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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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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
933 MACARTHUR BOULEVARD, MAHWAH, NEW JERSEY 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 at 933 MacArthur Boulevard, Mahwah, New Jersey 07430, on
Tuesday, May 2, 2000, at 10:00 a.m. local time (the "Meeting"), for the
following purposes:
1. To elect three directors to hold office for terms expiring in
2003;
2. To ratify the appointment of KPMG LLP as the Corporation's
independent auditors for fiscal 2000; and
3. To consider and transact such other business as may properly come
before the Meeting or any postponement or adjournment.
Stockholders of record at the close of business on March 27, 2000 are
entitled to notice of and to vote at the 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: March 31, 2000
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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
----------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 2, 2000
----------
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 Tuesday, May 2, 2000, at 10:00 a.m. local time, at
the offices of the Corporation at 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 2003 and (2) the
ratification of the appointment of KPMG LLP as the Corporation's independent
auditors for fiscal 2000.
This Proxy Statement, Notice of Meeting and accompanying proxy card are
first being mailed to stockholders on or about March 31, 2000.
GENERAL
The holders of shares of Common Stock of record at the close of business on
March 27, 2000 are entitled to vote such shares at the Meeting. On February 29,
2000, there were 19,926,304 shares of Common Stock outstanding. The presence in
person or by proxy of the holders of one-third 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 the votes cast at the
Meeting.
Proxies for shares marked "abstain" on a matter will be considered to be
represented at the Meeting, but will be considered to be voted only as to those
matters actually voted on. 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 or 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 INDEPENDENT AUDITORS FOR FISCAL 2000 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, telefax or e-mail 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 currently consists of seven members and is divided into
three classes of approximately equal size. On March 16, 2000, the Board adopted
a resolution enlarging the Board to provide for eight members, effective at the
Meeting. 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 2003. The Corporation has
inquired of each nominee and determined that he will serve if elected. In the
event that any of the nominees should become unavailable for election, the
persons named in the accompanying proxy intend to vote for such other person, if
any, as the Board may designate as a substitute nominee.
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. All nominees are current directors of the Corporation, except
Neele E. Stearns, Jr., who is a new nominee for director. The Board recommends
that stockholders vote "FOR" the Corporation's nominees for director.
TABLE I--NOMINEES FOR ELECTION AT THE 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS SINCE EXPIRING
- ------------ ------------------------------------------- ------ --------
<S> <C> <C> <C>
Stanley P. Goldstein, 65 ............ Former Chairman and Chief Executive Officer 1996 2003
of CVS Corporation and Melville Corporation
(CVS's predecessor). Mr. Goldstein serves as a
director of CVS Corporation, Bell Atlantic
Corporation and Linens 'n Things, Inc.
J.M. Robinson, 54 ................... Chairman of the Board, Chief Executive 1996 2003
Officer and President of the Corporation. Prior
to October 1996, Mr. Robinson was President
and Chief Executive Officer of the Meldisco
Division of Melville Corporation. Mr. Robinson
is a member of the Board of Visitors of the
University of Memphis, the Board of Trustees
of Connecticut Public Broadcasting, Inc. and the
Advisory Council of the National Wildlife
Federation.
Neele E. Stearns, Jr., 64 ........... Chairman of the Board of Directors of Wallace -- 2003
Computer Services, Inc. and a director of
Maytag Corporation. Mr. Stearns is the former
President and Chief Executive Officer of
CC Industries, Inc., a holding company with
operations in manufacturing and real estate
development and management.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
TABLE II--DIRECTORS WHOSE TERMS CONTINUE BEYOND THIS ANNUAL MEETING
DIRECTOR TERM
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS SINCE EXPIRING
- ------------ ------------------------------------------- ------ --------
<S> <C> <C> <C>
Robert A. Davies, III, 64 ........... 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
and Dwight.
George S. Day, 62 ................... Geoffrey G. Boisi Professor of Marketing and 1996 2002
Director of Huntsman Center for Global
Competition and Innovation at The Wharton
School, University of Pennsylvania. Mr. Day
also serves as a consultant to corporations
including AT&T, Eastman Kodak, General
Electric, Northern Telecom and IBM
Corporation.
Terry R. Lautenbach, 61 ............. Former Senior Vice President of IBM 1996 2001
Corporation. Mr. Lautenbach is also a
director of CVS Corporation, Air Products Corp.
and Varian Medical Systems, Inc.
Bettye Martin Musham, 67 ............ Chairwoman 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, Wallace
Computer Services, Inc., Peace Links and the
World Service Council of the YMCA of the USA.
Kenneth S. Olshan, 67 ............... Chief Executive Officer and director of 1996 2002
FirstTeacherTLC.com since February 2000.
Prior to October 1995, Chairman and Chief
Executive Officer of Wells Rich Greene BDDP.
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>
Committees of the Board of Directors. The Board held eight meetings during
1999. The Board has an Audit Committee, a Corporate Governance Committee and a
Compensation Committee.
The Audit Committee held three meetings during 1999. 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 1999. 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 the Committee 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 2001 Annual Meeting," on page 14 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 four meetings during 1999. 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 annual
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 compensation and benefit policies, plans
and programs other than health and welfare plans generally available to
employees of the Corporation and its subsidiaries.
The members of the Compensation Committee are:
Bettye Martin Musham, Chair
George S. Day
Terry R. Lautenbach
5
<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,
2000, 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 Officers listed in the Summary
Compensation Table 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
------------------------ ---------------------- ----------------
Directors and Named Officers:
<S> <C> <C>
J.M. Robinson ................................................ 367,955(2) 1.80%
Carlos E. Alberini ........................................... 135,663(2) *
Maureen Richards ............................................. 54,131(2) *
Robert D. Ravener, Jr. ....................................... 28,953(2) *
Robert A. Davies, III ........................................ 7,090(3) *
George S. Day ................................................ 11,015(3) *
Stanley P. Goldstein ......................................... 58,453(3)(4) *
Terry R. Lautenbach .......................................... 16,235(3) *
Bettye Martin Musham ......................................... 9,547(3) *
Kenneth S. Olshan ............................................ 12,074(3) *
Neele E. Stearns, Jr. ........................................ -- --
All executive officers and directors as a group (10 persons) . 701,116(2)(3)(4) 3.43%
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 22.08%
FMR Corp.,
Edward C. Johnson, 3d and
Abigail P. Johnson(6)
82 Devonshire Street
Boston, MA 02109 ............................................. 3,156,133 15.88%
David J. Greene and Company, LLC(7)
599 Lexington Avenue
New York, NY 10022 ........................................... 1,790,089 9.00%
Sasco Capital, Inc.(8)
10 Sasco Hill Road
Fairfield, CT 06430 .......................................... 1,698,467 8.54%
- ----------
</TABLE>
* Less than one percent (1%).
(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 (i) owned by a spouse, minor children or by
relatives sharing the same home, (ii) owned by entities owned or controlled
by the named person, and (iii) any shares that the named person has the
right to acquire within 60 days by the exercise of any right or option.
(2) Of the shares shown, 112,687; 50,785; 26,353 and 16,783 shares for Mr.
Robinson, Mr. Alberini, Ms. Richards and Mr. Ravener, respectively,
constitute restricted shares or deferred shares under the Corporation's
Deferred 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
5
<PAGE>
stock options which are currently exercisable or exercisable within 60
days: Mr. Robinson, 201,053; Mr. Alberini, 76,794; Ms. Richards, 25,455;
and Mr. Ravener, 10,855.
(3) Of the shares shown, 5,290; 5,815; 7,818; 9,018; 4,347 and 10,374 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 (the
"SEC") dated February 14, 2000 on Schedule 13G under the Securities
Exchange Act of 1934 ("Exchange Act"), disclosing beneficial ownership of
4,387,300 shares of Common Stock. Of such Common Stock, ESL Partners, L.P.
has sole voting and sole investment power with respect to 3,672,155 shares,
ESL Limited has sole voting and sole investment power with respect to
605,644 shares and ESL Institutional Partners, L.P. has sole voting and
sole investment power with respect to 109,501 shares.
(6) FMR Corp., Edward C. Johnson, 3d and Abigail P. Johnson (collectively,
"FMR") filed a statement with the SEC dated February 14, 2000 on Schedule
13G under the Exchange Act, disclosing beneficial ownership of 3,156,133
shares of Common Stock. Of such Common Stock, FMR has sole voting power
with respect to 19,064 shares and sole investment power with respect to
3,156,133 shares.
(7) David J. Greene and Company, LLC filed a statement with the SEC dated
February 14, 2000 on Schedule 13G under the Exchange Act, disclosing
beneficial ownership of 1,790,089 shares of Common Stock. Of such Common
Stock, David J. Greene and Company, LLC has sole voting and sole investment
power with respect to 93,516 shares, shared voting power with regard to
926,311 shares and shared investment power with regard to 1,696,573 shares.
(8) Sasco Capital, Inc. filed a statement with the SEC dated February 10, 2000
on Schedule 13G under the Exchange Act, disclosing beneficial ownership of
1,698,467 shares of Common Stock. Of such Common Stock, Sasco Capital, Inc.
has sole voting power with regard to 898,873 shares and sole investment
power with respect to 1,698,467 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 last three fiscal
years.
6
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- -----------------------
OTHER RESTRICTED/ NUMBER OF
ANNUAL DEFERRED SECURITIES ALL OTHER
FISCAL COMPENSATION STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(2) AWARDS($) OPTIONS (#) SATION ($)(6)
- --------------------------- ---- ---------- --------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
J.M. Robinson, Chairman of 1999 700,000 635,000 92,400 330,525(3) 105,271 6,856
the Board, Chief Executive 1998 688,500 248,500 67,375 129,500(4) 45,000 5,800
Officer and President 1997 637,500 250,250 457,025 644,588(5) 150,000 5,550
Carlos E. Alberini, Senior 1999 373,500 300,000 37,422 149,922(3) 23,975 13,406
Vice President and Chief 1998 355,500 102,240 29,700 55,260(4) 15,000 12,550
Financial Officer 1997 335,000 104,720 167,820 231,500(5) 50,000 12,300
Maureen Richards, Vice 1999 234,000 143,000 19,553 73,178(3) 17,275 6,856
President, General Counsel 1998 222,500 55,912 15,469 29,447(4) 10,000 5,800
and Corporate Secretary 1997 210,500 57,673 61,185 81,853(5) -- 5,550
Robert D. Ravener, Jr., 1999 228,250 107,184 19,058 209,251(3) 24,275 3,456
Vice President and 1998 170,000(1) 77,000 15,125 109,375(4) 15,000 --
Chief Personnel Officer
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</TABLE>
(1) Employment commenced in March 1998.
(2) The amounts in this column include one-half of the award pursuant to the
Career Equity Program (the Corporation's long-term bonus plan described
below in the "Compensation Committee Report on Executive Compensation"),
which award is payable in cash for the cycles ended January 1, 2000,
January 2, 1999 and January 3, 1998, respectively, as follows: Mr.
Robinson, $92,400, $67,375 and $207,025; Mr. Alberini, $37,422, $29,700 and
$92,820; Ms. Richards, $19,553, $15,469 and $48,685; and Mr. Ravener
$19,058 and $15,125 for the cycles ending January 1, 2000 and January 2,
1999, respectively. The amounts 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 of the voluntary deferral of 75% of the 1999 annual incentive
bonuses payable to each of the Named Officers: Mr. Robinson, 10,013 shares
valued at $238,125; Mr. Alberini, 4,731 shares valued at $112,500; Ms.
Richards, 2,255 shares valued at $53,625; and Mr. Ravener, 1,690 shares
valued at $40,194. The amounts shown also include the following deferred
shares 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, 3,885 shares valued at $92,400; Mr. Alberini,
1,574 shares valued at $37,422; Ms. Richards, 822 shares valued at $19,553;
and Mr. Ravener, 801 shares valued at $19,057. The amount shown for Mr.
Ravener also includes the value of shares of the Corporation's Common Stock
underlying restricted stock units of 5,963 shares granted in 1999 valued at
$150,000 on the date of grant and with a value as of January 3, 2000 of
$178,711. These restricted stock units vest in five years from the date of
grant contingent upon continued employment.
(4) These amounts include the following "match" by the Corporation in deferred
shares 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
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 3, 2000, of $60,443. These
restricted stock units vest in five years from the date of grant contingent
upon continued employment with the Corporation. At January 3, 2000, the
value of all of the deferred shares referenced in this footnote was
$151,711 for Mr. Robinson, $64,745 for Mr. Alberini, and $34,509 for Ms.
Richards, and $100,699 for Mr. Ravener.
7
<PAGE>
(5) These amounts include the following "match" by the Corporation in deferred
shares 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 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. 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: 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 3, 2000, the value of all of the deferred shares referenced in this
footnote was $651,523 for Mr. Robinson; $233,579 for Mr. Alberini; and
$82,192 for Ms. Richards.
(6) The amounts disclosed represent the Corporation's contributions under the
Corporation's 401(k) Profit Sharing Plan as well as $6,750 for Mr. Alberini
in each of 1999, 1998 and 1997 representing interest (calculated at 6.75%
annually) which might otherwise have had to been paid on a non-interest
bearing loan.
Option Grants in Last Fiscal Year. The table below shows information
regarding grants of stock options made to the Named Officers during fiscal 1999.
The amounts shown as potential realizable values are based on arbitrarily
assumed annualized rates of stock price appreciation of 5% and 10% over the full
ten-year term of the options, which would result in Common Stock prices of
approximately $40.98 and $65.26, respectively.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM ($)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#)(1) FISCAL YEAR ($/SH) DATE 5% 10%
---------- ------------ ---------- ---------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
J.M. Robinson ............... 105,271 20.5 25.16 03/02/09 1,665,702 4,221,216
Carlos E. Alberini .......... 23,975 4.7 25.16 03/02/09 379,356 961,363
Maureen Richards ............ 17,275 3.4 25.16 03/02/09 273,342 692,703
Robert D. Ravener, Jr. ...... 24,275 4.7 25.16 03/02/09 384,103 973,393
</TABLE>
- -----------------
(1) Each option vests at the rate of 20% per year over a five-year period
beginning on the first anniversary of the date of grant.
Option Exercises and Year-End Option Holdings. The following table shows
information regarding option exercises during 1999 as well as fiscal 1999
year-end option holdings for each of the Named Officers.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF SECURITIES IN-THE-MONEY
ACQUIRED VALUE UNDERLYING UNEXERCISED OPTIONS AT
ON EXERCISE REALIZED OPTIONS AT FY-END (#) FY-END($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --- --- ------------------------- -------------------------
<S> <C> <C>
J.M. Robinson .................... -- -- 140,999/279,272 675,360/1,012,777
Carlos E. Alberini ............... -- -- 58,999/89,976 337,680/353,235
Maureen Richards ................. -- -- 20,000/37,275 168,840/204,872
Robert D. Ravener, Jr. ........... -- -- 3,000/36,275 0/129,718
</TABLE>
8
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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
ESTIMATED ANNUAL RETIREMENT BENEFITS BASED ON
YEARS OF SERVICE AND COMPENSATION
----------------------------------------------------
10 YEARS 15 YEARS 20 YEARS 25 YEARS
-------- -------- -------- --------
$ 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
1,400,000 ............. 280,000 420,000 560,000 700,000
1,600,000 ............. 320,000 480,000 640,000 800,000
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 1999
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. As of January 1, 2000, the estimated credited years of service
under the Supplemental Retirement Plan for Messrs. Robinson, Alberini, Ravener
and Ms. Richards were 18, 3, 2, and 3 years, 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 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 as an "Employment Agreement" and collectively as
the "Employment Agreements") with Messrs. Robinson, Alberini, Ravener and Ms.
Richards. 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
9
<PAGE>
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
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 whom, 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 50% 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 is
accelerated in the event of death, disability, or a "change in control".
10
<PAGE>
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.
In 2000, the Board of Directors approved voluntary stock ownership
guidelines for all independent directors providing for ownership of Common Stock
of the Corporation in an amount equal to at least five times their annual
retainer, to be achieved over a five-year period.
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 $572 million to $8.0 billion were
identified as comparable corporations with which the Corporation competes for
talent. The companies that comprise this group are different than the companies
comprising each of the peer group indices 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.
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
compensation 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. The Chief
Executive Officer's base salary for fiscal 1999 was equal to his fiscal 1998
base salary.
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 75%
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").
11
<PAGE>
Incentive awards at target performance range from 60% of base salary for
the Chief Executive Officer and scale down depending on position
responsibilities. Larger awards, up to a maximum of 200% of normal 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 1999 was 116% of his target award
due to the Corporation's exceptional performance in meeting profit objectives.
In addition, the Chief Executive Officer was awarded a special one-time bonus
(as were certain other Named Officers) of $147,800, seventy-five percent of
which was mandatorily deferred for five years under the Company's STEP program
in connection with the execution of 1999 performance 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 the 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
were set at 40% and 85% 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 cycle ending December 31, 1999, the Career Equity Award for the
Named Officers (including the Chief Executive Officer) and other participants
was 66% of the targeted award due to the Corporation's below-target performance
against the pre-established long-term 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. In 1999, the Chief Executive Officer was granted 101,296
non-qualified stock options and 3,975 incentive stock options. Grants are
determined based on the executive officer's position, multiple of base
compensation, individual performance and fair market value of the Corporation's
Common Stock on the grant date.
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.
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 1999
qualified for full tax deductibility and it is anticipated that all compensation
to be paid in 2000 will also be fully deductible.
Compensation Committee:
Bettye Martin Musham, Chair
George S. Day
Terry R. Lautenbach
12
<PAGE>
Performance Graph. The following graph shows cumulative total stockholder
returns for the Corporation, assuming reinvestment of any dividends, compared
with the Standard & Poor's ("S&P") SmallCap Retail Specialty Index, the S&P
SmallCap 600 Index, the S&P 500 Stock Index and the S&P Retail Stores Composite
Index. The Corporation hereafter intends to use the following two indices in the
performance graph: the S&P SmallCap 600 Index and the S&P Retail Specialty
Index, which is a subset of the S&P SmallCap 600 Index. The Company believes
these indices more comparably reflect the Corporation's market capitalization,
liquidity and industry. Both of these indices have included the Corporation
since July 1997 and represent companies with an average market capitalization of
$691 million. The S&P 500 Index and the S&P Retail Stores Composite Index, which
is a subset of the S&P 500 Index, include companies with an average market
capitalization of $23.1 billion. Furthermore, the S&P Retail Stores Composite
Index includes all retail stores in the S&P 500 Index, not just specialty stores
such as the Corporation. The graph covers the period from October 14, 1996, the
date when Footstar's Common Stock was first traded on the New York Stock
Exchange, through January 1, 2000.
[GRAPHIC]
10/14/96 12/28/96 1/3/98 1/2/99 1/1/00
-------- -------- ------ ------ ------
Footstar, Inc. ............... 100.0 124.4 131.1 122.0 148.8
S&P 500 ...................... 100.0 107.6 138.6 174.7 208.8
S&P Small Cap 600 ............ 100.0 103.9 130.6 128.0 142.7
S&P Retail Stores Composite .. 100.0 97.1 134.8 216.7 261.0
S&P SM Retail-Specialty ...... 100.0 96.5 122.0 132.2 122.2
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Board 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. Day in
connection with the sale of 1,000 shares of the Corporation's Common Stock.
13
<PAGE>
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 fiscal 2000. KPMG LLP served as independent auditors for the Corporation for
the 1999 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.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE
2001 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Corporation's
2001 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 4, 2000.
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 IS BEING MAILED TO ALL
STOCKHOLDERS OF RECORD ON OR ABOUT MARCH 31, 2000. STOCKHOLDERS, UPON WRITTEN
REQUEST TO THE INVESTOR RELATIONS DEPARTMENT OF THE CORPORATION, 933 MACARTHUR
BOULEVARD, NEW JERSEY 07430, MAY RECEIVE, WITHOUT CHARGE, A COPY OF THE
CORPORATION'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES AND LIST OF EXHIBITS, REQUIRED TO BE FILED WITH
THE SEC FOR THE 1999 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 OR, IF NO SUCH RECOMMENDATION IS GIVEN, IN THE DISCRETION OF THE
PROXY HOLDERS.
14
<PAGE>
[LOGO]
PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 2, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT A. DAVIES, III and KENNETH S. OLSHAN
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
07430, on Tuesday, May 2, 2000, at 10:00 a.m., and at any adjournment or
postponement 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 for
2000, all as described in the accompanying Proxy Statement.
(CONTINUED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
<PAGE>
Please mark
your votes as [X]
Indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AND THE NOMINEES FOR DIRECTOR
LISTED BELOW AND FOR THE RATIFICATION OF APPOINTMENT OF AUDITORS.
1. ELECTION OF DIRECTORS FOR A TERM 2. RATIFICATION OF APPOINTMENT OF
TO EXPIRE IN 2003 KPMG LLP, AS DESCRIBED IN THE
PROXY STATEMENT
FOR all the nominees WITHHOLD STANLEY P. GOLDSTEIN, J.M. ROBINSON,
listed AUTHORITY NEELE E. STEARNS, JR.
(except as marked to vote for all
to the contrary) nominees listed FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(INSTRUCTION: To withhold authority
to vote for any individual nominee,
write that nominee's name in the
space provided below.)
------------------------------------
3. In their discretion, upon other
matters as may properly come
before the Annual Meeting.
----| Dated: April , 2000
|
|
------------------------------------
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.
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
