<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
TOO, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee 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: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
- --------------------------------------------------------------------------------
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<PAGE> 2
[TOO, INC. LOGO]
3885 MORSE ROAD
COLUMBUS, OHIO 43219
(614) 479-3500
April 7, 2000
Dear Shareholder:
You are cordially invited to attend our first annual meeting of
shareholders. The meeting will be held on Tuesday, May 16, 2000, at 9:00 a.m. at
our corporate offices, 3885 Morse Road, Columbus, Ohio. If you need assistance
in finding the location of the meeting, please call our Investor Relations
department at (614) 479-3739.
At the meeting, we will elect three directors to the Board and transact
other business as may come before the meeting. We will also report on our
performance in 1999 and our progress on our long-term strategy.
It is very important that your shares be represented and voted at the
meeting. After reading the enclosed proxy statement, please sign, date and
return the enclosed proxy card.
We look forward to seeing you at the annual meeting.
Sincerely,
/s/ Michael W. Rayden
Michael W. Rayden
Chairman, President and Chief
Executive Officer
<PAGE> 3
[TOO, INC. LOGO]
------------------------
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
May 16, 2000
The first Annual Meeting of Shareholders of Too, Inc. will be held on
Tuesday, May 16, 2000, at 9:00 a.m. at the corporate offices of Too, Inc., 3885
Morse Road, Columbus Ohio, to conduct the following items of business:
1. Elect three directors to three-year terms.
2. Transact other business properly coming before the meeting or any
adjournment thereof.
Shareholders who owned shares of our stock at the close of business on
March 31, 2000, are entitled to vote at the meeting. A complete list of these
shareholders will be available at our corporate offices prior to the meeting.
By Order of the Board of Directors
/s/ Michael W. Rayden
Michael W. Rayden
Chairman, President and Chief
Executive Officer
<PAGE> 4
PROXY STATEMENT TABLE OF CONTENTS
<TABLE>
<S> <C>
Information About the Annual Meeting and Voting............. 2
Election of Directors....................................... 4
Nominees and directors.................................... 4
Information concerning the Board of Directors............. 5
Committees of the Board of Directors...................... 5
Executive Officers........................................ 6
Security ownership of directors and management............ 7
Executive Compensation...................................... 8
Summary compensation table................................ 8
Stock options............................................. 10
Director compensation..................................... 11
Employment agreements with certain executive officers..... 12
Report of the Stock Option and Compensation Committee....... 13
Our compensation philosophy............................... 13
Principal compensation elements........................... 14
CEO compensation.......................................... 15
Section 162(m)............................................ 15
Shareholder Return Graph.................................... 16
Compensation Committee Interlocks and Insider
Participation............................................. 16
Share Ownership of Principal Shareholders................... 17
Section 16(a) Beneficial Ownership Reporting Compliance..... 17
Independent Public Accountants.............................. 18
Other Matters............................................... 18
Shareholder Proposals....................................... 18
Solicitation Expenses....................................... 18
</TABLE>
1
<PAGE> 5
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
The Board of Directors of Too, Inc. is soliciting your proxy to vote at the
2000 Annual Meeting of Shareholders (or any adjournment of the meeting). This
proxy statement summarizes the information you need to know to vote at the
meeting. Throughout the proxy statement, the terms "We", "Our", "Limited Too",
and the "Company" refer to Too, Inc.
We began mailing this proxy statement and the enclosed proxy card on or
about April 7, 2000, to all shareholders entitled to vote. Too's 1999 Annual
Report, which includes our financial statements, is being sent with this proxy
statement.
DATE, TIME AND PLACE OF MEETING
<TABLE>
<S> <C>
Date: May 16, 2000
Time: 9:00 a.m. Eastern Time
Place: Too, Inc.'s corporate offices
3885 Morse Road
Columbus, Ohio 43219
</TABLE>
SHARES ENTITLED TO VOTE
Shareholders entitled to vote are those who owned Too, Inc.'s common stock
at the close of business on the record date, March 31, 2000. As of the record
date, there were 30,734,019 shares of Too, Inc. common stock outstanding. Each
share of common stock that you own entitles you to one vote.
VOTING YOUR PROXY
Whether or not you plan to attend the annual meeting, we urge you to vote.
Shareholders of record can give proxies by mailing their signed proxy cards.
Please complete, sign and date the enclosed proxy card and return it promptly in
the envelope provided. Returning the completed proxy card will not affect your
right to attend the meeting and vote.
The enclosed proxy card indicates the number of shares that you own as of
the record date.
Voting instructions are included on your proxy card. If you properly
complete your proxy card and send it to the correct address, one of the
individuals named on your proxy card (your "proxy") will vote your shares as you
have directed. If you sign the proxy card but do not make specific choices, your
proxy will follow the Board's recommendations and vote your shares:
- "FOR" the election of all nominees for director (as described on page 4).
If any other matter is presented at the meeting, your proxy will vote in
accordance with his or her best judgment. At the time this proxy statement went
to press, we knew of no other matters to be acted on at the meeting.
2
<PAGE> 6
REVOKING YOUR PROXY
You may revoke your proxy by:
- submitting a later dated proxy,
- notifying our Secretary in writing before the meeting that you have
revoked your proxy, or
- voting in person at the meeting.
VOTING IN PERSON
If you plan to attend the meeting and vote in person, a ballot will be
available when you arrive. However, if your shares are held in the name of your
broker, bank or other nominee, you must bring a letter from the nominee
indicating that you are the beneficial owner of the shares as of the close of
business on March 31, 2000, the record date for voting, and that you are
authorized to vote those shares at the annual meeting.
QUORUM REQUIREMENT
A quorum of shareholders is necessary to hold a valid meeting. The presence
at the meeting, in person or by proxy of the holders of shares representing at
least one-third of the votes of the common stock entitled to vote constitutes a
quorum. Abstentions and broker "non-votes" are counted as present for
establishing a quorum. A broker non-vote occurs on an item when a broker is not
permitted to vote on that item absent instruction from the beneficial owner of
the shares and no instruction is given.
VOTES NECESSARY
<TABLE>
<CAPTION>
ITEM VOTE NECESSARY*
---- ---------------
<S> <C>
Election of Directors Directors are elected by a plurality of the votes
represented by the shares of Common Stock present at the
meeting in person or by proxy. This means that the director
nominee with the most affirmative votes for a particular
position is elected for that position.
Transaction of A plurality of the votes represented by the shares of common
Other Business stock present at the meeting in person or by proxy.
</TABLE>
- ------------
* Under New York Stock Exchange rules, if your broker holds your shares in its
name, your broker is permitted to vote your shares on these items even if it
does not receive voting instructions from you.
3
<PAGE> 7
ELECTION OF DIRECTORS
The Board of Directors has nominated three directors for election at the
annual meeting. All of the nominees are currently serving as directors. If you
re-elect them, each will hold office for a three-year term expiring at the 2003
annual meeting or until his or her successor has been elected.
Your proxy will vote for each of the nominees unless you specifically
withhold authority to vote for a particular nominee. If any nominee is unable to
serve, your proxy may vote for another nominee proposed by the Board. We do not
know of any nominee of the Board who would be unable to serve as director if
elected.
Shareholders wishing to nominate directors for election may do so by
delivering to the Secretary of the Company, not less than 14 days nor more than
50 days before a meeting of the stockholders called for the election of
directors, a notice stating: (a) the name, age, business address and, if known,
residence address of each nominee proposed in the notice; (b) the principal
occupation or employment of each nominee; (c) the number of shares of common
stock of the Company beneficially owned by each nominee, and (d) such other
information as is required by the Company's bylaws. No person may be elected as
a director unless he or she has been nominated by a shareholder in this manner
or by the Board of Directors.
The Board of Directors recommends the ELECTION of all of the following
nominees of the Board of Directors:
NOMINEES AND DIRECTORS
Nominees of the Board of Directors for election at the 2000 annual meeting
Kent A. Kleeberger Age 47
Mr. Kleeberger joined the Company as Vice President and Chief Financial
Officer in March 1998 following a 10-year career with The Limited Inc.,
including Victoria's Secret Catalogue from 1991 to 1995 and Corporate Controller
of The Limited, Inc. from 1995 to 1998. Mr. Kleeberger was first elected to the
Board in February 2000.
Nancy J. Kramer Age 44
Ms. Kramer has been Chief Executive Officer of Resource Marketing, Inc.
since 1981. Resource Marketing, Inc. was founded by Ms. Kramer and specializes
in strategic marketing services including internet consulting, digital
development, communications and advertising. Ms. Kramer was first elected to the
Board in August 1999.
James U. McNeal Age 68
Dr. McNeal has been a Professor of Marketing at Texas A&M University since
1967. Dr. McNeal established the Department of Marketing and served as
department head from 1967 to 1975. Dr. McNeal is a frequent consultant to public
companies and the federal government. Since 1976, he has been a marketing
consultant specializing in marketing to children as customers. Dr. McNeal was
first elected to the Board of Directors in August 1999.
4
<PAGE> 8
Directors whose terms continue until the 2001 annual meeting
David A. Krinsky Age 51
Mr. Krinsky is a partner at the law firm of O'Melveny and Myers LLP in
Newport Beach, California. Before joining the firm as a partner in 1994, he was
a partner at the law firm of Pettis, Tester, Kruse & Krinsky. He practices
business and securities law. Mr. Krinsky was first elected to the Board in
August 1999.
Kenneth J. Strottman Age 51
Mr. Strottman is the founder, President and Chief Executive Officer of
Strottman International, Inc. a marketing agency specializing in developing
promotional programs targeting children and families. Before founding his firm
in 1983, Mr. Strottman served as Vice President, Marketing, at Mattel, Inc. Mr.
Strottman was first elected to the Board in August 1999.
Directors whose terms continue until the 2002 annual meeting
Philip E. Mallott Age 41
Mr. Mallott retired as Vice President, Finance and Chief Financial Officer
of Intimate Brands, Inc. in February 2000, a position he held since 1995. For
approximately one year prior thereto, Mr. Mallott had been Chief Financial
Officer of Structure, Inc., a business operated by The Limited, Inc. From 1991
to 1994, Mr. Mallott was Vice President-Finance at Structure. Mr. Mallott was
first elected to the Board in February 2000.
Michael W. Rayden Age 51
Mr. Rayden has served as President and Chief Executive Officer of the
Company since March 1996. He was elected Chairman of the Board of the Company in
August 1999. Before joining Limited Too, he served as President, Chief Executive
Officer and Chairman of the Board of Pacific Sunwear of California, Inc. from
1990 to 1996, President and Chief Executive Officer of The Stride Rite
Corporation from 1987 to 1989 and President and Chief Executive Officer of Eddie
Bauer Inc. from 1984 to 1987. Mr. Rayden is also on the board of directors of
David's Bridal, Inc., a company which has a class of equity securities
registered pursuant to the Securities Exchange Act of 1934, and Strottman
International, Inc., a privately held company. Mr. Rayden was first elected to
the Board in August 1999.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Our Board of Directors held two meetings since the August 23, 1999
spin-off. All of the directors attended 75 percent or more of the total number
of meetings of the Board and committees of the Board held in 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee
The Audit Committee of the Board approves the firm to be employed as our
independent public accountants and reviews the scope of the audit and audit
fees. In addition, the audit committee consults with the independent auditors
about the plan of audit, the resulting audit report and the accompanying
management letter. The Audit Committee also confers with the independent
auditors about the adequacy of internal accounting controls, as appropriate,
outside of the presence of management. The members of the Audit Committee are
Philip A. Mallott, Chairman, David A. Krinsky and James U. McNeal, who served as
chairman until February 2000, when Mr. Mallott was named chairman. The Audit
Committee held one meeting in fiscal 1999.
5
<PAGE> 9
Stock Option and Compensation Committee
The Stock Option and Compensation Committee of the Board reviews executive
compensation and administers the Company's stock option and performance and
incentive plans. Its members are David A. Krinsky, Chairman, Nancy J. Kramer and
Kenneth J. Strottman. The Compensation Committee held two meetings in fiscal
1999.
EXECUTIVE OFFICERS
In addition to Mr. Kleeberger and Mr. Rayden, the following persons are our
executive officers:
Sally A. Boyer Age 39
Ms. Boyer has served as our Vice President-Merchandising Operations since
May 1998. Ms. Boyer previously held various positions with us and The Limited,
Inc., including as our Vice President - Planning and Distribution from 1995 to
1998. Before joining The Limited, Inc. in 1991, she served as a Financial
Consultant for Andersen Consulting from 1990 to 1991, a Merchandise Planner for
The Limited, Inc. from 1989 to 1990 and Merchandise Controller of Youthland,
Inc. from 1984 to 1989.
Kathleen C. Maurer Age 40
Ms. Maurer has served as our Vice President - Human Resources since April
1996 after serving 13 years in the human resources sector of the retail apparel
industry. Before her current position with us, Ms. Maurer was Vice President -
Human Resources of Structure, Inc. from 1991 to 1996, a Director of Human
Resources of Express from 1985 to 1991 and a Personnel Administrator of The
Limited, Inc. from 1984 to 1985.
James C. Petty Age 41
Mr. Petty has served as our Vice President - Stores since June 1997. Mr.
Petty previously held various positions involving store management and
operations with Old Navy, Inc., Banana Republic, Inc. and The Gap, Inc. during
his 13-year tenure with The Gap and its subsidiaries, including Vice President -
Store Operations of Old Navy, Inc. from 1994 to 1997 and Vice President - Store
Operations of Banana Republic, Inc. from 1991 to 1994.
6
<PAGE> 10
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
Below is a table with information providing the number of shares of Too,
Inc.'s common stock beneficially owned by each of the directors of the Company,
executive officers listed in the Summary Compensation Table below, and all of
the directors and executive officers of Too, Inc. as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON PERCENT
NAME STOCK BENEFICIALLY OWNED(1)(2) OF CLASS
---- ------------------------------ --------
<S> <C> <C>
Sally A. Boyer............................................ 30,775(3) *
Kent A. Kleeberger........................................ 41,651(4) *
Nancy J. Kramer........................................... 44 *
David A. Krinsky.......................................... -- *
Philip E. Mallott......................................... 2,689 *
Kathleen C. Maurer........................................ 27,257(5)(6) *
James U. McNeal........................................... -- *
James C. Petty............................................ 19,776(7) *
Michael W. Rayden......................................... 51,988(8) *
Kenneth J. Strottman...................................... 12,500(9) *
All directors and executive officers as a group........... 186,680 *
</TABLE>
- ------------
(*) Less than 1%.
(1) Unless otherwise indicated, each named person has voting and investment
power over the listed shares and such voting and investment power is
exercised by the named person or shared with a spouse.
(2) Reflects ownership as of February 29, 2000.
(3) Includes options to purchase 16,503 shares exercisable within 60 days after
February 29, 2000.
(4) Includes options to purchase 20,837 shares exercisable within 60 days after
February 29, 2000.
(5) Includes options to purchase 14,816 shares exercisable within 60 days after
February 29, 2000.
(6) Includes 925 shares owned by Ms. Maurer's family members, for which Ms.
Maurer disclaims beneficial ownership.
(7) Includes options to purchase 9,233 shares exercisable within 60 days after
February 29, 2000.
(8) Includes options to purchase 34,477 shares exercisable within 60 days after
February 29, 2000.
(9) Includes 2,500 shares owned by Mr. Strottman's family members, for which Mr.
Strottman disclaims beneficial ownership.
7
<PAGE> 11
EXECUTIVE COMPENSATION
The following table shows the compensation paid by Limited Too to each of
the named executive officers of the Company for each of the last two fiscal
years. Compensation listed for 1998 was paid while the Company was a
wholly-owned subsidiary of The Limited, Inc. The amounts listed for 1999 include
compensation paid by both The Limited, Inc. and Too, Inc.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------------------ -------------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
FISCAL COMPEN- STOCK OPTIONS COMPEN-
NAME AND PRINCIPAL POSITION YEAR(1) SALARY($) BONUS($)(2) SATION($)(3) AWARDS($)(4)(5) (5)(6)(7)(8) SATION($)(9)
- --------------------------- ------- --------- ----------- ------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael W. Rayden........... 1999 701,058 1,114,850 8,054 -- -- 257,094
Chairman of the Board, 1998 669,231 1,188,250 12,383 164,604 265,218 189,819
Chief Executive Officer
and President
Kent A. Kleeberger.......... 1999 257,986 155,360 1,441 -- 66,843 56,265
Vice President and 1998 237,308 171,840 -- 207,819 26,526 42,982
Chief Financial Officer
James C. Petty.............. 1999 258,036 155,360 908 -- 61,791 51,767
Vice President - Stores 1998 238,846 171,840 -- 207,819 13,262 14,940
Sally A. Boyer.............. 1999 247,107 145,120 1,313 -- 80,767 51,379
Vice President - 1998 216,538 157,520 -- 138,551 13,267 43,993
Merchandising Operations
Kathleen A. Maurer.......... 1999 208,548 125,940 1,147 -- 45,436 44,594
Vice President - 1998 193,846 139,620 -- 138,551 13,262 44,271
Human Resources
</TABLE>
- ------------
(1) Under rules set by the SEC, only the information related to the two most
recent completed fiscal years is noted in the "Summary Compensation Table"
since we were not a reporting company until August 1999.
(2) Represents the total of the performance-based incentive compensation for the
spring and fall selling seasons.
(3) Represents reimbursements of taxes on term life insurance premiums paid on
behalf of the listed officers.
(4) On February 1, 1998, 1,400, 4,200, 2,800 and 2,800 restricted stock
performance awards of The Limited's Class A common stock were granted to
officers Kleeberger, Petty, Boyer and Maurer, respectively. Conversion of
the unvested The Limited, Inc. restricted stock to Too, Inc. restricted
stock was effective as of the date of the spin-off, August 23, 1999, at a
price of $43.00 per The Limited, Inc. common share and $16.50 per Too, Inc.
common share. These restricted stock awards converted to 3,648, 10,945,
7,297 and 7,297 restricted stock performance awards of Too, Inc.'s common
stock for officers Kleeberger, Petty, Boyer and Maurer, respectively.
On June 1, 1998, 4,266 restricted stock performance awards of The Limited,
Inc.'s Class A common stock were granted to Mr. Rayden. Conversion of the
unvested The Limited, Inc.'s restricted stock to Too, Inc. restricted stock
was effective as of the date of the spin-off, August 23, 1999, at a price of
$43.00 per The Limited, Inc. common share and $16.50 per Too, Inc. common
share. These restricted stock awards converted to 9,975 restricted stock
performance awards of Too, Inc.'s common stock.
8
<PAGE> 12
On February 1, 1999, 4,833, 4,833, 3,222 and 3,222 restricted stock
performance awards of The Limited, Inc.'s Class A common stock were granted
to officers Kleeberger, Petty, Boyer and Maurer, respectively. Conversion of
the unvested The Limited, Inc. restricted stock to Too, Inc. restricted
stock was effective as of the date of the spin-off, August 23, 1999, at a
price of $43.00 per The Limited, Inc. common share and $16.50 per Too, Inc.
common share. These restricted stock awards converted to 12,595, 12,595,
8,397 and 8,397 restricted stock performance awards of Too, Inc.'s common
stock for officers Kleeberger, Petty, Boyer and Maurer, respectively.
(5) In connection with the spin-off, Mr. Rayden's unvested pre-1999 grants of
The Limited, Inc.'s restricted stock performance awards and The Limited,
Inc.'s stock options were converted into 883,181 Too, Inc. stock options,
398,749 shares of Too, Inc. restricted stock awards and $2,886,017 of
deferred compensation (with the same vesting schedule as the previous
awards) with vesting contingent on reaching certain performance targets
which were achieved in 1999.
(6) On February 2, 1998, 7,635, 5,089, 5,089 and 5,089 unvested stock options of
the Limited's Class A common stock were granted to officers Kleeberger,
Petty, Boyer and Maurer, respectively. Conversion of the unvested The
Limited, Inc. stock options to Too, Inc. stock options was effective as of
the date of the spin-off, August 23, 1999, at a price of $43.00 per The
Limited, Inc. common share and $16.50 per Too, Inc. common share. These
stock options converted to 19,897, 13,262, 13,262 and 13,262 stock options
of Too, Inc.'s common stock for officers Kleeberger, Petty, Boyer and
Maurer, respectively.
On March 23, 1998, 2,544 unvested stock options of The Limited's Class A
common stock were granted to Mr. Kleeberger. Conversion of The Limited, Inc.
stock options to Too, Inc. stock options was effective the date of the
spin-off, August 23, 1999, at a price of $43.00 per The Limited, Inc. common
share and $16.50 per Too, Inc. common share. These stock options converted
to 6,629 stock options of Too, Inc.'s common stock.
On February 1, 1999, 5,400, 5,400, 7,400, and 7,400 unvested stock options
of the Limited's Class A common Stock were granted to officers Kleeberger,
Petty, Boyer and Maurer, respectively. Conversion of the unvested The
Limited, Inc The Limited, Inc. stock options to Too, Inc. stock options was
effective as of the date of the spin-off, August 23, 1999, at a price of
$43.00 per The Limited, Inc. share and $16.50 per Too, Inc. common share.
These stock options converted to 14,073, 14,073, 19,285 and 11,206 stock
options of Too, Inc.'s common stock for officers Kleeberger, Petty, Boyer
and Maurer, respectively.
(7) Includes a one-time transition grant of Too, Inc. stock options in the
amount of 24,000 shares for each of officers Kleeberger, Petty, Boyer and
Maurer, granted as of the date of the spin-off, in connection with the
elimination of the Limited, Inc. Restricted Stock Performance Incentive
Plan.
(8) Includes Too, Inc. stock option grants effective with the date of the
spin-off in the amounts of 28,770, 23,718, 37,482 and 10,230 shares for
executive officers Kleeberger, Petty, Boyer and Maurer, respectively
(9) Includes group term insurance premiums paid on behalf of executive officers
Kleeberger, Petty, Boyer and Maurer, executive life insurance premiums paid
on behalf of Mr. Rayden and contributions and employer matching
contributions to the qualified retirement plan and the non-qualified
supplemental retirement and alternative savings plans in the amounts of
$231,306, $55,081, $51,045, $50,871 and $44,166 for officers Rayden,
Kleeberger, Petty, Boyer, and Maurer, respectively.
9
<PAGE> 13
STOCK OPTIONS
The following table shows certain information regarding stock options
granted to the executive officers named in the Summary Compensation Table during
the 1999 fiscal year.
OPTIONS GRANTED IN 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
----------------------------------------------------- RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR OPTION TERM($)(1)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ---------------------
NAME GRANTED IN FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ---------- -------------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Michael W. Rayden............ -- -- -- -- -- --
Kent A. Kleeberger........... 14,073(2) 0.6% 13.1424 2/1/09 116,316 294,767
24,000(3) 1.0% 16.50 8/23/09 249,042 631,122
28,770(4) 1.2% 16.50 8/23/09 298,539 756,565
Sally A. Boyer............... 19,285(2) 0.8% 13.1424 2/1/09 159,394 403,936
24,000(3) 1.0% 16.50 8/23/09 249,042 631,122
37,482(4) 1.5% 16.50 8/23/09 388,942 985,654
James C. Petty............... 14,073(2) 0.6% 13.1424 2/1/09 116,316 294,767
24,000(3) 1.0% 16.50 8/23/09 249,042 631,122
23,718(4) 1.0% 16.50 8/23/09 246,116 623,706
Kathleen A. Maurer........... 11,206(2) 0.5% 13.1424 2/1/09 92,620 234,716
24,000(3) 1.0% 16.50 8/23/09 249,042 631,122
10,230(4) 0.4% 16.50 8/23/09 106,154 269,015
</TABLE>
- ------------
(1) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Securities and Exchange
Commission and are not intended to forecast future appreciation, if any, in
the price of the Company's common stock. Such amounts are based on the
assumption that the option holders hold the options granted for their full
term. The actual value of the options will vary in accordance with the
market price of the Company's stock.
(2) Represents the number of stock options of Too, Inc. common stock converted
from The Limited, Inc. unvested stock options. Conversion of the unvested
The Limited, Inc. stock options to Too, Inc. stock option(s) was effective
the date of the spin-off, August 23, 1999, at a price of $43.00 per The
Limited, Inc. common share and $16.50 per Too, Inc. common share.
(3) Represents one-time transition option grants of Too, Inc. common stock
granted the date of the spin-off, August 23, 1999, in connection with the
elimination of The Limited Inc.'s Restricted Stock Performance Incentive
Plan.
(4) Represents Too, Inc. stock options grants as of the date of the spin-off,
August 23, 1999.
10
<PAGE> 14
The following table shows certain information about The Limited, Inc. stock
options exercised by the executive officers named in the Summary Compensation
Table and the value of the unexercised stock options held by those executive
officers during the last fiscal year:
AGGREGATED OPTION EXERCISES IN 1999 FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END(#)(2) YEAR-END($)(3)
SHARES VALUE --------------------------- ---------------------------
ACQUIRED ON REALIZED
NAME EXERCISE(#)(1) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael W. Rayden..... 80,397 2,007,510 -- 883,181 -- 7,947,875
Kent A. Kleeberger.... 21,369 545,206 -- 99,999 -- 366,362
Sally A. Boyer........ 19,095 557,323 -- 100,000 -- 283,718
James C. Petty........ 6,360 155,267 -- 85,000 -- 280,335
Kathleen A. Maurer.... 29,131 739,219 -- 64,999 -- 238,092
</TABLE>
- ------------
(1) The Limited, Inc. shares were acquired on exercise and the value realized
was calculated on the basis of the number of shares exercised multiplied by
the excess of the fair market value of a share of The Limited, Inc. common
stock on the date of exercise over the exercise price of the stock option.
(2) Represent exercisable and unexercisable Too, Inc. stock options for the
individual as of January 29, 2000. These amounts include stock options that
were issued to the individual in consideration of cancellation of The
Limited, Inc. stock options.
(3) Represents the total gain which would have been realized if all in-the-money
options held at fiscal year-end had been exercised, determined by
multiplying the number of shares underlying the options by the difference
between the per share option exercise price and per share fair market value
at year-end. An option is in-the-money if the fair market value of the
underlying shares exceeds the exercise price of the option.
DIRECTOR COMPENSATION
Associates and officers who are directors receive no additional
compensation for services as directors. In 1999, compensation for non-associate
directors included the following:
- an annual retainer of $10,000 plus $1,500 for each committee chair held,
50 percent of which is payable in shares of the Company's common stock;
- $1,000 for each Board meeting attended ($400 for a telephonic meeting);
- $600 for each committee meeting attended ($200 for a telephonic meeting);
and
- $200 for each action in writing that our Board or any committee takes.
Under the Too, Inc. 1999 Non-Associate Director Stock Plan, each director
who is not an associate of Too, Inc. receives:
- an initial grant to purchase 5,000 shares of our common stock; and
- annual grants of options to purchase 1,000 shares of our common stock at
a price equal to the fair market value of the shares at the grant date.
11
<PAGE> 15
EMPLOYMENT AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
We entered into an employment agreement with Michael Rayden effective
August 23, 1999. The agreement has an initial term of six years, after which it
will renew automatically for additional one year periods on the same terms and
conditions, unless either party provides notice to the other of an intention not
to extend it at least 90 days prior to the anniversary date.
The employment agreement provides for a minimum annual base salary of
$700,000, which may be adjusted by the Compensation Committee, and entitles Mr.
Rayden to participate in all employee benefit plans and programs made available
to senior executives, including the stock incentive plans. Mr. Rayden is also
entitled to participate in the Company's applicable incentive compensation plan
at a target level of 110% of his annual base salary. The Board may change the
terms and conditions for Mr. Rayden's bonus target from time to time. In
connection with the termination of the Executive Medical Reimbursement Plan, the
Board approved a $10,000 increase to Mr. Rayden's base salary in 1999.
The employment agreement also requires the Company to compensate Mr. Rayden
and provide him with certain benefits if his employment is terminated before the
agreement expires. The compensation and benefits Mr. Rayden is entitled to
receive vary depending on how his employment is terminated. In the event of
termination by the Company without cause, or by Mr. Rayden for "good reason" (as
defined in the agreement), the Company has agreed to pay Mr. Rayden's base
salary for one year.
The employment agreement also prohibits Mr. Rayden from becoming directly
or indirectly connected with any business or entity that competes directly or
indirectly with the Company for a period of one year following the termination
date.
In addition, the Company has entered into agreements with Messrs.
Kleeberger and Petty, and Ms. Maurer and Ms. Boyer under which the Company, in
the event of termination of their employment by the Company without cause, has
agreed to pay their base salary less compensation earned from subsequent
employment, for 52 weeks following separation from the Company. These agreements
also provide for protection of the Company's confidential information and
prohibit competition and solicitation of the Company's employees by the officer
for twelve months after separation from employment with the Company.
12
<PAGE> 16
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE
Our Stock Option and Compensation Committee has the power, among other
things, to do the following:
- Review and approve our executive compensation philosophy and policies and
the application of such policies to the compensation of our executive
officers;
- Determine the annual salary, bonus, stock grants and options, and other
benefits, direct and indirect, of our executives officers;
- Review new executive compensation programs;
- Establish and periodically review policies for the administration of our
executive compensation programs.
- Approve certain employment arrangements with new hires.
Prior to our spin-off from The Limited, Inc. effective August 23, 1999, the
compensation of our executive officers was determined by The Limited, Inc. Our
Stock Option and Compensation Committee was organized on August 24, 1999, and
adopted plans that generally mirror the executive compensation policies, plans
and arrangements put in place prior to the spin-off by The Limited, Inc. for the
remainder of fiscal 1999. The Company has recently retained independent
compensation and benefit consultants to assist it as well as the Committee in
assessing and determining our future executive officer compensation and benefit
programs along with compensation and benefits programs for all associates.
OUR COMPENSATION PHILOSOPHY
We seek to apply a consistent compensation philosophy for all of our
leadership group associates, including our executive officers. The primary goals
of our compensation program are to:
- Attract and retain qualified executives;
- Reward current and past individual performance;
- Provide short-term and long-term incentives for good and excellent future
performance; and
- Link total compensation for individual performance and our performance to
enhance stockholder value.
Accordingly, we have structured total compensation for our leadership group
associates to provide a portion of the compensation as fixed compensation and a
portion of the compensation as a variable amount based on performance.
Our philosophy is built on the following basic principles:
- To Pay for Outstanding Performance
We believe in paying for results. Individuals in leadership roles are
compensated based on a combination of total Company, business unit and
individual performance factors. Total Company performance is evaluated
primarily based on the degree by which financial targets are met or
exceeded. In addition, a significant portion of total compensation is in
the form of equity-based awards which ties into increases in shareholder
value.
13
<PAGE> 17
- To Pay Competitively
We are committed to providing a total compensation program designed to
attract the best senior leaders to our business and retain the best and
most consistent performers. To achieve this goal, we will periodically
compare our pay practices and overall pay levels with other leading retail,
and where appropriate, non-retail companies, and adjust our compensation
guidelines based on this review.
- To Pay Equitably
We believe that it is important to apply generally consistent
guidelines for substantially all associate compensation programs across our
Company, considering the size of unit, area of responsibility, complexity,
development stage, and performance of our Company, along with the
performance of the individual executive.
PRINCIPAL COMPENSATION ELEMENTS
The principal elements of our executive compensation packages are base
salary, short-term performance-based cash incentive compensation, and
equity-based long-term incentive programs.
Base salary
The Committee will annually review and approve the employment of each
executive officer, including the base salary. In determining salary adjustments,
the Committee considers the size and responsibility of the individual's
position, the business unit's overall performance, the individual's overall
performance and future potential, and the base salaries paid by competitors to
employees in comparable positions. Individual performance is measured against
the following factors: seasonal and annual business goals, business growth and
brand execution goals, and the recruitment and development of future leadership
talent. The Committee considers these factors subjectively in the aggregate, and
accords none a formula weight.
Performance-based cash incentive compensation
We have employed a short-term, performance-based cash incentive
compensation program for specified key leadership positions along with certain
other members of the Company's management that provides for incentive payments
based on the level of achievement of pre-established financial goals for each
six-month operating season. The goals under this plan for 1999 were based on
operating income. Goals, however, also may be based on other financial measures,
including the price of the Company's or an affiliate's common stock, shareholder
return, return on equity, return on investment, return on capital, sales
productivity, comparable store sales growth, economic profit, economic value
added, net income, operating income, gross margin, sales, free cash flow,
earnings per share, operating company contribution or market share. These goals
are generally determined prior to or near the beginning of each season, and are
based on an analysis of historical performance and growth expectations for our
business, expectations of the public markets and progress toward achieving our
long-range strategic plan for the business. Target cash incentive compensation
opportunities are established annually for eligible executives stated as a
specific percentage of base salary, ranging from 10 percent to 150 percent of
base salary. The amount of incentive compensation paid to participating
executives can range from zero to double their targets, based upon the extent to
which performance goals are achieved or exceeded. The maximum amount payable to
any participant may not exceed $3,000,000 in any year under the incentive
program.
14
<PAGE> 18
Equity-based incentive programs
The Committee believes that continued emphasis on equity-based compensation
opportunities encourages performance that enhances stockholder value, thereby
further linking leadership and shareholder objectives. We believe that the
magnitude and vesting schedule of the award also serve to retain key performers.
The award opportunity level for each eligible participant depends on the
individual's responsibility level and potential within the Company, competitive
practices, and the market price of our common stock.
In 1999, The Limited, Inc. awarded stock options to key executives prior to
the spin-off and the Company's Compensation Committee, in connection with the
spin-off, awarded stock options to executives in the amounts set forth in the
Option Grants in Fiscal Year 1999 Table on page 10. The option program utilizes
vesting periods to encourage retention of key executives. The exercise price for
each option granted equals the fair market value of the underlying common stock
on the date of grant.
Additionally, the unvested stock options and restricted stock awards
granted by The Limited, Inc. to our executive officers prior to the spin-off
were converted into Too, Inc. options and restricted stock by converting the
intrinsic "in the money value" of The Limited, Inc. options and restricted
awards to Too, Inc. options and restricted awards.
CEO COMPENSATION
Effective August 23, 1999, we entered into an employment agreement with Mr.
Rayden, which substantially continued the financial arrangements he had
previously as an employee of The Limited, Inc. Under the terms of his employment
agreement, Mr. Rayden may receive equity compensation such as restricted stock,
stock options, and deferred compensation at the Compensation Committee's
discretion. The terms of Mr. Rayden's employment agreement are described above
in this proxy statement under the section subtitled, "Employment agreements with
certain executive officers."
Upon achieving certain performance levels in 1999, Mr. Rayden received
stock options covering 883,181 shares of our common stock in consideration for
the conversion of his unvested Limited stock options. We granted these options
on the same terms and conditions as The Limited, Inc. stock options.
Additionally, as consideration for conversion of his unvested The Limited, Inc.
restricted stock awards, Mr. Rayden received 398,749 restricted shares of our
common stock on the same terms and conditions as The Limited, Inc. restricted
stock awards and subject to the gross sales performance criteria established by
the committee. The committee also established a non-interest bearing deferred
compensation agreement in the amount of $2,886,017 for Mr. Rayden which
represents the value of unvested restricted stock awards of The Limited, Inc.
not converted to Too, Inc. stock awards after the spin-off.
SECTION 162(m)
The Budget Reconciliation Act of 1993 amended the Internal Revenue Code to
add Section 162(m) which bars a deduction to any publicly held corporation for
compensation paid to a "covered employee" in excess of $1 million per year.
Generally, we intend that compensation paid to our "covered employees" shall be
deductible to the fullest extent permitted by law.
Stock Option and Compensation
Committee
David A. Krinsky, Chair
Nancy J. Kramer
Kenneth J. Strottman
15
<PAGE> 19
SHAREHOLDER RETURN GRAPH
The following graph shows a comparison, over a six-month period, of the
cumulative total return for Too, Inc. common stock, the Standard & Poor's
Specialty-Apparel Index and the Russell 2000 Index, each of which assumes an
initial investment value of $100 on August 9, 1999, the first day of trading of
Too, Inc.'s stock, on a "when-issued" basis, on the New York Stock Exchange. The
comparison also assumes the reinvestment of any dividends.
COMPARE CUMULATIVE TOTAL RETURN
AMONG TOO, INC.,
RUSSELL 2000 INDEX AND S&P SPECIALTY-APPAREL INDEX
[RUSSELL 2000 INDEX AND PEER GROUP INDEX CHART]
<TABLE>
<CAPTION>
S&P SPECIALTY - APPAREL
TOO, INC. INDEX RUSSELL 2000 INDEX
--------- ----------------------- ------------------
<S> <C> <C> <C>
8/09/99 100.00 100.00 100.00
8/31/99 120.09 99.34 96.19
9/30/99 122.64 90.32 96.08
10/29/99 109.40 96.69 96.38
11/30/99 126.50 102.86 102.01
12/31/99 117.95 106.69 113.39
1/28/2000 117.09 93.28 111.50
</TABLE>
ASSUMES $100 INVESTED ON AUG. 9, 1999. ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JAN. 29, 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Currently, David A. Krinsky, Nancy J. Kramer and Kenneth J. Strottman, who
are not employees of the Company, are members of the Stock Option and
Compensation Committee. Since 1993, Mr. Rayden has served as a member of the
board of directors of Strottman International, Inc., a privately held company,
of which Mr. Strottman is President and Chief Executive Officer.
16
<PAGE> 20
SHARE OWNERSHIP OF PRINCIPAL SHAREHOLDERS
This table shows the names of owners of the Company's common stock who, on
February 29, 2000, were known by Too, Inc. to be beneficial owners of more than
5% of the shares of common stock of the Company.
<TABLE>
<CAPTION>
AMOUNT PERCENT
BENEFICIALLY OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) CLASS(2)
------------------------------------ ------------ --------
<S> <C> <C>
Leslie H. Wexner............................................ 6,635,681(3)(4)(5)(6) 21.6%
Three Limited Parkway
P.O. Box 16000
Columbus, Ohio 43216
Capital Research and Management Company..................... 3,755,000 12.2%
333 South Hope Street 55th Floor
Los Angeles, California 90071
AMVESCAP PLC................................................ 2,863,801 9.3%
c/o INVESCO
1315 Peachtree Street NE
Atlanta, GA 30309
</TABLE>
- ------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and or investment power with respect to those securities.
(2) "Percent of Class" is calculated by dividing the number of shares
beneficially owned by the total number of outstanding shares of the Company
on February 29, 2000, plus the number of shares such person has the right to
acquire within 60 days of February 29, 2000.
(3) Includes 101,189 shares held by The Wexner Foundation and 50,001 shares held
by Health and Science Interests II for which the power to vote or direct the
disposition of may be deemed to be shared by Leslie H. Wexner, a trustee
thereof, with another trustee. Mr. Wexner disclaims beneficial ownership of
shares held by The Wexner Foundation and Health and Science Interests II.
(4) Includes 77,511 shares held in The Limited, Inc. Savings and Retirement Plan
for Mr. Wexner's account based on the number of shares of common stock of
The Limited, Inc. in the account as of December 31, 1999, over which he
exercises dispositive but not voting control. Excludes 125 shares held
directly by Abigail S. Wexner, Mr. Wexner's wife, and 28,572 shares held in
a trust of which Ms. Wexner is a beneficiary, as to which Mr. Wexner
disclaims beneficial ownership.
(5) Includes 2,678,625 shares held by Leslie H. Wexner as the sole trustee of
The Wexner Children's Trust.
(6) Includes 519,971 shares held by the Harry, Hannah David and Sarah Wexner
Trust for which the power to vote or direct the disposition of may be deemed
to be shared by Leslie H. Wexner, a trustee thereof, with another trustee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers,
directors, and greater than 10% shareholders to file reports of ownership and
changes in ownership of the Company's securities with the Securities and
Exchange Commission. SEC regulations require that copies of the reports be
provided to the
17
<PAGE> 21
Company. Based on our review of such reports, we believe that all reporting
persons complied with all filing requirements during the fiscal year ended
January 29, 2000.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP has served as the Company's independent public
accountants for the 1999 fiscal year and throughout the periods covered by the
consolidated financial statements. Representatives of PricewaterhouseCoopers are
expected to attend the annual meeting in order to respond to questions from
shareholders, and they will have the opportunity to make a statement.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
annual meeting. However, if other matters should come before the meeting, each
of the persons named in the proxy intends to vote in accordance with their
judgement on such matters.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 2001 Annual Meeting should be submitted to
the Secretary of the Company at our corporate offices by January 16, 2001, but
not before December 17, 2000. The Company may omit from the proxy statement and
form of proxy relating to the next annual meeting of shareholders any proposals
of shareholders which are intended to be presented at that meeting which are not
received by the Secretary by January 16, 2001, or which are received before
December 17, 2000.
Shareholder nominations for the Board of Directors to be elected at the
2001 Annual Meeting should be submitted not less than 14 days nor more than 50
days before the 2001 Annual Meeting.
SOLICITATION EXPENSES
The Company will pay the expense of preparing, assembling, printing and
mailing the proxy form and the form of material used in solicitation of proxies.
Our associates may solicit proxies by telephone, mail services, electronic mail,
mailgram, facsimile, telegraph, cable and personal interview. The Company has
retained Georgeson Shareholder Communication Services to help us solicit proxies
related to shares held by brokerage houses, custodians, fiduciaries and other
nominees for a fee of approximately $5,000 plus expenses. We do not expect to
pay any other costs for the solicitation of proxies.
By Order of the Board of Directors
/s/ Michael W. Rayden
Michael W. Rayden
Chairman, President & Chief Executive
Officer
18
<PAGE> 22
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR each of the named nominees. If no
specification is indicated, the shares represented by this proxy will be voted
as recommended by the Board.
- --------------------------------------------------------------------------------
1. Election of Directors
(see reverse side)
FOR WITHHELD The nominees are:
[ ] [ ] Kent A. Kleeberger
Nancy J. Kramer
James U. McNeal
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
2. Transact Other Business Properly Coming Before the Meeting.
- --------------------------------------------------------------------------------
The undersigned acknowledges receipt with
this Proxy of a copy of the Notice of Annual
Meeting of Shareholders and Proxy Statement
dated April 4, 2000.
IMPORTANT: Please date this Proxy and sign
exactly as your name or names appear hereon.
If stock is held jointly, signature should
include both names. Executors,
Administrator, Trustees, Guardians and
others signing in a representative capacity
should indicate full titles.
-------------------------------------------
-------------------------------------------
Signature, if held jointly DATE
* FOLD AND DETACH HERE *
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE.
TOO, INC.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
<PAGE> 23
PROXY
TOO, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 2000
The undersigned hereby appoints Michael W. Rayden and Kent A. Kleeberger and
each of them, proxies, with full power of substitution, to vote for the
undersigned all shares of Common Stock of Too, Inc. which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Shareholders
to be held on May 16, 2000, at 9:00 AM, Eastern Daylight time, and at any
adjournments thereof, upon the matters described in the accompanying Proxy
Statement and upon any other business that may properly come before the meeting
or any adjournments thereof.
Election of Directors, Nominees:
1. Kent A. Kleeberger 2. Nancy J. Kramer
3. James U. McNeal
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors recommendations. The tabulator cannot vote your
shares unless you sign and return this card.
- --------------------------------------------------------------------------------
* Fold and Detach Here *
ANNUAL MEETING OF SHAREHOLDERS
TOO, INC.
MAY 16, 2000
9:00 AM
CORPORATE OFFICES
3885 MORSE ROAD
COLUMBUS, OHIO
(614) 479-3500
WE INVITE YOU TO JOIN US.
YOUR VOTE IS IMPORTANT
----------------------
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY CARD AND
PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
