<PAGE>
ZIONS CO-OPERATIVE MERCANTILE INSTITUTION
2200 South 900 West
Salt Lake City, Utah 84137
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE ACT
of 1934 AND RULE 14f-1 THEREUNDER
November 12, 1999
Dear ZCMI Shareholder:
As you know, Zions Co-operative Mercantile Institution
("ZCMI") has agreed to merge with The May Department Stores
Company ("May"). Following the merger, ZCMI will be a wholly
owned subsidiary of May. Under the terms of the merger
agreement, for each share of ZCMI common stock that you own you
will receive a fraction of a share of May common stock equal to
$22.50. We expect to complete the merger by December 31, 1999.
We will send you more detailed information about the merger
at a later date when we send you proxy materials for a special
shareholder's meeting at which you will vote on the merger
agreement. Right now, we wanted to let you know about a change
to the composition of our board of directors that will take place
within the next few weeks. We will reduce the size of the board
to five members. Five long-time members of our current board of
directors will step down from the board. Three nominees from May
will join the remaining two members of the board.
The following pages explain why this change is happening.
This document also includes information about the board of
directors and our executives that updates the information in the
proxy statement you received in April, 1999. The Securities and
Exchange Commission requires us to provide you with this
information in connection with the change to the board of
directors. You should read this document carefully; however, you
do not need to take any action at this time.
Very truly yours,
Richard H. Madsen
Chairman, President and
Chief Executive Officer
<PAGE>
General
We are mailing this Information Statement to you on or about
November 12, 1999, to comply with Section 14(f) of the Securities
Exchange Act, and Rule 14f-l promulgated under that Act. May has
provided the information about May and the May board designees.
We encourage you to read this Information Statement carefully.
ZCMI common stock is the only class of equity securities of
ZCMI outstanding. Only shares of ZCMI common stock are generally
entitled to vote, including in the election of ZCMI's directors,
and each share of ZCMI common stock is entitled to one vote. As
of the close of business on October 14, 1999, 2,209,159 shares of
ZCMI common stock were issued and outstanding.
The board of directors of ZCMI currently consists of seven
directors, with a minimum of five and a maximum of 20 directors
provided for under ZCMI's bylaws. Each director serves for a
term of one year until the next annual meeting of shareholders
and until his or her successor is duly elected and qualified.
Rights to Designate Directors and May Designees
The merger agreement provides that we cannot complete the
merger until the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 ("HSR Act") has expired or
terminated. The merger agreement also provides that when the HSR
Act waiting period has expired or is terminated, May
automatically elects to waive all conditions to the merger
(except for a condition relating to the absence of any order by
any governmental entity or any statute, rule, decree, or
regulation that would restrain or prohibit the merger or make
completing the merger illegal). In addition, the merger
agreement provides that when May makes this election, ZCMI will
modify the number of directors on the ZCMI board and elect
nominees designated by May so that the May nominees will
constitute a majority of the board of directors. The waiting
period under the HSR Act was terminated on November 5, 1999.
Accordingly, May is deemed to have made the election on November
5, 1999.
<PAGE>
ZCMI plans to hold a meeting of its board of directors on
November 19, 1999. At that meeting, the number of directors
constituting the board of directors will be fixed at five, five
of the current members of the board of directors will resign and
the remaining two directors will elect three May designees to the
board. The two current members of the board of directors who
will continue as directors with the three May designees are
Richard H. Madsen and Keith C. Saunders. All of these changes
will become effective on November 26, 1999.
May's designees to the board of directors are listed on the
next page. Each has consented to serve as a director of ZCMI if
appointed or elected. None of May's designees currently is a
director of, or holds any positions with, ZCMI. To the best of
May's knowledge, none of May's designees or any of their
affiliates beneficially owns any equity securities or rights to
acquire any such securities of ZCMI, nor has any such person been
involved in any transaction with ZCMI or any of its directors,
executive officers or affiliates that is required to be disclosed
pursuant to Securities and Exchange Commission rules and
regulations other than with respect to transactions between May
and ZCMI contemplated by the merger agreement.
1
<PAGE>
The name, age, present principal occupation or employment
and five-year employment history of each May designee are set
forth below.
Principal Occupation
Name And Employment History Age
Richard A. Brickson Secretary and senior counsel
of May since 1988. Mr. Brickson 51
joined May in 1973.
John L. Dunham Vice chairman and chief financial 53
officer of May since November
2, 1999. Mr. Dunham served as
executive vice president and
chief financial officer of May
from 1993 until he assumed his
current position. Mr. Dunham
joined May in 1976.
R. Dean Wolfe Executive vice president of 55
acquisitions and real estate
of May since 1996. Mr. Wolfe
served as executive vice
president of real estate for
May from 1986 until he assumed
his current position. Mr. Wolfe
joined May in 1972.
Corporate Governance and Board of Directors
Board of Directors . ZCMI's business and affairs are
managed under the authority and direction of its board of
directors, currently chaired by Richard H. Madsen, president and
chief executive officer. The directors are responsible for
establishing broad corporate policies and for ZCMI's overall
performance. The directors are not, however, involved in
operating ZCMI's business on a day-to-day basis. The day-to-day
management of the affairs of ZCMI is entrusted to the executive
officers of ZCMI who are elected by the board of directors.
<PAGE>
The executive officers generally keep the board of directors
advised of ZCMI's business through regular written reports,
analyses, and discussions.
The board meets on a regularly scheduled basis during the
year to review significant developments affecting ZCMI and to act
on matters requiring board approval. It also holds special
meetings when an important matter requires board action between
scheduled meetings. The board regularly invites members of
senior management to board meetings to report on and discuss
their areas of responsibility. The directors met six times as a
full board during 1998. All directors attended all of the
meetings except Messrs. Eccles and Ball who attended five
meetings. During July, 1999, long-time board member, A. Blaine
Huntsman, resigned from the board of directors.
Stock Ownership of Directors. The ZCMI directors
beneficially own, as a group, 141,645 shares of ZCMI common
stock, including 32,000 shares of restricted stock, or 6.4% of
ZCMI's outstanding common stock as of October 14, 1999. The
directors, as a group, also hold currently exercisable but
unexercised options to purchase up to an aggregate of 34,000
shares of ZCMI common stock.
Director Compensation. Under ZCMI's by-laws, we may pay
the expenses that a director incurs in attending meetings. Some,
but not all, of the directors received reimbursement during 1998
for such expenses. Additionally, we paid a fee of $700 to each
director for his or her attendance at each of the six board
meetings. We also paid members of the executive committee of the
board of directors an annual fee of $6,000 for their service on
that committee. We paid audit committee members a fee of $400
for each audit committee meeting they attended.
2
<PAGE>
Committees. The executive committee of the board of
directors exercises the powers of the board in the management of
ZCMI's business and affairs 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 are made. The executive committee also
functions as the retirement committee and administers ZCMI's
plans and retirement programs, 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 met
twelve times during 1998.
The audit committee of the board, which met twice during
1998, 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 ZCMI.
Directors and Executive Officers. The name, present
occupation or employment and five-year employment history of the
current directors and executive officers of ZCMI are set forth
below. Directors serving on the executive (*) or audit (+)
committees of the board are also so identified. The stock
ownership numbers are as of October 14, 1999. Except where
specifically noted, each director owns less than 1% of the
outstanding shares of ZCMI common stock.
Directors
R. Barry Arnold, 54, has been a director of ZCMI since 1990. He
is vice president and general merchandise manager of ZCMI. Mr.
Arnold beneficially owns 10,367 shares of ZCMI common stock, of
which 10,000 shares are restricted stock. Mr. Arnold also holds
options to purchase up to 10,000 shares of ZCMI common stock
which are exercisable within 60 days but not yet exercised.
<PAGE>
Fred S. Ball, 66, has been a director of ZCMI 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. Mr. Ball beneficially owns 400 shares of
ZCMI common stock.
+Spencer F. Eccles, 64, has been a director of ZCMI 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, Union Pacific
Corporation and the Salt Lake Olympic Organizing Committee. He
is the beneficial owner of 7,500 shares of ZCMI common stock.
*James S. Jardine, 52, has been a director of ZCMI since 1985. He
is the managing director of the law firm of Ray, Quinney &
Nebeker (which acts as legal counsel to ZCMI). Mr. Jardine is
also a director of Daw Technologies Inc. and is secretary to the
Salt Lake Olympic Organizing Committee. Mr. Jardine beneficially
owns 400 shares of ZCMI common stock.
*+Patricia Madsen, 70, has been a director of ZCMI since 1976.
She is president of Sterling Furniture Company, and beneficially
owns 63,721 shares of ZCMI common stock. This represents
approximately 2.9% of the issued and outstanding shares of ZCMI
common stock. 1
*Richard H. Madsen, 60, has been a director of ZCMI since 1988
and is currently the chairman, president
and chief executive officer of ZCMI. 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 47,045 shares of
ZCMI common stock, which includes 12,000 shares of restricted
stock. This amount represents approximately 2.1% of the issued
and outstanding shares of ZCMI common stock. Mr. Madsen also
holds options to purchase up to 13,000 shares of ZCMI common
stock which are exercisable within 60 days but not yet exercised.
3
<PAGE>
*Keith C. Saunders, 56, has been a director of ZCMI since 1981,
and is executive vice president, chief financial officer and
secretary of ZCMI. Mr. Saunders beneficially owns 12,212 shares
of ZCMI common stock, which includes 10,000 shares of restricted
stock. Mr. Saunders also holds options to purchase up to 11,000
shares of ZCMI common stock which are exercisable within 60 days
but not yet exercised.
______________________
1 Includes 20,346 shares as to which Ms. Madsen has shared
voting and investment power as president and a director of
Sterling Furniture Company. Sterling Furniture Company
competes with ZCMI in the business of selling furniture.
Executive Officers
Nancy Mortensen, 57, is the vice president-marketing of ZCMI.
Ms. Mortensen is the beneficial owner of 11,550 shares of ZCMI
common stock, which includes 10,000 shares of restricted stock.
Ms. Mortensen also holds options to purchase up to 10,000 shares
of ZCMI common stock which are exercisable within 60 days but not
yet exercised.
Darrell F. Robinette, 72, is the vice president-stores of ZCMI.
Mr. Robinette is the beneficial owner of 10,743 shares of ZCMI
common stock. Mr. Robinette also holds options to purchase up to
8,500 shares of ZCMI common stock which are exercisable within 60
days but not yet exercised.
All current executive officers as a group (5 persons),
beneficially own 91,917 shares, or 4.2%, of ZCMI's common stock,
including 42,000 shares of restricted stock.
Principal Shareholders
The following table provides information with respect to any
person known to ZCMI to be the beneficial owner (within the
meaning of applicable governmental regulations) of five percent
(5%) or more of any class of ZCMI's voting securities as of
October 14, 1999:
<PAGE>
Amount and Nature of Percent
Name and Address Title of Class Beneficial Ownership of Class
ZCMI Reserve Trust Common Stock 1,176,599 shares 53.3%
50 East North Temple
Salt Lake City, UT 84150
ZCMI Trust Common Stock 113,785 shares 5.2%
35 Century Park-Way
Salt Lake City, UT 84115
4
<PAGE>
Executive Compensation
The executive committee of the board of directors furnished
the following report on executive compensation in ZCMI's April
26, 1999, proxy statement:
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 0%, 5% and 1.7% respectively in 1996,
1997, and 1998.
Other Named Executive Officers. The other executive
officers named in the summary compensation table received
increases ranging between 0%, 4.8% to 5%, and 1.7%
respectively in 1996, 1997, and 1998, 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 total of such
bonuses awarded is equal to 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 1996, 1997, and
1998 amounted to $0, $80,999, and $0 respectively, for all
executive officers combined. Bonuses are earned in the
preceding year and paid in March the following year after
<PAGE>
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 1996, 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.
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 H. Madsen, Chairman
Patricia Madsen
James S. Jardine
Keith C. Saunders
5
<PAGE>
Summary Compensation Table
Set forth below is information concerning the annual and long-term
compensation for services in all capacities to ZCMI for fiscal years 1998,
1997 and 1996 of ZCMI's chief executive officer and the other four most
highly compensated executive officers.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long-Term Compensation
Name and Awards
Principal Restricted
Compensation Stock Options All
Position Year Salary(1) Bonus(2) Awards /SARS Others(3)
<S> <C> <C> <C> <C> <C> <C>
Richard H. Madsen 1998 $250,900 $ -0- $ -0- -0- $3,607
President & CEO 1997 $246,892 $27,996 $ -0- -0- $3,618
1996 $233,184 $ -0- $135,000 13,000 $2,862
Keith C. Saunders 1998 $159,110 $ -0- $ -0- -0- $2,310
Executive V. P. 1997 $156,262 $17,231 $ -0- -0- $2,322
Secretary & CFO 1996 $150,000 $ -0- $112,500 11,000 $1,830
R. Barry Arnold 1998 $131,403 $ -0- $ -0- -0- $1,945
Vice President 1997 $129,153 $13,688 $ -0- -0- $1,974
1996 $123,800 $ -0- $112,500 10,000 $1,594
Darrell F. 1998 $111,885 $ -0- $ -0- -0- $1,694
Robinette, 1997 $109,895 $11,097 $ -0- -0- $1,692
Vice President 1996 $105,040 $ -0- $ 45,000 10,000 $1,351
Nancy Mortensen 1998 $110,770 $ -0- $ -0- -0- $1,769
Vice President 1997 $108,800 $10,987 $ -0- -0- $1,802
1996 $104,000 $ -0- $112,500 10,000 $1,413
</TABLE>
<PAGE>
1. Amounts shown as Salary include directors' fees, if any,
paid by ZCMI, but do not include expenditures for company
cars or merchandise or service discounts made available to
the executive officers, or other expenses paid by ZCMI on
behalf of or reimbursed to executive officers, which ZCMI
believes constitute ordinary and necessary business-related
expenses. All such expenses are paid or reimbursed by ZCMI
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 were earned in the preceding year but
were not paid until March of the year indicated.
3. Amounts shown include contributions by ZCMI to the Employee
Savings Plan (a 401(k) plan open to all full-time employees
of ZCMI). The named executive officers were able to
contribute up to 4.00% of their annual salary and bonus (up
to $150,000) to this plan in 1998, up to the IRS limitation
of $10,000 and ZCMI contributed a matching amount equal to
37.5% of the executive officers' contribution.
6
<PAGE>
Option Grants and Exercises
Stock Options Granted in 1998. No stock options were
granted in 1998.
Aggregated Option-SAR Exercises in last Fiscal
Year and FY-End Option-SAR Values. The table below sets out the
aggregate option-SAR exercises by the named executive officers,
and by all executive officers as a group, during 1998, and also
sets out numbers of shares of common stock underlying currently
outstanding options and the putative value of such options at
fiscal year-end.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Number of Fiscal Year-End Fiscal Year-End
Shares Value (#) ($)
Acquired On Realized (Exercisable/ (Exercisable/
Name Exercise ($) Nonexercisable) Unexercisable)
Richard
H. Madsen -0- $0.00 13,000 $48,750
Keith C.
Saunders -0- $0.00 11,000 $41,250
R. Barry
Arnold -0- $0.00 10,000 $37,500
Darrell F.
Robinette -0- $0.00 8,500 $31,875
Nancy
Mortensen -0- $0.00 10,000 $37,500
All Executive
Officers as a
Group (5 persons,
including those
named above) -0- $0.00 52,500 $196,875
# options exercisable within sixty days
7
<PAGE>
Compensation/Benefit Plans.
Compensation and benefit plans available generally for
employees of ZCMI and to executive officers are as follows:
Severance Pay Plan. Our severance pay plan is available for
all associates who have worked full time for at least one year.
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.
Retirement Plan. After one year of employment, ZCMI
employees who are age 21 and older and who work 1,000 hours or
more each year become participants in the our retirement plan,
which is fully funded by ZCMI. When a participant retires, 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.
Benefits for the executive officers under the retirement
plan consist of frozen benefits as of December 31, 1989 plus the
benefit for years of service after that date under the plan
formula. The "frozen" benefit calculated at December 31, 1989
for Messrs. Saunders, Arnold, and Robinette is $25,352.88,
$18,999.82, and $24,409.09 respectively. For Mrs. Mortensen this
amount is $13,461.69.
The figures shown in the table below are estimated annual
benefits as of December 31, 1998, based upon retirement at age 65
under the retirement plan for service after December 31, 1989.
Annualized Retirement Plan Projection
Yearly Years of Service
Salary 10 15 20 25 30
$100,000 10,000 15,000 20,000 25,000 30,000
$125,000 12,500 18,750 25,000 31,250 37,500
$150,000 15,000 22,500 30,000 37,500 45,000
$200,000 20,000 30,000 40,000 50,000 60,000
$250,000 25,000 37,500 50,000 62,500 75,000
<PAGE>
We computed these estimated annual retirement benefits on
the basis of assumed continuation of remuneration at their
respective rates as received for 1991 until retirement at age 65.
We do not have a supplemental retirement plan for our executive
officers. Salary for purposes of the retirement plan does not
include directors' fees. As of December 31, 1998 the credited
years of service under the retirement plan for each of the named
executive officers for purposes of the above table was nine
years.
Employee Savings Plan. Our 401(k) salary deferral plan
allows covered employees to make pre-tax contributions of up to
16% of salary (but no more than $10,000 for 1998) 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 1997. We contribute 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
named executive officers are reflected under "All Other
Compensation" in the Summary Compensation Table.
8
<PAGE>
Historical Performance of ZCMI Stock
The following table compares the cumulative total
shareholder return on a hypothetical $100 purchase of ZCMI
common stock on December 31, 1993 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]
MEASURE Base 94 Jan 95 Jan 96 Jan 97 Jan 98 Jan 99
ZCMI Common 100.00 116.68 135.77 155.14 188.40 215.10
Retail Composite 100.00 92.60 99.85 119.19 176.73 289.69
Retail DS-500 100.00 88.65 105.87 113.75 149.18 147.52
S&P 500 Index 100.00 100.53 139.40 176.12 223.51 296.13
Transactions with Management and Others
Some of the directors and executive officers of ZCMI,
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, ZCMI. Between January
1, 1998 and December 31, 1998, these persons have had immaterial
business transactions in the ordinary course of business with
ZCMI, 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.
Compliance with Section 16 Reporting Obligations
The directors and executive officers of ZCMI 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, ZCMI common stock. This
is a personal obligation of the executive officers and directors.
Based on information provided to ZCMI by its directors and
executive officers, it appears that all directors and executive
officers have timely filed these reports during 1998.
9
