_________________________________________________
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 26, 1999
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 26th day of May, 1999, 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 (except) to vote for all
a vote FOR all nominees) as marked to the nominees listed
contrary below) __ 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, A. Blaine Huntsman, James
S. Jardine, Patricia Madsen, Richard H. Madsen, and Keith C. Saunders.
IMPORTANT: Please sign exactly as your name appears. When shares are
held by joint tenants, both should sign. When signing as attorney, as
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.
DATED:_____________________________, 1999
__________________________________________
(Stockholder's Signature)
__________________________________________
(Joint Stockholder's Signature {if any})
_______________________________________________________
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 26, 1999
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 26, 1999 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 Thursday, April 15, 1999, 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 26, 1999
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 26, 1999
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 26, 1999 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 26, 1999, 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
1998 Annual Report to Shareholders are being sent to Shareholders for
delivery beginning May 3, 1999. 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, 1999, 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, 1999, the Corporation had 2,205,553 shares (2,168,942
issued less 7,632 treasury shares plus 44,243 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.
Once a quorum is determined to exist, 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 director nominees described in this Proxy Statement. Such votes, if
cast, will be determinative of the voting results with respect to 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, 1999:
Table 1
Amount and Nature of Percent
Name and Address Title of Class Beneficial Ownership of Class
ZCMI Reserve Trust Common Stock 1,135,982 shares 51.51%
50 East North Temple
Salt Lake City, UT 84150
Richard H. Madsen Common Stock 188,167 shares* 8.53%
4111 Parkview Dr
Salt Lake City, UT 84124
Patricia Madsen Common Stock 112,221 shares* 5.09%
5930 Holladay Boulevard
Salt Lake City, UT 84121
John Price Common Stock 112,785 shares 5.11%
35 Century Parkway
Salt Lake City, UT 84115
_____________________
*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.
*Includes 68,846 shares as to which Ms. Madsen shares voting and
investment power as a co-trustee of The Madsen-Williamson 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 Corporation's
President and Chief Executive Officer. 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 1998. All Directors attended all of the meetings except
Messrs.Eccles, Huntsman, and Ball who attended five meetings and Mrs. Ence
who attended four meetings.
The Directors of the Corporation beneficially own, as a group, 355,767
shares of the Corporation's Common Stock (including 34,000 currently
exercisable but unexercised option shares and 32,000 shares of restricted
stock ), or 16.13% of the Corporation's outstanding Common Stock as of
April 15, 1999.
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 twelve times
during the year. All members attended all meetings except Mr. Saunders who
attended eleven 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 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 the Corporation. All members attended
all meetings except Mr. Eccles. 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, 1999) 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 6, below. Executive Officers serve until the election of
their successors by the Board of Directors.
Table 2 - Executive Officers of the Corporation
Nancy Mortensen, 57, is the Corporation's Vice President-Marketing.
Ms. Mortensen is the beneficial owner of 21,550 shares of the Corporation's
Common Stock, including 10,000 option shares exercisable within 60 days but
not yet exercised and 10,000 shares of restricted stock.
Darrell F. Robinette, 72, is the Corporation's Vice President-Stores.
Mr. Robinette is the beneficial owner of 19,243 shares of the Corporation's
Common Stock, including 2,243 shares of restricted stock and 8,500 option
shares exercisable within 60 days but not yet exercised.
All current Executive Officers as a group (5 persons), beneficially own
272,539 shares, or 12.36%, of the Corporation's Common Stock (of which
52,500 shares are option shares exercisable within 60 days of the record
date but not yet exercised and 44,243 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 0%, 5% and 1.7%
respectively in 1996, 1997, and 1998.
Other Named Executive Officers. The other Executive Officers named
in Table 3 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 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 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 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.
(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 1998 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 3 - SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation Long-Term Compensation Awards
Restricted
Name and Year Salary(1) Bonus(2) Stock Awards Options All Other
Principal /SARS
Compensation
Position
<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>
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 4.00% of their annual and bonus
salary (up to $150,000) to this plan in 1998, up to the IRS
limitation of $10,000 and the Corporation contributed a matching
amount equal to 37.5% 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:
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.
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, 1998, based upon retirement at age 65 under the Retirement
Plan.
<TABLE>
Table 4 - Annualized Retirement Plan Projection
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>
$100,000 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
</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, 1998 the credited years of service under
the retirement plan for the Executive Officers named in Table 3 were nine
years for Mr. Madsen, 24 years for Mr. Saunders, 30 years for Mr. Arnold, 24
years for Mr. Robinette, and 36 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 $10,000 for 1998) to their Plan account. To meet
requirements of applicable law, highly paid employees were limited to a
maximum salary deferral of 4% of salary in 1997. The Corporation
contributes a matching amount equal to 50% of the eligible employee's
contribution for the first 2% of pay contributed and a 25% match on amounts
over 2% of pay, up to a maximum of 2% of a participating employee's salary.
Covered employees have a choice of ten (10) investment plans into which they
may direct their contributions and the matching employer contribution in the
Plan. An employee is fully vested in the employer contribution to the Plan
after 2 years of service. Employer matching contributions made for the
benefit of the five Executive Officers named in Table 3 are shown under "All
Other Compensation".
Stock Options Granted in 1998. There were no stock options granted in
1998.
Aggregated Option-SAR Exercises in last Fiscal Year and FY-End
Option-SAR Values. Table 5, below, sets out the aggregate Option-SAR
Exercises by the named Executive Officers in Table 3, and by all Executive
Officers as a group, during 1998, and also sets out numbers of shares of
Common Stock underlying currently outstanding options and the putative value
of such options at fiscal year-end.
<TABLE>
Table 5
Name Number of Shares Value Realized Number of Value of
Acquired On ($) Securities Unexercised
Exercise Underlying In-the-Money
Unexercised Options/SARs at
Options/SARs at Fiscal Year-End
Fiscal Year-End ($)
(#) (Exercisable/
(Exercisable/ Unexercisable)
<S> <C> <C> <C> <C>
Nonexercisable)
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 -0- $0.00 52,500 $196,875
a Group (5 persons,
including those named
above)
</TABLE>
# options exercisable within sixty days
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, 1998 and December 31,
1998, 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 1998.
LAST YEAR'S (1998) ANNUAL MEETING
The 1998 Annual Meeting of the Shareholders was held on May 20, 1998
in Salt Lake City, Utah. There were 1,755,590 shares of Common Stock
present at the 1998 Annual Meeting in person or by proxy, which number was
80% 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 78% of the shares present and
voting.
PROPOSALS FOR SHAREHOLDER ACTION
Election of Directors
The persons named in Table 6, 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. Eight (8) Directors are being nominated by the Executive
Committee for election at the 1999 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 6, 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 1998 Annual Meeting.
It is with sadness that we announce the passing of Board Member Lela
Ence on February 9, 1999. She was a wonderful example and made a
significant contribution to the Board of Directors.
There is set forth below, in Table 6, as to each of the eight (8)
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 6 - Nominees for Director
R. BARRY ARNOLD, 54, has been a Director of the Corporation since 1990.
He is Vice President and General Merchandise Manager of the Corporation.
Mr. Arnold beneficially owns 20,367 shares of the Corporation's Common
Stock, including 10,000 option shares exercisable within 60 days but not yet
exercised and 10,000 shares of restricted stock. This amount represents
approximately .92% of the issued and outstanding shares at the Record Date.
FRED S. BALL, 66, 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. Mr. Ball beneficially
owns 400 shares of the Corporation's Common Stock.
+SPENCER F. ECCLES, 64, 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, Union Pacific Corporation and the Salt Lake
Olympic Organizing Committee. He is the beneficial owner of 7,500 shares of
the Corporation's Common Stock.
+A. BLAINE HUNTSMAN, 62, 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 a Trustee 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 3,500 shares of the Corporation's common Stock.
*JAMES S. JARDINE, 52, has been a Director of the Corporation since 1985. He
is the Managing Director of the law firm of Ray, Quinney & Nebeker (which
acts as legal counsel to the Corporation). 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 the
Corporation's Common Stock.
*+PATRICIA MADSEN, 70, has been a Director of the Corporation since 1976.
She is President of Sterling Furniture Company, and beneficially owns
112,221 shares of the Corporation's Common Stock.1,3
*RICHARD H. MADSEN, 60, 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 8.53% of the issued and outstanding
shares at the Record Date.2,3
*KEITH C. SAUNDERS, 56, 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 owns 23,212 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.
______________________
1Includes 68,846 shares as to which Ms. Madsen shares voting and
investment power as a co-trustee of The Madsen-Williamson Family Voting
Trust, but not including any shares shown for Richard Madsen, as co-trustee,
above.
2Includes 146,905 shares held of record by the Francis A. Madsen
Family Voting Trust, as to which Mr. Madsen is Co-Trustee.
3Madsen 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 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.
<TABLE>
MEASURE Base94 Jan 95 Jan 96 Jan 97 Jan 98 Jan 99
<S> <C> <C> <C> <C> <C> <C>
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
</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 1998 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, 1999,
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, 2000. 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 2000
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, 1999.
