<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BROWN GROUP, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
<PAGE> 2
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 3
Brown Group, Inc.
8300 Maryland Avenue, St. Louis, Missouri 63105
Notice of
Annual Meeting of Shareholders
May 25, 1995
The Annual Meeting of Shareholders of Brown Group, Inc. (the "Corporation")
will be held on the 25th day of May, 1995, at 11:00 a.m., in the Brown Group,
Inc. Conference Center, located at 8300 Maryland Avenue, in Clayton, in St.
Louis County, Missouri, for the following purposes:
A. To elect five Directors;
B. To ratify the appointment of independent auditors for the current Fiscal
Year;
C. To vote upon the shareholders' proposals described in the accompanying
Proxy Statement, if presented at the meeting; and
D. To transact such other business as may properly come before the meeting.
On May 26, 1994, the Board of Directors of the Corporation amended
Article II, Section 1 of the Bylaws of the Corporation to reduce the number of
Directors from eleven to nine, and to classify the Directors in respect of the
time for which they shall severally hold office by dividing them into three
classes of three Directors each. Article II, Section 1 of the Corporation's
Bylaws, as so amended, is set forth in Exhibit 1 to the accompanying Proxy
Statement. On October 13, 1994, the Board of Directors amended the Bylaws of
the Corporation to increase the number of Directors from nine to ten, and to
classify the Directors in respect of the time for which they shall severally
hold office by dividing them into two classes consisting of three Directors
each and one class consisting of four Directors. At the same meeting, the
Board of Directors elected Mr. Richard A. Liddy to fill the Directorial vacancy
created by this amendment to the Bylaws, to serve until the 1995 Annual Meeting
of the Shareholders of the Corporation, and appointed Mr. Liddy to serve on the
Audit Committee of the Board of Directors. Article II, Section 1 of the
Bylaws, as so amended, is set forth in Exhibit 2 to the accompanying Proxy
Statement. On March 2, 1995, the Board of Directors amended the Bylaws to
increase the number of Directors from ten to eleven, and to classify the
Directors in respect of the time for which they shall severally hold office by
dividing them into two classes of four Directors each and one class of three
Directors. At the same meeting, the Board of Directors elected Mrs. Julie C.
Esrey to fill the Directorial vacancy created by this amendment to the Bylaws,
to serve until the 1995 Annual Meeting of the Shareholders of the Corporation,
and appointed Mrs. Esrey to serve on the Audit Committee of the Board of
Directors. Article II, Section 1 of the Bylaws, as so amended, is set forth in
Exhibit 3 to the accompanying Proxy Statement.
Holders of Common Stock of the Corporation whose names appear of record on
the books of the Corporation at the close of business on April 5, 1995 are
entitled to receive notice of and to vote at said meeting.
ROBERT D. PICKLE
Vice President, General Counsel
and Corporate Secretary
8300 Maryland Avenue
St. Louis, Missouri 63105
April 19, 1995
<PAGE> 4
Shareholders are urged to sign, date and return the enclosed Proxy as soon
as possible. A postage paid, return addressed envelope is enclosed for your
convenience.
<PAGE> 5
Brown Group, Inc.
8300 Maryland Avenue, St. Louis, Missouri 63105
PROXY STATEMENT
--------------------
ANNUAL MEETING OF SHAREHOLDERS, MAY 25, 1995
--------------------
This Proxy Statement is furnished to Shareholders of Brown Group, Inc. (the
"Corporation") in connection with the solicitation by the Board of Directors of
the Corporation of Proxies for use at the Annual Meeting of Shareholders to be
held on May 25, 1995, and at all adjournments thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders.
On the April 5, 1995 record date, the Corporation had outstanding
17,951,452 shares of Common Stock of the par value of $3.75 per share, each of
which is entitled to one vote. The Corporation's Annual Report for the Fiscal
Year ended January 28, 1995 accompanies this Proxy Statement. Such report
shall not, however, be considered as proxy soliciting material. This Proxy
Statement, the enclosed form of Proxy, and the Corporation's Annual Report to
Shareholders are being mailed to Shareholders of the Corporation on or about
April 19, 1995.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to each
person known by the Corporation, as of April 5, 1995, to beneficially own more
than 5% of the Common Stock of the Corporation:
<TABLE>
<CAPTION>
Number of Percent of
Shares of Outstanding
Name and Address of Beneficial Owner Common Stock Common Stock
- ------------------------------------------------- -------------- ------------
<S> <C> <C>
Boatmen's Bancshares, Inc. ...................... 979,199 <F1> 5.5% <F1>
One Boatmen's Plaza
St. Louis, Missouri 63101
FMR Corp. ....................................... 1,059,695 <F2> 5.9% <F2>
82 Devonshire Street
Boston, Massachusetts 02109
Mitchell Hutchins Institutional Investors Inc. .. 1,582,100 <F3> 8.8% <F3>
1285 Avenue of the Americas
New York, New York 10019
- ---------------
<FN>
<F1> Based on written representations made to the Corporation by such
Shareholder, the named Shareholder, acting in various fiduciary capacities,
possessed sole voting authority over 778,756 shares, shared voting authority
<PAGE> 6
over 200,443 shares and shared investment authority over 203,667 shares,
including 224,246 shares over which a wholly-owned subsidiary of such
Shareholder had sole investment authority.
<F2> Based on written representations made to the Corporation by such
Shareholder, the named Shareholder, acting in various fiduciary capacities,
possessed sole voting authority over 3,774 shares and sole investment authority
over 1,059,695 shares.
<F3> Based on written representations made to the Corporation by such
Shareholder, the named Shareholder, acting in various fiduciary capacities,
possessed shared investment authority and shared voting authority over
1,582,100 shares.
</TABLE>
SECURITY HOLDINGS OF MANAGEMENT
The following table sets forth, as of April 5, 1995, the amount of Common
Stock of the Corporation beneficially owned by each Director of the
Corporation, each nominee for election as a Director of the Corporation,
certain Executive Officers of the Corporation who are listed in the Summary
Compensation Table on page 13 of this Proxy Statement, and all Directors and
Executive Officers of the Corporation as a Group, together with the number of
incentive options and non-qualified options to purchase shares of Common Stock
which are exercisable by such persons, either immediately or by June 4, 1995,
at prices ranging from $23.00 to $38.625 per share, and which option shares are
considered to be beneficially owned by such persons pursuant to Rule 13d-3(d)
under the Securities Exchange Act of 1934:
<TABLE>
<CAPTION>
Amount of Common Stock
Beneficially Owned
-----------------------------
Number of Options
Shares Exercisable By
Name Owned June 4, 1995
- ------------------------------------------------ ------------- --------------
<S> <C> <C>
Joseph L. Bower ................................ 2,000 -0-
B. A. Bridgewater, Jr. ......................... 120,154 39,609
Brian C. Cook .................................. 48,142 14,205
Julie C. Esrey ................................. 1,000 -0-
Ronald A. Fromm ................................ 23,307 4,892
Joan F. Lane ................................... 2,100 -0-
Richard A. Liddy ............................... 1,500 -0-
John D. Macomber ............................... 3,000 -0-
William E. Maritz .............................. 2,000 -0-
General Edward C. Meyer, Retired ............... 2,000 -0-
Harry E. Rich .................................. 36,565 29,623
Morton I. Sosland .............................. 2,100 -0-
Daniel R. Toll.................................. 2,000 -0-
Thomas A. Williams ............................. 35,510 6,250
Directors and Executive Officers as a Group
(25 persons, including those named above) .... 451,219 174,407
<PAGE> 7
</TABLE>
Each person identified in the preceding table is the beneficial owner of
less than 1% of the Corporation's Common Stock. The 25 persons comprising
Directors and Executive Officers as a Group are, in the aggregate, the
beneficial owners of 3.5% of such outstanding Common Stock, when the shares
subject to the options described above are considered as beneficially owned by
such persons. Such option shares have been deemed to be outstanding as of
April 5, 1995, for purposes of calculating the aggregate percentage
beneficially owned by Directors and Executive Officers as a Group.
(A)
THE ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, with the terms of
office of each class ending in successive years. This classified Board
structure was adopted on November 2, 1954. Four Directors are to be elected
for terms expiring at the Annual Meeting in 1998; three Directors will continue
in office for terms expiring at the Annual Meeting in 1997; three Directors
will continue in office for terms expiring at the Annual Meeting in 1996; and
one Director will be elected for a term expiring at the Annual Meeting in 1996
(or, in the case of each Director, until such Director's successor has been
elected and qualified). It is intended that the votes will be cast pursuant to
the accompanying Proxy for the election of the nominees named below, unless
otherwise directed. In the event that any nominees for office should for any
reason become unavailable, although no reason is known why any will be unable
to serve, it is intended that votes will be cast pursuant to the accompanying
Proxy for substitute nominees designated by the Board of Directors, except for
Proxies marked to the contrary.
The nominees and the Directors who will continue in office, the terms for
which they are nominated or have been elected, their other positions or offices
with the Corporation, their ages, the respective years which marked the
commencement of their continuous service as Directors of the Corporation and
their principal current occupations are as set forth below. All nominees
except Mrs. Julie C. Esrey and Mr. Richard A. Liddy and all Directors
continuing in office previously have been elected by the Shareholders.
<TABLE>
TO BE ELECTED FOR A TERM
OF THREE YEARS
<CAPTION>
Director
Continuously
Name and Other Positions or Offices with the Corporation Age Since
- ------------------------------------------------------------ --- ------------
<C> <C> <C>
[PHOTOGRAPH OF B. A. BRIDGEWATER, JR.]
B. A. BRIDGEWATER, JR.
Chairman of the Board of Directors, President and
Chief Executive Officer; Chairman of the Corporation's
Executive Committee......................................... 61 1978
<PAGE> 8
[PHOTOGRAPH OF JULIE C. ESREY]
JULIE C. ESREY
Member of the Corporation's Audit Committee................. 56 1995
[PHOTOGRAPH OF RICHARD A. LIDDY]
RICHARD A. LIDDY
Member of the Corporation's Audit Committee................. 59 1994
[PHOTOGRAPH OF WILLIAM E. MARITZ]
WILLIAM E. MARITZ
Member of the Corporation's Audit Committee and
Member of the Corporation's Governance and
Nominating Committee........................................ 66 1983
TO BE ELECTED FOR A TERM
OF ONE YEAR
<CAPTION>
Director
Continuously
Name and Other Positions or Offices with the Corporation Age Since
- ------------------------------------------------------------ --- ------------
<C> <C> <C>
[PHOTOGRAPH OF GENERAL EDWARD. C. MEYER]
GENERAL EDWARD C. MEYER, RETIRED<F1>
Member of the Corporation's Audit Committee and
Member of the Corporation's Governance and
Nominating Committee........................................ 66 1992
- ---------------
<FN>
<F1> General Meyer was elected as a Director at the 1992 Annual Meeting of
Shareholders to a term of office expiring with the 1995 Annual Meeting
of Shareholders. As a result of the addition of Mrs. Julie C. Esrey
and Mr. Richard A. Liddy to the Board of Directors, which has served
to increase the number of active Directors from nine to eleven,
General Meyer is standing at this time for reelection for a term of
one year, in order to keep all classes of Directors as nearly equal in
number as possible, as required by the New York Business Corporation
Law.
<PAGE> 9
TO CONTINUE IN OFFICE
FOR TWO YEARS
<CAPTION>
Director
Continuously
Name and Other Positions or Offices with the Corporation Age Since
- ------------------------------------------------------------ --- ------------
<C> <C> <C>
[PHOTOGRAPH OF JOSEPH L. BOWER]
JOSEPH L. BOWER
Chairman of the Corporation's Compensation
Committee and Member of the Corporation's
Executive Committee......................................... 56 1987
[PHOTOGRAPH OF JOAN F. LANE]
JOAN F. LANE
Chairperson of the Corporation's Governance
and Nominating Committee; Member of the Corporation's
Executive Committee and Member of the Corporation's
Compensation Committee...................................... 66 1985
[PHOTOGRAPH OF HARRY E. RICH]
HARRY E. RICH
Executive Vice President and Chief Financial
Officer; Member of the Corporation's Executive
Committee................................................... 55 1985
TO CONTINUE IN OFFICE
FOR ONE YEAR
<CAPTION>
Director
Continuously
Name and Other Positions or Offices with the Corporation Age Since
- ------------------------------------------------------------ --- ------------
<C> <C> <C>
[PHOTOGRAPH OF JOHN D. MACOMBER]
JOHN D. MACOMBER
Member of the Corporation's Compensation
Committee and Member of the Corporation's
Governance and Nominating Committee......................... 67 1993
<PAGE> 10
[PHOTOGRAPH OF MORTON I. SOSLAND]
MORTON I. SOSLAND
Member of the Corporation's Audit Committee
and Member of the Corporation's
Compensation Committee...................................... 69 1987
[PHOTOGRAPH OF DANIEL R. TOLL]
DANIEL R. TOLL
Chairman of the Corporation's Audit Committee;
Member of the Corporation's Executive Committee
and Member of the Corporation's Compensation Committee...... 67 1981
</TABLE>
The following are brief summaries of the business experience, during the
period of the past five years, of each of the nominees for election as
Directors of the Corporation and of each of the present Directors of the
Corporation who are continuing in office, including, where applicable,
information as to the current other company directorships currently held by
each of them:
Mr. Joseph L. Bower is, and for the period of the past five years has been,
the Donald Kirk David Professor of Business Administration at the Harvard
Business School. In addition, from September, 1985 until September, 1989, he
was Senior Associate Dean and Director of External Relations at that
institution, where, since September, 1989, he has been Chairman of Doctoral
Programs and Director of Research. Mr. Bower serves as a Director of Anika
Research, the M. L. Lee Acquisition Fund, the New America High Income Fund and
Sonesta International Hotels Corporation and as a Trustee of the New England
Conservatory of Music and of the Dana DeCordova Museum.
Mr. B. A. Bridgewater, Jr. has been Chairman of the Board of Directors,
President and Chief Executive Officer of the Corporation during the past five
years. He serves also as a director of Boatmen's Bancshares, Inc., ENSERCH
Corporation and Enserch Exploration, Inc., FMC Corporation and McDonnell
Douglas Corporation.
Mrs. Julie C. Esrey serves as a director of various organizations. From
1962 to 1976, she was employed as an International Economist for Exxon
Corporation, where she subsequently was engaged as a consultant. Mrs. Esrey is
a member of the Executive Committee of the Board of Trustees of Duke
University, a director of the Duke Management Company, a member of the Board of
Visitors of the Duke University Medical Center, and a director of Bank IV
Kansas, National Association, in Wichita, Kansas. She serves also as a member
of the Central Governing Board for the Children's Mercy Hospital, in Kansas
City, Missouri.
Mrs. Joan F. Lane is a member of the Board of Trustees of The James Irvine
Foundation and a director of McClatchy Newspapers, Inc. For the period of the
past five years, Mrs. Lane has been employed by Stanford University, Stanford,
California, initially as a Consultant to the President and as Special Assistant
to the Dean of the School of Humanities and Sciences at that institution. She
<PAGE> 11
now serves as a Special Assistant to the Board of Trustees and to the President
of Stanford University.
Mr. Richard A. Liddy is a director and Chairman of the Board of Directors,
President and Chief Executive Officer of the General American Life Insurance
Company. He served as President and Chief Executive Officer of that
organization from 1992 until January 26, 1995, when he was elected to the
additional office of Chairman of the Board of Directors, and from 1988 until
1992 was President and Chief Operating Officer of the General American Life
Insurance Company. Mr. Liddy is a director and Chairman of the Board of the
Reinsurance Group of America, Inc., and of the registered investment companies
of the General American Capital Company and The Walnut Street Funds, Inc. Mr.
Liddy serves on the Boards of Directors of Union Electric Company, the Boy
Scouts of America, the Missouri Historical Society, the Repertory Theatre of
Saint Louis, the Saint Louis Art Museum, the United Way of Greater Saint Louis
and Webster University in Saint Louis. Additionally, he is a member of the
Board of Directors of the American Council of Life Insurance.
Mr. John D. Macomber has been Principal of JDM Investment Group, a private
investment firm, since 1992. From prior to April, 1990 until 1992, Mr.
Macomber was Chairman and President of the Export-Import Bank of the United
States, in Washington, D.C., and, prior to that, was, successively, Chairman,
President and Chief Executive Officer of Celanese Corporation, in New York
City, and a Senior Partner with McKinsey & Company, Inc. He currently serves
as a director of Bristol-Myers Squibb Company, Lehman Brothers Holdings Inc.,
Pilkington, Ltd., Textron Inc. and Xerox Corporation; as a director of the
National Executive Services Corps, The Atlantic Council of the United States,
The French-American Foundation and the George Bush Presidential Library
Foundation; as Chairman of the Council for Excellence in Government, in
Washington, D.C.; as a member of the Advisory Boards of the Center for
Strategic and International Studies, the Yale School of Management and STRIVE;
and as a Trustee of the Carnegie Institution of Washington and The Rockefeller
University.
Mr. William E. Maritz has been Chairman of the Board of Directors and Chief
Executive Officer of Maritz Inc., a motivation, travel, training,
communications and marketing research services company, during the past five
years. From prior to April, 1990, Mr. Maritz served also as President of
Maritz Inc., a position which he relinquished on July 9, 1991. Mr. Maritz
serves as a director of Maritz Inc., Boatmen's Bancshares, Inc., General
American Life Insurance Company and Petrolite Corporation and as a Trustee of
Washington University.
General Edward C. Meyer, Retired, served as the Twenty-Ninth Chief of Staff
of the United States Army until 1983. He currently serves as Managing Partner
of Cilluffo Associates, L.P., a private investment group, and as an
international business consultant. He currently is Chairman and a director of
GRC International Inc. and a director of ITT Corporation, Alcatel, N.V., FMC
Corporation, FMC--Nurol Savinma Sanayii A.S. (an FMC Corporation-Turkish joint
venture) and United Defense, L.P. General Meyer is a Trustee of The MITRE
Corporation and the George Catlett Marshall Foundation, and a member of the
Board of Governors of the Smith Richardson Foundation, the Board of Overseers
of the Hoover Institution and the Board of Advisors of the Center for Strategic
and International Studies, in Washington, D.C., and is President of the Army
Emergency Relief Association and Chairman of the Association of Graduates of
the United States Military Academy, at West Point, New York.
<PAGE> 12
Mr. Harry E. Rich has been Executive Vice President and Chief Financial
Officer of the Corporation during the past five years. Previously, Mr. Rich
served as Senior Vice President of the Corporation. Mr. Rich serves as a
director of The Boatmen's National Bank of St. Louis and the General American
Capital Company, a General American Life Insurance Company affiliate
organization.
Mr. Morton I. Sosland has been a director and Chairman of Sosland
Companies, Inc., a company engaged in diversified activities including
publishing and venture investing, since January, 1993. Prior to that, and for
the period of the past five years, he served as a director and as President of
that company. Mr. Sosland serves as a director of AgriStar Inc., Commerce
Bancshares, Inc., Continental Grain Company, Crown Media, Inc., H & R Block,
Inc., Hallmark Cards, Inc. and Kansas City Southern Industries, Inc. and as a
Trustee of the Midwest Research Institute.
Mr. Daniel R. Toll serves as a corporate and civic director. Until
March 31, 1985, Mr. Toll served as President of Heller International
Corporation, a financial services company which formerly was known as Walter E.
Heller International Corporation. Mr. Toll serves as a director of A.P. Green
Industries, Inc., Kemper Corporation, Kemper National Insurance Companies,
Lincoln National Convertible Securities Fund, Inc., Lincoln National Income
Fund, Inc., Mallinckrodt Group Inc. and NICOR Inc.
There are no family relationships between any Directors or Executive
Officers of the Corporation.
<PAGE> 13
EXECUTIVE COMPENSATION AND OTHER BENEFITS
The following information is given for the Fiscal Years ended January 28,
1995, January 29, 1994 and January 30, 1993 concerning annual and long-term
compensation for services rendered to the Corporation and its subsidiaries of
those persons who at January 28, 1995 were the Corporation's Chief Executive
Officer and the other four most highly compensated Executive Officers of the
Corporation whose total salary and bonuses exceeded $100,000:
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term Compensation <F4>
----------------------------
Annual Compensation Awards
---------------------------------- ----------------------------
Securities
Other Annual Restricted Underlying All Other
Name and Bonus Compensation Stock Award(s) Options/SARs Compensation
Principal Position Year Salary ($) ($) <F1> ($) <F2> ($) <F3> (#) ($) <F5>
- ---------------------- ---- ---------- -------- ------------ -------------- ------------ ------------
<C> <C> <C> <C> <C> <C> <C> <C>
B. A. Bridgewater, Jr. 1994 650,000 300,000 -0- 950,000 -0- 13,726
Chairman of the Board, 1993 650,000 130,000 -0- 470,625 -0- 15,186
President and Chief 1992 600,000 100,000 -0- -0- -0- 14,872
Executive Officer
Brian C. Cook 1994 425,000 145,350 -0- 570,000 -0- 6,186
Corporate Vice 1993 350,000 196,000 -0- 282,375 -0- 6,755
President, Footwear 1992 300,000 177,000 64,627 <F6> 125,000 -0- 6,210
Retailing, and
President, Famous
Footwear
Ronald A. Fromm 1994 300,000 102,600 -0- 380,000 5,000 6,373
Executive Vice 1993 210,000 117,600 -0- 156,875 -0- 6,647
President, Famous 1992 152,300 86,000 -0- -0- -0- 6,191
Footwear
Harry E. Rich 1994 350,000 165,000 -0- 380,000 -0- 6,277
Executive Vice 1993 300,000 70,000 -0- 188,250 -0- 6,611
President and Chief 1992 280,000 58,800 -0- -0- -0- 6,793
Financial Officer
Thomas A. Williams 1994 400,000 140,000 -0- 646,000 5,000 5,434
Corporate Vice 1993 327,500 191,400 -0- 251,000 -0- 13,897
President, Footwear 1992 260,000 172,530 -0- -0- -0- 13,092
Wholesaling;
Chairman, Pagoda;
and President, Brown
Shoe Company
- ---------------
<FN>
<F1> Amounts are earned and accrued during the Fiscal Years indicated, and are paid subsequent to the end
of each Fiscal Year, pursuant to the Corporation's Annual Incentive Plan described below.
<PAGE> 14
<F2> The named Executive Officers received certain perquisites, none of which exceeded the lesser of
$50,000 or 10% of such Officer's salary and bonus.
<F3> Restricted Stock Awards are valued by multiplying the closing market price of the Corporation's
unrestricted stock on the date of grant by the number of shares awarded. Dividends are paid on Restricted
Stock Awards at the same rate as paid to all Shareholders. On January 28, 1995, Mr. Bridgewater held 56,250
Restricted Shares having a market value of $1,778,906, Mr. Cook held 41,250 Restricted Shares having a
market value of $1,304,531, Mr. Fromm held 20,500 Restricted Shares having a market value of $648,313,
Mr. Rich held 23,000 Restricted Shares having a market value of $727,375 and Mr. Williams held 32,500
Restricted Shares having a market value of $1,027,813.
<F4> The Corporation has no long-term incentive plans other than those described below.
<F5> Includes in 1994 for Mr. Bridgewater: $5,250 to the Corporation's 401(k) Plan, $7,595 in
Corporation-paid group life insurance premiums and $881 in the Employee Stock Purchase Plan. Includes in
1994 for Mr. Cook: $5,452 to the Corporation's 401(k) Plan and $734 in the Employee Stock Purchase Plan.
Includes in 1994 for Mr. Fromm: $5,492 to the Corporation's 401(k) Plan and $881 in the Employee Stock
Purchase Plan. Includes in 1994 for Mr. Rich: $5,396 to the Corporation's 401(k) Plan and $881 in the
Employee Stock Purchase Plan. Includes in 1994 for Mr. Williams: $5,434 to the Corporation's 401(k) Plan.
The Corporation has no other Plans providing for other kinds of compensation entitlements, including split-
dollar life insurance arrangements, which otherwise would be required to be disclosed in this column.
<F6> Represents a relocation assistance benefit provided to Mr. Cook by the Corporation during the 1992
Fiscal Year.
</TABLE>
ANNUAL INCENTIVE PLAN
The Corporation's Executive Officers and certain other key management
employees, as determined by the Compensation Committee of the Board of
Directors, are eligible to receive Incentive Awards granted under the
Corporation's Annual Incentive Plan. Payments are based one-half upon the
achievement of financial objectives with respect to earnings and return on
invested capital each year and one-half upon the achievement of specific
management objectives; payments may vary between zero and one hundred fifty
percent of such Incentive Awards in light of corporate or divisional
performance (as appropriate) with respect to such financial objectives, and in
light of each individual's actual performance with respect to his or her
management objectives during each year. Awards paid to Executive Officers
pursuant to the Corporation's Annual Incentive Plan are included in the amounts
stated in the second compensation column of the Summary Compensation Table on
page 13 of this Proxy Statement.
RESTRICTED STOCK PLANS
The Corporation's Executive Officers and certain other key management
employees, as determined by the Compensation Committee of the Board of
Directors, are eligible to receive Restricted Stock granted under the Brown
Group, Inc. Stock Option and Restricted Stock Plan of 1994 (the "1994 Plan").
Awards of Restricted Stock have also been made to the Corporation's Executive
Officers and certain key management employees under the Brown Group, Inc. Stock
Option and Restricted Stock Plan of 1987, as amended (the "1987 Plan"). With
the 1994 Plan having been approved by the Shareholders of the Corporation at
the 1994 Annual Meeting of Shareholders, the Corporation is not making any
further Restricted Stock awards under the 1987 Plan.
<PAGE> 15
Under both Plans, shares of Restricted Stock are granted at no cost to the
Participant and are delivered at the time of the grant, but are subject to
forfeiture until certain specified conditions are met. Each certificate
representing shares of Restricted Stock bears a legend referring to the Plan
under which it was issued, the risk of forfeiture of the shares and the fact
that such shares are non-transferable until the restrictions have been
satisfied and the legend has been removed. The recipient of Restricted Stock
is entitled to full voting and dividend rights with respect to such shares from
the date of grant. Under both Plans, shares vest in the Participant and
restrictions lapse as follows: one-half of the shares after four years from
the date of grant, an additional one-fourth after six years and the remaining
one-fourth after eight years. A Participant in a Plan is entitled to receive
shares of Restricted Stock free of restrictions only if he is, at the time of
the lapse of such restrictions, in the employ of the Corporation and has been
continuously so employed since the date of grant, except in the case of
retirement or death. If employment is terminated because of disability, the
Participant will be treated as continuing in the employ of the Corporation for
purposes of fulfilling the applicable restriction period. In the event (1) any
person other than the Corporation acquires more than 25% of the Corporation's
Common Stock, (2) the Corporation is liquidated or dissolved following a sale
of all or substantially all of its assets, or (3) the Corporation is not the
surviving parent corporation resulting from any merger or consolidation to
which it is a party (each of which is deemed to be a "change of control"), then
any unvested shares of Restricted Stock granted under either Plan shall
immediately mature and vest in full.
The Summary Compensation Table on page 13 of this Proxy Statement sets out
in the fourth compensation column the value of the shares of Restricted Stock
granted under either the 1987 Plan or the 1994 Plan to persons named in that
table. Such shares have been included in the Stock Ownership Table on page 6
of this Proxy Statement.
RETIREMENT PLANS
Substantially all salaried, full-time retail and store employees of the
Corporation and designated subsidiaries, as well as the Corporation's Executive
Officers, are eligible to participate in the Shareholder-approved Brown Group,
Inc. Retirement Plan (the "Retirement Plan") after twelve months' employment
and the attainment of 21 years of age. Terms of the Retirement Plan, which is
funded by the Corporation, include, among others, provisions for normal,
optional, early or deferred retirement benefits and for survivor benefits.
Under the Retirement Plan, pensions are computed on a two-rate formula
basis of .825 percent and 1.425 percent for each year of service. The .825
percent service credit is applied to that portion of the average annual salary
for the five highest consecutive years during the last ten-year period that
does not exceed the Social Security Wage Base (the portion of salary subject to
the Federal Social Security Act), and the 1.425 percent service credit is
applied to that portion of the average that exceeds said level.
Certain key employees and Executive Officers are also eligible to
participate in the Supplemental Executive Retirement Plan (the "Supplemental
Plan"). The purpose of the Supplemental Plan is to supplement the benefits
payable to Participants under the Retirement Plan which are otherwise reduced
on account of the limitations of Sections 415 and 401(a)(17) of the Internal
Revenue Code of 1986, as amended. Terms of the Supplemental Plan, among other
things, provide for: an increase in the formula basis for salary in excess of
<PAGE> 16
the Social Security Wage Base; an early retirement benefit; the amount of
benefits payable under the Plan to equal the excess (if any) of the amount
which would have been payable to the Participant as a normal retirement benefit
under the Retirement Plan without regard to the limitations of Sections 415 and
401(a)(17) of the Code less the Participant's normal retirement benefit under
the Retirement Plan, taking into account the limitations of Sections 415 and
401(a)(17) of the Code; and payment, in lump sum value, of all benefits in the
event of a "change of control" of the Corporation, defined in the same manner
as in the 1987 Plan and the 1994 Plan above. The Supplemental Plan is
unfunded. All payments to a Participant will be made from the general assets
of the Corporation.
In addition to the Retirement Plan and the Supplemental Plan, the
Corporation has, incidental to hiring, entered into separate agreements with
two current Executive Officers providing additional credited years of service
over those for which the Executive is actually employed.
The following table shows the estimated annual retirement benefits payable
to Participants, including Executive Officers, in the Retirement Plan on a
straight life annuity basis, assuming normal retirement at age 65 during 1995.
The benefits shown in the table below are not subject to deduction for Social
Security or other offset amounts and also include benefits under the
Supplemental Plan. The table does not reflect the effect of profit sharing
balances on pension accounts. If the pension provided by the profit sharing
balance exceeds the formula benefit for the period of employment preceding
November 2, 1975, such excess is added to the total formula pension.
<TABLE>
Pension Plan Table
Years of Service
<CAPTION>
Final Average
Salary 10 15 20 25 30 35 or More
- ----------------- -------- -------- -------- -------- -------- ----------
<C> <C> <C> <C> <C> <C> <C>
$100,000......... $ 12,991 $ 19,487 $ 25,982 $ 32,478 $ 38,973 $ 45,469
200,000......... 27,641 41,462 55,282 69,103 82,923 96,744
300,000......... 42,291 63,437 84,582 105,728 126,873 148,019
400,000......... 56,941 85,412 113,882 142,353 170,823 199,294
500,000......... 71,591 107,387 143,182 178,978 214,773 250,569
600,000......... 86,241 129,362 172,482 215,603 258,723 301,844
700,000......... 100,891 151,337 201,782 252,228 302,673 353,119
800,000......... 115,541 173,312 231,082 288,853 346,623 404,394
</TABLE>
The credited years of service (including service by agreement) for purposes
of determining benefits for each of the persons named in the Summary
Compensation Table on page 13 are as follows: Mr. B. A. Bridgewater, Jr.--31;
Mr. Brian C. Cook--14; Mr. Ronald A. Fromm--8; Mr. Harry E. Rich--11; and Mr.
Thomas A. Williams--12. The dollar amounts shown in the first two columns of
the Summary Compensation Table on page 13 are substantially the same as the
compensation covered by the Retirement Plans.
<PAGE> 17
In 1944, the Shareholders approved the adoption of a Retirement Trust to
which the Corporation, and those subsidiaries which had adopted the Trust,
annually contributed six percent of their consolidated profits before taxes.
The Corporation's final contribution was made for the Corporation's 1975 Fiscal
Year. All full-time salaried employees and certain retail employees
compensated by commissions with five years' service with the Corporation or
subsidiaries which had adopted the Trust were eligible to participate.
The Corporation's annual contributions to the Trust were allocated to the
employees' accounts in proportion to each employee's salary.
All Participants' accounts, including the Corporation's contributions
thereto, became fully vested in the Participants on September 4, 1975. Cash
contributions by employees have been returned to each contributing employee
with interest at six percent per year to the date returned. The Retirement
Trust, after the Corporation's final contribution for the 1975 Fiscal Year, was
frozen on November 1, 1975, with account balances thereafter subject to change
solely for future earnings and market adjustments.
At retirement, each Participant under the Retirement Trust may receive his
or her Retirement Trust benefit in the form of either a lump sum or a monthly
annuity.
EMPLOYEE SAVINGS PLAN
Under the Corporation's Employee Savings Plan, as amended, eligible
employees (those who are 21 years of age or older and who have attained one
year of service with the Corporation) may elect to have from 2 percent to 17
percent of their annual salaries, up to a present maximum amount of $9,240 per
Plan Participant, invested in the Plan. The Corporation matches 75 percent of
the first 2 percent investment and 50 percent of the additional investment up
to the 6 percent level. Plan members employed prior to January 1, 1994 are 100
percent vested in their account balances at all times. Plan members employed
on January 1, 1994 and thereafter are vested in the Corporation's matching
contribution after five years. The Summary Compensation Table on page 13 of
this Proxy Statement sets out in the last column the amounts of contributions
by the Corporation which were allocated to the persons named in that table,
exclusive of changes representing increases and declines during the periods in
the market price of the Corporation's Common Stock, offset and reduced by
dividends thereon and short-term interest derived from cash balances of
contributions awaiting investment in such Common Stock. The full value of each
Plan Participant's account is paid to each Plan member when he or she retires,
leaves the employ of the Corporation or becomes permanently and totally
disabled.
DIRECTORS' COMPENSATION
The Corporation pays each non-employee Director of the Corporation an
annual cash retainer of $17,500 and also pays an additional annual cash
retainer of $2,000 to the Chairman of the Corporation's Audit Committee, the
Chairman of the Corporation's Compensation Committee and the Chairperson of the
Corporation's Governance and Nominating Committee.
The Corporation also pays each non-employee Director (a) a $1,000 fee for
attendance at each meeting of the Board of Directors, (b) a $1,000 fee for
attendance at each meeting of a standing committee of the Board of Directors
<PAGE> 18
and (c) a $1,000 fee to each non-employee Director who is a member of the
Corporation's Executive Committee for attendance at each meeting of the
Executive Committee. The Corporation also pays the premiums for Directors' and
Officers' Liability insurance and Travel Accident insurance coverage for each
Director. The Corporation has no Directors' retirement plan, and pays no
additional Directors' remuneration to any Director who is an Officer or
employee of the Corporation.
Under the 1994 Plan, which was approved by the Corporation's Shareholders
at the 1994 Annual Meeting of Shareholders, each non-employee Director in
office on May 26, 1994 (the date the Plan became effective) received a grant of
1,000 shares of Brown Group Common Stock. Thereafter, each newly appointed
non-employee Director is granted 1,000 shares on the date the Director is first
elected to serve. In addition, each non-employee Director is granted 250
shares of Brown Group Common Stock annually, and each non-employee Director who
serves as Chairman of the Corporation's Audit, Compensation or Governance and
Nominating Committee is annually granted an additional 100 shares of Brown
Group Common Stock.
STOCK OPTION PLANS
The Corporation has options outstanding under the 1994 Plan, the 1987 Plan
(both as defined above) and the Stock Appreciation, Stock Option and
Performance Bonus Plan of 1983 ("1983 Plan"). These Plans are administered by
the Corporation's Compensation Committee. The Compensation Committee, in its
discretion, based upon such factors as levels of responsibility and individual
performance, makes determinations as to those persons who are considered to be
key employees and who are therefore eligible for awards under these Plans. All
options are granted at 100% of market value on the date of the grant and expire
ten years from the date of grant. Following the adoption and approval of the
1987 Plan, the Corporation made no further awards under the 1983 Plan, and with
the 1994 Plan having been approved by the Shareholders at the 1994 Annual
Meeting of Shareholders, the Corporation will make no further awards under the
1987 Plan. In the event that (1) any person other than the Corporation
acquires more than 25% of the Corporation's Common Stock, (2) the Corporation
is liquidated or dissolved following a sale of all or substantially all of its
assets, or (3) the Corporation is not the surviving parent corporation
resulting from any merger or consolidation to which it is a party, then any
unexercisable options awarded under the 1983 Plan or the 1987 Plan shall
immediately become exercisable, and any outstanding options under the 1994 Plan
shall be settled by the payment by the Corporation to the holder of such
options of an amount equal to the difference between the aggregate exercise
price of such options and the aggregate fair market value of the shares of the
Corporation's Common Stock subject thereto.
<PAGE> 19
The following table shows information with respect to the options and Stock
Appreciation Rights ("SARs") granted to the Executive Officers named in the
Summary Compensation Table on page 13 during the past Fiscal Year:
<TABLE>
Options/SAR Grants in Last Fiscal Year
<CAPTION>
Individual Grants Potential Realizable
- ----------------------------------------------------------------------------------- Value at Assumed
Annual Rates of Stock
% of Total Price Appreciation
Options/SARs for Option Term
Granted to ---------------------
Options/SARs Employees in Exercise or Expiration
Name Granted Fiscal Year Base Price Date 5%($) 10%($)
- ---------------------------- ------------ ------------ ----------- ------------ --------- ----------
<C> <C> <C> <C> <C> <C> <C>
B. A. Bridgewater, Jr. ..... -0- n/a n/a n/a n/a n/a
Brian C. Cook .............. -0- n/a n/a n/a n/a n/a
Ronald A. Fromm ............ 5,000/-0- 10.3%/n/a $37.8125 May 26, 2004 118,900 301,317
Harry E. Rich .............. -0- n/a n/a n/a n/a n/a
Thomas A. Williams ......... 5,000/-0- 10.3%/n/a $37.8125 May 26, 2004 118,900 301,317
</TABLE>
The table on the following page shows information with respect to the
unexercised options and SARs granted during the past Fiscal Year and in prior
years to the Executive Officers named in the Summary Compensation Table on
page 13 and with respect to option/SAR exercises by those persons during the
past Fiscal Year:
<PAGE> 20
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End (#) at FY-End ($) <F2>
Shares
Acquired On Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) <F1> Unexercisable Unexercisable
- ---------------------------- ------------ ----------------- ---------------------- --------------------
<C> <C> <C> <C> <C>
B. A. Bridgewater, Jr. ..... 4,003 151,069 39,609 / -0- -0- / -0-
Brian C. Cook .............. 927 29,289 14,205 / -0- -0- / -0-
Ronald A. Fromm ............ -0- -0- 3,642 / 5,000 -0- / -0-
Harry E. Rich .............. 1,242 38,906 29,623 / -0- -0- / -0-
Thomas A. Williams ......... -0- -0- 5,000 / 5,000 -0- / -0-
- ---------------
<FN>
<F1> Based on the difference between the mean market price on the date of exercise and the option price.
<F2> Based on the difference between the mean price at Fiscal Year-end and the option price.
</TABLE>
LONG TERM INCENTIVE PLANS
The Corporation has no long-term incentive plans under which any of the
Executive Officers named in the Summary Compensation Table on page 13 of this
Proxy Statement received any award during the periods covered.
STOCK PURCHASE PLAN OF 1977
Substantially all salaried and commissioned employees, including Executive
Officers, may participate in the Stock Purchase Plan of 1977 after twelve
months' employment with the Corporation. Under this Plan, stock may be
purchased from the Corporation at 85 percent of its market value on the date of
purchase, or it may be purchased by the Trustee in the open market. In the
latter case, the Corporation and its participating subsidiaries contribute to
the Plan an amount equal to 17.647 percent of the Participants' contributions,
which is equivalent to 15 percent of the purchase price of the stock to the
Participants.
The Summary Compensation Table on page 13 of this Proxy Statement sets out
in the last column the amounts of contributions by the Corporation to the Plan
for the persons named in that table.
<PAGE> 21
BOARD OF DIRECTORS AND STANDING
COMMITTEES OF THE BOARD
BOARD OF DIRECTORS
During the Fiscal Year ended January 28, 1995, the Board of Directors of
the Corporation met at regular and special meetings on seven separate
occasions. Each of the Directors attended not less than seventy-five percent
(75%) of the meetings of the Board of Directors and of all committees of the
Board of Directors of which each such person was a member, except that Mr.
Richard A. Liddy attended one of the two remaining meetings of the Board of
Directors which he was eligible to attend following his election as a Director.
The Board of Directors has established standing Audit, Compensation, Executive
and Governance and Nominating Committees.
AUDIT COMMITTEE
The Audit Committee of the Board of Directors presently is composed of six
members of the Board of Directors who are not Officers or employees of the
Corporation or of any of its subsidiaries. Each member of the Audit Committee
is regarded as independent of the management of the Corporation and as free
from any relationship which, in the opinion of the Board of Directors, would
interfere with the exercise of independent judgment as an Audit Committee
member. The Chairman of the Audit Committee is appointed by the Board of
Directors on the recommendation of the Board's Governance and Nominating
Committee. The members of the Audit Committee serve for a term of one year or
until their successors are appointed.
The responsibilities of the Audit Committee are: to select the independent
public accountants for the Corporation for proposed ratification by the
Shareholders; to review with the independent public accountants their annual
audit plans, including the degree of coordination with the Corporation's
internal audit plans; to review proposed audit fees; to be informed of the use
of the independent public accountants for significant management advisory
services; to obtain explanations from management for all significant variances
in the financial statements between years; to request an explanation of changes
in accounting standards or rules that have an effect on the financial
statements; to inquire about the existence and substance of any significant
accounting accruals, reserves or estimates made by management that had a
material impact on the financial statements; to inquire if there were any
significant financial reporting issues discussed during the accounting period
and, if so, how they were resolved; during private meetings with the
independent public accountants, to request of them their opinions on various
matters including the quality of financial and accounting personnel and the
internal audit staff; to discuss with management and the independent public
accountants the substance of any significant issues concerning litigation,
contingencies, claims or assessments including tax matters, and to understand
how such matters are reflected in the Corporation's financial statements; to
review with the independent public accountants their recommendations on
accounting procedures and internal controls arising from the annual audit as
well as management's response to such recommendations; to review the internal
audit plans and scopes; to review, at least annually, the status of compliance
with the Corporation's Business Conduct Policies and to inquire as to whether
there have been any reported cases of noncompliance or violations; and to
instruct the independent public accountants and the internal audit staff that
the Audit Committee expects to be advised if there are any areas that require
its special attention.
<PAGE> 22
The members of the Audit Committee are Mr. Daniel R. Toll, Chairman; Mrs.
Julie C. Esrey; Mr. Richard A. Liddy; Mr. William E. Maritz; General Edward C.
Meyer, Retired; and Mr. Morton I. Sosland. During the Fiscal Year ended
January 28, 1995, the Audit Committee met on three separate occasions.
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors presently is composed
of five members of the Board of Directors who are not Officers or employees of
the Corporation or of any of its subsidiaries. The Chairman of the
Compensation Committee is appointed by the Board of Directors on the
recommendation of the Board's Governance and Nominating Committee. The members
of the Compensation Committee of the Board of Directors serve for a period of
one year or until their successors are appointed.
The responsibilities of the Compensation Committee are: to determine the
salaries and Annual Incentive Awards of the Officers and other executives and
key management employees of the Corporation and its subsidiaries; to review and
approve proposed changes in the salaries of other management employees; to
approve the participation of executives and other key management employees in
the Corporation's various compensation plans; to approve and recommend to the
Board of Directors (where appropriate) any changes which are indicated in the
Corporation's compensation programs; to monitor the Corporation's policies and
practices regarding promotion and management development; to counsel senior
management regarding assignment of responsibilities to managers; to ensure
continuity of experienced, qualified management at senior levels within the
Corporation; and to monitor the performance of the Chief Executive Officer and
assure continuity in this position, making appropriate recommendations to the
Board of Directors.
The members of the Compensation Committee are Mr. Joseph L. Bower,
Chairman; Mrs. Joan F. Lane; Mr. John D. Macomber; Mr. Morton I. Sosland; and
Mr. Daniel R. Toll. During the Fiscal Year ended January 28, 1995, the
Compensation Committee met on five separate occasions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the members of the Compensation Committee identified in the preceding
paragraph, none ever has been an employee of the Corporation.
EXECUTIVE COMMITTEE
The Bylaws of the Corporation provide that the Executive Committee of the
Board of Directors, presently composed of Mr. B. A. Bridgewater, Jr., Chairman;
Mr. Joseph L. Bower; Mrs. Joan F. Lane; Mr. Harry E. Rich; and Mr. Daniel R.
Toll; shall have and may exercise, so far as is permitted by law, all of the
powers and duties of the Board in the direction of the management of the
business and affairs of the Corporation during the intervals between meetings
of the Board of Directors which may lawfully be delegated to it by the Board of
Directors, except with respect to certain categories of matters which expressly
have been reserved to the full Board of Directors. The Executive Committee of
the Board of Directors also performs Finance Committee functions. The
Executive Committee met on one occasion during the Fiscal Year ended
January 28, 1995.
<PAGE> 23
GOVERNANCE AND NOMINATING COMMITTEE
The Governance and Nominating Committee of the Board of Directors presently
is composed of four members of the Board of Directors who are not Officers or
employees of the Corporation or any of its subsidiaries. The Chairperson of
the Governance and Nominating Committee is appointed by the Board of Directors
on the recommendation of this Committee. Members of the Governance and
Nominating Committee serve for a period of one year or until their successors
are appointed.
The responsibilities of the Governance and Nominating Committee are: to
develop appropriate criteria for serving as a member of the Board of Directors
and to screen, interview and recommend to the Board of Directors suitable
candidates for positions on the Board of Directors; to evaluate the structure
and composition of the Board of Directors, including the number and
responsibilities of the Standing Committees of the Board and to recommend
changes as indicated by this evaluation; to recommend chairmen and committee
members of each of the Standing Committees of the Board of Directors; to review
the elements and levels of Director compensation and the service of Directors
and to recommend any changes as indicated by this review; and to recommend to
the Board of Directors, prior to each Annual Shareholders' Meeting, suitable
persons to be designated by the Board of Directors as nominees for election by
the Shareholders to the office of Director of the Corporation, together with
their placement within the Corporation's classified Board structure as it was
adopted on November 2, 1954.
The Governance and Nominating Committee will consider suggestions from all
sources, including Shareholders, regarding possible Directorial candidates.
Such suggestions should be submitted to the Vice President, General Counsel and
Corporate Secretary of the Corporation, in the manner and within the time
required by the Bylaws of the Corporation.
The members of the Governance and Nominating Committee are Mrs. Joan F.
Lane, Chairperson; Mr. John D. Macomber; Mr. William E. Maritz; and General
Edward C. Meyer, Retired. During the Fiscal Year ended January 28, 1995, the
Governance and Nominating Committee met on four separate occasions.
COMPENSATION COMMITTEE REPORT
The policy of the Compensation Committee of the Board of Brown Group, Inc.
is to provide compensation programs that attract, motivate, and help retain a
highly qualified management team to meet the special management requirements of
this Corporation. These programs are not only central to the successful
operation of the stable and growing elements of the Corporation, but also
provide important incentives to management responsible for restructuring and
renewal. In these two ways the programs align closely the interests of
management with those of Shareholders.
STATEMENT OF PURPOSE
The Committee believes that compensation programs must be in place to
enable the Corporation to attract a limited number of executives with critical
experience for key positions, and to retain and motivate strong, capable
management during an extended period of change. The purposes of the programs
approved and actions taken by the Compensation Committee continue to be as
follows:
<PAGE> 24
* Encourage and reward an entrepreneurial spirit and business
success each year in the operating divisions of the Corporation,
and, at the same time, build the structure and teamwork necessary
for profitable long-term growth in the footwear business.
* Recognize and reward success in identifying and implementing
necessary structural changes, including consolidation and closing
of business units, plants, and retail stores and associated
overhead reduction throughout the Corporation; and developing
valuable new business initiatives. Success in making these
changes over time, and continued aggressive management of the
Corporation's growth businesses continue to position the
Corporation to move forward with encouraging prospects.
* Provide executives who succeed within the Corporation the
opportunity to build capital value through stock options and
restricted stock, as long as Shareholders build corresponding
value; and, conversely, give executives strong disincentives to
join competitors in businesses often characterized by executive
job-switching.
CASH PAY LEVELS
To achieve these purposes, the Committee sets overall cash compensation
levels that are reasonable in view of the practices of other footwear
companies, including the "Peer Group" companies reflected in the table
following this report, and other large companies with whom Brown Group competes
for management. Competitive survey data for industry-related and other large
companies and "Peer Group" companies is provided by an independent compensation
consulting firm. In this cash compensation program, a combination of the
executive's salary and a target annual incentive payment approximates
competitive total cash pay. Salaries are reviewed annually and are determined
based on the Committee's evaluation of this competitive survey data, specific
executive responsibilities, the changing nature of these responsibilities,
performance, and the competitive environment for attracting and retaining
footwear executives. The incentive payment can be increased or decreased
substantially by the Committee, however, based on each recipient's performance
in achieving financial and management objectives.
The amount of the annual incentive payment portion of total cash
compensation each year is based half upon the achievement of specific financial
objectives, and half upon the achievement of specific management objectives, as
explained on page 14 of this Proxy Statement. The financial objectives are
based on net earnings and on return on invested capital. Management objectives
relate specifically to controllable and, where possible, measurable elements of
each participant's position.
The competitive survey data described above indicates that these practices
place Brown Group's cash pay levels generally near the median of the "Peer
Group" companies cited previously, and generally in the mid-range of other
large companies with which Brown Group competes for management. In the
competitive compensation survey and the "Peer Group" chart on page 27
following, data for Nine West Group (a privately held company at the time the
"Peer Group" was formed, which went public in 1993), has been added to the
"Peer Group" statistics. The Committee also seeks to ensure that the
Corporation's cash pay practices are reasonable in view of the performance of
<PAGE> 25
the Corporation's stock, the dividends Shareholders receive, and Shareholder
perception of the Corporation's prospects.
LONG-TERM STOCK INCENTIVES
The Committee also administers a long-term restricted stock and stock
option program. Restricted stock awards to senior management in 1994, and the
past several years, align the interest of management with those of the
Shareholders and, because of the 8-year holding period required prior to the
full lapse of restrictions, are an important influence in Executive retention.
The size of restricted stock and stock option grants is based on comparison
with the practices of other footwear companies, including the "Peer Group"
companies reflected in the table following this report, and other large
companies with whom Brown Group competes for management. Comparative long-term
stock incentive practices of these companies are surveyed periodically by an
independent compensation consulting firm, and such a survey was conducted and
reviewed by the Committee in 1994. We observe that our practices in granting
stock awards are generally competitive with those of the "Peer Group" companies
cited previously.
CEO COMPENSATION
The Committee maintained the salary of the Chief Executive Officer for 1994
at the $650,000 level, reflecting the competitive factors and survey data
discussed previously. The total incentive payment of $300,000 comprised a part
based on achievement of management objectives, and a part based upon Corporate
financial performance.
Management Objectives
In determining the "management objectives" portion of the
incentive payment for the Chief Executive for 1994, the Committee gave
weight to the following factors: 1. The discontinuance of the Leased
Department, Connie, and Regal store businesses, consolidation of
Administrative operations, plant closings and other restructuring
changes were completed ahead of schedule, and at lower cost than
planned; 2. Cloth World was sold for approximately book value; 3. Cash
flow accumulated was $115 million, $10 million higher than planned;
net debt was reduced from 54 percent to 39 percent of total capital, 6
percent better than planned, and $4.5 million (26 cents per share) was
recovered to net earnings; 4. Total return to Shareholders was well
maintained compared with the "Peer Group" in 1994. More specifically,
we note that the total return to Brown Group, Inc. Shareholders has
consistently been higher than that of both the "Peer Group" companies,
and the S&P 500 average, during the 5-year period covered.
Considering these accomplishments, which successfully concluded a
decade-long program to withdraw from mature and declining businesses,
and to position Brown Group solely in attractive areas of the footwear
business, the Committee determined an award of $162,200 related to the
achievement of management objectives for the Chief Executive Officer.
<PAGE> 26
Financial Performance
A payment of $137,800 was determined based on 1994 financial
performance. Both Corporate earnings and return on invested capital
slightly exceeded planned levels, and this payment was determined by
formula.
RESTRICTED STOCK AWARDS
A restricted stock award of 25,000 shares was made to the Chief Executive
Officer in 1994. No stock option was granted to the Chief Executive Officer in
1994. In addition, in 1994 restricted stock grants totaling 101,500 shares
were made to 15 Executive Officers and stock option grants for an aggregate of
32,000 shares were made to ten such Executive Officers of the Corporation. The
restricted stock awards made to the Chief Executive Officer and the other
Executive Officers in 1994 were determined by the Committee on the basis of the
factors discussed above with respect to the cash and long-term stock incentive
compensation of the Chief Executive Officer and other Executive Officers, and
on the Committee's judgment as to the level at which such awards would, in each
particular case, serve the purpose of restricted stock and stock option grants:
to align the interest of management with those of Shareholders, and to
strengthen management's commitment to the Corporation. The Committee notes
that the continuing granting of Restricted Stock to increase the stock
ownership of Senior Management was strongly endorsed by the Shareholders last
year, when the Stock Option and Restricted Stock Plan of 1994 was approved by
the positive vote of 93 percent of the votes cast by Shareholders.
* * *
The Omnibus Budget Reconciliation Act of 1993 limits deductibility of
certain compensation for the Chief Executive Officer and the additional four
Executive Officers who are highest paid and employed at year end to $1 million
per year, effective for tax years beginning on or after January 1, 1994. In
1994, no Brown Group executive received compensation of $1 million or more.
The policy of the Committee related to this statutory provision is to establish
and maintain a compensation program that maximizes the creation of long-term
Shareholder value. Action is expected to be taken to qualify the Corporation's
compensation approaches for deductibility to the extent consistent with the
objectives of the Corporation's executive compensation program and with
maintaining competitive compensation.
Respectfully submitted,
COMPENSATION COMMITTEE OF
THE BROWN GROUP, INC. BOARD OF DIRECTORS
Mr. Joseph L. Bower, Chairman
Mrs. Joan F. Lane, Member
Mr. John D. Macomber, Member
Mr. Morton I. Sosland, Member
Mr. Daniel R. Toll, Member
<PAGE> 27
PERFORMANCE OF THE CORPORATION
Set forth below is a line graph comparing the annual percentage change in
the cumulative total Shareholder return on the Corporation's Common Stock
against the cumulative total return of three assumed Peer Group Indices and the
Standard & Poor's Composite-500 Index, with investment weighted based on market
capitalization. The Corporation's Fiscal Year ends on the Saturday nearest to
each January 31; accordingly, share prices are as of the last business day in
each Fiscal Year.
<TABLE>
Comparison of 5-Year Cumulative Total Return
<CAPTION>
2/1/91 1/31/92 1/29/93 1/28/94 1/27/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Brown Group, Inc. $114.17 $127.42 $151.79 $188.54 $180.24
Peer Group No. 1 $ 92.36 $137.61 $131.72 $113.63 $ 98.43
Peer Group No. 2 $ 92.36 $137.61 $131.72 $113.63 $ 96.98
Peer Group No. 3 $103.84 $146.96 $127.21 $107.62 $ 91.49
S&P 500 Index $107.33 $131.68 $145.61 $163.14 $164.72
</TABLE>
[PERFORMANCE GRAPH]
The following table is derived from the data shown in the foregoing line
graph and is intended to assist Shareholders in evaluating their total returns
on an annual basis for various holding periods.
<TABLE>
Compound Annual Rate of Total Return to Shareholders
<CAPTION>
5 Year <F1> 4 Year 3 Year 2 Year 1 Year
----------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Brown Group, Inc. 12.50% 12.08% 12.24% 8.97% -4.40%
Peer Group No. 1 -0.32% 1.60% -10.56% -13.56% -13.38%
Peer Group No. 2 -0.61% 1.23% -11.00% -14.19% -14.65%
Peer Group No. 3 -1.76% -3.11% -14.60% -15.19% -14.99%
S&P 500 Index 10.49% 11.29% 7.74% 6.36% 0.97%
- ---------------
<FN>
<F1> Holding period, in Fiscal Years of the Corporation corresponding to
the previous graph, ended January 27, 1995
</TABLE>
The Peer Group No. 1 Index depicted in the foregoing line graph and table
consists of six companies believed to be engaged in similar businesses: Edison
Brothers Stores, Inc., GENESCO Inc., Nine West Group, Inc., The Stride Rite
Corporation, The United States Shoe Corporation and Wolverine World Wide, Inc.
The Peer Group No. 2 Index depicted in the foregoing line graph and table
consists of the same companies as comprise the Peer Group No. 1 Index, except
<PAGE> 28
for Nine West Group, Inc., for which data became available only subsequent to
its going public in 1993. The Peer Group No. 3 Index in the foregoing line
graph and table consists of the same companies as comprised the "Peer Group"
for purposes of comparison in the Corporation's Proxy Statement for the 1994
Annual Meeting of Shareholders; these companies are the same as those in the
Peer Group No. 2 Index, with the addition of Fabri-Centers of America, Inc.,
Hancock Fabrics, Inc. and House of Fabrics, Inc. These three companies have
been omitted from Peer Group Indices Nos. 1 and 2 because the Corporation is no
longer in the line of business for which these companies previously were
included. Shareholders are cautioned against drawing any conclusions from the
data contained therein, as past results are not necessarily indicative of
future performance. These indices are included for comparative purposes only
and do not indicate an opinion of management that such indices are necessarily
an appropriate measure of the relative performance of the Corporation's Common
Stock.
(B)
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, Gateway One, Suite 1400, 701 Market Street,
St. Louis, Missouri 63101, has examined the financial statements of the
Corporation for the 1994 Fiscal Year and for many years prior thereto, and the
Board of Directors, upon the recommendation of its Audit Committee, wishes to
continue the services of this firm for the current Fiscal Year ending February
3, 1996. A resolution will be presented to the Annual Meeting to ratify the
appointment by the Board of Directors of the firm of Ernst & Young LLP, as
independent auditors, to examine the financial statements of the Corporation
for the current Fiscal Year ending February 3, 1996, and to perform other
appropriate accounting services. The Corporation has been advised that a
representative of Ernst & Young LLP will be present at the Annual Meeting with
an opportunity to make a statement if he or she desires and will be available
to respond to appropriate questions of the Shareholders.
The Corporation has been informed by Ernst & Young LLP that no member of
the firm has any financial interest, either direct or indirect, in the
Corporation or any of its subsidiaries, and that during the past three years no
such member has had any connection with the Corporation or any of its
subsidiaries in any capacity other than that of auditors or consultants.
If the Shareholders do not ratify the selection of Ernst & Young LLP, the
selection of independent auditors will be reconsidered by the Board of
Directors.
The Board of Directors of the Corporation recommends a VOTE FOR
ratification of the appointment of Ernst & Young LLP as its independent
auditors. It is intended that the votes will be cast pursuant to the
accompanying Proxy for ratification of the appointment of Ernst & Young LLP
unless Shareholders specify a contrary choice in their Proxies.
<PAGE> 29
(C)
SHAREHOLDER PROPOSALS
SHAREHOLDER PROPOSAL ON BOARD CLASSIFICATION
The Board of Directors of the Corporation strongly OPPOSES the following
shareholder proposal as being harmful to the best interests of the Corporation.
The Massachusetts Laborers' Pension Fund, located at One Gateway Center,
Newton, Massachusetts 02158, the holder of 200 shares of the Corporation's
Common Stock, has requested the Corporation to include the following resolution
in the Proxy Statement:
"BE IT RESOLVED: That the shareholders of Brown Group, Inc.,
("Company") urge that the Board of Directors take the necessary steps,
in compliance with New York state law, to declassify the Board of
Directors for the purpose of director elections. The Board
declassification shall be done in a manner that does not affect the
unexpired terms of directors previously elected.
"SUPPORTING STATEMENT
"The election of corporate directors is the primary avenue in the
American corporate affairs and exert accountability on management. We
strongly believe that our Company's financial performance is closely
linked to its corporate governance policies and procedures, and the
level of management accountability they impose. Therefore, as
shareholders concerned about the value of our investment, we are very
disturbed by our Company's current system of electing only one-third
of the board of directors each year. We believe this staggering of
director terms prevents shareholders from annually registering their
views on the performance of the board collectively and each director
individually.
"Concerns that the annual election of all directors would leave our
Company without experienced Board members in the event that all
incumbents are voted out is unfounded. If the owners should choose to
replace the entire board, it would be obvious that the incumbent
directors' contributions were not valued.
"Most alarming is that the staggered Board can help insulate directors
and senior executives from the consequences of poor performance by
denying shareholders the opportunity to replace an entire Board which
is pursuing failed policies. Regardless of whether you believe the
current Board and management team is performing satisfactorily or not,
we believe the Board is failing to realize the full potential of the
Company's assets. Until Brown Group's Board of Directors decided to
stagger Board terms, that process was the annual election of all
directors.
"Brown Group's performance has a tangible, monetary impact on the
wealth of its shareholders. We believe this company's performance is
a compelling reason to reconsider the wisdom of a staggered Board. We
believe that allowing shareholders to annually register their views on
the performance of the Board collectively and each director
individually is one of the best method's to insure that our Company
will be managed in the best interests of the shareholders."
<PAGE> 30
RECOMMENDATION OF THE CORPORATION
THE BOARD OF DIRECTORS OPPOSES THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Corporation's Board of Directors has been divided into three classes
since January, 1955. The current classification system was first adopted by
the Board of Directors of the Corporation on November 2, 1954 and ratified by
the Corporation's Shareholders at the January 13, 1955 Annual Meeting of
Shareholders, when 99.79% of the shares represented at the meeting were voted
in favor of such a classification system for the election of directors.
Effective with the 1955 Annual Meeting of Shareholders, therefore, the
Corporation's Directors generally have had terms of three years, with the
members of each class elected once every three years. After more than 40 years
in practice, we continue to believe that a classified board is in your best
interests. Classification helps to ensure continuity and stability in the
leadership and policies of the Corporation by providing that at any time a
majority of the Directors will likely have prior Board experience with the
Corporation. At least two annual Shareholder meetings, instead of one,
ordinarily will be required to effect a change in control of the Board. The
Corporation believes that the continuity and stability resulting from a
classified board are particularly important to the Corporation and its
Shareholders in light of the rapid changes in the current capital markets.
The Corporation has observed that certain takeover tactics, such as hostile
tender or exchange offers and greenmail, have become relatively common
occurrences for publicly-held companies without anti-takeover provisions. The
Corporation believes that the classification of the Board of Directors is
desirable to offer some protection to our Shareholders against these tactics
which can be highly disruptive to the Corporation's business, and adversely
affect the Corporation's relationships with its employees, customers, business
partners and others on which the Corporation's successful performance depends,
all to the detriment of the Shareholders as a whole. The Corporation believes
that the threat of removal facing the Board in such situations could severely
curtail the Board's ability to negotiate effectively and, in an appropriate
case, to help achieve a full value for Shareholders in any transaction
involving the Corporation. The delay imposed to effect a change in a majority
of the Board ensures that both the Board and our Shareholders will have
sufficient time to review an acquisition proposal and appropriate alternatives
to the proposal, and to act in the best interests of our Shareholders. A
classified board encourages any potential acquiror to negotiate at arm's length
with a seasoned board who will work to ensure that our Shareholders receive the
full value of the Corporation from any acquiror.
Numerous corporations have a classified Board of Directors, including
several corporations which have adopted a board classification in recent years.
Moreover, according to the Corporate Governance Bulletin of the Investor
Responsibility Research Center, in the 1994 proxy season the shareholders of
many large, publicly-held corporations have rejected proposals to eliminate
board classification. These corporations include Albertson's, Inc., Ameritech
Corporation, Bristol-Myers Squibb Company, Church & Dwight Co., Inc.,
Commonwealth Energy System, Dow Jones & Company, Inc., GTE Corporation, Host
Marriott Corporation, Mercantile Stores Co., Inc., Neiman Marcus Group, Inc.
and U S West, Inc. In each of these cases, more than 70% of the shareholders
voted to reject proposals seeking to repeal the board classification
provisions. Only two of 38 such proposals in the 1994 proxy season were
approved.
<PAGE> 31
Further, the proponent's proposal does not itself effect a repeal of the
board classification provisions found in the Corporation's Bylaws. The
proposal requests only that the Board of Directors take the necessary steps to
repeal the classification provisions in accordance with New York law.
Presumably, this proposal is seeking to have the Board amend the Bylaws to
remove the classification provisions. However, the primary power of amending
the Bylaws of the Corporation lies with our Shareholders. Even if the Board
were to amend the Bylaws as proposed, the Bylaws themselves provide that our
Shareholders may overturn any such amendment by the Board. Accordingly, if our
Shareholders believe that the repeal of the board classification system is
warranted, the most effective way to accomplish this change is direct action by
the Corporation's Shareholders themselves.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS
PROPOSAL, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
SHAREHOLDER PROPOSAL ON CONFIDENTIAL VOTING
The Board of Directors of the Corporation strongly OPPOSES the following
shareholder proposal as being harmful to the best interests of the Corporation.
The Amalgamated Clothing and Textile Workers Union, located at 1808 Swann
Street, N.W., Washington, D.C. 20009, the holder of 60 shares of the
Corporation's Common Stock, has requested the Corporation to include the
following resolution in the Proxy Statement:
"BE IT RESOLVED: The shareholders of Brown Group, Inc. ("the
Company") recommend that our board of directors take the necessary
steps to adopt and implement a policy of confidential voting at all
meetings of its shareholders which includes the following provisions:
"1. That the voting of all proxies, consents and authorizations
shall be secret, and that no such document shall be available
for examination nor shall the vote or identity of any
shareholder be disclosed except to the extent necessary to
meet the legal requirements, if any, of the company's state of
incorporation; and
"2. That the receipt, certification and tabulation of such votes
shall be performed by independent election inspectors.
"SUPPORTING STATEMENT
"The proponent believes that it is vitally important to establish
confidential proxy voting at the Company. The secret ballot is a
basic tenet of our nation's electoral system and is essential to its
integrity. The corporate board election process should also be
protected against potential abuses given the importance of corporate
policies and practices to shareholders and our national economy.
"In recent years, a great number of leading corporations have adopted
confidential voting policies. Eighteen major companies have adopted
confidential voting in the past year alone, among them, Dow Chemical,
McDonald's, Louisiana-Pacific, Merrill Lynch and Kimberly Clark.
Furthermore, several of the nation's largest banks including Citicorp,
Chase Manhattan and J.P. Morgan have also adopted such policies.
<PAGE> 32
"The implementation of a confidential voting system would enhance
shareholder rights in several ways. First, with the protection of a
confidential corporate ballot, shareholders would feel free to oppose
management nominees and issue positions without fear of retaliation.
This is especially important for professional money managers whose
business relationships can be jeopardized when management knows their
voting positions. A number of surveys of investment managers and
other fiduciaries report that proxy voters are frequently contacted by
the management of many companies. Many of those contacted believed
that the communication constituted undue pressure or was otherwise
improper. A survey by the New York Society of Security Analysts also
indicated that a vast majority of its members favor confidential
voting policies as a way to address this situation.
"Second, confidential voting would invigorate the Company's corporate
governance process by promoting greater activism among its
shareholders. A free and protected vote would empower shareholders to
be more assertive in proposing resolutions and alternative board
candidates.
"Finally, we believe that this enhancement of the proxy voting process
would address the syndrome where too often shareholders "vote with
their feet" instead of their ballots. This change, in turn, would
foster a long-term investment perspective that would promote the
efficient deployment and use of corporate assets.
"For the reasons outlined above, we urge you to VOTE FOR THIS
PROPOSAL."
RECOMMENDATION OF THE CORPORATION
THE BOARD OF DIRECTORS OPPOSES THIS PROPOSAL FOR THE FOLLOWING REASONS:
The proponent argues that secret proxy voting would enhance your
Shareholder rights by making you feel free to make your views known "without
fear of retaliation." The Corporation always has conducted its election
processes and all communications with our Shareholders in a fair, constructive
and non-coercive manner. The Corporation never has monitored your voting with
any intent or purpose of taking retribution based on your vote, as the
proponent suggests. Brown Group already uses the services of an independent
corporate service company, The Corporation Trust Company, as it has for many
years, to tabulate the voting results of its Annual Meeting of Shareholders.
Moreover, we object to the proponent's implication that The Corporation Trust
Company will not act independently.
The Corporation also believes that cutting off its access to voting results
would interfere with the vote gathering and tabulation process. The
Corporation is responsible for, among other things, soliciting votes to obtain
a quorum, pursuing proxies that are missing in the mails and helping to resolve
ambiguities. Currently, more than 76% of the shares are held in the names of
nominees. The tabulating process has become increasingly cumbersome as
ownership has been layered through the use of depositories, nominees and
"street names." The addition of a further layer of secrecy, in the
Corporation's view, would only delay the process and make it more cumbersome
and costly. Consequently, implementing secret proxy voting would result in a
considerable additional expense to you as Shareholders in order to address a
problem that does not exist and has never existed at Brown Group. Moreover, to
<PAGE> 33
the extent the Corporation cannot participate in the process and clarify voting
ambiguities, shares might not be voted and our Shareholders accordingly might
be disenfranchised.
The Corporation takes great pride in the open lines of communication we
have with our Shareholders and in our ability to listen and respond to you
quickly and directly. Many of you have chosen to use your proxy cards to
communicate openly with us. Your comments are valued by the management of
Brown Group. Implementing secret voting would eliminate this convenient method
of communication by which our Shareholders have historically offered productive
input into the management of Brown Group.
The surveys cited by the proponent are not relevant to the principal issue
in this case: What is in the best interests of the Shareholders of Brown
Group? The proponent cites a survey by the New York Society of Security
Analysts. However, the interests and opinions of a Shareholder may differ from
the interests of a professional security analyst who may have no ownership
interest.
Further, Shareholders who wish to maintain the confidentiality and privacy
of their vote may of course do so by registering their stock in broker, bank or
other nominee name. This method offers privacy for those who wish it, without
eliminating a valued method of communication between the Shareholders and the
management of the Corporation. Thus, under the current system, our
Shareholders may choose whether or not their votes will be confidential.
The proponent's arguments that several other corporations have implemented
similar proposals are incorrect and misleading. The proponent names five other
major non-banking corporations as having adopted similar proposals in the past
year. In reality, however, of these five corporations, at least four have
adopted confidential voting policies that are much less secretive and far less
damaging to shareholder interests than that which the proponent has offered.
The policies of these four corporations provide that there is no mandatory
confidential voting in instances of a contested proxy vote, such as in a
hostile takeover attempt. In such cases, management may freely communicate
with the shareholders. However, the proponent's proposal would impose
confidential voting even in contested proxy votes, impairing communication
between the Corporation and you, our Shareholders, when unrestricted
communication between management and Shareholders is essential to protect your
best interests.
Finally, this proposal has been submitted by a labor union which represents
factory employees of the Corporation. The proponent union has submitted a
different proposal in each of the prior two years which did not meet the
standards requiring its submission to Shareholders. Moreover, your Board
believes that the submission of the present proposal is in fact intended by the
proponent union more to advance its position in bargaining and labor relations
than to protect the interests of the Corporation's Shareholders generally.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS
PROPOSAL, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
<PAGE> 34
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Executive Officers and Directors, and persons who own more than
ten percent of a registered class of the Corporation's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "SEC") and with the New York and Chicago Stock
Exchanges. Executive Officers, Directors and greater-than-ten-percent
Shareholders are required by SEC regulations to furnish the Corporation with
copies of all Section 16(a) forms they file.
Based solely on review of the copies of such reports furnished to the
Corporation, or written representations that no such reports were required, the
Corporation believes that such persons complied with all Section 16(a) filing
requirements applicable to them with respect to transactions during the Fiscal
Year ended January 28, 1995.
VOTING
Under the New York Business Corporation Law (the "BCL") and the
Corporation's Certificate of Incorporation, the presence, in person or
represented by Proxy, of the holders of a majority of the outstanding shares of
Common Stock is necessary to constitute a quorum of Shareholders to take action
at the Annual Meeting. For these purposes, shares which are present, or
represented by Proxy, at the Annual Meeting will be counted as present,
regardless of whether the holder of the shares or Proxy fails to vote on a
particular matter or whether a broker with discretionary voting authority fails
to exercise such authority with respect to any particular matter. Once a
quorum of Shareholders is established, the affirmative vote of a plurality of
the shares which are present in person or represented by Proxy at the Annual
Meeting is required to elect each Director. The affirmative vote of a majority
of the shares which are present in person or represented by Proxy and entitled
to vote at the Annual Meeting is required to act on any other matter properly
brought before the Annual Meeting, including the appointment of independent
auditors.
Shares represented by Proxies which are marked "vote withheld" with respect
to the election of any person to serve on the Board of Directors will not be
considered in determining whether such a person has received the affirmative
vote of a plurality of the shares. Shares represented by Proxies which are
marked "abstain" with respect to any other proposal will not be considered in
determining whether such proposal has received the affirmative vote of a
majority of the shares and such Proxies will not have the effect of a "no"
vote. Shares represented by Proxies which deny the Proxy-holder discretionary
authority to vote on a proposal will not be considered in determining whether
such proposal has received the affirmative vote of a majority of the shares and
such Proxies will not have the effect of a "no" vote.
Except for any omitted Shareholder proposal, the Corporation knows of no
other matters to come before the Annual Meeting. If any other matters properly
come before the Annual Meeting, the Proxies solicited hereby will be voted on
such matters in accordance with the judgment of the persons voting such Proxies
and against any omitted Shareholder proposal.
<PAGE> 35
SHAREHOLDER PROPOSALS
FOR 1996 ANNUAL MEETING
Proposals of eligible Shareholders intended to be presented at the 1996
Annual Meeting, currently scheduled to be held on May 23, 1996, must be
received by the Corporation by December 20, 1995 for inclusion in the
Corporation's Proxy Statement and Proxy relating to that meeting. Upon receipt
of any such proposal, the Corporation will determine whether or not to include
such proposal in the Proxy Statement and Proxy in accordance with regulations
governing the solicitation of proxies.
In order for a Shareholder to nominate a candidate for Director, under the
Corporation's Bylaws timely notice of the nomination must be received by the
Corporation in advance of the meeting. Ordinarily, such notice must be
received by the Corporation not less than 60 days nor more than 90 days prior
to the meeting; provided, however, that in the event that less than 70 days'
notice or prior public disclosure of the date of the meeting is given or made
to Shareholders, notice by such Shareholder to be timely must be so received
not later than the close of business on the 10th day following the day on which
such notice of the date of the Annual Meeting was mailed or such public
disclosure was made. The Shareholder filing the notice of nomination must
describe various matters regarding the nominee, including such information as
(a) the name, age, business and residence addresses, occupation and shares held
of such person; (b) any other information relating to such nominee required to
be disclosed in the Proxy Statement; and (c) the name, address and shares held
by the Shareholder.
In order for a Shareholder to bring other business before a Shareholder
meeting, under the Corporation's Bylaws timely notice must be received by the
Corporation within the time limits described above. A Shareholder's notice
shall set forth as to each matter the Shareholder proposes to bring before the
Annual Meeting various information regarding the proposal, including (a) a
brief description of the business desired to be brought before the Annual
Meeting and the reasons therefor, (b) the name and address of such Shareholder
proposing such business, (c) the number of shares of Common Stock of the
Corporation which are beneficially owned by such Shareholder and (d) any
material interest of such Shareholder in such business. These requirements are
separate from and in addition to the requirements a Shareholder must meet to
have a proposal included in the Corporation's Proxy Statement.
In each case, notice must be given to the Vice President, General Counsel
and Corporate Secretary of the Corporation, whose address is 8300 Maryland
Avenue, St. Louis, Missouri 63105. Any Shareholder desiring a copy of the
Corporation's Bylaws will be forwarded one without charge upon written request
from such individual.
MISCELLANEOUS
The Corporation will bear the cost of solicitation of Proxies. Proxies
will be solicited by mail. They also may be solicited by Executive Officers
and regular employees of the Corporation personally or by telephone or
telegram, but such persons will not be specifically compensated for such
services. It is contemplated that brokerage houses, custodians, nominees and
fiduciaries will be requested to forward the soliciting material to the
beneficial owners of stock held of record by such persons and will be
reimbursed for their reasonable expenses incurred therein.
<PAGE> 36
Even though you plan to attend the meeting in person, please sign, date and
return the enclosed Proxy promptly. The person giving a Proxy has the power to
revoke it, at any time before it is exercised, by giving written notice of
revocation to the Vice President, General Counsel and Corporate Secretary of
the Corporation or by duly executing and delivering a Proxy bearing a later
date, or by attending the Annual Meeting and casting a contrary vote. All
shares represented by Proxies received in time to be counted at the Annual
Meeting will be voted. A postage paid, return addressed envelope is enclosed
for your convenience. Your cooperation in giving this your immediate attention
will be appreciated.
ROBERT D. PICKLE
Vice President, General Counsel
and Corporate Secretary
St. Louis, Missouri 63105
April 19, 1995
<PAGE> 37
EXHIBIT 1
ARTICLE II
"Section 1. Number. The number of directors within the maximum and
minimum limits provided for in the Certificate of Incorporation may be changed
from time to time by the shareholders or by the Board of Directors by an
amendment to these Bylaws. Subject to amendment of these Bylaws, as aforesaid,
the number of directors of the Corporation shall be nine. Such directors shall
be classified in respect of the time for which they shall severally hold
office, by dividing them into three classes consisting of three directors each.
At each annual election, the successors of the directors of the class whose
term shall expire in that year, shall be elected to hold office for the term of
three years so that the term of office of one class of directors shall expire
in each year. The Board of Directors shall not choose as a director to fill a
temporary vacancy any person over the age of seventy years, and shall not
recommend to the stockholders any person for election as a director for a term
extending beyond the Annual Meeting of Stockholders following the end of the
calendar year during which he attains his seventieth birthday, provided,
however, that this shall not apply to directors elected or holding office at
the time of the Annual Meeting of Stockholders in 1967; and provided further,
that this shall not prevent the designation by the Board of such person as an
Honorary Director, to serve without vote."
<PAGE> 38
EXHIBIT 2
ARTICLE II
"Section 1. Number. The number of directors within the maximum and
minimum limits provided for in the Certificate of Incorporation may be changed
from time to time by the shareholders or by the Board of Directors by an
amendment to these Bylaws. Subject to amendment of these Bylaws, as aforesaid,
the number of directors of the Corporation shall be ten. Such directors shall
be classified in respect of the time for which they shall severally hold
office, by dividing them into two classes consisting of three directors each
and one class consisting of four directors. At each annual election, the
successors of the directors of the class whose term shall expire in that year,
shall be elected to hold office for the term of three years so that the term of
office of one class of directors shall expire in each year. The Board of
Directors shall not choose as a director to fill a temporary vacancy any person
over the age of seventy years, and shall not recommend to the stockholders any
person for election as a director for a term extending beyond the Annual
Meeting of Stockholders following the end of the calendar year during which he
attains his seventieth birthday, provided, however, that this shall not apply
to directors elected or holding office at the time of the Annual Meeting of
Stockholders in 1967; and provided further, that this shall not prevent the
designation by the Board of such person as an Honorary Director, to serve
without vote."
<PAGE> 39
EXHIBIT 3
ARTICLE II
"Section 1. Number. The number of directors within the maximum and
minimum limits provided for in the Certificate of Incorporation may be changed
from time to time by the shareholders or by the Board of Directors by an
amendment to these Bylaws. Subject to amendment of these Bylaws, as aforesaid,
the number of directors of the Corporation shall be eleven. Such directors
shall be classified in respect of the time for which they shall severally hold
office, by dividing them into two classes consisting of four directors each and
one class consisting of three directors. At each annual election, the
successors of the directors of the class whose term shall expire in that year,
shall be elected to hold office for the term of three years so that the term of
office of one class of directors shall expire in each year. The Board of
Directors shall not choose as a director to fill a temporary vacancy any person
over the age of seventy years, and shall not recommend to the stockholders any
person for election as a director for a term extending beyond the Annual
Meeting of Stockholders following the end of the calendar year during which he
attains his seventieth birthday, provided, however, that this shall not apply
to directors elected or holding office at the time of the Annual Meeting of
Stockholders in 1967; and provided further, that this shall not prevent the
designation by the Board of such person as an Honorary Director, to serve
without vote."
<PAGE> 40
APPENDIX I
FORM OF PROXY
[FRONT]
[CORPORATE LOGO] Brown Group, Inc.
8300 Maryland Avenue, Post Office Box 20, St. Louis, Missouri 63166-0029
April 19, 1995
Dear Shareholder:
The Annual Meeting of Shareholders of Brown Group, Inc. will be held on the
25th day of May, 1995, at 11:00 a.m., in the Brown Ggroup, Inc. Conference
Center, located at 8300 Maryland Avenue, in Clayton, in St. Louis County,
Missouri.
It is important that your shares be represented at this meeting. Whether or
not you plan to attend the meeting, please review the enclosed proxy materials,
complete the attached proxy form below, and return it promptly in the envelope
provided.
PLEASE DETACH PROXY HERE, SIGN AND MAIL
- -------------------------------------------------------------------------------
BROWN GROUP, INC.
Proxy Solicited on Behalf of the Board of Directors of the Corporation
for Annual Meeting May 25, 1995
The undersigned hereby constitutes and appoints B. A. Bridgewater, Jr., Harry
E. Rich and Robert D. Pickle, and each of them, his true and lawful agents and
proxies, with full power of substitution in each, to represent the undersigned
at the Annual Meeting of Shareholders of BROWN GROUP, INC. to be held in the
Brown Group, Inc. Conference Center, located at 8300 Maryland Avenue, in
Clayton, in St. Louis County, Missouri, on Thursday, May 25, 1995, at
11 o'clock a.m., and at any adjournments thereof, and to vote all the shares of
Common Stock of the Corporation standing on the books of the Corporation in the
name of the undersigned as specified on the reverse side hereof and in their
discretion on such other business as may properly come before the meeting.
Dated: ____________________________, 1995
_________________________________________
_________________________________________
Signature of Shareholder
This Proxy Must be Signed Exactly as
Name Appears Hereon.
Executors, administrators, trustees, etc.
should give full titles as such. If the
signer is a corporation, please sign full
corporate name by duly authorized
officer.
(over)
<PAGE> 41
[BACK]
IT IS IMPORTANT THAT YOU VOTE, SIGN AND RETURN THE
PROXY BELOW AS SOON AS POSSIBLE.
BY DOING SO, YOU MAY SAVE THE CORPORATION THE
EXPENSE OF ADDITIONAL SOLICITATION.
PLEASE DETACH PROXY HERE, SIGN AND MAIL
- -------------------------------------------------------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING:
---
1. ELECTION OF DIRECTORS:
Nominees: B. A. Bridgewater, Jr., Julie C. Esrey, Richard A. Liddy,
William E. Maritz and General Edward C. Meyer, Retired.
[ ] VOTE FOR all nominees listed.
[ ] VOTE FOR all nominees listed, except: _________________________________
[ ] VOTE WITHHELD from all nominees.
2. APPROVAL OF AUDITORS: FOR [ ] AGAINST [ ] ABSTAIN [ ]
- -------------------------------------------------------------------------------
MANAGEMENT RECOMMENDS A VOTE AGAINST THE FOLLOWING:
-------
3. SHAREHOLDER PROPOSAL REGARDING CHANGING THE CURRENT CLASSIFICATION SYSTEM
FOR THE ELECTION OF DIRECTORS:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. SHAREHOLDER PROPOSAL REGARDING CONFIDENTIAL SHAREHOLDER PROXY VOTING:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
This proxy when properly executed will be voted in the manner directed by the
undersigned Shareholder. If no direction is made, this proxy will be voted for
Proposals 1 and 2 and against Proposals 3 and 4, as recommended by the Board of
Directors.
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| PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY |
| CARD PROMPTLY USING THE ENCLOSED ENVELOPE |
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