SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission only (as permitted by
Rule 14a-6(e)(2))
FOOTSTAR, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fees paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
FOOTSTAR [LOGO]
933 MACARTHUR BOULEVARD, MAHWAH, N.J. 07430
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Footstar,
Inc., a Delaware corporation (the "Corporation"), will be held at the offices of
the Corporation's headquarters at 933 MacArthur Boulevard, Mahwah, New Jersey
07430, on Monday, May 3, 1999, at 10:00 a.m. local time, for the following
purposes:
1. To elect three directors to hold office for a term expiring in
2002;
2. To ratify the appointment of KPMG LLP as the Corporation's auditors
for 1999; and
3. To consider and transact such other business as may properly come
before the Annual Meeting or any postponement or adjournment.
Stockholders of record at the close of business on March 19, 1999 are
entitled to notice of and to vote at the Annual Meeting or at any postponement
or adjournment.
By order of the Board of Directors,
FOOTSTAR, INC.
MAUREEN RICHARDS
Vice President, General Counsel
and Corporate Secretary
Dated: April 2, 1999
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YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING,
PLEASE COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY, WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING.
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<PAGE>
FOOTSTAR [LOGO]
-------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 3, 1999
-------------------
PROXY STATEMENT
This Proxy Statement is being furnished to the stockholders of Footstar,
Inc., a Delaware corporation ("Footstar" or the "Corporation"), in connection
with the solicitation of proxies by the Board of Directors of the Corporation
(the "Board") for use at the Annual Meeting of Stockholders of the Corporation
(the "Meeting") to be held on Monday, May 3, 1999, at 10:00 a.m. local time, at
the offices of the Corporation, 933 MacArthur Boulevard, Mahwah, New Jersey
07430, and at any postponement or adjournment of the Meeting. At the Meeting,
stockholders are being asked to consider and vote on (1) the election of three
directors, each to hold office for a term expiring in 2002 and (2) the
ratification of the appointment of KPMG LLP as the Corporation's auditors for
1999.
This Proxy Statement, Notice of Meeting and accompanying proxy card are
first being mailed to stockholders on or about April 2, 1999.
GENERAL
The holders of shares of Common Stock of record at the close of business on
March 19, 1999 are entitled to vote such shares at the Meeting. The presence in
person or by proxy of the holders of a majority of the shares outstanding on the
record date is necessary to constitute a quorum for the transaction of business.
Each stockholder is entitled to one vote, in person or by proxy, for each
share of Common Stock held as of the record date on each matter to be voted on
at the Meeting. Directors are elected by the affirmative vote of a plurality of
the votes cast at the Meeting. The proposal to ratify the appointment of the
auditors requires the affirmative vote of a majority of shares present in person
or represented by proxy at the Meeting and entitled to vote.
Proxies for shares marked "abstain" on a matter will be considered to be
represented at the Meeting, but not voted for such purposes. Broker non-votes,
that is, shares registered in the names of brokers or other "street name"
nominees for which proxies are voted on some but not all matters and as to which
non-voted matters the broker does not have discretionary authority, will be
considered to be represented at the Meeting but will be considered to be voted
only as to those matters actually voted on. Therefore, abstentions and broker
non-votes will be disregarded and will have no effect on the election of
directors, but will have the same effect as a vote against the ratification of
the appointment of auditors.
Shares of Common Stock represented by a properly executed proxy received in
time for the Meeting will be voted as specified in the proxy, unless the proxy
has previously been revoked. UNLESS CONTRARY INSTRUCTIONS ARE GIVEN IN THE
PROXY, IT WILL BE VOTED BY THE PERSONS DESIGNATED IN THE PROXY FOR THE ELECTION
OF THE BOARD'S NOMINEES FOR DIRECTOR, FOR RATIFICATION OF THE APPOINTMENT OF
KPMG LLP AS THE CORPORATION'S AUDITORS AND, WITH RESPECT TO ANY OTHER MATTERS
PROPERLY SUBMITTED TO STOCKHOLDERS AT THE MEETING, AS RECOMMENDED BY THE BOARD
OR, IF NO SUCH RECOMMENDATION IS GIVEN, IN THEIR DISCRETION.
A proxy may be revoked by filing with the Secretary of the Corporation,
prior to the voting of such proxy, either a written revocation of that proxy or
a new proxy bearing a later date. A proxy may also be revoked by voting in
person at the Meeting. The presence of a stockholder at the Meeting will not in
itself constitute revocation of a proxy.
<PAGE>
This proxy solicitation is being made on behalf of the Corporation and the
expense of preparing, printing and mailing this Proxy Statement and proxy is
being paid by the Corporation. The Corporation has retained Morrow & Co. to
assist it in the solicitation of proxies for a fee of $4,500, plus out-of-pocket
expenses. In addition, solicitations may be made in person or by mail,
telephone, telegraph or telefax, by the directors, officers and regularly
engaged employees of the Corporation, without extra compensation. The
Corporation will reimburse banks, brokers and other custodians, nominees and
fiduciaries for their costs in sending proxy materials to the beneficial owners
of Common Stock.
PROPOSAL 1
ELECTION OF DIRECTORS
General. The Board of Directors currently consists of seven members and is
divided into three classes of approximately equal size. Directors are generally
elected for three-year terms on a staggered term basis, so that each year the
term of office of one class will expire and the terms of office of the other
classes will extend for additional periods of one and two years, respectively.
This year's nominees each have been nominated to serve for a three-year term
expiring in the year 2002. The Corporation has inquired of each nominee and
determined that he or she will serve if elected.
The names of the nominees for election, the directors whose terms extend
beyond the Meeting and certain information about each of them are set forth in
the tables below. The Board of Directors recommends that stockholders vote "FOR"
the Corporation's nominees for director.
TABLE I--NOMINEES FOR ELECTION AT THE 1999 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS SINCE EXPIRING
------------ ------------------------------------------- ----- --------
<S> <C> <C> <C>
George S. Day, 61 .................. Geoffrey G. Boisi Professor of Marketing 1996 2002
and Director of Huntsman Center for
Global Competition and Innovation at
The Wharton School, University of
Pennsylvania; consultant to
corporations including AT&T, Eastman
Kodak, General Electric, Northern
Telecom and IBM Corporation.
Bettye Martin Musham, 66 ........... President and Chief Executive Officer of 1996 2002
Gear Holdings, Inc., which she co-founded
in 1977. Ms. Martin Musham also serves as a
director of Brunswick Corporation, Consolidated
Communications, Inc., Peace Links and the
World Service Council of the YMCA of
the USA.
Kenneth S. Olshan, 66 .............. Chairman and Chief Executive Officer of Wells 1996 2002
Rich Greene BDDP until October 1995.
Mr. Olshan also serves as a director of
Saatchi & Saatchi PLC, Charming Shoppes
and WellGen, Inc. and as a Trustee of the
Central Park Conservancy.
</TABLE>
2
<PAGE>
TABLE II--DIRECTORS WHOSE TERMS CONTINUE BEYOND THIS ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS SINCE EXPIRING
------------ ------------------------------------------- -------- --------
<S> <C> <C> <C>
Robert A. Davies, III, 63 .......... President, Chief Executive Officer and 1998 2001
Director of Church & Dwight Co., Inc.
since October 1995. From January 1995
to September 1995, he was the President
of the Arm & Hammer division of Church
& Dwight. During the period 1985 to 1990,
he served as President and Chief Executive
Officer and a member of the Board of Directors
of California Home Brands, Inc.
Stanley P. Goldstein, 64 ........... Chairman of CVS Corporation and prior 1996 2000
thereto, also Chief Executive Officer
of CVS and Melville Corporation (CVS's
predecessor). Mr. Goldstein also serves as
a director of Bell Atlantic Corporation and
Linens 'n Things, Inc.
Terry R. Lautenbach, 60 ............ A retired Senior Vice President of IBM 1996 2001
Corporation. Mr. Lautenbach is also a
director of CVS Corporation, Air Products
Corp. and Varian Associates, Inc.
J.M. Robinson, 53 .................. Chairman, Chief Executive Officer and 1996 2000
President of the Corporation. Prior to October
1996, Mr. Robinson was President and Chief
Executive Officer of the Meldisco Division of
Melville Corporation.
</TABLE>
Committees of the Board of Directors. The Board of Directors held eight
meetings during 1998. The Board has an Audit Committee, a Corporate Governance
Committee and a Compensation Committee. The directors serving on all of these
committees are independent, non-employee directors.
The Audit Committee held three meetings during 1998. The main purpose of
the Audit Committee is the oversight of the financial reporting process, the
system of internal controls and the audit process. The duties of the Audit
Committee, among others, are (i) to consider the adequacy of the accounting and
internal control systems, (ii) to oversee the audit function, (iii) to review
annual consolidated financial statements, (iv) to institute, direct and
supervise special investigations, (v) to recommend to the Board the appointment
of independent auditors, (vi) to review non-audit services provided by the
independent auditors, (vii) to review the Corporation's Code of Conduct,
including its conflict of interest policy and compliance procedures and (viii)
to report to the Board from time to time and make such recommendations and
observations as it sees fit.
The members of the Audit Committee are:
George S. Day, Chair
Robert A. Davies, III
Kenneth S. Olshan
3
<PAGE>
The Corporate Governance Committee held two meetings during 1998. The
duties of the Corporate Governance Committee are (i) to nominate, in concert
with the Chairman of the Board of Directors, any new director for election to
the Board, (ii) to report annually to the Board an assessment of the Board's
performance, (iii) to review with the Board the criteria it believes appropriate
for Board membership and (iv) to recommend to the Board guidelines on corporate
governance. The Corporation's Bylaws establish an advance written notice
procedure for stockholders seeking to nominate candidates for election as
directors at any annual meeting of stockholders. See "Stockholder Proposals and
Nominations for the 2000 Annual Meeting" on page 15 of this Proxy Statement.
The members of the Corporate Governance Committee are:
Kenneth S. Olshan, Chair
Stanley P. Goldstein
Bettye Martin Musham
The Compensation Committee held five meetings during 1998. The duties of
the Compensation Committee are (i) to establish policies governing, and to
implement, administer and interpret all aspects of, compensation of all officers
and other key executives of the Corporation and its subsidiaries whose base
salaries are $150,000 or greater, and other employees designated by the
Committee as key executives of the Corporation and its subsidiaries, (ii) to
have the same responsibilities with respect to compensation of non-employee
directors, except that determinations and actions which are non-ministerial are
subject to approval of the full Board and (iii) in connection with the
foregoing, to establish and administer the Corporation's compensation and
benefit policies, plans and programs other than health and welfare plans
generally available to employees.
The members of the Compensation Committee are:
Bettye Martin Musham, Chair
George S. Day
Terry R. Lautenbach
4
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as to beneficial
ownership of the outstanding Common Stock of the Corporation as of March 15,
1999, by each person known to the Corporation to own beneficially more than 5%
of the outstanding Common Stock, by each director and nominee for director of
the Corporation, by each of the named executive officers listed in the Summary
Compensation Table (the "Named Officers"), and by all directors and executive
officers of the Corporation as a group. To the Corporation's knowledge, except
as otherwise indicated, all persons listed below have sole voting and investment
power with respect to such shares.
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) PERCENT OF CLASS
------------------------ ------------------------ -----------------
<S> <C> <C>
Directors and Named Officers:
J.M. Robinson ................................................... 248,954(2) 1.06%
Carlos E. Alberini .............................................. 89,080(2) *
Maureen Richards ................................................ 34,066(2) *
Robert D. Ravener, Jr. .......................................... 14,371(2) *
Robert A. Davies, III ........................................... 4,087(3) *
George S. Day ................................................... 8,877(3) *
Stanley P. Goldstein ............................................ 55,441(3)(4) *
Terry R. Lautenbach ............................................. 13,142(3) *
Bettye Martin Musham ............................................ 7,147(3) *
Kenneth S. Olshan ............................................... 9,008(3) *
All executive officers and directors as a group (10 persons) .... 484,173(2)(3)(4) 2.06%
5% Stockholders:
ESL Partners, L.P.,
ESL Limited and
ESL Institutional Partners, L.P.
(collectively, "ESL")(5)
One Lafayette Place
Greenwich, CT 06830 ............................................ 4,387,300 18.65%
FMR Corp.,
Edward C. Johnson, 3d and
Abigail P. Johnson(6)
82 Devonshire Street
Boston, MA 02109 ............................................... 3,567,651 15.17%
David J. Greene and Company, LLC(7)
599 Lexington Avenue
New York, NY 10022 ............................................. 2,742,875 11.66%
Sasco Capital, Inc.(8)
10 Sasco Hill Road
Fairfield, CT 06430 ............................................ 2,167,073 9.21%
</TABLE>
- ----------------
* Less than one percent (1%); percentages shown are based on 23,522,750
shares outstanding as of January 2, 1999.
(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared investment
power. It also includes shares owned (i) by a spouse, minor children or by
relatives sharing the same home, (ii) by entities owned or controlled by
the named person, and (iii) by other persons if the named person has the
right to acquire such shares within 60 days by the exercise of any right or
option.
(2) Of the shares shown, 78,762; 35,020; 18,766 and 10,911 shares for Mr.
Robinson, Mr. Alberini, Ms. Richards and Mr. Ravener, respectively,
constitute restricted or deferred shares under the Corporation's Deferred
5
<PAGE>
Compensation Plan. A majority of such shares are subject to forfeiture if
the executive does not continue to be employed by the Corporation for five
years from the date of grant. The amounts shown also include the following
stock options which are currently exercisable or exercisable within 60
days: Mr. Robinson, 116,999; Mr. Alberini, 46,999; Ms. Richards, 14,000;
and Mr. Ravener, 3,000.
(3) Of the shares shown, 2,687; 4,077; 5,207; 6,325; 3,347 and 7,708 shares for
Messrs. Davies, Day, Goldstein, Lautenbach, Ms. Musham and Mr. Olshan,
respectively, constitute deferred shares. Each director has the right to
receive these shares either at the later of ceasing to be a director or
attaining age 65, or if voluntarily deferred, until the time elected.
(4) Of the shares shown, 5,758 shares are owned by Mr. Goldstein's wife. Mr.
Goldstein disclaims beneficial ownership of such shares.
(5) ESL filed a statement with the Securities and Exchange Commission ("SEC")
dated November 12, 1998 on Schedule 13G under the Securities Exchange Act
of 1934 ("Exchange Act"), disclosing beneficial ownership of 4,073,800
shares of Common Stock of the Corporation. Of such Common Stock, ESL
Partners, L.P. showed sole voting and sole investment power of 3,422,619
shares, ESL Limited showed sole voting and sole investment power of 549,057
shares and ESL Institutional Partners, L.P. showed sole voting and sole
investment power of 102,124 shares. ESL filed a Form 4 with the SEC on
January 8, 1999 showing aggregate ownership of 4,387,300 shares of Common
Stock.
(6) FMR Corp., Edward C. Johnson, 3d and Abigail P. Johnson (collectively,
"FMR") filed a statement with the SEC dated February 1, 1999 on Schedule
13G under the Exchange Act, disclosing beneficial ownership of 3,567,651
shares of Common Stock of the Corporation. Of such Common Stock, FMR has
sole voting power with respect to 139,372 shares.
(7) David J. Greene and Company, LLC filed a statement with the SEC dated
February 8, 1999 on Schedule 13G under the Exchange Act, disclosing
beneficial ownership of 2,742,875 shares of Common Stock of the
Corporation. Of such Common Stock, it showed sole voting and sole
investment power of 116,853 shares.
(8) Sasco Capital, Inc. filed a statement with the SEC dated February 8, 1999
on Schedule 13G under the Exchange Act, disclosing beneficial ownership of
2,167,073 shares of Common Stock of the Corporation and sole voting power
with respect to 1,302,679 of such shares.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table summarizes all compensation
awarded to, earned by or paid to the four named key-policy making officers of
the Corporation (the "Named Officers") for all services rendered to the
Corporation and its subsidiaries during the Corporation's fiscal years ended
January 2, 1999 and January 3, 1998 and the partial fiscal year ended December
28, 1996, the year Footstar began operation as an independent, publicly-held
company.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS
------------------------------------ ----------------------
OTHER RESTRICTED/ NUMBER OF
ANNUAL DEFERRED SECURITIES ALL OTHER
FISCAL COMPENSATION STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(2) AWARDS($) OPTIONS/SARS ($)(6)
- --------------------------- ------ ---------- --------- ------------ ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
J.M. Robinson, Chairman of 1998 688,500 248,500 67,375 129,500(3) 45,000 5,800
the Board, Chief Executive 1997 637,500 250,250 457,025 644,588(4) 150,000 5,550
Officer and President 1996 600,000(1) 480,000 -- 720,000(5) 120,000 5,400
Carlos E. Alberini, Senior 1998 355,500 102,240 29,700 55,260(3) 15,000 12,550
Vice President and Chief 1997 335,000 104,720 167,820 231,500(4) 50,000 12,300
Financial Officer 1996 160,000(1) 102,400 -- 371,200(5) 60,000 9,475
Maureen Richards, Vice 1998 222,500 55,912 15,469 29,447(3) 10,000 5,800
President, General Counsel 1997 210,500 57,673 61,185 81,853(4) -- 5,550
and Corporate Secretary 1996 100,000(1) 56,000 -- 228,000(5) 30,000 5,400
Robert D. Ravener, Jr., 1998 170,000(1) 77,000 15,125 109,375(3) 15,000 --
Vice President and
Chief Personnel Officer
</TABLE>
- ------------
(1) The 1996 figures represent payments for the period beginning on January 1,
1996 and ending on December 31, 1996 for Mr. Robinson, and for the period
beginning on July 1, 1996 and ending on December 31, 1996 for Mr. Alberini
and Ms. Richards. The 1998 figure for Mr. Ravener represents payment for
his employment which commenced in March 1998.
(2) The amounts in this column include the one-half portion of the Career
Equity Program (the Corporation's long term bonus plan described below in
the "Compensation Committee Report on Executive Compensation") award
payable in cash for the cycles ended January 2, 1999 and January 3, 1998,
respectively, as follows: Mr. Robinson, $67,375 and $207,025; Mr. Alberini,
$29,700 and $92,820; Ms. Richards, $15,469 and $48,685; and Mr. Ravener
$15,125 for the cycle ending January 2, 1999 only. The amounts disclosed
for 1997 also consist of the cash portion of a special bonus paid in April,
1997 as follows: Mr. Robinson, $250,000; Mr. Alberini, $75,000; and Ms.
Richards, $12,500.
(3) These amounts include the following "match" by the Corporation in deferred
shares (based on the fair market value of the Corporation's Common Stock of
$25.16 on March 2, 1999, the deferral date) of the voluntary deferral of
50% of the 1998 annual incentive bonuses payable to each of the Named
Officers: Mr. Robinson 2,470 shares valued at $62,125; Mr. Alberini 1,016
shares valued at $25,560; Ms. Richards 556 shares valued at $13,978; and
Mr. Ravener 765 shares valued at $19,250. The amounts shown also include
the following deferred shares (based on the fair market value of the
Corporation's Common Stock of $25.16 on March 2, 1999, the deferral date)
awarded as part of the Corporation's Career Equity Plan, 50% of which vests
in five years and the remaining 50% of which vests at retirement: Mr.
Robinson 2,678 shares valued at $67,375; Mr. Alberini 1,181 shares valued
at $29,700; Ms. Richards 615 shares valued at $15,469; and Mr. Ravener 601
shares valued at $15,125. The amount shown for Mr. Ravener also includes
the value of shares of the Corporation's Common Stock underlying restricted
stock units of 2,051 shares granted in 1998 valued at $75,000 on the date
of grant and with a value as of January 2, 1999 of $50,577 ($24.66 per
share). These restricted stock units vest in five years from the date of
grant contingent upon continued employment with the Corporation.
(4) These amounts include the following "match" by the Corporation in deferred
shares (based on the fair market value of the Corporation's Common Stock of
$29.47 on February 24, 1998, the deferral date) of the voluntary deferral
of 50% of the 1997 annual incentive bonuses payable to each of the Named
Officers: Mr. Robinson 2,123 shares valued at $62,562; Mr. Alberini 888
shares valued at $26,180; and Ms. Richards 489 shares valued at $14,418.
The amounts shown also include the following deferred shares (based on the
fair market value of the Corporation's Common Stock of $29.47 on February
24, 1998, the deferral date) awarded as part of the Corporation's Career
Equity Plan, 50% of which vests in five years and the remaining 50% of
which vests at retirement: Mr. Robinson 7,025 shares valued at $207,025;
Mr. Alberini 3,150 shares valued at $92,820; and Ms.
7
<PAGE>
Richards 1,652 shares valued at $48,685. The amounts shown also include the
following mandatory deferral and "match" of special bonuses paid in 1997
(based on the fair market value of $28.94 of the Corporation's Common Stock
on April 1, 1997, the deferral date): Mr. Robinson 12,960 shares valued at
$375,000; Mr. Alberini 3,888 shares valued at $112,500; and Ms. Richards
648 shares valued at $18,750. At January 2, 1999, the value of all of the
deferred shares (based on $24.66 per share) disclosed in this footnote was
$545,183 for Mr. Robinson; $195,455 for Mr. Alberini; and $68,776 for Ms.
Richards.
(5) The amounts shown represent the value of shares of the Corporation's Common
Stock underlying restricted stock units and deferred shares granted in
1996, in each case as valued as of the date of grant. On October 12, 1996,
Mr. Robinson, Mr. Alberini, and Ms. Richards were granted 28,409; 15,152,
and 9,470 shares of restricted stock units, respectively, with grant date
values of $600,000, $320,000, and $200,000, respectively. At January 2,
1999, each such officer continued to hold such restricted stock units which
had year end market values (based on $24.66 per share) of $700,566,
$373,648, and $233,530, respectively. These shares of restricted stock
units are entitled to any dividends paid on the Corporation's Common Stock
(the Corporation does not currently pay dividends). The amounts shown also
include the following "match" by the Corporation in deferred shares (based
on the fair market value of the Corporation's Common Stock on March 3,
1997, the deferral date) of 1996 annual incentive bonuses deferred by each
of the Named Officers: Mr. Robinson 4,637 shares valued at $120,000; Mr.
Alberini 1,978 shares valued at $51,200; and Ms. Richards 1,082 shares
valued at $28,000. At January 2, 1999, the value of these deferred shares
(based on $24.66 per share) were $114,348 for Mr. Robinson, $48,777 for Mr.
Alberini, and $26,682 for Ms. Richards. These deferred shares generally
vest in five (5) years from the date of grant contingent upon continued
employment with the Corporation.
(6) The amounts disclosed include the Corporation's contributions under the
Corporation's 401(k) Profit Sharing Plan as well as $6,750, $6,750 and
$3,375 for Mr. Alberini in 1998, 1997 and 1996, respectively, representing
interest (calculated at 6.75% annually) which might otherwise have had to
been paid on a non-interest bearing loan granted by the Corporation. See
"Certain Transactions with Related Parties."
Option Grants in Last Fiscal Year. The table below shows information
regarding grants of stock options made to the Named Officers during fiscal 1998.
The amounts shown for each of the Named Officers as potential realizable values
are based on arbitrarily assumed annualized rates of stock price appreciation of
five percent and ten percent over the full ten year term of the options, which
would result in Common Stock prices of approximately $51.72 and $82.35,
respectively, for Mr. Robinson, Mr. Alberini and Ms. Richards and approximately
$59.55 and $87.16, respectively, for Mr. Ravener. These potential realizable
values are based solely on arbitrarily assumed rates of appreciation specified
in applicable SEC regulations. The Corporation is not aware of any model or
formula which will determine with reasonable accuracy a present value for stock
options. The actual before-tax amount, if any, realized upon the exercise of
stock options will depend upon the excess, if any, of the market price of the
Corporation's Common Stock over the exercise price per share of Common Stock of
the stock option at the time the stock option is exercised. There is no
assurance that the hypothetical present values of the stock options reflected in
this table will be realized.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM ($)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#)(1) FISCAL YEAR ($/SH) DATE 5% 10%
---- -------------- ------------ ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
J.M. Robinson ................ 45,000 14.7 31.75 03/10/08 898,533 2,277,059
Carlos E. Alberini ........... 15,000 4.9 31.75 03/10/08 299,511 759,020
Maureen Richards ............. 10,000 3.3 31.75 03/10/08 199,674 506,013
Robert D. Ravener, Jr. ....... 15,000 4.9 36.56 03/27/08 344,886 874,008
</TABLE>
- -------------
(1) Each option granted vests at the rate of 20% per year over a five year
period beginning on the first anniversary of the date of grant.
8
<PAGE>
Option Exercises and Year-End Option Holdings. The following table shows
information regarding option exercises during 1998 as well as fiscal 1998
year-end option holdings for each of the Named Officers. No stock appreciation
rights have been granted by the Corporation or are outstanding.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF SECURITIES IN-THE-MONEY
ACQUIRED VALUE UNDERLYING UNEXERCISED OPTIONS/SARS
ON EXERCISE REALIZED OPTIONS/SARS AT FY-END (#) AT FY-END($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- --------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
J.M. Robinson ..................... -- -- 78,000/237,000 169,742/254,613
Carlos E. Alberini ................ -- -- 34,000/91,000 84,871/127,306
Maureen Richards .................. -- -- 12,000/28,000 42,435/63,653
Robert D. Ravener, Jr. ............ -- -- 0/15,000 --
</TABLE>
Supplemental Retirement Plan. The following table indicates the approximate
amount of annual retirement income that would be payable under the Supplemental
Retirement Plan for Select Senior Management of Footstar (the "Supplemental
Retirement Plan"), including to each of the Named Officers, based on various
assumptions as to compensation and years of service, assuming benefits are
computed under a straight life annuity formula and retirement at age 60. The
annual benefit will be reduced by the annualized value of any retirement or
deferred profit sharing benefit paid or payable under any other plan maintained
by the Corporation (excluding benefits attributable to contributions made by
participants), and without offset for social security or other benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS BASED ON
YEARS OF SERVICE AND COMPENSATION
----------------------------------------------------
10 YEARS 15 YEARS 20 YEARS 25 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 200,000 .................. $ 40,000 $ 60,000 $ 80,000 $100,000
400,000 .................. 80,000 120,000 160,000 200,000
800,000 .................. 160,000 240,000 320,000 400,000
1,000,000 .................. 200,000 300,000 400,000 500,000
1,200,000 .................. 240,000 360,000 480,000 600,000
</TABLE>
The Supplemental Retirement Plan is designed to provide competitive
retirement benefits to selected executives with at least ten years of credited
service. The normal retirement benefit commencing at age 60 is equal to 2% of
the highest average three consecutive years' base salary plus target annual
bonus for the executive in the preceding ten years, multiplied by the number of
years of credited service with the Corporation (to a maximum of 25 years). In
the case of retirement on or after age 55 but before age 60, a reduced benefit
is provided. Except in the event of a change in control (as defined in the
Supplemental Retirement Plan) or as provided in the Employment Agreements
referred to below, no benefits are payable to an eligible executive who
terminates employment prior to age 55 or prior to completing ten years of
credited service. Benefits are generally payable in annual installments for the
life of the executive, but other forms of payment of equivalent actuarial value
may be elected.
Compensation which may potentially be used to determine benefits for each
of the Named Officers covered by the Supplemental Retirement Plan for 1998
equals the respective amounts shown in the Salary column of the Summary
Compensation Table, plus the target amount of the Named Officer's annual
incentive bonus. The amounts shown in the 1998 Bonus column of the Summary
Compensation Table for the Named Officers are 29% lower than those target
amounts, except for Mr. Ravener, who was paid 100% of his 1998 annual incentive
bonus pursuant to his employment agreement. As of January 2, 1999, the
approximate credited years of service under the Supplemental Retirement Plan for
Messrs. Robinson, Alberini, Ravener and Ms. Richards were 17, 2, 1 and 2
year(s), respectively. If a covered executive is terminated without cause or
voluntarily terminates his or her employment for good reason (as each such term
is defined in the Supplemental Retirement Plan) contemporaneously with or within
two years following a change in control, benefits will be payable in a lump sum
equal to the actuarial equivalent of the annual
9
<PAGE>
retirement benefit which would have been payable under the Supplemental
Retirement Plan had the executive remained employed by the Corporation until the
date when he or she would attain 10 years of service (or such later date as the
executive would attain age 60), multiplied by a fraction in which the numerator
is the executive's actual years of credited service (but not more than 10) and
the denominator is 10 (thus reducing the benefit proportionately to the extent
the executive's actual years of credited service are less than 10).
Employment Agreements. The Corporation has entered into employment
agreements (each referred to in this section individually as an "Employment
Agreement" and collectively as the "Employment Agreements") with Messrs.
Robinson, Alberini, Ravener and Ms. Richards relating to their employment with
the Corporation. The following briefly summarizes the principal terms of the
Employment Agreements.
The period of employment under the Employment Agreements extends initially
for three years (five years in the case of Mr. Robinson), subject to automatic
one-year extensions at the end of the initial term unless either party gives
notice of non-renewal at least 180 days prior to expiration of the term. The
Employment Agreements generally provide for payment of an annual base salary
that will be reviewed each year, but may not be decreased from the amount in
effect in the previous year. The Employment Agreements also generally provide
for (i) continued payment of base salary, incentive compensation, and other
benefits for 36 months in the case of Mr. Robinson and for 18 months in the case
of the other Named Officers (or 24 months in the case of a change in control) in
the event the executive's employment is terminated other than a termination by
the Corporation for "cause" or voluntarily by the executive without "good
reason"; (ii) non-competition for a period of 18 months (36 months for Mr.
Robinson) subsequent to termination for any reason other than by the executive
for "good reason" or by the Corporation without "cause" following a "change in
control"; (iii) other restrictive covenants including non-disclosure,
non-solicitation of employees and availability for litigation support; (iv)
participation in certain benefit plans and programs (including pension benefits,
disability and life insurance, and medical benefits); (v) annual and long-term
incentive compensation opportunities; and (vi) deferred compensation
arrangements. Mr. Robinson's Employment Agreement provides that his target
annual incentive and long-term incentive opportunities may not be less than 50%
and 35%, respectively, of his annual base salary.
A "change in control" is defined as (i) any person acquiring beneficial
ownership of 25% or more of the outstanding Common Stock or the combined voting
power of the Corporation's outstanding voting securities; (ii) the
reorganization, merger, consolidation, complete liquidation or dissolution of
the Corporation, sale or disposition of all or substantially all of the assets
of the Corporation, or similar corporate transaction; or (iii) members of the
Board serving at the effective date of the 1996 Incentive Compensation Plan,
together with members first elected thereafter (excluding certain directors
elected as a result of an actual or threatened election contest) with the
approval of a majority of the original members and new members previously so
approved, ceasing to constitute a majority of the Board. "Good reason" is
defined generally as demotion, reduction in compensation, unapproved relocation
in the case of Mr. Robinson (or other Named Officers following a change in
control), material breach of the Employment Agreement by the Corporation, or, in
the case of Mr. Robinson, failure to extend the term of the Employment Agreement
to his 60th birthday. "Cause" is defined generally as a breach of the
restrictive covenants referred to above, certain felony convictions, or willful
acts or gross negligence that are materially damaging to the Corporation.
If payments under the Employment Agreements following a change in control
are subject to the "golden parachute" excise tax, the Corporation will make an
additional "gross-up" payment sufficient to ensure that the net after-tax amount
retained by the executive (taking into account all taxes, including those on the
gross-up payment) is the same as would have been the case had such excise tax
not applied.
The Employment Agreements obligate the Corporation to indemnify the
executives to the fullest extent permitted by law, including the advancement of
expenses, and provide that the Corporation generally will reimburse an executive
for expenses incurred in seeking enforcement of the Employment Agreement, unless
the executive's assertion of rights was in bad faith or frivolous. The
Employment Agreement with Mr. Robinson relates to his employment as Chairman and
Chief Executive Officer and his agreement to serve as a director. The Employment
Agreements with Mr. Alberini, Ms. Richards and Mr. Ravener relate to their
employment as senior executives of the Corporation.
Director Compensation. Directors who are not receiving compensation as
officers or employees of the Corporation or of any affiliate ("non-employee
directors") are paid an annual retainer of $10,000 and a $1,000 fee for
10
<PAGE>
attendance at each meeting of the Board or any committee of the Board and a
$2,500 fee for serving as a committee chair. Non-employee directors are also
eligible to participate in the 1996 Non-Employee Director Stock Plan (the "1996
Director Plan"). Under the 1996 Director Plan, each non-employee director
receives a one-time non-qualified option to purchase 2,000 shares of Common
Stock at an exercise price equal to the fair market value of Common Stock on the
grant date. Each option becomes exercisable in 20% increments on each of the
first five anniversaries of the date of grant, and thereafter remains
exercisable until the option expires.
The 1996 Director Plan also provides for automatic grants of 2,000 stock
units ("Stock Units") to each person who, at the close of business on the date
of each annual meeting of the Corporation's stockholders, is a non-employee
director. Each Stock Unit represents the right to receive one share of Common
Stock at the end of a specified period. Fifty percent of such Stock Units vest
six months and a day after the grant date, provided the non-employee director
has not ceased to serve as a director for any reason other than death,
disability, or retirement at or after attaining age 65, except that payment of
such Stock Units will be accelerated in the event of a change in control. The
remaining fifty percent of such Stock Units vest upon the later of ceasing to be
a director or attaining age 65, provided that vesting of such Stock Units shall
be accelerated in the event of death, disability, or a change in control.
The 1996 Director Plan permits a non-employee director to elect to defer
receipt of all or a portion of the shares otherwise deliverable in connection
with Stock Units. The 1996 Director Plan also permits a non-employee director to
elect to defer receipt of fees otherwise payable in cash, with such deferred
amounts deemed invested in Stock Units.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised of three
independent, non-employee directors. This Committee is responsible for
establishing, implementing, administering and monitoring the Corporation's
compensation strategy, policies and plans.
Compensation Strategy. The Corporation's compensation strategy is based
upon the premise that all of its associates are important to its success, with
senior executives setting the direction of the business and having overall
responsibility for its results. Because the Corporation operates in a highly
competitive and difficult economic environment for retailers, the Committee has
adopted compensation policies and plans intended to
o attract and retain high caliber individuals,
o provide compensation opportunities that are fair and competitive with
comparable organizations, as well as effective and tax efficient,
o reward the creativity of its key executives in maximizing business
opportunities, and
o provide incentives to motivate key management based on achievement of
both short and long term business objectives, strategic progress and
the creation of stockholder value.
The Corporation's executive compensation program was designed to be aligned
with the Corporation's competitive marketplace and short and long term
performance objectives. The compensation practices at 13 specialty retailers
with revenues ranging from approximately $600 million to $7.4 billion were
identified as comparable corporations with which the Corporation competes for
talent. The companies that comprise this group are substantially different than
the companies included in the S&P Retail Stores Composite referred to in the
performance graph of this Proxy Statement. In the view of the Compensation
Committee, the group of 13 specialty retailers that were selected is more
representative for compensation review purposes.
The Committee has implemented a compensation program that is comprised of
annual and longer term financial incentives. Base salaries are positioned at
approximately the 50th to 60th percentile and remuneration at approximately the
65th percentile of the peer group at target but with the opportunity for
increased yields for superior results. Actual total remuneration levels may
range well below or above target in any one year and over a period of years
based on performance against annual and long term business objectives and total
return to stockholders. The primary components of the compensation program are
base salary, annual incentive awards, a career equity program and stock options.
11
<PAGE>
Base Salaries. The Committee reviews base salaries annually and considers
increases based on corporate profitability, competitive salaries, position
responsibility levels and individual qualifications and performance. In making
pay decisions for key management including the Named Officers (other than the
Chief Executive Officer), the Committee also takes into consideration the views
and recommendations of the Chief Executive Officer. As a result of its review
and strategy, the Compensation Committee increased the base salary of the Chief
Executive Officer in 1998 to $700,000. The salaries of the other Named Officers
were increased to reflect alignment to approximately the 50th percentile of the
peer group, as described above.
Annual Incentive Awards. The Corporation's annual incentive program
provides for cash bonuses based on performance relative to predetermined
objectives approved by the Committee each year. As an added retention feature
and to further align the interests of management and stockholders, executive
officers and other members of management may elect to defer receipt of up to 50%
of their cash bonuses for five years in deferred shares of Common Stock and
receive partial matching grants which vest upon completion of five years of
continued employment, subject to accelerated vesting in certain events (the
"STEP Program").
Incentive awards at target performance range from 50% of base salary for
the Chief Executive Officer and scale down depending on position
responsibilities. Larger awards, up to a maximum of 200% of target awards, are
permitted if performance exceeds predetermined objectives. Smaller or no awards
are made if performance falls below such objectives.
Bonuses payable to the Chief Executive Officer and other Named Officers
were based on the Corporation's earnings before Federal income taxes. The Chief
Executive Officer's annual incentive award for 1998 was 71% of his normal award
due to the Corporation's performance in meeting profit objectives.
Career Equity Program. As part of its long term incentive compensation
arrangements, the Committee has implemented a Career Equity Program for
executive officers and other key members of management. Three-year cycles begin
each year with two shortened start-up cycles which began on October 1, 1996 with
periods ending on December 31, 1997 and December 31, 1998, respectively. The
value of such awards are determined by pre-established goals set by the
Committee based on the Corporation's cumulative net income and return on average
equity during each cycle. The target and maximum awards for the Chief Executive
Officer have been set at 35% and 70% of base salary, respectively. Award
payments are made in equal combinations of current cash and deferred shares of
the Corporation's Common Stock, with one-half of the deferred shares vesting
after five years of continued employment and one-half vesting at retirement,
subject to accelerated vesting in certain events.
For the shortened cycle ending December 31, 1998, the Career Equity Award
for the Named Officers (including the Chief Executive Officer) and other
participants was 55% of the targeted award due to the Corporation's performance
against the pre-established goals.
Stock Options. Stock options are granted to the Corporation's executive
officers and over 100 other key employees to further align their interests with
those of the stockholders. Stock options are granted at an exercise price equal
to the fair market value of the Corporation's Common Stock and are exercisable
in five equal annual installments based on continued employment during the
five-year period following the grant date, subject to accelerated vesting in
certain events. These awards provide value to participants only when and to the
extent that the fair market value of the Corporation's Common Stock appreciates
over the fair market value on the date of grant. In 1998, the Chief Executive
Officer was granted 41,851 non-qualified stock options and 3,149 incentive stock
options on the terms outlined above.
Stock Ownership Guidelines. In order to encourage management to have an
ownership stake in the Corporation, the Compensation Committee adopted voluntary
stock ownership guidelines for the Chief Executive Officer and other key
managers including the Named Officers. The Committee believes that executive
stock ownership provides a meaningful link to stockholder interests and
signifies a personal commitment from the management team to the Corporation's
long term success. These guidelines provide that over a five year period the
Chief Executive Officer should attain an ownership interest in the Corporation's
Common Stock of five times base salary and that the other key managers
(including the Named Officers) attain an ownership interest of one to three
times base salary.
12
<PAGE>
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code generally disallows a tax deduction to public companies
for compensation over $1 million paid to the Chief Executive Officer and the
other four most highly compensated individuals who are executive officers as of
the end of the year. Qualifying performance-based compensation is not subject to
the deduction limit if certain requirements are met. It is the Committee's
policy to preserve corporate tax deductions by qualifying compensation paid over
$1 million to named executive officers. However, the Committee has retained the
flexibility to approve compensation arrangements that it deems to be in the best
interests of the Corporation and its stockholders that may not always qualify
for full tax deductibility. All compensation paid by the Corporation in 1998
qualified for full tax deductibility and it is anticipated that all compensation
to be paid in 1999 will also be fully deductible.
Compensation Committee:
Bettye Martin Musham, Chair
George S. Day
Terry R. Lautenbach
13
<PAGE>
Performance Graph. The following graph provides an indicator of cumulative
total stockholder returns, assuming reinvestment of any dividends for the
Corporation as compared with the Standard & Poor's 500 Stock Index and the
Standard & Poor's Retail Stores Composite Index. The graph covers the period of
time beginning on October 14, 1996, the date when Footstar's Common Stock was
first traded on the New York Stock Exchange, through January 2, 1999.
[GRAPHICAL REPRESENTATION GOES HERE]
10/14/96 12/28/96 1/3/98 1/2/99
-------- -------- ------ ------
Footstar, Inc. .................. 100.0 124.4 131.1 121.9
S&P 500 ......................... 100.0 108.0 141.7 181.4
S&P Retail Stores Composite ..... 100.0 97.3 136.6 221.1
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Board of Directors is comprised of three outside
independent directors, Bettye Martin Musham (Chair), George S. Day and Terry R.
Lautenbach.
Certain Transactions With Related Parties. The Corporation is a payee with
respect to $100,000 of a relocation loan received by Mr. Alberini. The loan
bears no interest and is to be forgiven if Mr. Alberini remains employed by the
Corporation through May 2000 or is terminated by the Corporation prior to such
time.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Exchange Act requires the Corporation's officers and directors to file with
the SEC reports regarding ownership of the Corporation's Common Stock, and to
furnish the Corporation with copies of all such filings. Based on a review of
these filings, the Corporation believes that all filings were timely made other
than a Form 4 which was inadvertently filed late on behalf of Mr. Davies in
connection with the purchase of 1,000 shares of the Corporation's Common Stock.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP as the Corporation's
independent auditors to make an examination of the accounts of the Corporation
for the 1999 fiscal year. KPMG LLP served as independent auditors for the
Corporation for the 1998 fiscal year and prior. Representatives of KPMG LLP are
expected to be present at the Meeting and will be available to respond to
appropriate questions and to make such statements as they may desire.
14
<PAGE>
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2000 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Corporation's
2000 Annual Meeting of Stockholders, must be received by the Secretary of the
Corporation, for inclusion in the Corporation's proxy statement, notice of
meeting and proxy relating thereto not later than December 6, 1999.
The Corporation's Bylaws establish an advance written notice procedure for
stockholders seeking to nominate candidates for election as directors at any
annual meeting of stockholders, or to bring business before an annual meeting of
stockholders of the Corporation. The Bylaws provide that only persons who are
nominated by, or at the direction of, the Board, or by a stockholder who has
given timely written notice to the Secretary of the Corporation prior to the
meeting at which directors are to be elected, will be eligible for election as
directors of the Corporation. The Bylaws also provide that at any meeting of
stockholders only such business may be conducted as has been brought before the
meeting by, or at the direction of, the Board or, in the case of an annual
meeting of stockholders, by a stockholder who has given timely written notice to
the Secretary of the Corporation of such shareholder's intention to bring such
business before such meeting. Under the Bylaws, for any such shareholder notice
to be timely, such notice must be received by the Corporation in writing not
less than 60 days nor more than 90 days prior to the meeting, or in the event
that less than 70 days' notice or prior public disclosure of the date of the
annual meeting is given or made to stockholders, to be timely, notice by the
stockholder must be received not later than the close of business on the 10th
day following the day on which such notice of the date of the meeting or such
public disclosure was made. Under the Bylaws, a stockholder's notice must also
contain certain information specified in the Bylaws.
ANNUAL REPORT
A COPY OF THE CORPORATION'S ANNUAL REPORT WAS MAILED TO ALL STOCKHOLDERS OF
RECORD ON OR ABOUT APRIL 2, 1999. STOCKHOLDERS, UPON WRITTEN REQUEST TO THE
INVESTOR RELATIONS DEPARTMENT OF THE CORPORATION, 933 MACARTHUR BOULEVARD,
MAHWAH, NEW JERSEY 07430, MAY RECEIVE, WITHOUT CHARGE, A COPY OF THE
CORPORATION'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES, REQUIRED TO BE FILED WITH THE SEC FOR THE 1998
FISCAL YEAR.
OTHER MATTERS
As of the date of this Proxy Statement, the Corporation knows of no
business that will be presented for consideration at the Meeting other than the
items referred to above. PROXIES IN THE ENCLOSED FORM WILL BE VOTED IN RESPECT
OF ANY OTHER BUSINESS THAT IS PROPERLY BROUGHT BEFORE THE MEETING AS RECOMMENDED
BY THE BOARD OF DIRECTORS OR, IF NO SUCH RECOMMENDATION IS GIVEN, IN THE
DISCRETION OF THE PROXY HOLDERS.
15
<PAGE>
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FOOTSTAR
PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS
MONDAY, MAY 3, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J.M. ROBINSON and TERRY R. LAUTENBACH and
each of them, as Proxy, each with full power of substitution, to vote all of the
stock of Footstar, Inc. ("Footstar" or the "Corporation") standing in the
undersigned's name at the Annual Meeting of Stockholders of Footstar, to be held
at the Corporation's headquarters, 933 MacArthur Boulevard, Mahwah, New Jersey
on Monday, May 3, 1999 at 10:00 a.m., and at any adjournments or postponements
thereof. The undersigned hereby revokes any and all proxies heretofore given
with respect to such meeting.
This proxy will be voted as specified hereon. If no choice is specified,
the proxy will be voted FOR the nominees for Director listed hereon, and FOR
ratification of the appointment of KPMG LLP as the Corporation's auditors (the
"Ratification"), all as described in the accompanying Proxy Statement.
(CONTINUED ON REVERSE SIDE)
- -------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
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<PAGE>
- --------------------------------------------------------------------------------
PLEASE MARK [X]
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR
LISTED BELOW AND FOR THE RATIFICATION.
1. ELECTION OF DIRECTORS FOR A TERM TO EXPIRE IN 2002
FOR all the nominees WITHHOLD
listed below AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed below
[ ] [ ]
GEORGE S. DAY, BETTYE MARTIN MUSHAM,
KENNETH S. OLSHAN
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
----------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF KPMG LLP, AS DESCRIBED IN THE PROXY
STATEMENT
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, upon other matters as may properly come before the
Annual Meeting.
Dated:______________________, 1999
__________________________________
Signature
__________________________________
Signature
(Please sign exactly as your name
appears. When signing as executor,
administrator, guardian, trustee or
attorney, please give your title as
such. If signer is a corporation,
please sign the full corporate name
and then an authorized officer
should sign his or her name and
print his or her name and title
below the signature. If the shares
are held in joint names, all joint
owners should sign.)
PLEASE COMPLETE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
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