________________________________________________
PROXY DESIGNATION AND INSTRUCTION CARD
_________________________________________________
ZION'S COOPERATIVE MERCANTILE INSTITUTION
Salt Lake City, Utah 84137
THIS PROXY DESIGNATION AND INSTRUCTION IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
to be held on
May 21, 1997
The undersigned hereby appoints Richard H. Madsen and Keith C. Saunders, or
either of them, jointly or severally as agent and Proxy for the undersigned,
with full power of substitution, to vote the shares of Zion's Cooperative
Mercantile Institution's common stock held by the undersigned to the same
extent which the undersigned would be entitled to vote such shares if
personally present at the Annual Meeting of Shareholders of Zion's Cooperative
Mercantile Institution, or any adjournment thereof, to be held in the Memorial
House in Memory Grove, 485 No. Canyon Road, Salt Lake City, Utah, on
Wednesday, the 21st day of May, 1997, at 2:30 o'clock P.M. for the purpose of
electing Directors and for the purpose of conducting any other business
properly brought before the Meeting.
Without limiting the general powers hereby conferred, the undersigned
instructs said Proxies to vote as specified on the reverse side hereof. Shares
represented by signed Proxy Designations & Instructions will be voted: (1) as
specified on the matters listed on the reverse side of this form; (2) in
accordance with the Directors' recommendations where a choice is not
specified; and (3) in accordance with the judgment of the Proxies on any other
matters that properly come before the meeting.
(Please complete and sign on reverse side)
<PAGE>
1. ELECTION OF DIRECTORS FOR all nominees WITHHOLD AUTHORITY
(The Directors recommend listed below to vote
a vote for all nominees (except as marked
to the contrary below)
(INSTRUCTION: TO VOTE FOR SOME BUT WITHHOLD AUTHORITY TO VOTE FOR ANY
OTHER INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST BELOW AS TO WHICH YOU WITHHOLD
AUTHORITY.)
R. Barry Arnold, Fred S. Ball, Spencer F. Eccles, Lela Ence, A. Blaine
Huntsman, James S. Jardine, Patricia Madsen, Richard H. Madsen, and Keith
C.Saunders.
IMPORTANT: Please sign exactly as your name appears.
DATED:_____________________________, 1997
When shares are held by joint
tenants, both should sign. When signing
as attorney, as executor, administrator,
__________________________________________
trustee or guardian, please give (Stockholder's Signature)
full title as such. If a corporation,
please sign in full corporate name by
__________________________________________
President or other authorized (Joint Stockholder's Signature (if any))
officer. If a partnership, please sign
in partnership name by authorized person.
_______________________________________________________
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
PLEASE INDICATE ANY CHANGE OF ADDRESS
__________________________________________________
(Street and Number)
__________________________________________________
(City) (State) (Zip Code)
<PAGE>
ZION'S COOPERATIVE MERCANTILE INSTITUTION
2200 South 900 West
Salt Lake City, Utah 84137
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 21, 1997
To the Shareholders of
ZION'S COOPERATIVE MERCANTILE INSTITUTION
Pursuant to the laws of the State of Utah and its Bylaws, the Annual
Meeting of the Shareholders of Zion's Cooperative Mercantile Institution ("the
Corporation") will be held in the Memorial House in Memory Grove, 485 No.
Canyon Road, Salt Lake City, Utah, on Wednesday, May 21, 1997 at 2:30 p.m. for
the following purposes:
1. To elect a Board of Directors for the ensuing year,
2. To transact such other business as may properly come before the
meeting and any adjournments thereof.
The close of business on Tuesday, April 15, 1997, was fixed by the Board
of Directors as the time for the determination of the shareholders of record
entitled to notice of and to vote at the Annual Meeting and any and all
adjournments thereof.
We hope that all shareholders who can conveniently do so will attend the
Annual Meeting in person. Whether or not you expect to attend, it will
facilitate the conduct of the Corporation's business if you will immediately
sign the enclosed proxy instruction card and return it in the envelope
provided in order that your shares may be represented at the Annual Meeting.
No postage is required if the proxy instruction card is mailed in the United
States.
By ORDER OF THE BOARD OF DIRECTORS
Dated at Salt Lake City, Utah
April 21, 1997
KEITH C. SAUNDERS
Executive Vice President and Secretary
<PAGE>
Z C M I
ZION'S COOPERATIVE MERCANTILE INSTITUTION
2200 South 900 West
Salt Lake City, Utah 84137
PROXY STATEMENT
April 21, 1997
GENERAL INFORMATION FOR SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Zion's Cooperative Mercantile Institution, a Utah
corporation (hereinafter called the "Corporation") of Proxy Designations and
Instructions for use at the Corporation's Annual Meeting of Shareholders to be
held in the Memorial House in Memory Grove, 485 No. Canyon Road, Salt Lake
City, Utah on Wednesday, May 21, 1997 at 2:30 p.m., and at any and all
adjournments thereof.
A Proxy Designation and Instruction Card ("Proxy Card") is enclosed for
your use in voting at the Annual Meeting. You are requested to date and sign
the enclosed Proxy Card, and to return it in the envelope provided. All duly
executed Proxy Cards received prior to the Annual Meeting will have the shares
represented thereby voted in accordance with the choices specified therein.
As to any matter for which no choice has been specified in a duly executed
Proxy Card, the shares represented thereby will be voted at the Meeting or any
adjournment thereof for election as directors all of the nominees listed
herein, and otherwise as recommended by the Directors, or otherwise as deemed
appropriate by the Proxies on other business properly coming before the
meeting. Any shareholder signing a Proxy Card has the power to revoke his/her
voting directions at any time before the designated Proxies vote at the Annual
Meeting by notifying the Secretary of the Corporation in writing prior to 2:30
p.m. M.S.T. on May 21, 1997, or by voicing such revocation in person at the
Annual Meeting at the time voting occurs. If you wish to give your proxy to
someone other than the named Proxies on the enclosed Proxy Card, you may do so
by crossing out the names of all of the designated Proxies and writing in the
name of another person or persons (not more than two). The signed Proxy Card
must be presented at the Meeting by the person or persons you have designated
on the card.
The cost of preparing, assembling and mailing these proxy materials will
be borne by the Corporation. The solicitation of Proxy Designations and
Instructions by the Board of Directors is being made by mail, and in addition
may be made by officers and directors of the Corporation, or their agents, in
person or by telephone. No additional compensation will be given to officers
or directors for such solicitation. Non-employee agents of the Board of
Directors may be retained to assist in the proxy solicitation process at a
cost to the Corporation, if any, not expected to exceed $10,000. Custodians
of securities held for shareholders of record (e.g., banks, brokers, etc.) may
be paid their reasonable out-of-pocket expenses incurred in forwarding proxy
materials to shareholders.
This Proxy Statement, the enclosed Proxy Card, and the Corporation's
1996 Annual Report to Shareholders are being sent to Shareholders for delivery
beginning May 5, 1997. Shareholders who have not received a copy of any of
these materials should contact the Corporation at (801) 579-6404 to obtain a
copy.
VOTING AT THE ANNUAL MEETING
Shareholders of record will be entitled to one vote for each share of
Common Stock held at the close of business on April 15, 1997, which is the
record date for determination of the shareholders entitled to notice of and to
vote at the Annual Meeting and at any and all adjournments. Shares may be
voted, without cumulation, as to each Director-nominee, and as to any other
proposal for shareholder action as may properly come before the Annual
Meeting. On April 15, 1997, the Corporation had 2,202,363 shares (2,168,942
issued less 12,579 treasury shares plus 46,000 restricted shares) of Common
Stock (par value $0.001) issued and outstanding. The issued and outstanding
shares do not include any shares of stock options.
The presence in person or by proxy of a majority of the outstanding
voting shares is required to constitute a quorum at the Annual Meeting. A
plurality of votes cast at the Annual Meeting is required to elect each
Director. Only Proxies marked "FOR all nominees (except as marked to the
contrary below)" or "WITHHOLD AUTHORITY to vote all nominees below" will be
cast in the election of Directors and considered in determining the plurality
of votes in favor of a Director-nominee. Abstentions and broker non-votes
will not be counted in determining the shares voting or the plurality of votes
for any Director nominee. Certain shareholders beneficially owning, as a
group, in excess of 50% of the outstanding shares have indicated an intention
to vote in favor of all nominations for director. Such votes, if cast, will
be determinative of the voting results with the election of Directors.
PRINCIPAL SHAREHOLDERS
The following table provides information with respect to any person
known to the Corporation to be the beneficial owner (within the meaning of
applicable governmental regulations) of five percent (5%) or more of any class
of the Corporation's voting securities as of April 15, 1997:
<TABLE>
Table 1
Amount and Nature of Percent
Name and Address Title of Class Beneficial Ownership of Class
<S> <C> <C> <C>
Corp. of the President Common Stock 1,127,989 shares 51.22%
The Church of Jesus Christ
of Latter-Day Saints
47 East South Temple
Salt Lake City, UT 84150
Richard H. Madsen & Common Stock 188,167 shares* 8.54%
Mary Louise M. Rawlings Co-TR
1300 Walker Center
175 South Main St.
Salt Lake City, UT 84111
</TABLE>
_______________________
*Includes 146,905 shares as to which Mr. Madsen shares voting and
investment power as a co-trustee of Francis A. Madsen Family Voting Trust.
MANAGEMENT OF THE CORPORATION
Board of Directors
The business of the Corporation is managed under the direction of its
Board of Directors, currently chaired by Richard H. Madsen. The Directors
have responsibility for establishing broad corporate policies and for the
overall performance of the Corporation. The Directors are not, however,
involved in operating the Corporation's business on a day-to-day basis. This
day-to-day management is entrusted to the Executive Officers elected by the
Board of Directors. The Board is kept advised of the Corporation's business
through regular written reports, analyses, and discussions with the Executive
Officers of the Corporation.
The Board meets on a regularly scheduled basis during the year to review
significant developments affecting the Corporation and to act on matters
requiring Board approval. It also holds special meetings when an important
matter requires Board action between scheduled meetings. Members of senior
management are regularly invited to Board meetings to report on and discuss
their areas of responsibility. The Directors met six times as a full Board
during 1996. All Directors attended all of these meetings.
The Directors of the Corporation beneficially own, as a group, 319,884
shares of the Corporation's Common Stock (including 35,300 currently
exercisable but unexercised option shares and 32,000 shares of restricted
stock ), or 14.52% of the Corporation's outstanding Common Stock as of April
15, 1997.
The Bylaws permit payment of Directors' expenses incurred in attending
meetings and some, but not all, of the Directors received reimbursement for
such expenses. Additionally, fees of $700 were paid to Directors for each of
the six meetings held.
The Executive Committee of the Board of Directors exercises the powers
of the Board in the management of the business and affairs of the Corporation
between the Board's regularly scheduled meetings. The Executive Committee
serves as the nominating committee for the election of Directors and,
although there are no formal procedures for shareholders to recommend
nominations, the Committee will consider any recommendations from shareholders
that may be made. The Executive Committee also functions as the Retirement
Committee and administers the plans and retirement programs of the
Corporation, including a review of the actuary reports, and reports to the
Board of Directors. Also, the Executive Committee makes compensation
recommendations to the Board for all corporate officers. The Executive
Committee keeps regular minutes of its meetings and reports to the Board at
the regular Directors' meetings. The Executive Committee met 11 times during
the year. All members attended all meetings except Mr. Jardine who attended
nine meetings. Members of the Executive Committee are paid an annual fee of
$6,000 for their service which is in addition to any other fees earned as a
Director of the Corporation.
The Audit Committee of the Board, which met twice during 1996, reports
to the Board of Directors with respect to various auditing and accounting
matters, the scope of the audit procedures, the performance of the internal
auditors, and accounting practices of the Corporation. All members attended
all meetings. Fees of $400 are paid to Committee Members for each meeting
held.
Information on Executive Officers
Set forth in Table 2, below, are the names, ages, positions and
beneficial ownership of shares (as of April 15, 1997) in the Corporation of
all Executive Officers, other than Messrs. Madsen, Saunders, and Arnold whose
biographical information is disclosed together with the other nominees for
Director in Table 7, below. Executive Officers serve until the election of
their successors by the Board of Directors.
Table 2 - Executive Officers of the Corporation
Nancy Mortensen, 54, is the Corporation's Vice President-Marketing. Ms.
Mortensen is the beneficial owner of 24,050 shares of the Corporation's Common
Stock, including 12,500 option shares exercisable within 60 days but not yet
exercised and 10,000 shares of restricted stock.
Darrell F. Robinette, 70, is the Corporation's Vice President-Stores.
Mr. Robinette is the beneficial owner of 21,000 shares of the Corporation's
Common Stock, including 4,000 shares of restricted stock and 10,000 option
shares exercisable within 60 days but not yet exercised.
All current Executive Officers as a group (5 persons), beneficially own
278,096 shares, or 12.63%, of the Corporation's Common Stock (of which 57,800
shares are option shares exercisable within 60 days of the record date but not
yet exercised and 46,000 shares are restricted stock.)
COMPENSATION OF EXECUTIVE OFFICERS
The Executive Committee acts as the Compensation Committee of the Board
of Directors as to compensation of Executive Officers. Messrs. Madsen and
Saunders do not vote on Executive Officer compensation matters.
BASE SALARY. In assessing salaries and salary increases, the primary
factors considered are: the Committee's assessment of performance on
the job, salaries of comparable jobs in similar size retail companies,
and compensation that the Committee believes will help attract, motivate
and retain qualified executives.
Chief Executive Officer Salary Action. In an effort to pay Mr.
Madsen a salary more in line with the Committee's view of his
performance and position, Mr. Madsen was given base salary raises
of 8.5%, 6%, and 0% respectively in 1994, 1995, and 1996.
Other Named Executive Officers. The other Executive Officers
named in Table 3 received increases ranging between 4.4% to
15.4%, 2.8% to 4%, and 0% respectively in 1994, 1995, and 1996,
based on subjective evaluations made by the Committee in
consultation with Mr. Madsen.
SHORT-TERM INCENTIVES. All the named Executive Officers participate in
an annual cash bonus plan. The bonuses awarded are 3% of the increase
or decrease in the Corporation's pretax profits from year to year added
to or subtracted from the previous year's bonus. Bonuses are
distributed between the executive officers based on base salary and
rating points determined by an officer's position in the Corporation.
Bonuses awarded in 1994, 1995, and 1996 amounted to $191,950, $187,581,
and $0 respectively, for all executive officers combined. Bonuses are
earned in the preceding year and paid in March the following year after
Company profits are determined in the second close of the Company books.
This is prior to audited results.
LONG-TERM INCENTIVES. Stock options have been awarded based on a plan
approved by shareholders in 1982 at an exercise price of $16.50 and in
1996 at an option price of $11.25. During the year the Board approved
46,000 shares of common stock to be awarded to executive officers and
124,000 shares of common stock as stock options granted to the executive
officers and key management associates of the Company. There are 80,000
stock options that have not been granted. (See Table 5)
The Committee believes that this compensation mix is in the best
interests of the shareholders and supports the business and financial
objectives of the organization.
Richard Madsen, Chairman
Patricia Madsen
James S. Jardine
Keith C. Saunders
Table 3, below, is a statement of compensation paid by the Corporation
during 1996 to its Chief Executive Officer and to each of the four (4)
Executive Officers who were paid in excess of $100,000 in salary and bonus
during the year.
<TABLE>
Table 3 - SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
Compensation Awards
Name and Year Salary(1) Bonus(2) Stock Awards Options All Other
Principal Position /SARS compensation(3)
<S> <C> <C> <C> <C> <C> <C>
Richard H. Madsen 1996 $233,184 $ -0- $135,000 13,000 $2,862
President & CEO 1995 $220,354 $62,483 -0- -0- $4,254
1994 $206,593 $65,044 -0- -0- $4,161
Keith C. Saunders 1996 $150,000 $ -0- $112,500 11,000 $1,830
Executive Vice 1995 $149,415 $41,699 $ -0- -0- $2,785
Pres. Secretary 1994 $144,890 $43,324 $ -0- -0- $2,769
& CFO
R. Barry Arnold 1996 $123,800 $ -0- $112,500 10,000 $1,594
Vice President 1995 $123,092 $31,327 $ -0- -0- $2,387
1994 $117,366 $32,603 $ -0- -0- $2,302
Darrell F. 1996 $105,040 $ -0- $ 45,000 10,000 $1,351
Robinette 1995 $104,418 $26,166 $ -0- -0- $1,961
Vice President 1994 $100,045 $27,201 $ -0- -0- $1,923
Nancy Mortensen 1996 $104,000 $ -0- $112,500 10,000 $1,413
Vice President 1995 $103,385 $25,906 $ -0- -0- $2,052
1994 $ 97,110 $23,778 $ -0- -0- $1,920
</TABLE>
1 Amounts shown as Salary include directors' fees, if any, paid by
the Corporation, but do not include expenditures for company cars
or merchandise or service discounts made available to the
Executive Officers, or other expenses paid by the Corporation on
behalf of or reimbursed to Executive Officers, which the
Corporation believes constitute ordinary and necessary
business-related expenses. All such expenses are paid or reimbursed
by the Corporation in the interest of assisting those individuals to
do their jobs effectively, and to attract and retain qualified
personnel and clients, and do not exceed $25,000 per Executive
Officer per year.
2 Amounts shown as bonus are earned in the preceding year but are
not paid until March of the year indicated.
3 Amounts shown include contributions by the Corporation to the
Employee Savings Plan (a 401(k) plan open to all full-time
employees of the Corporation). The named Executive Officers were
able to contribute up to 3.06% of their annual and bonus salary
(up to $150,000) to this plan in 1996, up to the IRS limitation of
$9,500 and the Corporation contributed a matching amount equal to
40.8% of the Executive Officers contribution.
Compensation/Benefit Plans.
Compensation and benefit plans available generally for employees of the
Corporation that are available to Executive Officers are as follows:
Retirement Plan. After one year of employment, employees of the
Corporation who are age 21 and older and who work 1,000 hours or more each
year become participants in the ZCMI Retirement Plan, which is fully funded by
the Corporation. At the time of a participant's retirement, the
benefit payable is equal to the sum of the benefit earned as of April 30,
1990, plus, commencing May 1, 1990, the total of 1% of taxable earnings for
each year of Credited Service. The benefit for retirement prior to age 65 is
actuarily adjusted for the age difference. The Plan allows vesting of
employer contributions after five (5) years of service.
The figures shown in Table 4, below, are estimated annual benefits as of
December 31, 1996, based upon retirement at age 65 under the Retirement Plan.
Table 4 - Annualized Retirement Plan Projection
<TABLE>
Yearly Salary 10 Years of 15 Years of 20 Years of 25 Years of 30 Years of
Service Service Service Service Service
<S> <C> <C> <C> <C> <C>
$100,00 10,000 15,000 20,000 25,000 30,000
$125,00 12,500 18,750 25,000 31,250 37,500
$150,00 15,000 22,500 30,000 37,500 45,000
$200,00 20,000 30,000 40,000 50,000 60,000
$250,00 25,000 37,500 50,000 62,500 75,000
</TABLE>
These estimated annual benefits on Retirement have been computed on the basis
of assumed continuation of remuneration at their respective rates as received
for 1991 until retirement at age 65 and the earned benefit frozen as of
December 31, 1989. The Corporation does not have any supplemental retirement
plan for its Executive Officers. Salary for purposes of the Retirement Plan
does not include Directors' fees. (Benefits shown on Table 4 are in addition
to the "frozen" benefit calculated at December 31, 1989. For Messrs. Saunders,
Arnold, and Robinette this amount is $25,352.88, $18,999.82, and $24,409.09
respectively. For Ms. Mortensen this amount is $13,461.69.) As of December
31, 1996 the credited years of service under the retirement plan for the
Executive Officers named in Table 3 were seven years for Mr. Madsen, 22 years
for Mr. Saunders, 28 years for Mr. Arnold, 22 years for Mr. Robinette, and 34
years for Ms. Mortensen.
Employee Savings Plan. The Corporation's 401(k) salary deferral plan
allows covered employees to make pre-tax contributions of up to 16% of salary
(but no more than $9500 for 1996) to their Plan account. To meet
requirements of applicable law, highly paid employees were limited to a
maximum salary deferral of 4% of salary in 1994. The Corporation contributes
a matching amount equal to 50% of the eligible employee's contribution for the
first 2% of pay contributed and a 25% match on amounts over 2% of pay, up to a
maximum of 2% of a participating employee's salary. Covered employees have a
choice of ten (10) investment plans into which they may direct their
contributions and the matching employer contribution in the Plan. An employee
is fully vested in the employer contribution to the Plan after 2 years of
service. Employer matching contributions made for the benefit of the five
Executive Officers named in Table 3 are shown under "All Other Compensation".
Stock Options Granted in 1996. Table 5, below, shows the stock options
granted to each of the executive officers named in Table 3 during 1996. Some
executive officers were granted two rounds of stock options with differing
terms.
Table 5
<TABLE>
Individual Grants Black-Scholes
Grant Date
Value
Name Number of Percent of Exercise or Expiration Grant Date
Securities Total Base Price Date Present
Underlying Options/ ($/share) Value
Options/SARs SARs ($)
Granted Granted to
(#) Employees in
Fiscal Year
1996
<S> <C> <C> <C> <C> <C>
Richard H. Madsen 13,000 7.65% $11.25 8-27-2006 $22,360
Keith C. Saunders 11,000 6.47% $11.25 8-27-2006 $15,730
R. Barry Arnold 1,300* 17.56% $16.50* 7-14-1997
10,000 5.88% $11.25 8-27-2006 $17,200
Darrell F. 10,000 5.88% $11.25 8-27-2006 $14,300
Robinette
Nancy Mortensen 2,500* 33.78%* $16.50* 7-14-1997
10,000 5.88% $11.25 8-27-2006 $18,200
All Executives 3,800* 51.35%* $16.50* 7-14-1997
as a Group (five 54,000 31.76% $11.25 8-27-2006 $87,790
persons, including
those named above)
</TABLE>
*A separate grant of short term options at a $16.50 exercise price was made to
several executive officers and to certain other employees.
Aggregated Option-SAR Exercises in last Fiscal Year and FY-End Option-SAR
Values. Table 6, below, sets out the aggregate Option-SAR Exercises by the
named Executive Officers in Table 3, and by all executive officers as a group,
during 1996, and also sets out numbers of shares of Common Stock underlying
currently outstanding options and the putative value of such options at fiscal
year-end.
Table 6
<TABLE>
Name Number of Value Number of Value of
Shares Realized Securities Unexercised
Acquired On ($) Underlying In-the-Money
Exercise Unexercised Options/SARs at
Options/SARs at Fiscal Year-End
Fiscal Year-End ($)
(#) (Exercisable/
(Exercisable/ UnExercisable)
Nonexercisable)
<S> <C> <C> <C> <C>
Richard H. Madsen -0- $0.00 13,000* $16,250
Keith C. Saunders -0- $0.00 11,000* $13,750
R. Barry Arnold -0- $0.00 1,300# $( 5,200)
10,000* $13,750
Darrell F. Robinette -0- $0.00 10,000* $13,750
Nancy Mortensen -0- $0.00 2,500# $(10,000)
10,000* $13,750
All Executive -0- $0.00 3,800# $( 5,200)
Officersas a Group 54,000* $71,250
(5 persons
including those named
above)
# options exercisable within sixty days
*options not yet exercisable
</TABLE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Some of the Directors and Executive Officers of the Corporation, members
of their immediate families, and corporations and organizations of which they
are executive officers or in which they or their immediate families have at
least a 10% interest, are customers of, or service providers to, the
Corporation. Between January 1, 1996 and December 31, 1996, these persons
have had immaterial business transactions in the ordinary course of business
with the Corporation, all of which were on substantially the same terms as
those prevailing at the time for comparable transactions with unaffiliated
persons, and did not involve more than the normal risk of collectibility or
present other unfavorable features. The Corporation expects to continue to
have such transactions on similar terms in the future.
COMPLIANCE WITH SECTION 16 REPORTING OBLIGATIONS
The Directors and Executive Officers of the Corporation are required
under the Securities Exchange Act of 1934 to file reports with the Securities
and Exchange Commission evidencing their ownership of, and their current
transactions in, the Corporation's common stock. This is a personal
obligation of the Executive Officers and Directors. Based on information
provided to the Corporation by its Directors and Executive Officers, it
appears that all Directors and Executive Officers have timely filed these
reports during 1996.
A Severance Pay Plan is available for all associates who have worked
full time for at least one year including Executive Officers. The plan pays
one week's pay for those who have worked one year but less than two years, and
two weeks' pay for those who have worked more than two years.
LAST YEAR'S (1996) ANNUAL MEETING
The 1996 Annual Meeting of the Shareholders was held on May 22, 1996 in
Salt Lake City, Utah. There were 1,701,740 shares of Common Stock present at
the 1996 Annual Meeting in person or by proxy, which number was 78.7% of those
entitled to vote, and thus constituted a legal quorum. Each of the nominees
to the Board of Directors was voted upon separately, and each was elected by
the affirmative vote of more than 77% of the shares present and voting.
Motion #2 concerning ZCMI listing on a national stock exchange was defeated by
a vote of 72% of the shares present and voting. Motion #3 to approve the ZCMI
1996 Equity-based Incentive Plan was approved by over 74% of the shares
present and voting.
PROPOSALS FOR SHAREHOLDER ACTION
Election of Directors
The persons named in Table 7, below, have been nominated by the
Executive Committee for election to the Board of Directors of the Corporation,
to serve until the next Annual Meeting or until their successors are elected
and qualified. Additional nominations will be accepted from the floor at the
Annual Meeting, and interested shareholders are invited to suggest names to
the Executive Committee from time to time for nomination as a Director of the
Corporation.
The Bylaws of the Corporation provide for a Board of Directors of up to
20 members. Nine (9) Directors are being nominated by the Executive Committee
for election at the 1997 Annual Meeting. The Board knows of no reason why any
nominee may be unable to serve as a Director. If any nominee is unable to
serve, the shares represented by all valid proxies will be voted for the
election of such other person as the Board may recommend, or the Board may
reduce the number of Directors to eliminate the vacancy. It is the intention
of the Proxies to vote FOR the election of ALL of the nominees listed in
Table 7, below, in the absence of contrary direction. All of the nominees are
current Directors, and were elected to their present term of office by a vote
of shareholders at the 1996 Annual Meeting.
There is set forth below, in Table 7, as to each of the nine (9)
nominees for election as a Director, his/her age, the year he/she became a
Director of the Corporation, his/her principal occupation, his/her business
experience during the past five years, other directorships held at this time
and beneficial stock ownership in the Corporation. Directors serving on the
Executive (*) or Audit (+) Committees of the Board are also so identified:
Table 7 - Nominees for Director
R. BARRY ARNOLD, 52, has been a Director of the Corporation since 1990. He
is Vice President and General Merchandise Manager of the Corporation. Mr.
Arnold beneficially owns 21,667 shares of the Corporation's Common Stock,
including 11,300 option shares exercisable within 60 days but not yet
exercised and 10,000 shares of restricted stock. This amount represents
approximately .98% of the issued and outstanding shares at the Record Date.
FRED S. BALL, 64, has been a Director of the Corporation since 1996. He is a
Senior Vice President of Zions First National Bank and President of CreaCtive
Marketing. He previously served as President and Chief Executive Officer of
the Salt Lake Area Chamber of Commerce. He is also serving as a Director of
Dick Simon Trucking Company. Mr. Ball beneficially owns 400 shares of the
Corporation's Common Stock.
+SPENCER F. ECCLES, 62, has been a Director of the Corporation since 1976. He
is Chairman, Chief Executive Officer, and a Director of First Security
Corporation (a bank holding company). Mr. Eccles is also a Director of
Anderson Lumber Company and Union Pacific Corporation. He is the beneficial
owner of 7,500 shares of the Corporation's Common Stock.
LELA "LEE" ENCE, 69, has been a Director of the Corporation since 1987. She
retired as Executive Director of the University of Utah Alumni Association in
1989. Mrs. Ence beneficially owns 491 shares of the Corporation's Common
Stock.
+A. BLAINE HUNTSMAN, 60, has been a Director of the Corporation since 1977.
He was Chairman and Chief Executive Officer of Olympus Capital Corporation,
the holding company of Olympus Bank, until its acquisition by Washington
Mutual in April 1995. He is also aTrustee of The Achievement Funds Trust, a
group of seven mutual funds. Mr. Huntsman is a former Dean and professor of
the College of Business at the University of Utah. Mr. Huntsman beneficially
owns 3,700 shares of the Corporation's common Stock.
*JAMES S. JARDINE, 50, has been a Director of the Corporation since 1985. He
is the managing partner of the law firm of Ray, Quinney & Nebeker (which acts
as legal counsel to the Corporation). Mr. Jardine beneficially owns 400
shares of the Corporation's Common Stock.
*+PATRICIA MADSEN, 68, has been a Director of the Corporation since 1976. She
is President of Sterling Furniture Company, and beneficially owns 74,347
shares of the Corporation's Common Stock.1,3
*RICHARD H. MADSEN, 58, has been a Director of the Corporation since 1988 and
is currently the Chairman, President and Chief Executive Officer of the
Corporation. He was formerly Chairman and Chief Executive Officer and is
currently a Director of Madsen Furniture Galleries. He is also a Director of
Zions Bancorporation. Mr. Madsen beneficially owns 188,167 shares of the
Corporation's Common Stock which includes 12,000 shares of restricted stock
and 13,000 option shares exercisable within 60 days but not yet exercised.
This amount represents approximately 8.32% of the issued and outstanding
shares at the Record Date.2,3
*KEITH C. SAUNDERS, 54, has been a Director of the Corporation since 1981, and
is Executive Vice President, Chief Financial Officer and Secretary of the
Corporation. Mr. Saunders beneficially owns23,212 shares of the Corporation's
Common Stock which includes 10,000 shares of restricted stock and 11,000
option shares exercisable within 60 days but not yet exercised. This amount
represents approximately 1.05% of the issued and outstanding shares at the
Record Date.
______________________
1 Includes 30,972 shares as to which Ms. Madsen shares voting and
investment power as a co-trustee or controlling partner of various
Madsen family trusts and partnerships, but not including any
shares shown for Richard Madsen, as co-trustee, above.
2 Includes 146,905 shares held of record by the Francis A. Madsen
Family Voting Trust, as to which Mr. Madsen is Co-Trustee.
3 Madsen Furniture Galleries and Sterling Furniture Co., of which
Mr. Madsen and Ms. Madsen are directors, respectively, compete
with the Corporation's furniture sales.
Historical Performance of ZCMI Stock
The following table and graph compares the cumulative total shareholder
return on a hypothetical $100 purchase of ZCMI common stock on December 31,
1991 over a five-year period, to that of a hypothetical $100 purchase of (i)
Retail Department Stores stock price index, (ii) Retail Composite including
department stores stock price index, and (iii) the average of the high and low
stock prices of the Standard & Poor's Retail Stores Composite stock price
index as of the same date. The four indices assume reinvestment of
dividends.
(Performance Graph deleted)
<TABLE>
Cumulatvie Shareholder Return
MEASURE Base92 Jan 93 Jan 94 Jan 95 Jan 96 Jan 97
<S> <C> <C> <C> <C> <C> <C>
ZCMI Common 100.00 82.25 101.60 118.55 137.94 157.62
Retail Composite 100.00 119.36 115.04 106.53 114.87 137.12
Retail DS-500 100.00 111.64 128.01 113.47 135.53 145.61
S&P 500 Index 100.00 110.58 124.82 125.48 174.00 219.83
</TABLE>
OTHER BUSINESS
Management does not know of any other business to be presented at the
Meeting. However, if any other business is presented, it is the intention of
the Proxies to vote according to their best judgment with respect to such
other business.
On written request, the Corporation will provide, without charge, a copy
of the Corporation's Form 10-K Report for 1996 filed with the Securities and
Exchange Commission (including the financial statements and the schedules
thereto and a list briefly describing the exhibits thereto) to any
shareholder. The reports will be available for mailing in May, 1997, and
requests should be sent to: Keith C. Saunders, Executive Vice President and
Chief Financial Officer, 2200 South 900 West, Salt Lake City, Utah 84137.
INDEPENDENT AUDITORS
Upon recommendation of its Audit Committee, the Board of Directors has
appointed Deloitte & Touche LLP as the independent auditors to examine the
accounts of the Corporation and its subsidiaries for the year ending January
31, 1998. This firm has audited the Corporation's accounts for many years and
is one of the largest and best known firms of independent certified public
accountants. A member of the firm will be in attendance at the Annual Meeting
to make a statement on behalf of the firm if he so desires and to answer
appropriate questions, if any, from shareholders.
DEADLINE FOR SHAREHOLDER PROPOSALS
If any shareholder wishes to present a proposal for action at the 1998
Annual Meeting of the Shareholders, the shareholder must comply with
applicable Securities and Exchange Commission Regulations, including adequate
notice to the Corporation. Any proposal must be submitted in writing by
Certified Mail -- Return Receipt Requested, to Zion's Cooperative Mercantile
Institution, Attention: Secretary of the Corporation, 2200 South 900 West,
Salt Lake City, Utah, 84137, on or before December 31, 1997.
