<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>
[ ] 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>
Zale Corporation
- --------------------------------------------------------------------------------
(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)(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
ZALE CORPORATION
901 WEST WALNUT HILL LANE
IRVING, TEXAS 75038-1003
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 5, 1999
--------------
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Zale Corporation, a Delaware corporation (the "Company"),
will be held on Friday, November 5, 1999, at 10:00 a.m., local time, at the
University Club at the Galleria, 13350 Dallas Parkway, Suite 4000, Dallas,
Texas, 75240-9933 for the following purposes:
1. To elect eight directors for terms that will expire at the 2000
annual meeting of stockholders;
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 23,
1999, as the record date for determining the stockholders entitled to notice of,
and to vote at, the Annual Meeting or any adjournment thereof. A list of such
stockholders will be maintained at the Company's headquarters during the ten-day
period prior to the date of the Annual Meeting and will be available for
inspection by stockholders for any purpose germane to the meeting during
ordinary business hours.
We hope you will be represented at the Annual Meeting by signing and
returning the enclosed proxy card in the accompanying envelope as promptly as
possible, whether or not you expect to be present in person. Your vote is
important and the Board of Directors appreciates the cooperation of stockholders
in directing proxies to vote at the meeting.
By Order of the Board of Directors,
Alan P. Shor
Executive Vice President and Chief Operating Officer,
Secretary
Dallas, Texas
September 24, 1999
<PAGE> 3
ZALE CORPORATION
901 WEST WALNUT HILL LANE
IRVING, TEXAS 75038-1003
(972) 580-4000
----------------
PROXY STATEMENT
SEPTEMBER 24, 1999
----------------
GENERAL INFORMATION
This Proxy Statement is being furnished by the Board of Directors (the
"Board of Directors") of Zale Corporation, a Delaware corporation (the
"Company"), to the holders of common stock (the "Common Stock") of the Company
in connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the University Club at the
Galleria, 13350 Dallas Parkway, Suite 4000, Dallas, Texas, 75240-9933, 10:00
a.m., local time, on Friday, November 5, 1999, and at any and all adjournments
thereof.
A proxy delivered pursuant to this solicitation is revocable at the
option of the person giving the same at any time before it is exercised. A proxy
may be revoked, prior to its exercise, by executing and delivering a later dated
proxy card, by delivering written notice of the revocation of the proxy to the
Secretary of the Company prior to the Annual Meeting, or by attending and voting
at the Annual Meeting. Attendance at the Annual Meeting, in and of itself, will
not constitute a revocation of a proxy. Unless previously revoked, the shares
represented by the enclosed proxy will be voted in accordance with the
stockholder's directions if the proxy is duly executed and returned prior to the
Annual Meeting. If no directions are specified, the shares will be voted FOR the
election of the director nominees recommended by the Board of Directors, FOR the
ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants, and in accordance with the discretion of the
named proxies on other matters properly brought before the Annual Meeting.
The expense of preparing, printing and mailing this Proxy Statement and
soliciting the proxies sought hereby will be borne by the Company. In addition
to the use of the mail, proxies may be solicited by officers, directors and
regular employees of the Company, who will not receive additional compensation
therefor, in person, or by telephone, telegraph or facsimile transmission. The
Company also will request brokerage firms, banks, nominees, custodians and
fiduciaries to forward proxy materials to the beneficial owners of shares of
Common Stock as of the record date and will provide reimbursement for the cost
of forwarding the proxy materials in accordance with customary practice. Your
cooperation in promptly signing and returning the enclosed proxy card will help
to avoid additional expense.
At September 3, 1999, the Company had 35,984,508 shares of Common Stock
issued and outstanding. Each share of Common Stock entitles the holder to one
vote. Only stockholders of record at the close of business on September 23, 1999
will be entitled to notice of, and to vote at, the Annual Meeting.
This Proxy Statement and the enclosed proxy card are first being mailed
to stockholders on or about September 28, 1999.
1
<PAGE> 4
OUTSTANDING VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information with respect to the
beneficial ownership, as of September 23, 1999 (except as otherwise noted
below), of shares of Common Stock by persons believed by the Company to own
beneficially more than five percent of the outstanding shares of Common Stock
and by the directors and named executive officers set forth in the Summary
Compensation Table herein and the directors and executive officers of the
Company as a group, and the percentage of the outstanding shares of Common Stock
represented thereby. As of September 23, 1999, the Company does not believe
there are any five percent holders of its Common Stock. Other than as set forth
below, no director or executive officer of the Company is known to be the
beneficial owner of any shares of Common Stock. Except as noted below, the
Company believes that each of the persons listed has sole investment and voting
power with respect to the shares included in the table.
2
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS(1)
------------------------ ----------------------- --------
<S> <C> <C>
DIRECTORS AND
NAMED EXECUTIVE OFFICERS:
Robert J. DiNicola 423,748 (2) 1.18
Glen Adams 15,000 (3) *
A. David Brown 3,750 (4) *
Peter P. Copses 8,100 (5) *
Andrea Jung 7,000 (6) *
Richard C. Marcus 11,900 (7) *
Charles H. Pistor, Jr. 4,750 (8) *
Andrew H. Tisch 31,500 (9) *
Beryl B. Raff 176,330 (10) *
Alan P. Shor 69,724 (11) *
Sue E. Gove 31,381 (12) *
Mary L. Forte 55,463 (13) *
DIRECTORS AND EXECUTIVE OFFICERS 838,646 2.33
AS A GROUP (12 PERSONS):
</TABLE>
- -----------------
* Represents less than one percent.
3
<PAGE> 6
(1) The information contained in this table with respect to Common Stock
ownership reflects "beneficial ownership" as determined in accordance
with Rule 13-d under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Percentages are based on total shares outstanding
as of September 3, 1999.
(2) Includes 316,666 shares of Common Stock which Mr. DiNicola may acquire
upon the exercise of options within 60 days after September 23, 1999,
103,846 shares of Restricted Stock which will vest 33% each year over
three years beginning February 25, 2000 and 1,236 shares of Common
Stock held in the Zale Corporation Savings and Investment Plan.
(3) Includes 10,500 shares of Common Stock which Mr. Adams may acquire upon
exercise of options within 60 days of September 23, 1999.
(4) All shares of Common Stock may be acquired by Mr. Brown upon exercise
of options within 60 days of September 23, 1999.
(5) Includes (i) 3,250 shares of Common Stock held by The Copses/Mueller
Family Trust and (ii) 1,100 shares of Common Stock owned by The Copses
Children's Irrevocable Trust of 1996. Mr. Copses disclaims beneficial
ownership of the 1,100 shares of Common Stock owned by The Copses
Children's Irrevocable Trust of 1996. Also includes 3,750 shares of
common stock which Mr. Copses may acquire upon exercise of options
within 60 days of September 23, 1999.
(6) Includes 7,000 shares of Common Stock which Ms. Jung may acquire upon
exercise of options within 60 days after September 23, 1999.
(7) Includes 10,500 shares of Common Stock which Mr. Marcus may acquire
upon exercise of options within 60 days after September 23, 1999.
(8) Includes 3,750 shares of Common Stock which Mr. Pistor may acquire upon
exercise of options within 60 days after September 23, 1999.
(9) Includes 10,000 shares of Common Stock held by Mr. Tisch's wife and
brother as custodians for his four minor children and 10,500 shares of
Common Stock, which Mr. Tisch may acquire upon exercise of options
within 60 days after September 23, 1999.
(10) Includes 123,750 shares of Common Stock which Ms. Raff may acquire upon
exercise of options within 60 days after September 23, 1999, 51,923
shares of Restricted Stock which will vest 25% each year over four
years beginning February 25, 2000 and 657 shares of Common Stock held
in the Zale Corporation Savings and Investment Plan.
(11) Includes 57,500 shares of Common Stock which Mr. Shor may acquire upon
exercise of options within 60 days after September 23, 1999, 10,385
shares of Restricted Stock which will vest 25% each year over four
years beginning February 25, 2000 and 639 shares of Common Stock held
in the Zale Corporation Savings and Investment Plan.
(12) Includes 23,000 shares of Common Stock Ms. Gove may acquire within 60
days after September 23, 1999, 7,269 shares of Restricted Stock which
will vest 25% each year over four years beginning February 25, 2000 and
1,112 shares of Common Stock held in the Zale Corporation Savings and
Investment Plan.
(13) Includes 42,500 shares of Common Stock which Ms. Forte may acquire upon
exercise of options within 60 days after September 23, 1999, 7,269
shares of Restricted Stock which will vest 25% each year over four
years beginning February 25, 2000 and 1,074 shares of Common Stock held
in the Zale Corporation Savings and Investment Plan.
4
<PAGE> 7
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of eight
directors, each of whom will serve until the 2000 Annual Meeting of Stockholders
and until his or her successor is elected and qualified.
The Board of Directors has no reason to believe that any of the
nominees for director will not be available to stand for election as director.
However, if some unexpected occurrence should require the substitution of some
other person or persons for any one or more of the nominees, the proxies may be
voted FOR such substitute nominees as the Board of Directors may designate.
The following sets forth the principal occupations for at least the
last five years and the current directorships of the eight nominees for director
to be elected pursuant to Proposal No. 1.
ROBERT J. DINICOLA, Age 51.
Chairman of the Board
Mr. DiNicola has served as Chairman of the Board of the Company since
April 18, 1994. He also served as Chief Executive Officer of the Company from
April 18, 1994 until September 7, 1999. For the three years prior to joining the
Company, Mr. DiNicola was a senior executive officer of The Bon Marche Division
of Federated Department Stores, Inc., having served as Chairman and Chief
Executive Officer of that Division from 1992 to 1994 and as its President and
Chief Operating Officer from 1991 to 1992. From 1989 to 1991, Mr. DiNicola was a
Senior Vice President of Rich's Department Store Division of Federated. For 17
years, prior to joining the Federated organization, Mr. DiNicola was associated
with Macy's, where he held various executive, management and merchandising
positions, except for a one-year period while he held a division officer
position with The May Department Stores Company, Inc.
BERYL B. RAFF, Age 48.
President and Chief Executive Officer, Director
Ms. Raff was appointed Chief Executive Officer and a member of the
Company's Board of Directors on September 7, 1999, while retaining her position
as President of the Company. From July 15, 1998 to September 7, 1999, Ms. Raff
served as President and Chief Operating Officer. From July 1997 to July 1998,
she served as Executive Vice President and Chief Operating Officer. From
November 1994 to July 1997, she served as President of Zales. From March 1991
through October 1994, Ms. Raff served as Senior Vice President of Macy's East
with responsibilities for its jewelry business in a 12 state region. From April
1988 to March 1991, Ms. Raff served as Group Vice President of Macy's
South/Bullocks. Prior to 1988, Ms. Raff had 17 years of retailing and
merchandising experience with the Emporium and Macy's department stores.
5
<PAGE> 8
GLEN ADAMS, Age 60.
Director
Mr. Adams has served as a director of the Company since July 21, 1993.
From August 1990 to August 1996, Mr. Adams served as Chairman, President and
Chief Executive Officer of Southmark Corporation in Dallas, Texas, a real estate
financing and syndication firm. From 1986 to 1989, he served as Chairman,
President and Chief Executive Officer of The Great Western Sugar Company. Mr.
Adams is also a director of U.S. Home Corporation.
A. DAVID BROWN, Age 57.
Director
Mr. Brown joined the board as a director on March 4, 1997. Mr. Brown
became Managing Partner for the New York office of Pendleton James Associates as
of May 15, 1997. Prior to joining Pendleton James Associates, Mr. Brown served
as Vice President of the Worldwide Retail/Fashion Specialty Practice at
Korn/Ferry International from June 1, 1994 to May 14, 1997. Prior to joining
Korn/Ferry, Mr. Brown held numerous positions with R.H. Macy & Co., Inc.,
including Senior Vice President of Human Resources, a position he held from 1983
to 1994. Mr. Brown is a director of The Sports Authority and Selective Insurance
Group, Inc. Mr. Brown also serves as a trustee for Drew University.
PETER P. COPSES, Age 41.
Director
Mr. Copses served from September 9, 1993 to September 9, 1996 as a
director of the Company and returned to serve on the Board on February 4, 1997.
Since 1990, Mr. Copses has been a principal of Apollo Advisors, L.P., which,
together with certain affiliates, acts as the managing general partner of Apollo
Investment Fund, L.P., AIF II, L.P., Apollo Investment Fund III, L.P., and
Apollo Investment Fund IV, L.P., private securities investment funds, and of
Lion Advisors, L.P., which acts as a financial advisor to and representative for
certain institutional investors with respect to securities investments. Mr.
Copses is a director of Mariner-Post Acute Network, Inc., Rent-A-Center, Inc.,
and Prandium, Inc.
RICHARD C. MARCUS, Age 60.
Director
Mr. Marcus has served as a director of the Company since July 21, 1993.
Mr. Marcus is a private investor and cofounder of InterSolve Group, a management
services firm, which was established in 1991. Since January 1997, Mr. Marcus has
served as an advisor to Peter J. Solomon Company, a New York investment banking
firm. From December 1994 through December 1995, Mr. Marcus served as CEO of the
Plaid Clothing Group and as a director of that company from December 1994
through December 1996. In July 1995, Plaid Clothing Group filed a petition of
reorganization under Chapter 11 of the U.S.
6
<PAGE> 9
Bankruptcy Code and was subsequently sold to Hartmarx in December 1996. From
1988 to 1991, Mr. Marcus was a consultant for companies serving the retail
industry. From 1979 to 1988, he served as Chairman and Chief Executive Officer
of Neiman Marcus in Dallas, Texas. Mr. Marcus is a director of Michaels Stores
Inc. and Fashionmall.com.
CHARLES H. PISTOR, JR., Age 69.
Director
Mr. Pistor joined the board as a director on June 24, 1997. Mr. Pistor
is the former Vice Chair of Southern Methodist University, and has served as
Chief Executive Officer of Republic BankDallas and president of the American
Bankers Association. Mr. Pistor currently serves as a director on the boards of
Fortune Brands, AMR and American Airlines and Centex Corporation.
ANDREW H. TISCH, Age 50.
Director
Mr. Tisch has served as a director of the Company since July 21, 1993.
Mr. Tisch has been Chairman of the Management Committee of Loews Corporation
since October 1995 and a member of that committee since October 1994. Mr. Tisch
also served as Chairman of the Board and Chief Executive Officer of Lorillard,
Inc. from 1989 to May 1995. Mr. Tisch is Chairman of the Board of Directors of
Bulova Corporation and served as its President from 1980 to 1989. From 1985 to
1989, Mr. Tisch served as a director of Gordon Jewelry Corporation prior to its
acquisition by the Company. Since January 1, 1999, Mr. Tisch has served as
Chairman of the Executive Committee of Loews Corporation. Mr. Tisch currently
serves as a director of Loews Corporation, Bulova Corporation and Canary Wharf,
Ltd.
Andrea Jung, who served as a director of the Company since June 6, 1996, is not
standing for reelection.
7
<PAGE> 10
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The following discussion of meetings of the Board of Directors and the
committees thereof includes meetings occurring during the Company's 1999 fiscal
year beginning on August 1, 1998 and ending July 31, 1999 ("Fiscal Year 1999").
The standing committees of the Board of Directors are the Audit and
Compensation Committees. Their principal functions and the names of the
directors currently serving as members of those committees are set forth below.
The Audit Committee has the power and authority to initiate or review
the results of all audits or investigations into the business affairs of the
Company and its subsidiaries, and to conduct pre- and post-audit reviews with
the Company's management, financial employees and independent auditors. The
Audit Committee also reviews the Company's quarterly and annual financial
statements and reports. The Audit Committee met two times during Fiscal Year
1999. Glen Adams, Andrea Jung (through November 5, 1999), Charles H. Pistor, Jr.
and Andrew H. Tisch are the current members of the Audit Committee. Mr. Adams is
Chairman.
Subject to the final decision of the Board of Directors, the
Compensation Committee reviews the proposed compensation of the Company's
Chairman, Chief Executive Officer and all other corporate officers and considers
management succession and related matters. In addition, the Compensation
Committee administers the Company's Stock Incentive Plan and its other incentive
compensation plans. The Compensation Committee met five times during Fiscal Year
1999. The current members of the Compensation Committee are Richard C. Marcus,
A. David Brown and Peter P. Copses. Mr. Marcus is Chairman.
During Fiscal Year 1999, the Board of Directors met seven times. No
member of the Board of Directors attended fewer than 75% of the total number of
meetings held by the Board of Directors and the committees on which such
director served during that period except for Andrea Jung who attended three
Board of Directors meetings.
8
<PAGE> 11
PROPOSAL NO. 2:
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the Company's independent public
accountants for the interim period from April 1, 1994 to July 31, 1994 and for
the fiscal years ended July 31, 1995, July 31, 1996, July 31, 1997, July 31,
1998, and July 31, 1999 and has been reappointed by the Board of Directors to
serve in that capacity for the 2000 fiscal year. The Company has been advised
that no member of Arthur Andersen LLP or any of its associates has any financial
interest in the Company or its affiliates. A representative of Arthur Andersen
LLP will be available at the Annual Meeting to respond to appropriate questions
and will be given an opportunity to make a statement on behalf of Arthur
Andersen LLP, if desired.
Although not formally required, the appointment of the independent
auditors of the Company has been directed by the Board of Directors to be
submitted to the stockholders for ratification as a matter of sound corporate
practice. If the stockholders do not ratify the appointment of Arthur Andersen
LLP, the appointment of the independent auditors will be reconsidered by the
Board of Directors. If the stockholders ratify the appointment, the Board of
Directors, in its sole discretion, may still direct the appointment of new
independent auditors at any time during the 2000 fiscal year if the Board of
Directors believes that such a change would be in the best interests of the
Company.
The Board of Directors recommends that the stockholders vote FOR the
ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants.
9
<PAGE> 12
EXECUTIVE AND DIRECTOR COMPENSATION
The following tables set forth all compensation, including bonuses,
stock option awards and other payments, paid or accrued by the Company during
each of the fiscal years ended July 31, 1999, July 31, 1998 and July 31, 1997,
to the Company's Chairman, Chief Executive Officer, and the three other most
highly compensated executive officers of the Company currently serving as such
(collectively, the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------- ------------------------------------------
RESTRICTED SECURITIES ALL OTHER
SALARY STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) BONUS($)(2) AWARDS ($)(3) OPTIONS(#) ($)
--------------------------- ---- --------- ---------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. DiNicola (4) 1999 1,000,000 1,100,000 4,153,840 -- 10,768
Chairman of the Board 1998 850,000 873,477 -- 500,000 34,792
1997 825,000 588,414 -- -- 39,889
Beryl B. Raff (5) 1999 400,000 300,000 2,076,920 100,000 8,496
President and Chief Executive Officer, 1998 350,000 163,485 -- 250,000 4,216
Director 1997 301,507 37,500 -- 60,000 9,326
Alan P. Shor (6) 1999 350,000 175,000 415,400 50,000 7,147
Executive Vice President and Chief 1998 317,708 148,401 -- 50,000 8,328
Operating Officer, Secretary 1997 288,750 90,858 -- 55,000 11,583
Sue E. Gove (7) 1999 200,000 100,000 290,760 50,000 6,325
Executive Vice President and 1998 179,721 84,078 -- 35,000 4,985
Chief Financial Officer 1997 168,750 51,342 -- 10,000 6,274
Mary L. Forte (8) 1999 285,000 142,500 290,760 25,000 7,194
Executive Vice President and 1998 275,000 153,452 -- 35,000 7,273
Chief Administrative Officer 1997 250,000 58,529 -- 45,000 5,215
</TABLE>
- -------------
(1) Includes amounts contributed by such executive officers to the
Company's 401(k) savings plan.
(2) Includes amounts deferred under the Executive Deferred Compensation
Plan.
(3) As of the end of fiscal 1999 the aggregate restricted stock holdings
for the named executive officers consisted of 180,692 shares worth
$7,227,680 at the closing price as of July 31, 1999, without giving
effect to the diminution of value attributable to the restrictions on
such stock. The restricted stock awards are eligible for dividends and
become vested as to 25 percent of the shares covered thereby on each of
the first, second, third, and fourth anniversaries of the date of grant
except for the restricted stock awards granted to Mr. DiNicola which
become vested as to 33 percent of the shares on each of the first,
second and third anniversaries of the date of grant.
(4) Mr. DiNicola's "All Other Compensation" for 1999 consists of $2,304 for
group term life insurance premiums and $8,464 for annual insurance
premiums paid by the Company.
(5) Ms. Raff's "All Other Compensation" for 1999 consists of $1,392 for
group term life insurance premiums and $7,104 for annual insurance
premiums paid by the Company.
(6) Mr. Shor's "All Other Compensation" for 1999 consists of $816 for group
term life insurance premiums and $6,331 annual insurance premiums paid
by the Company.
10
<PAGE> 13
(7) Ms. Gove's "All Other Compensation" for 1999 consists of $371 for group
term life insurance premiums and $5,954 annual insurance premiums paid
by the Company.
(8) Ms. Forte's "All Other Compensation" for 1999 consists of $1,392 for
group term life insurance premiums and $5,802 annual insurance premiums
paid by the Company.
OPTION GRANTS IN LAST FISCAL YEAR (1)
The following table sets forth all stock option grants to the named executive
officers during the year ended July 31, 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED ANNUAL RATES
------------------------------------------------- OF STOCK PRICE
NUMBER OF APPRECIATION
SECURITIES FOR OPTION TERM (2)
UNDERLYING -----------------------------
OPTIONS % OF TOTAL OPTIONS EXERCISE OR
GRANTED GRANTED TO EMPLOYEES BASE PRICE EXPIRATION
NAME (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- --------- -------------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert J. DiNicola 0 -- -- -- -- --
Beryl B. Raff 100,000 15.54 $ 43.50 7/15/09 2,735,962 6,932,780
Alan P. Shor 50,000 7.77 $ 43.50 7/15/09 1,367,846 3,466,390
Sue E. Gove 50,000 7.77 $ 43.50 7/15/09 1,367,846 3,466,390
Mary L. Forte 25,000 3.89 $ 43.50 7/15/09 683,923 1,733,195
</TABLE>
(1) Sets forth options granted under the Zale Omnibus Stock Incentive Plan
(the "Stock Incentive Plan") for the fiscal year ended July 31, 1999.
Unless the applicable plan agreement provides otherwise, options
granted under the Stock Incentive Plan become cumulatively exercisable
as to 25 percent of the shares covered thereby on each of the first,
second, third and fourth anniversaries of the date of grant. Upon the
occurrence of a change of control (as defined in the Stock Incentive
Plan), options shall become fully and immediately exercisable. The
options granted to Mr. DiNicola become cumulatively exercisable as to
33 percent of the shares covered thereby on each of the first, second
and third anniversaries of the date of grant.
(2) The dollar amounts under these columns are the result of calculations
at the 5 percent and 10 percent rates required by the Securities and
Exchange Commission. These amounts should not be construed as forecasts
of possible future appreciation, if any, of the stock price for the
Company's Common Stock.
11
<PAGE> 14
FY-END OPTION VALUES
The following table sets forth information with respect to the named executive
officers concerning the number of securities underlying unexercised options and
the value of unexercised options held as of July 31, 1999.
<TABLE>
<CAPTION>
VALUE OF
SHARES NUMBER OF SECURITIES UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
EXERCISE REALIZED OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
NAME (#) ($) (#) ($)
---- ----------- -------- ---------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. DiNicola 650,000 12,369,013 316,666 458,334 4,509,371 4,953,129
Beryl B. Raff 50,000 822,335 123,750 336,250 1,699,141 2,194,453
Alan P. Shor 26,250 427,666 57,500 123,750 1,012,654 941,485
Sue E. Gove 7,000 183,207 23,000 83,750 361,203 318,984
Mary L. Forte 37,500 669,636 42,500 86,250 800,938 860,391
</TABLE>
(1) These amounts represent the excess of the fair market value of the
Common Stock of $40.00 per share as of July 31, 1999 above the exercise
price of the options.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
On September 14, 1995, each of the Boards of Directors of the Company
and Zale Delaware, Inc., a wholly-owned subsidiary of the Company ("ZDel"),
approved the preparation and implementation of the Zale Delaware, Inc.
Supplemental Executive Retirement Plan (the "Plan"), which was executed on
behalf of the Company on February 23, 1996, to be effective as of September 15,
1995. The purpose of the Plan is to provide eligible executives with the
opportunity to receive payments each year after retirement equal to a portion of
their Final Average Pay as defined below. On July 18, 1996, the Company amended
the definition of "Change of Control" in the Plan to correct a minor
technicality.
12
<PAGE> 15
A participant becomes vested in his benefit in the Plan after
completing five years of service with the Company after September 14, 1995. A
participant also becomes vested in his Plan benefits upon a change of control of
the Company or the death or disability of the participant while an active
employee. A retired participant who is vested is entitled to monthly payments
continuing over the life of the participant (or, at the election of the
participant, in a joint and 50% survivor annuity with his or her surviving
spouse) commencing on the first day of the month immediately following the
participant's 65th birthday. The amount of each payment is determined under the
following formula:
Benefit Points x Final Average Pay
----------------------------------
100
Benefit Points are calculated based on a goal for earnings before
interest, taxes, depreciation and amortization established each plan year by the
Compensation Committee of the Company. The Final Average Pay means the average
of the monthly base salary received by the participant from the Company in the
60-month period ending immediately prior to the participant's retirement or
other termination from the Company. The estimated annual benefits payable upon
retirement at normal retirement age for Robert J. DiNicola, Beryl B. Raff, Alan
P. Shor, Sue E. Gove and Mary L. Forte (assuming salary of each of the named
executive officers for the year ended July 31, 1999) are $519,000, $244,100,
$312,500, $176,300 and $175,500 respectively.
EMPLOYMENT AGREEMENTS
DiNicola Employment Agreement. On September 7, 1999, the Company
entered into an Amended and Restated Employment Agreement ("the Agreement") with
Mr. DiNicola that will expire September 6, 2001, unless otherwise terminated or
renewed pursuant to its terms. Under the Agreement, Mr. DiNicola will be
employed by the Company as its Chairman of the Board. Mr. DiNicola will receive
an annual base salary of not less than $750,000 (subject to annual review and
potential increase by the Board of Directors). He is eligible to participate in
the Company's Executive Bonus Program and can receive up to 50% of his base
salary in accordance with the terms and conditions of that Program.
In the event of a change of control (as defined), resulting in the
termination of Mr. DiNicola's employment, the Company shall pay to Mr. DiNicola:
(1) an amount equal to three (3) times his base salary; (2) an amount equal to
three (3) times his average annual cash bonus for the preceding two fiscal
years; (3) all benefits under the Company's various benefits plans for 36 months
following the termination; and (4) certain benefits under the Zale Delaware,
Inc. Supplemental Executive Retirement Plan.
In the event the Agreement is not renewed or Mr. DiNicola retires after
September 6, 2000, he and the Company will enter into a Consulting Agreement for
consulting services for a $150,000 annual fee.
Executive Employment Agreements. Ms. Raff, Mr. Shor and Ms. Gove
entered into employment agreements on August 1, 1998, and Ms. Forte entered into
an employment agreement on January 15, 1998 (collectively the "Executive
Employment Agreements") with the Company. These agreements were also amended on
October 8, 1998. These Executive Employment Agreements are substantially similar
to the Company's employment agreement with Mr. DiNicola, except that Ms. Raff is
eligible to receive up to
13
<PAGE> 16
100% of her base salary in accordance with the Executive Bonus Program and the
term of the Executive Employment Agreements is three years (except for Ms.
Forte, whose Executive Employment Agreement expires July 31, 2000).
EXECUTIVE SEVERANCE ARRANGEMENTS
Effective February 10, 1994, the Company adopted an executive severance
plan for its executives (the "Severance Plan"), which becomes operative upon the
occurrence of certain events, such as termination without cause (as defined).
Under the Severance Plan, as amended effective May 20, 1995, Executive Vice
Presidents (who are not parties to Executive Employment Agreements), Company
Senior Vice Presidents and Division Presidents are entitled to receive severance
pay equal to one month of pay and benefits for each year of continuous service,
with a minimum of three months of pay and a maximum of nine months of pay.
Company Vice Presidents and directors, and Division Senior Vice Presidents, Vice
Presidents and directors are entitled to severance pay equal to one week of pay
for each year of continuous service, with a minimum of twelve weeks of pay and a
maximum of twenty-six weeks of pay.
CHANGE OF CONTROL AGREEMENTS
The Company has entered into Change of Control Agreements (the "Change
of Control Agreements") with certain of its senior officers (excluding those
officers under an employment agreement) and key employees. The Change of Control
Agreements are intended to supplement any other programs sponsored by the
Company, including, but not limited to, the Company's severance and stock option
plans. Under the Change of Control Agreements, a change of control ("Change of
Control") is defined as the date as of which: (i) there is consummated any
consolidation or merger of the Company pursuant to which the Company is not the
surviving corporation or the shares of the Company's Common Stock are converted
into cash, securities or other property, other than a merger in which the
holders of the Company's Common Stock have the same proportionate ownership of
the surviving corporation immediately after the merger, or any sale, lease,
exchange or other transfer of all or substantially all of the assets of the
Company; (ii) the stockholders of the Company approve any plan or proposal for
liquidation or dissolution of the Company; (iii) any "person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Exchange Act), becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 promulgated pursuant
to the Exchange Act), of 30% of the Company's outstanding common stock; or (iv)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Company cease for
any reason to constitute a majority of the Board of Directors unless the
election, or nomination for election by the Company's stockholders, was approved
by a vote of at least two-thirds of the directors who were directors at the
beginning of such period.
If any of the parties to the Change of Control Agreements are
terminated within two years following a Change of Control, for any reason other
than Cause or Disability (as defined), or if the parties terminate their
employment with the Company for Good Reason (as defined), the Company shall: (i)
pay an amount equal to three times the party's average Annual Compensation (as
defined) for any fiscal year beginning with or within the three-year period
ending on the date of termination of the party's employment; (ii) for three
years following the date of termination of employment, the party and anyone
entitled to claim under or through the party shall be entitled to all benefits
provided by the Company under certain group employee benefit plans to the same
extent to which the party would have been entitled if he or she had remained an
employee of the Company; and (iii) a lump sum payment equal to the actuarial
equivalent of the benefits that would have accrued to the party under the Zale
Delaware, Inc. Supplemental Executive Retirement Plan. The Change of Control
Agreements are required to be assumed by any successor to the Company by merger
or otherwise.
14
<PAGE> 17
DIRECTOR COMPENSATION
Each Non-Employee director of the Company receives an annual retainer
fee of $15,000, and is entitled to a $3,000 fee for each board meeting attended
in person and a $1,000 fee for each meeting attended by telephone. A chairman of
a committee of the Board of Directors receives an additional annual retainer fee
of $2,500, and each committee member is entitled to $1,000 for each committee
meeting attended, whether in person or by telephone. Non-Employee directors also
receive annual grants of options to purchase Common Stock under the 1995 Outside
Directors' Stock Incentive Plan.
DIRECTOR INDEMNIFICATION ARRANGEMENTS
During 1993, each of the Company and ZDel entered into indemnification
agreements (the "Indemnification Agreements") with the directors of the Company,
agreeing to indemnify such persons against expenses, judgments, fines and
amounts paid in settlement of, or incurred in connection with, any threatened,
pending or completed action, suit or proceeding in which the director was or is,
or is threatened to be made, a party by reason of his service as a director,
officer, employee or agent of the Company subsequent to July 21, 1993, provided
that the director acted in good faith and in a manner he reasonably believed to
be in the best interest of the Company or ZDel, as applicable, and, with respect
to any criminal action or proceeding, provided he had reasonable cause to
believe his actions were lawful. Each Indemnification Agreement also provides
for the advancement of expenses incurred by the director in defending any
proceeding. The Company has entered into similar agreements with all directors
elected to the Board for the first time since 1993 and may enter into similar
agreements with any new directors elected in the future.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, there were no Compensation Committee interlocks.
15
<PAGE> 18
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Subject to the final decision of the Board of Directors, the
Compensation Committee (the "Committee") actively reviews the proposed
compensation of the Company's Chief Executive Officer and all other corporate
officers and considers management succession and related matters. In addition,
the Committee administers the Company's Stock Incentive Plan and its other
incentive compensation plans.
Under the supervision of the Committee, the Company has developed and
implemented compensation policies, plans and programs that seek to enhance the
profitability of the Company, and thus stockholder value, by aligning closely
the financial interests of the Company's executives with those of its
stockholders. The objectives of the Company's executive compensation program are
to:
o Support the achievement of the Company's strategic operating
objectives;
o Provide compensation that will attract and retain superior talent
and reward the executives based upon Company and individual
performance;
o Align the executives' financial interests with the success of the
Company by placing a substantial portion of pay at risk (i.e.,
payout that is dependent upon Company and individual performance);
and
o Provide a strategic balance among short, medium and long-term
compensation such that it encourages a balanced perspective on the
part of the executive between short-term profit goals and
long-term value creation.
The Company's executive compensation program consists of base salary,
annual cash incentive compensation in the form of performance bonuses, long-term
incentive compensation in the form of stock options, and other potential equity
incentives, supplemental executive benefits and various other benefits,
including life and medical insurance plans.
Base Salaries. It is the Committee's objective to maintain base
salaries that are reflective of the financial performance of the Company and the
individual executive's experience, responsibility level and performance, and
that are competitive with the salary levels of executives at other companies
engaged in the same or similar lines of business with revenues in a range
comparable to those of the Company. The Committee intends to monitor the
salaries of all corporate officers annually and to make any adjustments it deems
necessary and appropriate.
Bonuses. For fiscal 1999, the annual bonuses available to the Company's
executive officers were based upon quantitative measures of the Company's
financial performance as measured by overall corporate net income targets and
overall net income as a percentage of total sales, as set forth in the Company's
annual financial plan.
Bonus opportunity is calculated as a percentage of the recipient's base
salary. Specifically, all participants can earn up to 70% of their maximum bonus
opportunity if the Company exceeds its net
16
<PAGE> 19
income bonus target and up to 30% of the maximum bonus opportunity if the
Company exceeds its net income as a percentage of sales target. No bonus can be
achieved if the Company fails to attain at least the threshold target for net
earnings. No bonus can be achieved if the Company fails to attain at least the
minimum threshold for net income.
For Fiscal 2000, the annual bonuses available to the Company's
executive officers will again be based upon quantitative measures of the
Company's financial performance as measured by overall corporate net income
targets and overall net income as a percentage of total sales, as set forth in
the Company's annual financial plan.
Bonus opportunity will still be calculated as a percentage of the
recipient's base salary. Specifically, all participants can earn up to 70% of
their maximum bonus opportunity if the Company exceeds its net income bonus
target and up to 30% of the maximum bonus opportunity if the Company exceeds its
net income as a percentage of sales target. No bonus can be achieved if the
Company fails to attain at least the threshold target for net earnings. No bonus
can be achieved if the Company fails to attain at least the minimum threshold
for net income.
Equity Incentives. The Company's Stock Incentive Plan currently forms
the basis for the Company's long-term incentive plan for executives and key
employees. The Stock Incentive Plan provides for the grant of stock options,
SARs, restricted stock, stock bonuses and phantom stock. To date, only stock
options and restricted stock have been issued in connection with the Stock
Incentive Plan. The purpose of the Stock Incentive Plan is to promote the
interests of the Company and its shareholders by providing officers and other
employees of the Company with appropriate incentives and rewards to encourage
them to enter into and continue in the employ of the Company and to acquire a
proprietary interest in the long-term success of the Company.
During the fiscal year ended July 31, 1999, option awards were made to
approximately 100 of the Company's employees covering an aggregate of 608,500
shares of Common Stock. All options were granted with an exercise price equal to
the fair market value of the Company's Common Stock at the date of grant, have a
term of ten years, and become exercisable 25% per year beginning one year from
the date of grant.
In addition, restricted stock awards were made on February 25, 1999 to
the five executive officers covering an aggregate of 180,692 shares of Common
Stock. All restricted stock has a term of ten years, and becomes vested 25% per
year beginning one year from the date of grant except for Mr. DiNicola's
restricted stock which becomes vested 33% per year beginning one year from the
date of grant.
The Committee, in satisfying its duty to establish the compensation
levels of the Company's Chairman, Chief Executive Officer and its other
corporate officers, considered and approved management's recommendations for the
1999 fiscal year with respect to changes to the elements and levels of
compensation paid to such officers. The Committee consulted with the Company's
human resources department and/or outside compensation consultants in evaluating
the recommendations made by management. The Committee, in its role as
administrator of the Stock Incentive Plan, intends to review periodically with
the Company's human resources department and/or outside compensation consultants
the levels and types of cash incentives and stock-based compensation that are
appropriate for a corporation similarly situated to the Company.
17
<PAGE> 20
Compensation of the Chairman of the Board. Under the terms of his
employment agreement, Mr. DiNicola receives an annual base salary of not less
than $750,000. This base salary is subject to annual review and potential
increase by the Board of Directors. See "Executive and Director Compensation -
Employment Agreements." An annual bonus for Mr. DiNicola for fiscal 1999 was
awarded pursuant to the terms of the Company's annual bonus plan. As described
in "Executive and Directors Compensation - Summary Compensation Table," in 1999,
Mr. DiNicola received a bonus of $1,100,000.
Section 162(m). Section 162(m) of the Code prevents publicly held
corporations, including the Company, from taking a tax deduction for
compensation paid to a "covered employee" in a taxable year to the extent that
the compensation exceeds $1 million and is not qualified performance-based
compensation under the Code. Generally, covered employees are the executive
officers named in the Summary Compensation Table. The Stock Incentive Plan and
Executive Bonus Plan have been designed to meet the regulations so that
compensation realized in connection with stock options, stock appreciation
rights and other performance-based equity incentives granted under the Stock
Incentive Plan and Executive Bonus Plan bonuses will generally be excluded from
the deduction limit. Moreover, the Committee believes that, in order to attract,
retain and reward the executive talent necessary to maximize stockholder
returns, the Company's interests are best served in some circumstances by
providing compensation which is subject to the deductibility limitation imposed
by Section 162(m). The Committee's present intention is to structure
compensation to be tax deductible; however, it retains the discretion to
authorize compensation that does not qualify for income tax deductibility.
Richard C. Marcus, Chairman
A. David Brown
Peter P. Copses
18
<PAGE> 21
CORPORATE PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
the Company, the S&P 500 Index and the Dow Jones Retail - All Specialty Index
for the period since August 1, 1993 (the date on which the Company's Common
Stock began trading publicly). The comparison assumes $100 was invested on
August 1, 1993 in the Company's Common Stock and in each of the three indices
and, for the S&P 500 Index, the Dow Jones Retail - All Specialty Index and the
S&P 600 Index, assumes reinvestment of dividends. The Company has not paid
dividends since August 1, 1993.
[GRAPH]
<TABLE>
<CAPTION>
8/1/93 1/31/94 7/29/94 1/31/95 7/31/95 1/31/96 7/31/96 1/31/97
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Zale Corporation 100 96.10 93.51 106.49 148.05 143.48 180.57 166.23
S&P 500 100 108.96 105.15 109.53 132.57 151.80 154.48 191.76
S&P Specialty Retail 100 100.51 97.59 99.85 103.84 93.01 108.00 111.11
S&P 600 100 107.61 96.08 97.59 121.58 127.61 131.22 155.50
<CAPTION>
7/31/97 1/31/98 7/31/98 1/31/99 7/31/99
<S> <C> <C> <C> <C> <C>
Zale Corporation 225.97 254.55 322.08 340.91 415.58
S&P 500 234.99 234.48 270.07 310.66 324.66
S&P Specialty Retail 153.09 138.64 159.67 140.33 152.66
S&P 600 180.56 186.79 186.00 184.18 193.37
</TABLE>
The stock price performance depicted in the above graph is not
necessarily indicative of future price performance. The Corporate Performance
Graph will not be deemed to be incorporated by reference in any filing by the
Company under the Securities Act of 1993, as amended (the "Securities
19
<PAGE> 22
Act") or the Exchange Act, except to the extent that the Company specifically
incorporates the graph by reference.
SECTION 16(a) REPORTING
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than 10% of any class
of the Company's equity securities, to file with the Commission initial reports
("Form 3") of beneficial ownership and reports of changes ("Form 4") in
beneficial ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% beneficial owners are required by
Commission regulation to furnish the Company with copies of all Section 16(a)
reports they file. To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, all Section 16(a) filing requirements applicable
to its officers, directors and greater than 10% beneficial owners were complied
with for the year ended July 31, 1999.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before
the Annual Meeting. However, if any other matters are properly brought before
the Annual Meeting, it is the intention of the named proxies in the accompanying
proxy to vote in accordance with their judgment on such matters.
VOTING REQUIREMENTS
With regard to Proposal No. 1, the election of directors, votes may be
cast for or votes may be withheld from each nominee. Directors will be elected
by plurality vote. Therefore, votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may not be specified with
respect to the election of directors and, under applicable Delaware law, broker
non-votes will have no effect on the outcome of the election of directors.
With regard to Proposal No. 2, the ratification of independent public
accountants, votes may be cast for or against the matter, or stockholders may
abstain from voting on the matter. Under applicable Delaware law, abstentions
and broker non-votes will have no effect on the outcome of Proposal No. 2.
Broker non-votes will count for purposes of determining the presence of a
quorum.
If no directions are specified in any duly signed and dated proxy card
received by the Company, the shares represented by that proxy card will be
counted as present for quorum purposes and will be voted by the named proxies
FOR the election of the director nominees recommended by the Board of Directors,
FOR the ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants, and in accordance with the discretion of the
named proxies on other matters properly brought before the Annual Meeting.
20
<PAGE> 23
STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES
The Bylaws of the Company provide that any stockholder of record who is
entitled to vote for the election of directors at a meeting called for that
purpose may nominate persons for election to the Board of Directors subject to
the following notice requirements.
As described more fully in the Company's Bylaws, a stockholder desiring
to nominate a person for election to the Board of Directors must send a written
notice to the Secretary of the Company setting forth (i) as to each person who
the stockholder proposes to nominate, all information required to be disclosed
in solicitations of proxies for election of directors, or as otherwise required,
in each case pursuant to Regulation 14A under the Exchange Act (including such
person's written consent to being named in the Proxy Statement as a nominee and
to serving as a director if elected); and (ii) as to the stockholder giving the
notice (A) the name and address of such stockholder as it appears on the
Company's books and (B) the class and number of shares of the Company that are
owned of record by such stockholder. See "Stockholder Proposals" for additional
requirements.
STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Company's Proxy Statement
relating to the 2000 Annual Meeting of Stockholders of the Company must be
received by no later than June 9, 2000 at the Company's principal executive
offices, 901 West Walnut Hill Lane, Irving, Texas 75038-1003, Attention: Legal
Department. Pursuant to the Company's Bylaws, to be timely, notice of business
to be brought before a stockholders meeting and notice by a stockholder of
nominations for election of a director at a meeting of stockholders, must be
delivered to the principal executive offices of the Company not less than 60
days and not more than 90 days prior to the meeting. However, in the event that
there is less than 70 days' notice or prior public disclosure of the date of the
meeting, in that case, to be timely, notice from the stockholder must be
received no later than ten (10) days following the day on which such notice of
the meeting date was mailed or such public disclosure was made. Alternatively,
in the case of an annual meeting, such notice must be delivered by the sixtieth
day before the anniversary date of the last annual meeting (November 13th was
the date of the 1998 Annual Stockholders' Meeting), assuming that such sixtieth
day is earlier than the tenth day following the day on which notice of the
meeting was mailed or public disclosure was made. The obligation of stockholders
to comply with the foregoing Bylaw provision is in addition to the requirements
of the proxy. Stockholders of the Company who intend to nominate candidates for
election as a director or to bring business before the meeting must also comply
with other applicable procedures set forth in the Company's Bylaws. See
"Stockholder Nomination of Director Candidates." The Company will furnish copies
of such Bylaw provisions upon written request to the Secretary of the Company at
the aforementioned address.
21
<PAGE> 24
AVAILABILITY OF FORM 10-K
The Company will provide to any stockholder, without charge, upon
written request of such stockholder, a copy of the Annual Report and Form 10-K
for the fiscal year ended July 31, 1999, as filed with the Securities and
Exchange Commission. Such requests should be addressed to Zale Corporation, 901
West Walnut Hill Lane, Irving, Texas 75038-1003, Attention: Investor Relations,
MS 6B-3.
The foregoing Notice and Proxy Statement are sent by order of the Board
of Directors.
ALAN P. SHOR
Executive Vice President and
Chief Operating Officer,
Secretary
22
<PAGE> 25
VOTE BY TELEPHONE AND INTERNET
24 HOURS A DAY, 7 DAYS A WEEK
[LOGO]
ZALE CORPORATION
TELEPHONE
800-650-4644
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in
the box below, and then follow the simple directions.
INTERNET
http://proxy.shareholder.com/zlc
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the website. You will be prompted to enter your control number, located
in the box below, to create an electronic ballot.
MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided.
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned the proxy card.
If you have submitted your proxy by telephone of the Internet there is no need
for you to mail back your proxy.
PLEASE NOTE THAT THE TELEPHONE AND INTERNET VOTING WILL CEASE AT 5:00 PM EST ON
NOVEMBER 4, 1999.
CALL TOLL-FREE TO VOTE o IT'S FAST AND CONVENIENT
CONTROL NUMBER FOR
800-650-4644 TELEPHONE OR INTERNET VOTING
DETACH PROXY CARD HERE IF YOU ARE NOT
VOTING BY TELEPHONE OR INTERNET
- --------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
ITEMS 1,2 AND 3. MANAGEMENT RECOMMENDS A VOTE FOR ITEMS 1,2 AND 3.
1. To elect eight directors for terms that will expire at the 2000 annual
meeting of stockholders.
FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below [ ] for all nominees listed below. [ ] [ ]
NOMINEES: 01 - Robert J. DiNicola, 02 - Beryl B. Raff, 03 - Glen Adams,
04 - Peter P. Copses, 05 - A. David Brown, 06 - Richard C. Marcus,
07 - Charles H. Pistor, Jr. and 08 - Andrew H. Tisch
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED
BELOW)
* Exceptions
-----------------------------------------------------------------
2. To ratify the appointment of Arthur Andersen LLP as the Company's independent
public accountants.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Change of Address and/
or Comments Mark Here [ ]
If you agree to access our Annual Report
and Proxy Statement electronically
in the future, please mark this box. [ ]
Please sign exactly as name appears on Stock Certificate. If
stock is held in the name of two or more persons, all must
sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Date: , 1999
---------------------------------------------------
--------------------------------------------------------------
Signature
--------------------------------------------------------------
Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK. [X]
PLEASE DETACH HERE
YOU MUST DETACH THIS PORTION OF THE PROXY CARD
BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE
<PAGE> 26
[LOGO]
ZALE CORPORATION
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of Zale
Corporation to be held at 10:00 a.m., November 5, 1999 at the University Club
of Dallas at the Galleria, located at 13350 Dallas Parkway, Suite 4000, Dallas,
Texas 75240-9933. Whether or not you attend the meeting, we hope that you will
be represented at the meeting by signing and returning the enclosed proxy card
in the accompanying envelope as promptly as possible. Thank you for your
consideration of the matters presented.
Sincerely,
/s/ ROBERT J. DINICOLA
Robert J. DiNicola
Chairman of the Board
- DETACH PROXY CARD HERE -
PROXY ZALE CORPORATION PROXY
901 West Walnut Hill Lane
Irving, Texas 75038-1003
COMMON STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, NOVEMBER 5, 1999
The undersigned appoints ROBERT J. DINICOLA and ALAN P. SHOR, each of
them, proxies with full power of substitution, to represent and to vote as set
forth herein all the shares of Common Stock of Zale Corporation held of record
by the undersigned on September 23, 1999, at the Annual Meeting of Stockholders
of Zale Corporation (the "Company") to be held at the University Club of the
Galleria, located at 13350 Dallas Parkway, Suite 4000, Dallas, Texas 75240-9933
at 10:00 a.m. local time, on Friday, November 5, 1999, and any adjournments
thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
ZALE CORPORATION
P.O. BOX 11072
NEW YORK, N.Y. 10203-0072
