaco’s executive compensation philosophy. Through this review process, combined with evaluation of the practices of our industry peers and consultation with outside consultants, the Compensation Committee manages our executive compensation practices. The Compensation Committee retains discretion over compensation decisions in order that it may regularly monitor pay against performance and determine how to compensate appropriately for performance. The Compensation Committee meets regularly in private executive session with Towers Perrin (see ‘‘Compensation Consultant’’ below for additional information) to discuss executive compensation matters.

In addition, the Compensation Committee undertakes an annual self-evaluation of its practices and operations to ensure that all members of the Committee are satisfied with the manner in which the Committee is executing its duties. The self-evaluation results are reviewed by our Nominating and Corporate Governance Committee and our Board of Directors.

In Fiscal 2007, the members of the Compensation Committee were Mr. Bell, Chairman, Mr. Bowman, Mr. Goeltz (as of May 15, 2007), Ms. Hopkins, Mr. Perrin, Ms. Reardon and Ms. Turpin (each of whom continues to serve on the Compensation Committee as of the date of this Proxy Statement). Each member of the Compensation Committee during Fiscal 2007 was, and each member currently is, an independent director under the NASDAQ listing standards as determined by the Board of Directors.

The Compensation Committee operates under a written charter which is available on the corporate governance page of our Internet website located at www.warnaco.com and which was amended in March 2007 to address the Committee’s review and approval of the discussion of its compensation policies and objectives. The Compensation Committee reviews its charter annually and amends it as necessary.

Compensation Consultant

In 2004, the Compensation Committee retained Towers Perrin as its independent compensation consultant to advise the Compensation Committee on all matters related to executive compensation, general compensation programs and other compensation and benefits-related matters. Other than the services described below (all of which have been reviewed and approved by the Compensation Committee), Towers Perrin provides no other services to, and is not otherwise affiliated with, Warnaco.

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Representatives of Towers Perrin assist the Compensation Committee in selecting an appropriate peer group and in analyzing the peer group’s pay practices. Our Compensation Committee considers this information in determining the compensation of our Executive Officers. As part of its engagement, Towers Perrin regularly provides guidance relating to our overall compensation practices, in addition to advice regarding best practices in the industry and broader marketplace.

Towers Perrin also advises our Nominating and Corporate Governance Committee with respect to Director compensation, including annual compensation, meeting fees and equity awards. Additionally, management may from time to time utilize Towers Perrin’s proxy data and other information services. This use is limited in nature and is subject to review and approval by the Compensation Committee, in its sole discretion.

Our relationship with Towers Perrin continues in 2008.

Compensation Committee Interlocks and Insider Participation

None.

Certain Relationships and Related Person Transactions

We have adopted a written Policy and Procedures with respect to Related Person Transactions (available on the corporate governance page of our Internet website located at www.warnaco.com) relating to the review, approval and ratification of related person transactions, including transactions that are disclosable under SEC Regulation S-K, Item 404(a). Generally, our policy requires that our Audit Committee review and approve transactions involving more than $120,000 in which Warnaco is a participant and in which any of the following persons has a direct or indirect material interest: any of our Directors (or nominees) or Executive Officers or any person known to be the beneficial owner of more than 5% of our voting securities, any immediate family member of, or any person sharing a household with, any of the foregoing persons, or any entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest. Prior to the consummation of any transaction with a related person (regardless of the dollar amount involved), full disclosure of all facts and circumstances of such transaction must be made to our legal department. The legal department then determines whether such transaction or arrangement requires the approval of the Audit Committee. If appropriate, the transaction is submitted to the Audit Committee for consideration at the next Committee meeting or, in those instances where the legal department, in consultation with the Chief Executive Officer or Chief Financial Officer, determines it is not practicable or desirable to wait until the next meeting, to the Chair of the Committee (who possesses delegated authority to act between Committee meetings).

The Audit Committee (or Chair, as applicable) will approve only those related person transactions that are in, or not inconsistent with, the best interests of Warnaco and its stockholders. Our written policies also include similar procedures relating to the review and ratification of any related person transaction not previously approved pursuant to the policy, and procedures for identifying related persons.

There were no transactions since the beginning of our last fiscal year, and there are no currently proposed transactions, required to be disclosed under SEC Regulation S-K, Item 404(a).

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DIRECTOR COMPENSATION

Compensation of our independent Directors is structured to provide pay commensurate with the work required of them and to align independent Directors’ goals with those of stockholders. In addition, independent Director compensation is regularly evaluated to ensure consistency with peer company practices, as well as the broader marketplace.

Fiscal 2007 Director Compensation

Upon the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors approved the following Fiscal 2007 compensation arrangements for our independent Directors (other than our Non-Executive Chairman, whose compensation arrangement is described separately below): (i) $50,000 in cash and (ii) Common Stock issued under the 2005 Stock Incentive Plan with a value of $75,000; and (iii) fees of $1,200 per day for attendance at meetings of the Board’s Committees. The Company does not pay fees for attendance at meetings of the Board of Directors.

Upon the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors approved the following Fiscal 2007 compensation arrangement for our Non-Executive Chairman — Charles R. Perrin: (i) $210,000 in cash and (ii) Common Stock issued under the 2005 Stock Incentive Plan with a value of $125,000. The Non-Executive Chairman did not receive fees for attendance at meetings of the Board of Directors or its Committees or Committee Chairman fees.

In addition, in Fiscal 2007, the Chairmen of the Audit and Compensation Committees were paid additional fees of $12,500 and $7,500, respectively. In Fiscal 2007, Mr. Goeltz served as Chairman of the Audit Committee (until May 15, 2007, at which time Mr. Seeley was appointed as Chairman of the Audit Committee), Mr. Bell served as Chairman of the Compensation Committee and Mr. Perrin served as Chairman of the Nominating and Corporate Governance Committee. As noted above, Mr. Perrin does not receive a Committee Chairman fee.

Directors were also reimbursed for reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors and its Committees.

We do not pay any additional remuneration to employees who serve as Directors of Warnaco.

In December 2006, the Nominating and Corporate Governance Committee approved The Warnaco Group, Inc. Non-Employee Directors Deferred Compensation Plan (the ‘‘Directors Deferred Compensation Plan’’) for our independent Directors effective beginning in 2007. The Directors Deferred Compensation Plan provides for an annual elective deferral of cash and/or stock retainer and/or meeting fees into an unfunded individual account, the performance of which is linked to investment options selected by each participant.

Director Compensation Table

The following table discloses compensation earned by or paid to our non-management Directors with respect to Fiscal 2007:


Name Fees
Earned or
Paid in
Cash
($)
Stock
Awards
($) (a)
Total
($)
Charles R. Perrin $ 210,003 $ 118,743 (b)  $ 328,746
Robert A. Bowman $ 70,400 $ 68,749 $ 139,149
David A. Bell $ 73,100 $ 68,749 $ 141,849
Richard Karl Goeltz $ 73,050 (c)  $ 68,749 (d)  $ 141,799
Sheila A. Hopkins $ 70,400 (e)  $ 68,749 (f)  $ 139,149
Nancy A. Reardon $ 69,200 (g)  $ 66,984 (h)  $ 136,184
Donald L. Seeley $ 75,450 $ 68,749 $ 144,199
Cheryl Nido Turpin $ 66,800 (i)  $ 68,749 (j)  $ 135,549

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(a) The amounts shown are the amounts recorded in our financial statements during Fiscal 2007 and calculated in accordance with Financial Accounting Standards Board Statement No. 123(R), based on the assumptions described on pages F-13 and F-14 of our Annual Report on Form 10-K filed with the SEC on February 27, 2008. Such amounts are expensed over twelve months following the annual grant in May.
(b) $72,917 of the value shown above has been deferred until Mr. Perrin ceases to serve as a Director of Warnaco, pursuant to Mr. Perrin’s election under the Directors Deferred Compensation Plan.
(c) $55,025 of the value shown above has been deferred until Mr. Goeltz ceases to serve as a Director of Warnaco, pursuant to Mr. Goeltz’s election under the Directors Deferred Compensation Plan.
(d) $43,750 of the value shown above has been deferred until after Mr. Goeltz ceases to serve as a Director of Warnaco, pursuant to Mr. Goeltz’s election under the Directors Deferred Compensation Plan.
(e) $55,500 of the value shown above was deferred until after Ms. Hopkins ceases to serve as a Director of Warnaco, pursuant to Ms. Hopkins’ election under the Directors Deferred Compensation Plan.
(f) $43,750 of the value shown above has been deferred until after Ms. Hopkins ceases to serve as a Director of Warnaco, pursuant to Ms. Hopkins’ election under the Directors Deferred Compensation Plan.
(g) $55,500 of the value shown above has been deferred until after Ms. Reardon ceases to serve as a Director of Warnaco, pursuant to Ms. Reardon’s election under the Directors Deferred Compensation Plan.
(h) $43,750 of the value shown above has been deferred until after Ms. Reardon ceases to serve as a Director of Warnaco, pursuant to Ms. Reardon’s election under the Directors Deferred Compensation Plan.
(i) $37,500 of the value shown above has been deferred until after Ms. Turpin ceases to serve as a Director of Warnaco, pursuant to Ms. Turpin’s election under the Directors Deferred Compensation Plan.
(j) $43,750 of the value shown above has been deferred until after Ms. Turpin ceases to serve as a Director of Warnaco, pursuant to Ms. Turpin’s election under the Directors Deferred Compensation Plan.

2008 Director Compensation

In January 2008, upon the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors approved fiscal 2008 compensation and reimbursement for the independent Directors, Committee Chairmen and our Non-Executive Chairman on the same terms as provided in Fiscal 2007.

COMPENSATION DISCUSSION AND ANALYSIS

Overview and Business Goals

Warnaco designs, sources, markets, licenses and distributes a broad line of intimate apparel, sportswear and swimwear worldwide. Our products are sold under several highly recognized brand names, including but not limited to Calvin Klein®, Speedo®, Chaps®, Warner’s® and Olga® . We distribute our diversified portfolio of products both domestically and internationally, primarily to wholesale customers through various distribution channels, including major department stores, independent retailers, chain stores, membership clubs, specialty and other stores, mass merchandisers and the internet, including such leading retailers as Macy’s, J.C. Penney, Kohl’s, Sears, Target, and Costco. In addition, we distribute our Calvin Klein branded products through dedicated Calvin Klein retail stores. Beginning in 2008, our products are manufactured solely through third-party manufacturing contractors.

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We strive to become the premier global apparel company by expanding our portfolio of leading brands and leveraging the strengths of our businesses. We seek to achieve long-term growth with superior financial returns that reward our stockholders, associates, and business partners.

We remain committed to exploring new opportunities to meet the needs of consumers and customers and to driving improvement in stockholder returns. To this end, we are working to enhance operational efficiencies throughout our business. By employing one corporate platform, we are able to better support an increasingly global business with diversified product offerings. We have transitioned to an internally-managed sourcing model. In working toward our corporate goals and specific strategic initiatives, we rely on the contributions of all Warnaco employees worldwide. We regard our employees as key drivers of our success, and we are focused on continuing to build a corporate culture that recognizes the collective contributions of all employees, appreciates personal contributions to superior product and performance, promotes the values of diversity and cultural and personal respect in the workplace and encourages and rewards teamwork and collaboration across business units to maximize the Company’s resources.

Compensation Program Objectives and Supporting Principles

Our compensation philosophy is designed to support our business mission, strategic objectives and corporate culture. The compensation program’s core objectives are to:

  Reward employees for superior performance
  Attract and retain world-class talent
  Ensure consistency of compensation with Warnaco’s operating objectives
  Encourage alignment of Warnaco’s and employees’ performance goals with stockholder interests
  Provide competitive compensation, as measured against our predetermined peer group and other comparable companies in the broader marketplace

The following guiding principles support the program’s core objectives:

  Consideration of competitive compensation practices, job scope and responsibility, as well as our need to retain, attract, and reward executive talent
  Emphasis on the importance of team accountability by structuring certain incentive awards primarily based on the results of Warnaco and each of our business units, with adjustments for individual performance in cases of significant under- or over-performance
  Determination of incentive payment awards based on a predetermined quantitative framework as well as rigorous discretionary review of qualitative results
  Application of our compensation philosophy globally, with adjustments to individual compensation packages based on local standards of practice
  Motivation to achieve business goals through executive compensation that is tied, in part, to our overall financial results

The Compensation Committee annually evaluates the compensation philosophy and adjusts it as necessary, from time to time, to ensure that the philosophy continues to be aligned with our corporate objectives and stockholder interests.

Executive Officer Compensation

In compensating Executive Officers, the Compensation Committee considers factors relating to each Executive Officer’s individual position and performance, including experience, relevant skill sets, achievement of financial goals and achievement of strategic and/or tactical objectives. In addition, the Compensation Committee considers factors relating to each Executive Officer’s contribution to his or her business unit (where appropriate) and Warnaco generally, including performance relative to competitive peer companies and the overall marketplace. Furthermore, the Compensation Committee considers other

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quantitative or qualitative measures of performance, as appropriate. The Compensation Committee considers the effect of certain external factors including, but not limited to, the overall economic environment and retention risk. Other factors that the Compensation Committee considers are the Chief Executive Officer’s performance evaluations and related compensation recommendations for each other Executive Officer. The Compensation Committee does not consider the recommendations of our other Executive Officers in determining the compensation of our Chief Executive Officer. Total compensation packages as well as each element of compensation (i.e., base salary, incentive compensation, long-term incentives and benefits and perquisites) are targeted at the median of the peer group companies. Actual compensation and the specific elements thereof vary up or down based on individual performance and certain discretionary factors.

Throughout our fiscal year, the Compensation Committee follows a pre-established process for evaluating compensation levels for Executive Officers. During the course of the year, the Compensation Committee regularly reviews:

  The manner in which our compensation philosophy is implemented
  The composition of the peer group of companies used for benchmarking executive compensation
  Our annual budget and operating plan
  Our Chief Executive Officer’s and other Executive Officers’ ongoing performance against pre-established financial, strategic and operational goals, including each Executive Officer’s performance against the aspects of the operating plan over which the Executive Officer has principal responsibility
  Our Executive Officers’ competitive compensation positioning compared to peer companies and the marketplace
  Our Chief Executive Officer’s and other Executive Officers’ full compensation packages, including all conditional amounts, such as payments upon termination or change in control

The process described above forms the basis for the Compensation Committee’s decisions regarding executive compensation, which are made annually before the end of our first fiscal quarter. Once the executive compensation decisions are made for a given fiscal year, the Compensation Committee begins the process of reviewing and evaluating the factors noted above, which involves an ongoing evaluation based on a pre-established calendar designed to provide the Compensation Committee ample time to thoughtfully consider the factors on which it will base the determination of the following year’s executive compensation.

Competitive Market for Talent

In order to ensure that we meet both our short- and long-term business goals in each of our operating areas, it is critical that we attract a highly-motivated and experienced team of Executive Officers and employees. The apparel industry is extremely competitive in this regard, and it is common for companies to use compensation as the basis to initially attract talent. Our current executive compensation packages reflect, in part, our goal of attracting and retaining superior performers to meet diverse business needs.

Moreover, we have experienced a number of significant structural and corporate changes in recent years including (i) our emergence in 2003 from reorganization proceedings under Chapter 11 of the United States Bankruptcy Code; (ii) our transition from a third-party based sourcing model to an internal sourcing model beginning in 2005; (iii) the continued growth of our Calvin Klein businesses through (a) the 2006 acquisition of the companies that operate the wholesale and retail businesses of Calvin Klein jeanswear and accessories in Europe and Asia and the CK Calvin Klein ‘‘bridge’’ line of sportswear and accessories in Europe (the ‘‘CKJEA Acquisition’’) and (b) the 2008 acquisition of additional Calvin Klein licenses which will allow us to further extend our direct-to-consumer business into Europe, Asia and Latin America; and (iv) the recent dispositions of certain of our businesses including our private label and designer swimwear businesses (except Calvin Klein swimwear), our Mexico swimwear manufacturing facilities, the Lejaby intimate apparel business and the OP swimwear businesses. These corporate and strategic changes, among others, have necessitated the recruitment and employment of a new management

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team to provide us with the leadership and talent to support a global business model. For example, in connection with our 2003 reorganization, we undertook an executive search and recruited both Mr. Gromek and Mr. Rutkowski to serve as Chief Executive Officer and Chief Financial Officer, respectively. Additionally, in 2005 we recruited Mr. Meyer to serve as President — Global Sourcing to manage the transition to an internal sourcing model. Helen McCluskey, our Group President — Intimate Apparel, who assumed responsibility for the Swimwear Group on June 12, 2007, has an expanded job scope in connection with this new role. In certain cases such as these, elements of individual compensation packages are set at the higher end of the competitive range in order to attract and retain the most talented candidates with the specific skills and background needed to manage our business and execute our strategic goals.

When measuring the level of compensation for Executive Officers against the competitive market, the Compensation Committee uses pay data disclosed in proxy data from a predetermined set of peer companies, comprised of wholesale and/or vertically integrated apparel companies, with revenues within an appropriate range of our revenue. In order to ensure that we are evaluating compensation in the most relevant context, the Compensation Committee regularly evaluates the peer group to determine whether refinements to the group based on the established methodology are required. In 2007, with the assistance of Towers Perrin, we revised the criteria used to determine our peer group to provide that a company is included in the peer group if it:

(i)  designs and develops its own product;
(ii)  focuses primarily on women’s wear or men’s wear (and not footwear or children’s wear); and
(iii)  is headquartered within the United States.

With assistance from Towers Perrin and using the above-stated criteria, we have determined that our peer group of companies is:


Abercrombie & Fitch J. Crew Group, Inc.
Aeropostale Jones Apparel Group Inc.
American Eagle Outfitters Kellwood
AnnTaylor Stores Liz Claiborne Inc.
Charming Shoppes New York & Company
Chico’s FAS Oxford Industries
Coach Inc. Pacific Sunwear of California
Columbia Sportswear Perry Ellis International
Dress Barn Phillips-Van Heusen
Eddie Bauer Holdings Inc. Polo Ralph Lauren
Guess? Quicksilver
Hanesbrand The Talbots Inc.
  VF Corp.

The Compensation Committee also relies in part on additional pay practice and competitive data, in particular with regard to individuals who may be recruited from outside the apparel industry, provided by Towers Perrin.

Compensation Elements

We believe that the combination of base salary, short-term incentives, long-term incentives and benefits and perquisites should be weighted towards variable compensation as the amount of total compensation increases. While a competitive level of fixed compensation in the form of base salary serves an important competitive purpose and also provides Executive Officers with a level of certainty that allows for planning of personal financial expenses, it does not provide sufficient incentive to Executive Officers to achieve our goals. Therefore, increasing short-term and long-term incentives as a percentage of the overall package is desirable for higher compensated Executive Officers.

Similarly, the percentage of variable compensation targeted toward long-term incentives increases with level and scope of responsibility to reflect an increased level of job focus on strategic long-term goals.

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Our executive compensation program consists of the following components:

Base Salary

We provide base salary to retain and attract Executive Officers by providing a form of fixed competitive compensation which is consistent with an individual’s role and experience. However, we do not intend that base salary be the primary method of rewarding performance for Executive Officers. Instead, incentive compensation and equity awards, each as described in detail below, are the primary methods for rewarding Executive Officers’ achievement of short- and long-term goals. Base salaries are targeted at the median of our peer group. However, in some cases, base salaries of our Executive Officers may be higher than the competitive median, such as when an Executive Officer is recruited to join Warnaco or when a particular skill set is required in connection with the scope and complexity of a given position. Executives may receive base salary above or below the median of the peer group depending on experience, proficiency, scope of responsibilities, and/or potential future value to Warnaco. We annually review Executive Officers’ base salaries against the peer group and internally to ensure that all Executive Officers receive comparable pay for positions requiring comparable skills and responsibilities.

Incentive Compensation

We provide incentive compensation in order to reward Executive Officers for meeting annual financial and strategic goals that contribute to the achievement of our short- and long-term business objectives.

The foundation of the Compensation Committee’s process to determine annual incentive compensation awards under the Warnaco Incentive Compensation Plan (the ‘‘WICP’’) for Executive Officers and other participating employees is its review of our annual operating plan, which outlines annual financial, operational and strategic goals both at the corporate and business unit level. Following the Board of Directors’ review of the operating plan, the Compensation Committee approves financial, operational and strategic goals that serve as a basis for awards under the WICP and a target incentive compensation award amount which is (i) reflected as a percentage of base salary for Executive Officers and other participating employees, (ii) targeted to the median of our peer group, and (iii) linked to the overall performance of the Company and/or one or more of our operating divisions, on a percentage basis, depending upon the individual’s duties and responsibilities. During the course of the year, the Compensation Committee regularly reviews these goals to monitor our progress against them. After the end of the fiscal year, the compensation committee determines the amounts to be paid as incentive compensation awards. In making this determination, the Compensation Committee considers the following factors:

  Our achievement of pre-determined financial goals
  A discretionary assessment of our overall performance against other aspects of our operating plan
  Our revenue, earnings and earnings per share performance relative to our peer companies
  Our Chief Executive Officer’s assessment of Executive Officer performance
  Other quantitative and qualitative factors

The members of our Compensation Committee have frequent access to and interaction with the Named Executive Officers during the course of the year, which enables them to directly assess the Named Executive Officers’ individual performance against the above-listed factors. Awards under the WICP, which are based on pre-determined financial goals and are not subject to discretionary increase, are intended to be our primary vehicle for grants of incentive compensation. However, although no such awards were made in Fiscal 2007, incentive compensation may also be granted in the form of discretionary bonus awards granted outside the WICP. Awards granted under the WICP are intended to be eligible for deductibility under Section 162(m) of the Internal Revenue Code (the ‘‘Code’’) as discussed below under ‘‘Limitations on Deductibility of Executive Compensation’’.

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Equity Awards

We provide annual equity awards in order to:

  Align Executive Officers’ and stockholders’ interests
  Focus Executive Officers on attainment of long-term business goals to drive stockholder value
  Reward Executive Officers for superior performance
  Provide a retention incentive

Annual equity award values are targeted at the median of our peer group, but actual annual grants may be higher or lower based on the recommendation of our Chief Executive Officer with respect to the performance of other Executive Officers, scope of responsibilities, experience, retention risk, and/or potential future value to Warnaco. The ultimate value of the grant delivered (and our associated competitive positioning) will be determined over time by our stock price.

As part of our 2003 reorganization, the creditors’ committee representing Warnaco and its affiliates approved substantial equity grants to Executive Officers and other employees, reflecting the absence of any outstanding grants from prior years. These grants were approved in order to attract and retain executives during an unstable period, to motivate employees to achieve long-term business goals and to align employees’ and stockholders’ interests. We have provided equity grants in subsequent years at substantially lower levels.

We provide annual equity awards in the form of time-vested restricted stock and time-vested stock options, which, in the case of stock options, are granted with an exercise price equal to the fair market value of the underlying Warnaco stock as of the date of grant. Grants are designed to balance the retention power of restricted stock with the leverage inherent in stock options. Vesting of restricted stock and stock options occurs over a three-year period and each option grant remains exercisable for 10 years after the date of grant. This approach results in a significant amount of restricted shares and options at risk of forfeiture at any time. To this end, restricted stock awards assist with our retention goals. To make restricted stock awards a more effective retention tool, the Compensation Committee determined that vesting of restricted stock granted in 2008 shall be more heavily weighted toward the end of the three-year vesting period. The 10-year term of the options provides Executive Officers an incentive to work towards our long-term goals and to drive initiatives that will enhance stock price performance.

Benefits and Perquisites

We provide certain benefits and perquisites to our Executive Officers to meet competitive norms. These benefits and perquisites typically focus on insurance coverage and automobile services and allowances. In one instance, we provide local housing to Mr. Tworecke, the only Executive Officer with a primary domicile outside of the immediate vicinity of our headquarters. All benefit and perquisite amounts to Named Executive Officers (as defined below) are disclosed below in the Summary Compensation Table. Additionally, Executive Officers are eligible to participate in (i) Warnaco-sponsored retirement plans available to all of our employees; (ii) contractual supplemental award arrangements as described below under ‘‘Post-Termination Compensation’’; and (iii) The Warnaco Group, Inc. Deferred Compensation Plan (the ‘‘Deferred Compensation Plan’’), which provides U.S.-based employees earning $150,000 per year or more with the option to defer all or a portion of base salary and bonus into an unfunded individual account, the performance of which is linked to investment options selected by each participant.

Tax Assistance or ‘‘Gross-Ups’’

As part of the overall compensation package for our Executive Officers, we provide tax assistance or ‘‘gross-ups’’ on the following items: (i) Warnaco-paid premiums for group term life insurance; (ii) automobile services; and (iii) apartment rental and travel expenses. These gross-ups allow the executive to fully realize the intended benefit of a particular compensation element. In Fiscal 2007, the aggregate value of all tax assistance to the Named Executive Officers was $93,640.

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2007 Compensation

In March 2007, the Compensation Committee approved 2007 base salaries, target incentive compensation awards (which were subject to the Compensation Committee’s ongoing review and final determination following the 2007 fiscal year) and equity grants for Executive Officers. These compensation award targets were consistent with the Compensation Committee’s philosophy set forth above and its prior practices. However, where in prior years the performance metric used to determine incentive compensation awards was based on operating income, in 2007 the performance metric was set at the high end of our earnings guidance of $1.79 per diluted share (as disclosed in our February 26, 2007 earnings press release), subject to certain adjustments. This approach allowed for alignment of internal goals with our stated external earnings per share guidance and long-term strategic plan. Rather than using stretch goals, the Compensation Committee set targets that were more attainable, but which continued to provide management with significant challenge, motivation and possibility for major, positive change.

The 2007 base salaries, target incentive compensation awards and equity grants, which include time-vested restricted shares and stock options, for Named Executive Officers were as follows:


Named Executive
Officer
2007 Base
Salary
Basis of Incentive
Compensation
Award
Target Incentive
Compensation
Award
Equity Grant
Joseph R.
Gromek
$ 1,000,000 Earnings per diluted
share of Warnaco
125% of base salary;
maximum 200% of target
75,100 restricted shares
75,100 stock options 10,784 restricted stock units under the terms of a supplemental award
Lawrence R. Rutkowski $ 580,000 Earnings per diluted
share of Warnaco
85% of base salary;
maximum 200% of target
16,100 restricted shares
16,100 stock options 1,366 restricted shares under the terms of a supplemental award
Helen McCluskey $ 725,000 Earnings per diluted
share of Warnaco
85% of base salary;
maximum 200% of target
26,800 restricted shares
26,800 stock options 2,347 restricted shares under the terms of a supplemental award
Frank Tworecke $ 750,000 Earnings per diluted
share of Warnaco
85% of base salary;
maximum 200% of target
20,400 restricted shares
20,400 stock options 2,557 restricted shares under the terms of a supplemental award
Dwight Meyer $ 650,000 Earnings per diluted
share of Warnaco
85% of base salary;
maximum 200% of target
18,000 restricted shares
18,000 stock options 1,956 restricted shares under the terms of a supplemental award

In addition to the items described above, the Compensation Committee reserved the right to pay discretionary bonuses to Executive Officers based on certain qualitative considerations and/or extraordinary performance during the year. However, no discretionary bonus awards were paid for 2007.

In March 2008, the Compensation Committee determined 2007 incentive bonuses for our Executive Officers. Using the pre-determined financial goals discussed above, Executive Officers became eligible for the maximum incentive bonus amount at 200% of target. The Compensation Committee also factored in discretionary elements including (i) the completion of our restructuring initiatives to exit the Swimwear Group’s private label and designer swimwear businesses (except Calvin Klein swimwear), the sale of our

18





Mexican swimwear manufacturing facilities, and the disposal of our OP Swim and Lejaby intimate apparel businesses; (ii) the year-over-year performance of the business; and (iii) the Company’s revenue and earnings results compared to those of our peer companies. All of the factors considered by the Compensation Committee, in the aggregate, resulted in incentive compensation awards between 160% and 180% of base salary (i.e., below the 200% of target level award permissible under the terms of the WICP based on the earnings per diluted share (on an adjusted basis, as described in our February 26, 2008 press release) achieved).

2008 Compensation

In March 2008, the Compensation Committee approved 2008 base salaries, target incentive compensation awards (which will be subject to stockholder approval of the Incentive Compensation Plan at our Annual Meeting and the Compensation Committee’s ongoing review and final determination following the 2008 fiscal year) and equity grants for Executive Officers, which grants are also subject to stockholder approval of the Amended and Restated Plan at our Annual Meeting. These compensation award targets and equity grants were consistent with the Compensation Committee’s philosophy set forth above and its 2007 practices.

The 2008 base salaries, target incentive compensation awards and equity grants, which include time-vested restricted shares and stock options, for Named Executive Officers were as follows:


Named Executive
Officer
2008 Base
Salary
Basis of Incentive
Compensation
Award (a)
Target Incentive
Compensation
Award
Equity Grant (b)
Joseph R.
Gromek
$ 1,100,000 Earnings per diluted
share of Warnaco
125% of base salary;
maximum 200% of target
Restricted shares and
stock options with a value of $3,000,000
12,051 restricted stock
units under the terms of a supplemental award
Lawrence R. Rutkowski $ 600,000 Earnings per diluted
share of Warnaco
85% of base salary;
maximum 200% of target
Restricted shares and
stock options with a value of $632,700
1,896 restricted shares
under the terms of a supplemental award
Helen McCluskey $ 800,000 Earnings per diluted
share of Warnaco
85% of base salary;
maximum 200% of target
Restricted shares and
stock options with a value of $1,000,000
2,433 restricted shares
under the terms of a supplemental award
Frank Tworecke $ 775,000 Earnings per diluted
share of Warnaco
85% of base salary;
maximum 200% of target
Restricted shares and
stock options with a value of $ 817,238
3,175 restricted shares
under the terms of a supplemental award
Dwight Meyer $ 670,000 Earnings per diluted
share of Warnaco
85% of base salary;
maximum 200% of target
Restricted shares and
stock options with a value of $ 706,515
2,043 restricted shares
under the terms of a supplemental award

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(a) In 2008, the performance metric is equal to the mid-point of our earnings guidance, on an as adjusted basis (excluding restructuring expenses), of $2.55 per diluted share from continuing operations (as disclosed in our February 26, 2008 earnings press release).
(b) Grants (other than supplemental awards) are subject to stockholder approval of the Amended and Restated Plan at the Annual Meeting, as further discussed in Proposal No. 2.

Equity Grant Practices and Equity Ownership and Retention Policy

Equity Grant Practices

We generally grant equity to Executive Officers on an annual basis, at the Compensation Committee meeting following the release of the prior year’s annual financial results. Stock options granted at this meeting have an exercise price equal to the closing price of the common shares on the date of the meeting. In addition to annual grants that we customarily award following the release of financial results, interim grants may also be made upon the hire or promotion of new Executive Officers, with stock options having an exercise price equal to the closing price on the date of hire or promotion.

In 2008, the Committee approved in advance certain stock option awards as part of its annual process. Because there was not a sufficient number of shares available in the reserve under the 2005 Stock Incentive Plan as currently in effect, these awards were granted subject to stockholder approval of the Amended and Restated Plan, and priced with exercise prices equal to the closing prices of the common shares on the date of the annual stockholder meeting at which the Amended and Restated 2005 Stock Incentive Plan is approved.

In 2007, we approved an Equity Grant Policy (which codified our existing practices) which, among other things, provides that all equity grants are generally approved in advance by the Compensation Committee. In certain instances relating to hire or promotion awards to employees who are not Executive Officers, grants may be approved by the Chairman of the Compensation Committee and the Chief Executive Officer, or, in limited circumstances and only with respect to individuals earning a base salary below $300,000, the Chief Executive Officer and the Senior Vice President, Human Resources (in each case, pursuant to a delegation of authority from, within guidelines established by, and subject to the oversight of, the Compensation Committee).

Equity Ownership and Retention Policy

Our Directors, Chief Executive Officer and all other Executive Officers are subject to our Equity Ownership and Retention Policy for Directors and Senior Management (the ‘‘Equity Ownership and Retention Policy’’). The Equity Ownership and Retention Policy provides that on and after the fifth anniversary of the later of (i) his or her appointment as an Executive Officer or Non-Executive Director or (ii) May 28, 2003 (i.e., the effective date of the policy), each participant in the Equity Ownership and Retention Policy shall meet the following requirements:

  A target equity ownership level for the Chief Executive Officer of equity having a value equal to five times base salary;
  A target equity ownership level for all other Executive Officers of equity having a value equal to three times base salary; and
  A target equity ownership level for Directors of equity having a value equal to three times annual retainer.

For purposes of calculating ownership levels under the Equity Ownership and Retention Policy, ownership includes the: (i) value of company-granted restricted stock upon which restrictions have lapsed; (ii) value of Common Stock purchased on the open market; (iii) value of shares of Common Stock acquired pursuant to the exercise of stock options; and (iv) share value equivalent of gains on vested unexercised stock options. Compliance with the Equity Ownership and Retention Policy is monitored by our General Counsel, under the supervision and direction of the Compensation Committee. The Compensation Committee will determine, in its sole discretion, the appropriate measures to address any non-compliance with the Policy.

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Although we do not have a policy that specifically prohibits our Executive Officers from hedging the economic risk of stock ownership in the Company, our Statement of Policy Concerning Purchases and Sales of Company Securities and Conflicts of Interest prohibits Directors and employees (including Executive Officers) from, among other things, trading in options of Warnaco stock or effecting ‘‘short sales’’.

‘‘Clawback’’ and certain other Compensation Recovery

Our equity agreements with Executive Officers and other employees include provision for the repayment of incentives to the Company, commonly referred to as clawbacks. The clawback provisions allow us to redeem certain equity previously granted in limited situations. Specifically, in the event of a termination for cause, we may require employees to forfeit all option gains from options exercised in the previous six months and may rescind all restricted stock which vested in the previous six months. In addition, vested but unexercised options will terminate immediately upon a termination for cause.

In addition, the Compensation Committee may, in its sole discretion, recover annual incentive compensation payments in the event of a subsequent occurrence affecting our achievement of financial, operational or strategic goals for an earlier award year. In March 2007, the Compensation Committee reduced the annual incentive compensation awards for the fiscal year ended December 30, 2006 (‘‘Fiscal 2006’’) for Messrs. Gromek, Rutkowski and Tworecke in the amounts of $45,600, $22,440 and $51,744, respectively, based on the restatement of our fiscal 2005 financial results in September 2006.

Limitations on Deductibility of Executive Compensation

Section 162(m) of the Code limits the deductibility of compensation paid to certain of our Executive Officers. To qualify for an exemption to such limitation, compensation in excess of $1.0 million per year generally must constitute performance-based compensation under Section 162(m) of the Code. In order to so qualify, compensation must be paid solely on account of the attainment of one or more pre-established performance goals established by a committee of two or more ‘‘outside directors,’’ pursuant to an arrangement that has been approved by stockholders. Also, in order for an arrangement to give rise to fully deductible performance-based compensation, the terms of the arrangement must preclude the exercise of any discretion in the administration of the plan that would have the effect of increasing compensation paid to the employees covered by Section 162(m) of the Code.

The Compensation Committee is aware of the requirements for full deductibility of executive compensation under Section 162(m) of the Code. However, the Compensation Committee will balance the costs and burdens involved in compliance against the value of the tax benefits to be obtained by the Company and may, in certain instances, pay compensation that is not fully deductible if the Compensation Committee determines that the costs and burdens outweigh the benefits.

Post-Termination and Retirement Compensation

Post-termination benefits are necessary to recruit and retain Executive Officers and to provide them with a level of long-term financial security commensurate with that offered by our peers.

We provide additional retirement benefits to Executive Officers in the form of two programs: supplemental awards and deferred compensation. The supplemental award consists of (i) annual contributions to an unfunded, unsecured individual account, the performance of which is linked to certain investment options chosen by the recipient and (ii) annual grants of restricted shares or restricted stock units. The Deferred Compensation Plan, which is available to all of our U.S.-based employees earning $150,000 per year or more, provides for an annual elective deferral of base salary, and/or incentive bonus into an unfunded individual account, the performance of which is linked to certain investment options chosen by the recipient. These two programs provide for company-funded and employee-funded retirement savings to supplement the company contributions and employee tax deferred contributions to our qualified retirement plans.

To ensure that overall compensation packages are competitive, Executive Officers have certain contractually agreed upon rights to severance payments, payable under certain conditions. Severance is

21





generally payable for termination without cause or resignation for good reason. Severance is not payable for termination for cause. If termination occurs (other than for cause), within one year following a change in control of Warnaco, enhanced severance payments are payable. See below under ‘‘Employment Agreements’’ and ‘‘Potential Payments Upon Termination or Change in Control’’ for additional details on contractual severance payments to our Named Executive Officers.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis that appears above with Warnaco’s management. Based on the Compensation Committee’s review and discussion with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Members of the Compensation Committee

David A. Bell (Chairman)
Robert A. Bowman
Richard Karl Goeltz (as of May 15, 2007)
Sheila A. Hopkins
Charles R. Perrin
Nancy A. Reardon
Cheryl Nido Turpin

COMPENSATION OF EXECUTIVE OFFICERS

Set forth below are tables prescribed by the proxy rules of the SEC which present the compensation with respect to Fiscal 2006 and Fiscal 2007 of (i) Mr. Gromek, our President and Chief Executive Officer; (ii) Mr. Rutkowski, our Chief Financial Officer; and (iii) the three most highly compensated Executive Officers other than the Chief Executive Officer and Chief Financial Officer, namely Messrs. Tworecke and Meyer and Ms. McCluskey (collectively, the ‘‘Named Executive Officers’’). Mr. Meyer was not a Named Executive Officer in Fiscal 2006 and, therefore, no data is provided for him for that period.

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Summary Compensation Table

The following table discloses compensation paid or to be paid to the Named Executive Officers with respect to Fiscal 2006 and Fiscal 2007.


Name and Principal
Position
Year Salary
($)
Bonus
($)
Stock
Awards
($)(c)
Option
Awards
($)(d)
Non-Equity
Incentive Plan
Compensation
($)
Change In
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(g)
All Other
Compensation
($)
Total
($)
Joseph R. Gromek 2007 $ 1,000,000 $ 0 (a)  $ 1,439,465 $ 961,377 $ 2,000,000 (e)  $ 0 $ 342,067 (j)  $ 5,742,909
President and Chief Executive Officer 2006 $ 991,667 $ 954,400 (b)  $ 996,870 $ 1,070,935 $ 0 (f)  $ 0 $ 296,236 $ 4,310,108
Lawrence R. Rutkowski 2007 $ 577,500 $ 0 (a)  $ 359,668 $ 311,046 $ 838,800 (e)  $ 0 $ 62,308 (k)  $ 2,149,322
Executive Vice President and Chief Financial Officer 2006 $ 562,500 $ 361,760 (b)  $ 396,581 $ 489,759 $ 0 (f)  $ 0 $ 58,548 $ 1,869,148
Helen McCluskey 2007 $ 716,667 $ 0 (a)  $ 455,181 $ 479,089 $ 1,100,000 (e)  $ 0 $ 88,465 (l)  $ 2,839,402
Group President — Intimate Apparel 2006 $ 670,833 $ 244,390 (b)  $ 343,652 $ 611,282 $ 355,610 (f)  $ 0 $ 70,087 $ 2,295,854
Frank Tworecke 2007 $ 747,500 $ 0 (a)  $ 384,596 $ 346,994 $ 1,076,228 (e)  $ 0 (h)  $ 280,295 (m)  $ 2,835,613
Group President — Sportswear 2006 $ 729,167 $ 145,177 (b)  $ 338,353 $ 565,223 $ 190,424 (f)  $ 0 (i)  $ 272,553 $ 2,240,897
Dwight Meyer
President — Global Sourcing, Distribution and Logistics
2007 $ 641,667 $ 0 (a)  $ 322,419 $ 256,400 $ 884,000 (e)  $ 0 $ 80,872 (n)  $ 2,185,358
(a) No discretionary bonuses were granted by the Compensation Committee with respect to 2007 compensation.
(b) Represents discretionary bonus award granted by the Compensation Committee. Bonuses were reduced for Messrs. Gromek, Rutkowski and Tworecke by $45,600, $22,440 and $51,744, respectively, to reflect the fiscal 2005 financial restatement, as described above under ‘‘Clawback’’ and certain other Compensation Recovery’’.
(c) Reflects awards of time-vested restricted stock and/or restricted stock units. The amounts shown are the amounts recorded in our financial statements during Fiscal 2006 and Fiscal 2007, respectively, and calculated in accordance with Financial Accounting Standards Board Statement No. 123(R). Awards expensed in Fiscal 2006 and Fiscal 2007, respectively, include grants made since 2003. The assumptions used with respect to Fiscal 2006 are described on pages F-16 and F-17 of our Annual Report on Form 10-K filed with the SEC on March 7, 2007. The assumptions used with respect to Fiscal 2007 are described on pages F-13 and F-14 of our Annual Report on Form 10-K filed with the SEC on February 27, 2008. We do not pay dividends on our Common Stock.
(d) Reflects awards of stock options. The amounts shown are the amounts recorded in our financial statements during Fiscal 2006 and Fiscal 2007, respectively, and calculated in accordance with Financial Accounting Standards Board Statement No. 123(R). Awards expensed in Fiscal 2006 and Fiscal 2007, respectively, include grants made since 2003. The assumptions used are described on pages F-16 and F-17 of our Annual Report on Form 10-K filed with the SEC on March 7, 2007. The assumptions used with respect to Fiscal 2007 are described on pages F-13 and F-14 of our Annual Report on Form 10-K filed with the SEC on February 27, 2008.
(e) Represents incentive compensation paid pursuant to the WICP for 2007. In 2007, the Company exceeded maximum thresholds under the WICP and, therefore, participants were eligible for incentive compensation payments at the maximum levels. As noted above, the Compensation Committee considered certain discretionary factors and reduced incentive compensation payments under the WICP accordingly.

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(f) Represents incentive compensation paid pursuant to the WICP for 2006.
(g) Represents the change in actuarial present value under all of our retirement plans. Earnings on voluntary employee deferrals under non-tax qualified plans and Warnaco contributions to non-tax qualified deferred compensation arrangements — including those related to Notional Accounts (as defined below under ‘‘Employment Agreements’’) — do not exceed market rates of return and thus have been excluded from this column.
(h) There was a 2007 change in pension value of ($239,994) related to Mr. Tworecke’s contractual retirement arrangement as described below in the Pension Benefits Table. This amount is not included in the Summary Compensation Table because it represents a negative change in pension value.
(i) There was a 2006 change in pension value of ($147,365) related to Mr. Tworecke’s contractual retirement arrangement as described below in the Pension Benefits Table. This amount is not included in the Summary Compensation Table because it represents a negative change in pension value.
(j) Includes $291,910 in respect of Warnaco contributions to Notional Account; $18,000 in respect of car allowance; $11,250 in respect of Warnaco contributions to qualified defined contribution plan; $9,994 in respect of tax gross-up related to car services and executive medical expenses and Warnaco paid premiums for certain group term life insurance; $7,223 in respect of car services; $2,350 in respect of Warnaco paid premiums for certain group term life insurance; and $1,340 in respect of executive medical expenses.
(k) Includes $36,970 in respect of Warnaco contributions to Notional Account; $11,250 in respect of Warnaco contributions to qualified defined contribution plan; $11,250 in respect of car allowance; $1,595 in respect of Warnaco paid premiums for certain group term life insurance; and $1,243 in respect of tax gross-up related to Warnaco paid premiums for certain group term life insurance.
(l) Includes $63,542 in respect of Warnaco contributions to Notional Account; $12,000 in respect of car allowance; $11,250 in respect of Warnaco contributions to qualified defined contribution plan; $940 in respect of Warnaco paid premiums for certain group term life insurance; and $733 in respect of tax gross-up related to Warnaco paid premiums for certain group term life insurance.
(m) Includes $91,251 in respect of local apartment rental and travel expenses; $69,210 in respect of Warnaco contributions to Notional Account; $79,624 in respect of tax gross-up related to local apartment rental and travel expenses and Warnaco paid premiums for certain group term life insurance; $18,000 in respect of car allowance; $11,250 in respect of Warnaco contribution to qualified defined contribution plan; and $10,960 in respect of Warnaco paid premiums for certain group term life insurance.
(n) Includes $52,950 in respect of Warnaco contributions to Notional Account; $12,000 in respect of car allowance; $11,250 in respect of Warnaco contributions to qualified defined contribution plan; $2,046 in respect of tax gross-up related to Warnaco paid premiums for certain group term life insurance and executive medical expenses; $1,445 in respect of Warnaco paid premiums for certain group term life insurance; and $1,181 in respect of executive medical expenses.

24





Grants of Plan-Based Awards Table

This table discloses the following plan-based awards to Named Executive Officers in Fiscal 2007: WICP, equity awards under the 2003 Stock Incentive Plan and the 2005 Stock Incentive Plan and equity awards granted under contractual supplemental award arrangements. Each of these awards is described in the Compensation Discussion and Analysis.


Name Grant Date Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
(a)
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
All Other
Option
Awards:
Number
of Securities
Underlying
Options
(#)
Exercise or
Base Price
of Option
Awards
($/Sh)
Grant Date
Fair Value of
Stock and
Option
Awards
Threshold
($)
Target
($)
Maximum
($)
       
Joseph R. Gromek 3/07/07 $ 1,000,000 $ 1,250,000 $ 2,500,000 N/A      
  3/07/07       75,100 (b)  N/A N/A $ 2,032,957
  3/07/07       10,784 (c)  N/A N/A $ 291,923
  3/07/07         75,100(d) $ 27.07 $ 803,570
Lawrence R. Rutkowski 3/07/07 $ 394,400 $ 493,000 $ 986,000 N/A      
  3/07/07       16,100 (b)  N/A N/A $ 435,827
  3/07/07       1,366 (e)  N/A N/A $ 36,978
  3/07/07         16,100(d) $ 27.07 $ 172,270
Helen McCluskey 3/07/07 $ 493,000 $ 616,250 $ 1,232,500 N/A     0
  3/07/07       26,800 (b)  N/A N/A $ 725,476
  3/07/07       2,347 (e)  N/A N/A $ 63,533
  3/07/07         26,800(d) $ 27.07 $ 286,760
Frank Tworecke 3/07/07 $ 510,000 $ 637,500 $ 1,275,000 N/A      
  3/07/07       20,400 (b)  N/A N/A $ 552,228
  3/07/07       2,557 (e)  N/A N/A $ 69,218
  3/07/07         20,400(d) $ 27.07 $ 218,280
Dwight Meyer 3/07/07 $ 442,000 $ 552,500 $ 1,105,000 N/A      
  3/07/07       18,000 (b)  N/A N/A $ 487,260
  3/07/07       1,956 (e)  N/A N/A $ 52,944
  3/07/07         18,000(d) $27.07 $ 192,600
(a) Represents threshold, target and maximum payments under the WICP for Fiscal 2007. No payments will be made for performance below threshold levels. In 2007, under the WICP, the Compensation Committee determined awards based on the high end of our earnings per diluted share guidance (disclosed in our February 26, 2007 earnings press release). This approach allowed for alignment of internal goals with our stated external earnings per share guidance and long-term strategic plan. Actual payments under the WICP for Fiscal 2007 are provided above in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
(b) Represents awards of restricted shares, one-third of which vest on each of the first, second and third anniversary of the grant date.
(c) Represents awards of restricted stock units pursuant to a supplemental award, as described below under ‘‘Employment Agreements’’.
(d) Represents awards of stock options granted at the March 7, 2007 Compensation Committee meeting, with the exercise price determined using the closing share price on the grant date. One-third of the options vest on each of the first, second and third anniversary of the grant date.
(e) Represents awards of restricted shares pursuant to a supplemental award, as described below under ‘‘Employment Agreements’’.

25





Outstanding Equity Awards at Fiscal Year-End Table

The following table discloses outstanding restricted stock awards and stock option grants to the Named Executive Officers as of December 29, 2007. Where applicable, the value of equity-related awards is based on the December 28, 2007 closing price of our Common Stock of $34.50. For additional clarification, the table includes a line indicating total amounts of exercisable and unexercisable options for each Named Executive Officer.


  Option Awards Stock Awards
Name Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
Number
of Shares
or Units
of Stock
That
Have
Not
Vested
(#)
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)
Joseph R. Gromek 600,000 0 n/a $ 9.55 (d)  4/15/2013 153,595(f )  $ 5,299,028 n/a n/a
  85,000 42,500 (a)    $ 21.83 (e)  5/23/2015        
  46,100 92,200 (b)    $ 23.21 (e)  2/28/2016        
  0 75,100 (c)    $ 27.07 (e)  3/07/2017        
Total 731,100 209,800              
Lawrence R. Rutkowski 200,000 0 n/a $ 16.75 (d)  9/11/2013 33,182(j )  $ 1,144,779 n/a n/a
  27,200 13,600 (g)    $ 21.83 (e)  5/23/2015        
  12,200 24,400 (h)    $ 23.21 (e)  2/28/2016        
  0 16,100 (i)    $ 27.07 (e)  3/07/2017        
Total 239,400 54,100              
Helen McCluskey 110,000 0 n/a $ 20.28 (d)  7/15/2014 41,939(m )  $ 1,446,896 n/a n/a
  14,600 29,200 (k)    $ 23.21 (e)  2/28/2016        
  0 26,800 (l)    $ 27.07 (e)  3/07/2017        
Total 124,600 56,000              
Frank Tworecke 210,000 0 n/a $ 18.08 (d)  5/07/2014 38,471(p )  $ 1,327,250 n/a n/a
  15,900 31,800 (n)    $ 23.21 (e)  2/28/2016        
  0 20,400 (o)    $ 27.07 (e)  3/07/2017        
Total 225,900 52,200              
Dwight Meyer 0 25,000 (q)  n/a $ 21.83 (d)  5/23/2015 29,908(s )  $ 1,031,826 n/a n/a
  0 18,000 (r)    $ 27.07 (e)  3/07/2017        
Total 0 43,000              
(a) Represents options granted on May 23, 2005, of which 42,500 options vested on March 2, 2008.
(b) Represents options granted on February 28, 2006, of which 46,100 options vested on February 28, 2008 and 46,100 options will vest on February 28, 2009.
(c) Represents options granted on March 7, 2007, of which 25,034 options vested on March 7, 2008, and 25,033 options will vest on each of March 7, 2009 and March 7, 2010.
(d) Represents closing stock price on the date of hire.
(e) Represents closing stock price on the date of grant.

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(f) Represents (i) restricted shares granted on May 23, 2005, of which 14,167 shares vested on March 2, 2008; (ii) restricted shares granted on February 28, 2006, of which 15,366 shares vested on February 28, 2008 and 15,367 shares will vest on February 28, 2009; (iii) restricted shares granted on March 7, 2007, of which 25,034 shares vested on March 7, 2008 and 25,033 shares will vest on each of March 7, 2009 and March 7, 2010; (iv) restricted stock units granted on May 23, 2005 under a supplemental award agreement, of which 6,060 shares will vest on April 14, 2008 and 6,061 will vest on September 28, 2011; (v) restricted stock units granted on February 28, 2006 under a supplemental award agreement, of which 5,345 shares will vest on each of April 14, 2008 and September 28, 2011; and (vi) restricted stock units granted on March 7, 2007 under a supplemental award agreement, of which 5,392 shares will vest on each of April 14, 2008 and September 28, 2011.
(g) Represents options granted on May 23, 2005, of which 13,600 options vested on March 2, 2008.
(h) Represents options granted on February 28, 2006, of which 12,200 options vested on February 28, 2008 and 12,200 options will vest on February 28, 2009.
(i) Represents options granted on March 7, 2007, of which 5,367 options vested on March 7, 2008; 5,366 options will vest on March 7, 2009 and 5,367 options will vest on March 7, 2010.
(j) Represents (i) restricted shares granted on May 23, 2005, of which 4,533 shares vested March 2, 2008; (ii) restricted shares granted on February 28, 2006, of which 4,066 vested on February 28, 2008 and 4,067 will vest on February 28, 2009; (iii) restricted shares granted on March 7, 2007, of which 5,367 shares vested on March 7, 2008; 5,366 shares will vest on March 7, 2009 and 5,367 shares will vest on March 7, 2010; (iv) restricted shares granted on August 11, 2005 under a supplemental award agreement, of which 1,497 shares will vest on August 11, 2015; (v) restricted shares granted on February 28, 2006 under a supplemental award agreement, of which 1,553 shares will vest on February 28, 2016; and (vi) restricted shares granted on March 7, 2007 under a supplemental award agreement, of which 1,366 shares will vest on March 7, 2017.
(k) Represents options granted on February 28, 2006, of which 14,600 options vested on February 28, 2008 and 14,600 options will vest on February 28, 2009.
(l) Represents options granted on March 7, 2007, of which 8,934 options vested on March 7, 2008 and 8,933 options will vest on each of March 7, 2008 and March 7, 2009.
(m) Represents (i) restricted shares granted on February 28, 2006, of which 4,866 shares vested on February 28, 2008; and 4,867 shares will vest on February 28, 2009; (ii) restricted shares granted on March 7, 2007, of which 8,934 shares vested on March 7, 2008 and 8,933 shares will vest on each of March 7, 2009 and March 7, 2010; (iii) restricted shares granted on August 11, 2005 under a supplemental award agreement, of which 1,120 shares will vest on August 11, 2015; (iv) restricted shares granted on February 28, 2006 under a supplemental award agreement, of which 1,939 shares will vest on February 28, 2016; and (v) restricted shares granted on March 7, 2007 under a supplemental award agreement of which 2,347 shares will vest on March 7, 2017.
(n) Represents options granted on February 28, 2006, of which 15,900 options vested on February 28, 2008 and 15,900 will vest on February 28, 2009.
(o) Represents options granted on March 7, 2007, of which 6,800 options vested on March 7, 2008 and 6,800 options will vest on each of March 7, 2009 and March 7, 2010.
(p) Represents (i) restricted shares granted on February 28, 2006, of which 5,300 shares vested on February 28, 2008 and 5,300 shares will vest on February 28, 2009; (ii) restricted shares granted on March 7, 2007, of which 6,800 shares vested on March 7, 2008 and 6,800 shares will vest on each of March 7, 2009 and March 7, 2010; (iii) restricted shares granted on August 11, 2005 under a supplemental award agreement, of which 776 shares will vest on November 2, 2008 and 777 shares will vest on November 2, 2011; (iv) restricted shares granted on February 28, 2006 under a supplemental award agreement, of which 1,680 shares will vest on November 2, 2008 and 1,681 shares

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will vest on November 2, 2011; and (v) restricted shares granted on March 7, 2007 under a supplemental award agreement, of which 1,278 shares will vest on November 2, 2008 and 1,279 shares will vest on November 2, 2011.
(q) Represents options granted on May 23, 2005, of which 25,000 options will vest on April 11, 2008.
(r) Represents options granted on March 7, 2007, of which 6,000 options vested on March 7, 2008 and 6,000 will vest on each of March 7, 2009 and March 7, 2010.
(s) Represents (i) restricted shares granted on May 23, 2005, of which 8,333 shares will vest on April 11, 2008; (ii) restricted shares granted on March 7, 2007, of which 6,000 vested on March 7, 2008 and 6,000 shares will vest on each of March 7, 2009 and March 7, 2010; (iii) restricted shares granted on February 28, 2006 under a supplemental award agreement, of which 809 will vest on September 18, 2014 and 810 will vest on February 28, 2016; and (iv) restricted shares granted March 7, 2007 under a supplemental award agreement, of which 978 will vest on each of September 18, 2014 and March 7, 2017.

Option Exercises and Stock Vested Table

The following table discloses option exercises for the Named Executive Officers in Fiscal 2007 and vesting of restricted shares and/or restricted stock units for Named Executive Officers in Fiscal 2007. No Named Executive Officer exercised options in Fiscal 2006.


  Option Awards Stock Awards
Name Number of Shares
Acquired on Exercise
(#)
Value Realized on
Exercise (a)
($)
Number of Shares
Acquired on Vesting
(#)
Value Realized on
Vesting (b)
($)
Joseph R. Gromek n/a n/a 29,533 $ 764,886
Lawrence R. Rutkowski n/a n/a 21,100 $ 549,047
Helen McCluskey 100,000 1,864,330 16,534 $ 593,806
Frank Tworecke n/a n/a 16,967 $ 457,878
Dwight Meyer 50,000 852,300 8,333 $ 228,908
(a) The value realized is equal to the number of shares exercised multiplied by the difference between the stock price on the date of the open market sale and the option exercise price.
(b) The value realized is equal to the number of shares which vest multiplied by the stock price at the close of business on the date of vesting.

Pension Benefits Table

We have a defined benefit pension plan covering certain full-time non-union domestic employees and certain domestic employees covered by a collective bargaining agreement, which plan was frozen effective December 31, 2002. None of the Named Executive Officers participate in our frozen defined benefit pension plan.

Pursuant to a letter agreement with Mr. Tworecke, if Mr. Tworecke remains employed with us until April 2009, we will, subject to certain terms and conditions, provide him with a non-qualified pension benefit of $75,000 per year, payable following the termination of his employment with us for any reason other than for Cause (as defined in the Tworecke Agreement) for 15 years or, if earlier, until Mr. Tworecke’s death, provided that the payments due to Mr. Tworecke will be reduced by the value of any Tworecke Supplemental Awards (as defined in the Tworecke Agreement) that have vested as of the date of his termination.

The following table discloses pension benefits and years of credited services under Mr. Tworecke’s Employment Agreement.

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Name (a) Plan Name Number of Years
Credited Service
(#)
Present Value of
Accumulated Benefit
($)
Payments During Last
Fiscal Year
($)
Frank Tworecke Contractual arrangement 3 years, 8 months $ 92,774 $ 0
(a) No disclosure has been made with respect to any of our other Named Executive Officers because none of them is entitled to pension benefits.

Nonqualified Deferred Compensation Table

The following table discloses benefits to Named Executive Officers under our nonqualified deferred compensation arrangements which include the Notional Account portion of certain supplemental awards described below under ‘‘Employment Agreements’’ and the Deferred Compensation Plan.


Name Executive
Contributions in
Last FY (a)
($)
Registrant
Contributions in
Last FY (b)
($)
Aggregate
Earnings in
Last FY (c)
($)
Aggregate
Withdrawals/
Distributions
($)
Aggregate
Balance at
Last FYE (d)
($)
Joseph R. Gromek $ 334,433 $ 291,910 $ 9,321 $ 0 $ 1,529,406
Lawrence R. Rutkowski $ 0 $ 36,970 $ 2,909 $ 0 $ 113,326
Helen McCluskey $ 68,646 $ 63,542 $ 13,358 $ 0 $ 335,915
Frank Tworecke $ 0 $ 69,210 $ 32,025 $ 0 $ 227,488
Dwight Meyer $ 0 $ 52,950 $ 2,877 $ 0 $ 95,224
(a) Represents voluntary contribution by the Named Executive Officer of Base Salary and/or Incentive Compensation to the Deferred Compensation Plan. These amounts are also included in the ‘‘Salary’’, ‘‘Bonus’’ and ‘‘Non-Equity Incentive Plan Compensation’’ columns of the ‘‘Summary Compensation Table’’.
(b) Represents Warnaco contributions to the Notional Account as set forth in the contractual supplemental award agreements. These amounts are also included in the ‘‘All Other Compensation’’ column of the ‘‘Summary Compensation Table’’.
(c) Represents aggregate investment gains and losses on deferred compensation and Notional Account balances based on investment options chosen by each Named Executive Officer.
(d) The aggregate balance for each of Messrs. Gromek, Rutkowski, Tworecke and Meyer and Ms. McCluskey includes the following amounts (consisting of contributions by Warnaco to each of their respective Notional Accounts) which were also reported in the ‘‘All Other Compensation’’ column of the ‘‘Summary Compensation Table’’ in our Fiscal 2006 and Fiscal 2007 proxy statements: (i) Mr. Gromek — $540,035; (ii) Mr. Rutkowski — $73,010; (iii) Mr. Tworecke — $147,210; (iv) Ms. McCluskey — $108,542; and (v) Mr. Meyer — $52,950.

EMPLOYMENT AGREEMENTS

The summaries below disclose the terms and conditions of our employment contracts with our Named Executive Officers. Our other Executive Officers and certain other key personnel have employment contracts that contain provisions similar to those of the Named Executive Officers described below (other than Mr. Gromek).

Disclosure regarding amounts to be paid to Named Executive Officers in the event of termination or a change in control under these contracts is provided below under ‘‘Potential Payments Upon Termination or Change in Control’’.

Joseph R. Gromek.    Mr. Gromek is party to an amended and restated employment agreement with Warnaco dated December 19, 2007 (the ‘‘Gromek Agreement’’), which amended and restated his December 22, 2004 employment agreement. The Gromek Agreement has an initial term of three years and two months, continuing until March 1, 2011, with automatic one-year renewals thereafter unless

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notice of termination is given at least 180 days prior to the date on which the term would otherwise expire. Under the Gromek Agreement, Mr. Gromek is entitled to an annual base salary of $1 million (which may be reviewed annually by the Board of Directors for increase), with a target bonus opportunity for 2007 equal to 125% of his base salary (with a potential maximum award of 200% of target). Mr. Gromek is also generally entitled to employee benefits and perquisites that are no less favorable than those provided to other similarly-situated executives. For each fiscal year during the term, Mr. Gromek continues to have an annual target equity opportunity with a target value on the grant date equal to no less than 100% of his total cash compensation (base salary and target bonus opportunity) and is awarded annually a supplemental award equal to 30% of his prior year’s total cash compensation (base salary and earned annual bonus) (the ‘‘Gromek Supplemental Award’’). The Gromek Supplemental Award is granted in the form of restricted stock units (‘‘Career Units’’); provided, that Mr. Gromek may elect to receive up to 50% of the value of the Gromek Supplemental Award in the form of a credit to a bookkeeping account on Warnaco’s books (‘‘Notional Account’’). Amounts credited to Mr. Gromek’s Notional Account are credited (or debited) with the deemed positive (or negative) return based on the investment alternatives under Warnaco’s 401(k) plan selected by Mr. Gromek in advance to apply to such account. Any Gromek Supplemental Award granted prior to April 14, 2008 will vest 50% on April 14, 2008 and 50% on Mr. Gromek’s 65th birthday, while any Gromek Supplemental Award granted on or after April 14, 2008 will vest entirely on Mr. Gromek’s 65th birthday. The Career Units will also vest upon a Change in Control of the Company (as defined in the Gromek Agreement) (provided such event satisfies the definition of a change in control event under Section 409A of the Code) if restricted stock granted under Warnaco’s Stock Incentive Plan also vests upon such event and any balance in the Notional Account will vest and be paid out upon such Change in Control. In all cases, the vested portion of the Gromek Supplemental Award is generally payable in January of the year following the year in which Mr. Gromek’s employment terminates, subject to a six-month delay if so required to comply with Section 409A of the Code.

If Mr. Gromek’s employment terminates due to his death or disability, he (or his legal representatives or estate, as the case may be) will be entitled to (i) a pro-rata bonus for the year of termination based on Warnaco’s performance for such year, (ii) a pro-rata Gromek Supplemental Award for the year of termination, in each case payable within 60 days following Mr. Gromek’s termination or death, and (iii) immediate vesting of all outstanding equity awards and any previously granted Gromek Supplemental Award, with any vested stock options remaining exercisable for the shorter of two years following the date of termination or death or the remainder of the option term. If Mr. Gromek’s employment is terminated without Cause or by Mr. Gromek for Good Reason (each term as defined in the Gromek Agreement) or if we provide notice of non-renewal of the Gromek Agreement and terminate Mr. Gromek’s employment at the end of the term in circumstances that would constitute a termination without Cause, in all cases not in connection with a Change in Control (as defined in the Gromek Agreement), Mr. Gromek will be entitled to (i) payment of 1.5 times base salary and target bonus opportunity, payable within 60 days of the termination date, (ii) a pro-rata bonus for the year of termination based on Warnaco’s performance for such year, (iii) immediate vesting of 50% of any unvested restricted stock award, (iv) two years (or the remainder of the option’s term, if shorter) to exercise vested options, (v) immediate vesting of 50% of any previously granted Career Units which would have vested on the next scheduled vesting date if Mr. Gromek had remained employed through such date; (vi) immediate vesting of 25% of any balance in the Notional Account if termination is prior to April 14, 2008 and, if termination is after such date but prior to Mr. Gromek’s 65th birthday, immediate vesting of a pro-rata portion of the unvested balance in the Notional Account based on employment during the period from April 14, 2008 through Mr. Gromek’s 65th birthday and (vii) continued participation in welfare benefit plans until the earlier of 18 months from the date of his termination and the date he obtains equivalent coverage from subsequent employment.

If Mr. Gromek’s employment is terminated by us without Cause or by Mr. Gromek for Good Reason upon or within one year following a Change in Control, his employment is terminated by us without Cause within 90 days prior to a Change in Control (and such termination is in connection with, or in anticipation of, such Change in Control) or if we provide notice of non-renewal of the Gromek Agreement and terminate Mr. Gromek’s employment at the end of the term in circumstances that would constitute a termination without Cause and the term expires within the one year period following a Change in Control, Mr. Gromek will be entitled to (i) three times the sum of base salary plus target bonus, payable within

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60 days of the termination date, (ii) a pro-rata bonus for the year of termination based on our performance for such year, (iii) an amount equal to 90% of the total cash compensation used to determine the value of the Gromek Supplemental Award granted immediately prior to the date of termination, payable within 60 days of the termination date, (iv) immediate vesting of all outstanding equity awards (other than Career Units) and any previously granted Gromek Supplemental Award, with vested stock options remaining exercisable for the remainder of their original terms and (v) continued participation in welfare benefit plans until the earlier of 36 months from the date of his termination and the date he obtains equivalent coverage from subsequent employment.

If Mr. Gromek’s employment terminates upon Retirement (as defined in the Gromek Agreement), Mr. Gromek will be entitled to (i) continued vesting of any stock options granted on or after December 19, 2007 as if he had remained an employee, with any such stock options which are exercisable as of his retirement date remaining exercisable until the first anniversary of such date (or the expiration of the option’s term, if shorter) and any such stock options vesting after his retirement date remaining exercisable until the first anniversary of such vesting date (or the expiration of the option’s term, if shorter) and (ii) if on his retirement less than a majority of the members of the Board of Directors are members who were members on December 19, 2007, the balance in the Notional Account shall immediately vest upon the retirement date and be paid out in January of the following year (in accordance with Section 409A of the Code) and any restricted stock or any Supplemental Award in the form of restricted stock units granted to Mr. Gromek after December 19, 2007 will immediately vest as of the retirement date, provided that Mr. Gromek will be restricted from selling such shares (other than to pay taxes associated therewith) until the date the stock or units would have normally vested.

If Mr. Gromek’s employment is terminated by us for Cause or if he voluntarily resigns (other than upon Retirement or for Good Reason), he will be entitled to any vested Gromek Supplemental Award, payable as described above, and Mr. Gromek will forfeit any unvested restricted stock, stock options, restricted stock units and other equity awards as well as any account balance in the Notional Account that remains unvested.

Under the Gromek Agreement, Mr. Gromek is bound by a perpetual confidentiality covenant and is prohibited from competing with us both during employment and for 12 months following termination of employment (24 months in the case of Retirement). Additionally, for 18 months following termination of employment (24 months in the case of Retirement) he is prohibited from soliciting or hiring employees of Warnaco and our affiliates and from soliciting our customers.

If any payments, benefits or entitlements provided to Mr. Gromek under the Gromek Agreement or otherwise are subject to federal excise tax as excess parachute payments and Mr. Gromek would be in a better position on an after-tax basis, such payments, benefits or entitlements will be reduced such that no federal excise tax will apply.

Lawrence R. Rutkowski.    Mr. Rutkowski is party to an employment agreement with Warnaco dated September 11, 2003, which was amended effective August 11, 2005 (as amended, the ‘‘Rutkowski Agreement’’). The Rutkowski Agreement has an initial two-year term commencing September 15, 2003, with automatic one-year renewals thereafter unless notice of termination is given at least 120 days prior to the date on which the term would otherwise expire. Under the Rutkowski Agreement, Mr. Rutkowski receives a base salary of $550,000 (which may be reviewed annually for increase by the Compensation Committee in consultation with Mr. Gromek) and employee benefits and perquisites consistent with those provided to our other senior executives. In addition, the Rutkowski Agreement provides for a target bonus opportunity equal to 70% of Mr. Rutkowski’s base salary (pro-rated for fiscal 2003). The Rutkowski Agreement also provided for a grant of 50,000 shares of restricted stock (the ‘‘Initial Rutkowski RS Grant’’) and an option to purchase 200,000 shares of our Common Stock (the ‘‘Initial Rutkowski Option’’), each of which was made under the 2003 Stock Incentive Plan and subject to the terms and conditions set forth in the agreements evidencing the awards. Each of these equity awards is fully vested as of the date of this Proxy Statement. Beginning with fiscal 2005, Mr. Rutkowski receives an annual supplemental award equal to a percentage of his prior year’s total cash compensation (base salary and earned annual bonus) (‘‘Rutkowski Supplemental Award’’) based on his age, ranging from 6% at under age 40 to 13% at age 60 or older. The Rutkowski Supplemental Award is granted 50% in restricted stock

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