<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 SHOE COMPANY, 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[BROWN SHOE COMPANY, INC. LOGO]
BROWN SHOE COMPANY, INC.
8300 Maryland Avenue, Post Office Box 29, St. Louis, Missouri 63166-0029
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 2000
The Annual Meeting of Shareholders of Brown Shoe Company, Inc. (the
"Corporation") will be held on the 25th day of May, 2000, at 11:00 a.m., in the
Brown Shoe Company, Inc. Conference Center, located at 8300 Maryland Avenue, in
Clayton, in St. Louis County, Missouri, for the following purposes:
A. To elect three Directors; and
B. To transact such other business as may properly come before the meeting.
On October 14, 1999, the Board of Directors of the Corporation amended
Article II, Section 1 of the Bylaws of the Corporation to increase the number of
Directors from eight to nine, effective on October 14, 1999, 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, and elected Mr. W.
Patrick McGinnis to fill the Directorial vacancy created by that amendment to
the Bylaws, to serve until the 2000 Annual Meeting of the Shareholders of the
Corporation. On March 2, 2000, the Board of Directors of the Corporation further
amended Article II, Section 1 of the Bylaws of the Corporation, in order to give
effect to the October 20, 1999 resignation of Mr. Harry E. Rich from the Board
of Directors, to reduce the number of Directors from nine to eight, effective on
March 2, 2000, and to classify the Directors in respect of the time for which
they shall severally hold office by dividing them into two classes of three
Directors each and one class of two Directors. Article II, Section 1 of the
Bylaws, as so amended, is set forth in Exhibit 1 to the accompanying Proxy
Statement. As a result, the number of Directors from and after March 2, 2000 is
eight.
It is the policy of the Corporation that all proxies, ballots and vote
tabulations that identify the vote of a Shareholder will be kept confidential
from the Corporation, its Directors, Officers and employees until after a final
vote is tabulated and announced, except in limited circumstances including any
contested solicitation of proxies, when required to meet a legal requirement, to
defend a claim against the Corporation or to assert a claim by the Corporation,
and when written comments by a Shareholder appear on a proxy and/or other voting
material. The Corporation intends to continue its long standing practice of
retaining an independent tabulator to receive and tabulate proxies, and
independent inspectors of election to certify the results.
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, 2000 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
Post Office Box 29
St. Louis, Missouri 63166-0029
April 19, 2000
It is important that your shares be represented and voted at the Annual
Meeting. Shareholders are urged to vote in one of these ways:
- USE THE TOLL-FREE TELEPHONE NUMBER shown on the Proxy card;
- VISIT THE WEB SITE shown on the Proxy card to vote via the Internet; or
- SIGN, DATE AND PROMPTLY RETURN the Proxy card in the enclosed postage
paid, return addressed envelope.
1
<PAGE> 3
[BROWN SHOE COMPANY, INC. LOGO]
BROWN SHOE COMPANY, INC.
8300 Maryland Avenue, Post Office Box 29, St. Louis, Missouri 63166-0029
PROXY STATEMENT
------------
ANNUAL MEETING OF SHAREHOLDERS, MAY 25, 2000
------------
This Proxy Statement is furnished to Shareholders of Brown Shoe Company,
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, 2000, and at all adjournments thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders.
On the April 5, 2000 record date, the Corporation had outstanding
18,269,190 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 29, 2000 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, 2000.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to each
person known by the Corporation, as of April 5, 2000, 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>
Dimensional Fund Advisors Inc. 1,168,600(1) 6.40%(1)
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Mellon Financial Corporation, 2,225,447(2) 12.18%(2)
through its indirect, wholly-owned Subsidiaries
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
</TABLE>
- -------------------------
(1) Based on written representations made to the Corporation by such
Shareholder, the named Shareholder, acting in various fiduciary capacities,
possessed sole voting authority over 1,168,600 shares and sole investment
authority over 1,168,600 shares.
(2) Based on written representations made to the Corporation by such
Shareholder, the named Shareholder, acting in various fiduciary capacities,
possessed sole voting authority over 2,060,447 shares and sole investment
authority over 2,215,747 shares.
2
<PAGE> 4
SECURITY HOLDINGS OF MANAGEMENT
The following table sets forth, as of April 5, 2000, the amounts 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
pages 9 and 10 of this Proxy Statement, and all current 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 5, 2000, at prices
ranging from $14.1875 to $37.8125 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 5, 2000
---- --------- --------------
<S> <C> <C>
Joseph L. Bower............................................. 7,750 4,000
Brian C. Cook............................................... 87,189 92,750
Julie C. Esrey.............................................. 2,250 4,000
Ronald A. Fromm............................................. 90,767 97,500
Charles C. Gillman.......................................... 6,000 16,000
Richard A. Liddy............................................ 10,050 4,000
John Peters MacCarthy....................................... 14,000 3,400
Patricia G. McGinnis........................................ 1,000 3,400
W. Patrick McGinnis......................................... 1,000 -0-
Gary M. Rich................................................ 18,898 44,750
Harry E. Rich(1)............................................ 43,437 80,250
Jerry E. Ritter............................................. 2,950 4,000
David H. Schwartz........................................... 6,845 36,250
Directors and Executive Officers as a Group
(22 persons, including those named above)(2).............. 357,436 518,175
</TABLE>
Mr. Ronald A. Fromm is the beneficial owner of approximately 1% of the
Corporation's Common Stock. Each other person identified in the preceding table
is the beneficial owner of less than 1% of the Corporation's Common Stock. The
22 persons comprising current Directors and Executive Officers as a Group are,
in the aggregate, the beneficial owners of 4.66% 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, 2000, for purposes of calculating the aggregate
percentage beneficially owned by Directors and Executive Officers as a Group.
- ------------------------
(1) Mr. Harry E. Rich resigned as the Corporation's Executive Vice President and
Chief Financial Officer on October 14, 1999, resigned as a Director of the
Corporation on October 20, 1999, and retired as an employee of the
Corporation on December 31, 1999.
(2) Although the security holdings of Mr. Harry E. Rich are listed in the table
above, Mr. Rich's security holdings are not included in the aggregate
security holdings of current Directors and Executive Officers as a Group,
since Mr. Rich is no longer a Director or Executive Officer of the
Corporation.
3
<PAGE> 5
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. Three Directors are to be elected for terms
expiring at the Annual Meeting in 2003; two Directors will continue in office
for terms expiring at the Annual Meeting in 2002; and three Directors will
continue in office for terms expiring at the Annual Meeting in 2001 (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 Directors
continuing in office previously have been elected by the Shareholders; Mr. W.
Patrick McGinnis, a nominee for election as a Director, has not previously been
elected by the Shareholders of the Corporation.
4
<PAGE> 6
TO BE ELECTED FOR A TERM
OF THREE YEARS
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NAME AND OTHER POSITIONS OR OFFICES WITH THE CORPORATION AGE SINCE
-------------------------------------------------------- --- ------------
<S> <C> <C> <C>
[BOWER PHOTO] JOSEPH L. BOWER
Chairman of the Corporation's Compensation
Committee and Member of the Corporation's
Governance and Nominating Committee................... 61 1987
[MCGINNIS PHOTO] W. PATRICK MCGINNIS
Member of the Corporation's Compensation
Committee............................................. 52 1999
[RITTER PHOTO] JERRY E. RITTER
Chairman of the Corporation's Governance and Nominating
Committee; Member of the Corporation's Compensation
Committee and Member of the Corporation's Executive
Committee............................................. 65 1996
</TABLE>
TO CONTINUE IN OFFICE
FOR TWO YEARS
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NAME AND OTHER POSITIONS OR OFFICES WITH THE CORPORATION AGE SINCE
-------------------------------------------------------- --- ------------
<S> <C> <C> <C>
[FROMM PHOTO] RONALD A. FROMM
Chairman of the Board of Directors, President and
Chief Executive Officer; Member of the Corporation's
Executive Committee................................... 49 1999
[MCGINNIS PHOTO] PATRICIA G. MCGINNIS
Member of the Corporation's Audit Committee........... 52 1999
</TABLE>
5
<PAGE> 7
TO CONTINUE IN OFFICE
FOR ONE YEAR
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NAME AND OTHER POSITIONS OR OFFICES WITH THE CORPORATION AGE SINCE
-------------------------------------------------------- --- ------------
<S> <C> <C> <C>
[ESREY PHOTO] JULIE C. ESREY
Chairperson of the Corporation's Audit Committee
and Member of the Corporation's Governance and
Nominating Committee.................................. 61 1995
[LIDDY PHOTO] RICHARD A. LIDDY
Chairman of the Corporation's Executive Committee;
Member of the Corporation's Audit Committee and
Member of the Corporation's Governance and
Nominating Committee.................................. 64 1994
[MACCARTHY PHOTO] JOHN PETERS MACCARTHY
Member of the Corporation's Audit Committee
and Member of the Corporation's Compensation
Committee............................................. 67 1996
</TABLE>
6
<PAGE> 8
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
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 from September, 1989 to September, 1995, he was Chairman of Doctoral
Programs and Director of Research. Mr. Bower serves as a director of Anika
Therapeutics, 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. W. Patrick McGinnis is a member of the Board of Directors and Chief
Executive Officer of Ralston Purina Company, and is the President and Chief
Executive Officer of the Pet Products Group of Ralston Purina Company. He served
as President and Chief Executive Officer of the Pet Products Group of Ralston
Purina Company from 1992 to 1997, when he was elected to the Board of Directors
and to the additional office of Co-Chief Executive Officer of Ralston Purina
Company. From 1989 to 1992, he served as President and Chief Operating Officer
of the Grocery Products Division of Ralston Purina Company. Mr. McGinnis joined
Ralston Purina Company's marketing organization in 1972 and, in 1978, became
Director of Marketing, Consumer Products, for Ralston Purina International.
Thereafter, in 1980, he was named Executive Vice President and Director of the
Grocery Products Division's Canadian operation. Mr. McGinnis returned to Saint
Louis in 1983 upon his elevation to Division Vice President and Director of
Marketing for the Grocery Products Division. Subsequently, in 1984, he was named
Corporate Vice President and Executive Vice President of the Grocery Products
Division, a position he held until 1989. Mr. McGinnis serves on the Board of
Trustees of Washington University in Saint Louis.
Mr. Jerry E. Ritter is a Consultant to Anheuser-Busch Companies, Inc., a
company engaged in the brewing of beer and in providing family entertainment,
where, until 1996, he was Executive Vice President and Chief Financial and
Administrative Officer. From 1996 until 1999, Mr. Ritter served as Chairman of
the Board of Directors of the Kiel Center sports and entertainment complex and
of the Saint Louis Blues Hockey Club of the National (Professional) Hockey
League, and as Chairman of the Board of Directors and Chief Executive Officer of
Clark Enterprises, Inc., a (parent) holding company which then was engaged in
the management and operation of the Kiel Center. Mr. Ritter is a director of The
Earthgrains Company and The Kroll-O'Gara Company, and serves, also, as a member
of the Board of Directors of the Automobile Club of Missouri and as a
Commissioner of the Saint Louis Science Center.
Mr. Ronald A. Fromm has been Chairman of the Board of Directors, President
and Chief Executive Officer and a Director of Brown Shoe Company, Inc. (formerly
Brown Group, Inc.) since May 27, 1999. Mr. Fromm had been Chairman of the Board
of Directors, President and Chief Executive Officer and a Director of Brown
Group, Inc. and President of Brown Shoe Company from January 31, 1999 until May
27, 1999. Previously, Mr. Fromm served as a Vice President of Brown Group, Inc.
and as President of Brown Shoe Company from April 9, 1998 and March 9, 1998,
respectively, until January 31, 1999 and May 27, 1999, respectively. From 1992
until March 9, 1998, Mr. Fromm served as Executive Vice President of the Famous
Footwear Division of the Corporation, where, previously, he served from 1991
until 1992 as Vice President and Chief Financial Officer. He currently serves as
a director of the Footwear Distributors and Retailers of America (FDRA), of the
Fashion Footwear Association of New York (FFANY) and of the Two/Ten
International Footwear Foundation.
Ms. Patricia G. McGinnis is the President and Chief Executive Officer of
the Council for Excellence in Government, a national membership organization of
private sector leaders who have served as senior officials in government. She
has held that position since June, 1994. From 1982 until May, 1994, she was a
principal at the FMR Group, a public affairs consulting firm. Previously, she
had served in various senior policy positions in the federal government,
including the Office of the Vice President, the Department of Health and Human
Services, the Department of Commerce, the Office of Management and Budget and
the Senate Budget
7
<PAGE> 9
Committee. Ms. McGinnis is a member of the Board of Directors of Primark
Corporation and of the Board of Visitors of the School of Public Affairs at the
University of Maryland. She is also a Fellow of the National Academy of Public
Administration, and previously served on the Executive Council of the Kennedy
School of Government at Harvard University and the Associates Council of the
School of Business and Public Management at George Washington University.
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. Until recently,
Mrs. Esrey has served as a member of the Executive Committee of the Board of
Trustees of Duke University and a director of the Duke Management Company. She
also has served as a director of Bank IV Kansas, National Association, in
Wichita, Kansas, and as a member of the Board of Visitors of the Duke University
Medical Center and the Central Governing Board for the Children's Mercy
Hospital, in Kansas City, Missouri. She is currently a Trustee of the
Steadman-Hawkins Sports Medicine Foundation and is engaged in various other
civic activities.
Mr. Richard A. Liddy is a director and Chairman of the Board of Directors,
President and Chief Executive Officer of GenAmerica Corporation, formerly known
as 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, now GenAmerica Corporation. Mr. Liddy also
serves presently as Senior Executive Vice President of MetLife, Inc. and as a
member of the Executive Committee of the Metropolitan Life Insurance Company.
Mr. Liddy is a director and Chairman of the Boards of Directors of Conning
Corp., the Paragon Life Insurance Company, the Reinsurance Group of America,
Inc., the Security Equity Life Insurance Company and of the registered
investment companies of the General American Capital Company and The Walnut
Street Funds, Inc. Mr. Liddy additionally serves on the Boards of Directors of
Ameren Corporation, Energizer Holdings, Inc., Ralston Purina Company, the Boy
Scouts of America, the Missouri Historical Society, the Saint Louis Art Museum
and the United Way of Greater Saint Louis.
Mr. John Peters MacCarthy is the past Chairman and Chief Executive Officer
of Boatmen's Trust Company, a position he held from 1988 until his retirement in
1994. He served as President and Chief Executive Officer of Centerre Bank,
National Association from 1984 until 1988. He served as an officer of Centerre
Trust Company from 1969 until 1979, when he was named Chief Executive Officer
and a Director of Centerre Trust Company. He was a Partner in the law firm of
Bryan, Cave, McPheeters and McRoberts in Saint Louis, Missouri from 1959 to
1968. Mr. MacCarthy serves on the Board of Directors of Ameren Corporation. Mr.
MacCarthy is a Trustee of Washington University and of the Saint Louis Art
Museum.
There are no family relationships between any Directors or Executive
Officers of the Corporation.
8
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER BENEFITS
The following information is given for the Fiscal Years ended January 29,
2000, January 30, 1999 and January 31, 1998 concerning annual and long-term
compensation for services rendered to the Corporation and its subsidiaries of
those persons who at January 29, 2000 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 $100,000, and of Mr. Harry
E. Rich, who, but for the fact that he was not serving as an Executive Officer
at January 29, 2000, would have been among the other four most highly
compensated Executive Officers at January 29, 2000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS(4)
---------------------------------- -------------------------------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND BONUS COMPENSATION STOCK AWARD(S) OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($)(1) ($)(2) ($)(3) (#)(5) ($)(6)
------------------ ---- --------- ------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Brian C. Cook............... 1999 550,000 372,075 -0- -0- 15,000/-0- 6,536
Executive Vice President 1998 475,000 380,000 -0- 421,875 70,000/18,278 5,984
of the Corporation 1997 475,000 152,950 -0- 81,875 32,000/20,441 5,984
and President,
Famous Footwear
Ronald A. Fromm............. 1999 629,167 454,410 -0- -0- 20,000/-0- 7,087
Chairman of the Board, 1998 442,471 225,000 -0- 988,125 140,000/16,899 6,710
President and Chief 1997 365,000 142,530 -0- 40,938 25,000/14,778 6,171
Executive Officer
Charles C. Gillman.......... 1999 261,573 192,920 -0- -0- 6,000/-0- 5,667
Senior Vice President 1998 236,505 144,000 -0- -0- 3,000/-0- 5,667
and Director, Far East 1997 215,000 85,785 -0- 49,125 -0-/-0- 5,124
Operations, Brown
Sourcing Division
Gary M. Rich................ 1999 391,573 359,450 -0- 72,500 20,000/-0- 5,667
President, Brown 1998 368,602 231,000 -0- -0- 15,000/8,018 5,627
Pagoda Division 1997 360,000 144,000 -0- -0- 12,000/4,930 5,622
Harry E. Rich............... 1999 450,000 277,695 -0- -0- 15,000/-0- 4,456
Executive Vice President 1998 425,000 242,000 -0- 337,500 50,000/18,278 5,600
and Chief Financial 1997 425,000 -0- -0- 81,875 32,000/20,441 5,609
Officer(7)
David H. Schwartz........... 1999 382,944 350,350 -0- 72,500 20,000/-0- 5,640
President, Brown 1998 367,204 237,000 -0- -0- 10,000/5,000 5,654
Sourcing Division 1997 350,000 159,600 -0- -0- 12,000/2,573 5,582
</TABLE>
- ------------------------
(1) 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 Incentive and Stock Compensation Plan of 1999, described
below.
(2) The named Executive Officers received certain perquisites, none of which
exceeded the lesser of $50,000 or 10% of any such Officer's salary and
bonus.
(3) 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 29, 2000, Mr. Cook held 41,000
Restricted Shares having a market value of $449,718.75, Mr. Fromm held
68,750 Restricted Shares having a market value of $754,101.56, Mr. Gillman
held 4,500 Restricted Shares having a market value of $49,359.38, Mr. Gary
M. Rich held 8,875 Restricted Shares having a market value of $97,347.66,
Mr. Harry E. Rich held 31,500 Restricted Shares having a market value of
$345,515.63, and Mr. Schwartz held 5,750 Restricted Shares having a market
value of $63,070.31.
(4) The Corporation has no long-term incentive plans other than those described
below.
(5) All SARs were issued in tandem with options presented in this table.
9
<PAGE> 11
(6) Includes in 1999 for Mr. Cook: $5,801.91 to the Corporation's 401(k) Plan
and $734.24 in the Employee Stock Purchase Plan. Includes in 1999 for Mr.
Fromm: $6,205.77 to the Corporation's 401(k) Plan and $880.88 in the
Employee Stock Purchase Plan. Includes in 1999 for Mr. Gillman: $5,667.32 to
the Corporation's 401(k) Plan. Includes in 1999 for Mr. Gary M. Rich:
$5,667.32 to the Corporation's 401(k) Plan. Includes in 1999 for Mr. Harry
E. Rich: $4,455.76 to the Corporation's 401(k) Plan. Includes in 1999 for
Mr. Schwartz: $5,640.40 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.
(7) Mr. Harry E. Rich resigned as the Corporation's Executive Vice President and
Chief Financial Officer on October 14, 1999, resigned as a Director of the
Corporation on October 20, 1999, and retired as an employee of the
Corporation on December 31, 1999. Mr. Rich's Early Retirement Agreement with
the Corporation is described hereinbelow.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Corporation entered into an Employment Agreement with Mr. Ronald A.
Fromm dated as of May 14, 1998 (modified by a First Amendment on July 27, 1998
incorporating a Severance Agreement as described below) initially for his
services as a Vice President of the Corporation and as President of the Brown
Shoe Company Division. The Employment Agreement provides that for the period of
May 1, 1998 through April 30, 2001, he will be paid annual base compensation of
not less than $450,000; he will be eligible to receive an annual incentive
payment in accordance with the Corporation's annual incentive plan; he will
receive an option to acquire a substantial number of shares of Common Stock
under the Corporation's Stock Option and Restricted Stock Plan of 1994, as
amended; and the Corporation will pay his relocation expense and purchase his
former residence for $465,000 (representing his cost). Pursuant to the
Employment Agreement, the Corporation has granted Mr. Fromm an option to
purchase 140,000 shares of Common Stock, has awarded him 50,000 shares of
Restricted Stock and has purchased his former residence. If his employment is
terminated by the Corporation other than for cause prior to April 30, 2001, he
may elect to receive either (a) a sum equal to $37,500 multiplied by the number
of full months remaining until May 1, 2001, less the amount, if any, of any base
compensation paid to him for the month of termination prior to the date of such
termination, plus, had he been terminated prior to January 30, 1999, an
incentive payment of $180,000 or (b) if the Severance Agreement described below
has not previously been terminated, the severance benefits payable in accordance
with the Severance Agreement.
During 1998 and 1999, the Corporation entered into Severance Agreements
with sixteen Executive Officers of the Corporation, including Messrs. Brian C.
Cook, Ronald A. Fromm, Charles C. Gillman, Gary M. Rich, Harry E. Rich and David
H. Schwartz, each of whom is named in the Summary Compensation Table above. The
Severance Agreement with Mr. Harry E. Rich has since been superseded by the
provisions of his Early Retirement Agreement with the Corporation, described
hereinbelow. Each Severance Agreement is for a term of three years and is
automatically extended for successive one-year periods unless terminated by the
Corporation or the employee on six months' notice. An employee's employment may
be terminated by the Corporation for cause (as defined) or without cause at any
time. If an employee's employment is terminated for cause, the employee will be
entitled to receive accrued and unpaid base salary, credit for unused vacation
time, and all other amounts earned and unpaid. If an employee's employment is
terminated without cause prior to change in control (as defined) or more than 24
months after a change in control, or if he voluntarily terminates his employment
for good reason (reduction in salary or position) the employee will also be
entitled to receive his base salary (including targeted bonus) for 18 months;
coverage under the Corporation's medical/dental plans for 18 months; a cash
payment equal to the fair market value of his shares of restricted stock which
would have vested during the following 18 months plus, for each non-vested stock
option which would have vested during the following 18 months, the excess of the
fair market value of the Common Stock over the exercise price; the reasonable
cost of outplacement services; and 1.5 years will be added to his credited
service under the Corporation's Supplemental Executive Retirement Plan. If an
employee's employment is terminated without cause within 24 months after a
change in control which occurs during the term of the Severance Agreement or if
he voluntarily terminates his employment for good reason, the
10
<PAGE> 12
employee will be entitled to receive a lump sum cash payment of 250% of his base
salary and targeted bonus; dental/medical coverage for 30 months; outplacement
services; and 2.5 years will be added to his credited service. If any payment to
the employee would subject him to excise tax under Section 4999 of the Internal
Revenue Code, the employee would be entitled to receive an additional payment in
an amount sufficient to compensate him therefor.
In addition, in 1998, the Corporation entered into separate, currently
effective Severance Agreements with twelve other key management employees of the
Corporation, providing for other severance benefits which are consistent with
their status as such senior, key management employees.
In connection with the early retirement of Mr. Harry E. Rich as an employee
of the Corporation on December 31, 1999, the Corporation entered into an Early
Retirement Agreement with Mr. Rich, formerly the Executive Vice President and
Chief Financial Officer and a Director of the Corporation. Under this agreement
the Corporation will pay or provide to Mr. Rich the following: his base monthly
salary in effect during calendar year 1999 through June 30, 2001, including
monthly one-twelfth of his targeted bonus for the fiscal year ending February 3,
2001; credit for such compensation as well as 1.5 years of Credited Service
under the Corporation's Supplemental Executive Retirement Plan; employee
benefits under the Corporation's Incentive and Stock Compensation Plan of 1999
(except for long-term performance-based stock awards, discussed below) through
June 30, 2001, insurance program and medical and dental plans except to the
extent he is covered by another employer's group life insurance and medical and
dental plans; one-third of his long-term performance-based stock award for the
three-year period ending on the last day of the 2001 fiscal year based on actual
results during such period; medical and dental coverage under the Corporation's
plans to Mr. Rich, his spouse and any dependents (to age 23) from July 1, 2001
until he attains age 65 or is covered by another employer's medical and dental
plans if earlier; with respect to each non-vested stock option held by Mr. Rich
on June 30, 2001 or his death if earlier (the "Retirement Payment Date"), the
excess, if any, of the fair market value of the Corporation's common stock
subject to such option (determined as of the Retirement Payment Date) over the
option exercise price; any non-vested restricted stock held by him on the
Retirement Payment Date, which would have vested if he had remained employed
until age 65, will vest on the Retirement Payment Date; continued access to
certain corporate facilities and services, including office space and
secretarial service, income tax preparation fees for 1999 and 2000, and club
memberships until he reaches age 65 or his earlier death. These benefits are
subject to Mr. Rich's agreement not to provide any services to any other person
or firm in the shoe industry for a period of 18 months after his Retirement Date
or to disclose any of the Corporation's confidential information.
LOAN AGREEMENT
In connection with the engagement of Mr. Ronald A. Fromm, initially for his
services as a Vice President of the Corporation and as President of the Brown
Shoe Company Division, the Corporation entered into a Loan Agreement on May 1,
1998 with Mr. Fromm pursuant to which the Corporation made an interest-free
$400,000 loan to Mr. Fromm. The loan is payable in annual installments of
$80,000 on May 1 in each of the years 1999 through 2003. The principal amount
will become payable in full upon the sale of Mr. Fromm's current residence or
termination of his employment other than by reason of disability or death. The
first such annual installment payment was made on May 1, 1999.
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 Shoe
Company, Inc. Incentive and Stock Compensation Plan of 1999 (the "1999 Plan"),
under the Brown Shoe Company, Inc. Stock Option and Restricted Stock Plan of
1998 (the "1998 Plan"), and under the Brown Shoe Company, Inc. Stock Option and
Restricted Stock Plan of 1994, as amended by the Shareholders at the 1996 Annual
Meeting (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 Shoe Company, Inc. Stock Option and Restricted Stock Plan of 1987, as
amended (the "1987 Plan"). With the
11
<PAGE> 13
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.
Under each of the three 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 each of the three 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 or she 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 any of the three Plans shall
immediately mature and vest in full.
INCENTIVE AND STOCK COMPENSATION PLAN OF 1999
All employees and Directors of the Corporation are eligible to participate
in the Brown Shoe Company, Inc. Incentive and Stock Compensation Plan of 1999
(the "1999 Plan"), as it was approved by the Shareholders of the Corporation at
the 1999 Annual Meeting of Shareholders on May 27, 1999.
Under the 1999 Plan, the Board of Directors of the Corporation has full
power to select employees and Directors who are to participate in the Plan,
determine the sizes and types of Awards, determine the terms and conditions of
Awards, interpret the Plan, establish, amend or waive rules and regulations for
the Plan's administration, amend the terms and conditions of any outstanding
Award and make all other determinations that may be necessary or advisable.
Under the 1999 Plan, a Stock Option is granted under an Award Agreement
specifying the price, the duration of the Stock Option, the number of shares of
Common Stock to which the Stock Option pertains and whether the Stock Option is
an Incentive Stock Option or a Nonqualified Stock Option.
The Board of Directors of the Corporation sets performance goals which will
determine the number and/or value of Performance Units/Shares and Cash-Based
Awards that will be paid. The performance measures may include earnings per
share, net income (before and after taxes), operating income (before and after
taxes), return on invested capital, return on assets, or return on equity, cash
flow return on equity, cash flow return on investments which equals net cash
flows divided by owners' equity, earnings before interest or taxes, gross
revenues or revenue growth, market share and growth in share price or total
Shareholder return.
The Board may pay Performance Units/Shares and Cash-Based Awards in the
form of cash or shares of Common Stock (or any combination) which have an
aggregate fair market value equal to the value of the Awards earned at the close
of the Performance Period.
Under the 1999 Plan, each Restricted Stock grant will be stated in a
Restricted Stock Award Agreement that will specify the period(s) of restriction,
the number of shares of Restricted Stock granted and other necessary provisions.
During the period of Restriction, Participants holding shares of Restricted
Stock may be credited with regular cash dividends paid with respect to the
underlying shares while they are so held.
Upon the occurrence of a Change in Control, any and all Stock Options
granted pursuant to the Plan shall become immediately exercisable, any
Restriction Periods and restrictions imposed on Restricted Shares which are not
performance-based shall lapse, the target payout opportunities attainable under
all outstanding
12
<PAGE> 14
Awards of Restricted Stock, Performance Units, Performance Shares, and
Cash-Based Awards shall be deemed to have been fully earned for the entire
Performance Period(s) as of the effective date of the Change in Control, and all
such Awards shall be deemed to be fully vested.
As of the effective date of the Change in Control, (a) each Participant
holding Options shall be paid in cash, in full satisfaction thereof, an amount
equal to the excess, if any, of (i) the aggregate value of the Shares subject to
such Options (based on the consideration per Share paid by the acquirer in
connection with the Change in Control) over (ii) the aggregate exercise price of
such Options, and (b) each Participant awarded Performance Shares shall be paid
in cash, in full satisfaction thereof, an amount equal to (i) the value of one
Share (based on the consideration per Share paid by the acquirer in connection
with the Change in Control) multiplied by (ii) the number of Performance Shares
awarded to such Participant.
The Summary Compensation Table on pages 9 and 10 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, the 1994 Plan, the 1998 Plan or the
1999 Plan to the persons named in that table. Such shares have been included in
the Stock Ownership Table on page 3 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 Shoe
Company, 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
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, the 1994 Plan, the 1998 Plan, and the 1999 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 entered into separate agreements with six Executive Officers at
various times, incident to hiring in the cases of four such persons, providing
additional credited years of service over those for which the Executive is
actually employed. One such Executive Officer, Mr. Brian C. Cook, currently is
employed by the Corporation.
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 2000.
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
13
<PAGE> 15
exceeds the formula benefit for the period of employment preceding November 2,
1975, such excess is added to the total formula pension.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
FINAL AVERAGE -------------------------------------------------------------------------------------
SALARY 10 15 20 25 30 35 OR MORE
------------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000............ $ 12,404 $ 18,605 $ 24,807 $ 31,009 $ 37,211 $ 43,413
$ 200,000............ 27,054 40,580 54,107 67,634 81,161 94,688
$ 300,000............ 41,704 62,555 83,407 104,259 125,111 145,963
$ 400,000............ 56,354 84,530 112,707 140,884 169,061 197,238
$ 500,000............ 71,004 106,505 142,007 177,509 213,011 248,513
$ 600,000............ 85,654 128,480 171,307 214,134 256,961 299,788
$ 700,000............ 100,304 150,455 200,607 250,759 300,911 351,063
$ 800,000............ 114,954 172,430 229,907 287,384 344,861 402,338
$ 900,000............ 129,604 194,405 259,207 324,009 388,811 453,613
$1,000,000........... 144,254 216,380 288,507 360,634 432,761 504,888
</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 pages 9 and 10 are as follows: Mr. Brian C. Cook--29; Mr.
Ronald A. Fromm--13; Mr. Charles C. Gillman--10; Mr. Gary M. Rich--10; Mr. Harry
E. Rich--26; and Mr. David H. Schwartz--10. The dollar amounts shown in the
first two columns of the Summary Compensation Table on pages 9 and 10 are
substantially the same as the compensation covered by the Retirement Plans.
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 may elect to have from 2 percent to 20 percent of their annual
salaries, up to a present maximum amount of $10,500 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 pages 9 and 10 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
14
<PAGE> 16
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 $20,000 and also pays an additional annual cash retainer
of $2,000 to the Chairman of the Corporation's Executive Committee, the
Chairperson of the Corporation's Audit Committee, the Chairman of the
Corporation's Compensation Committee and the Chairman 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 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 the Corporation's Common Stock. Thereafter, each newly appointed
non-employee Director is granted 1,000 shares on the date at which the Director
is first elected to serve. In addition, under the 1999 Plan, each non-employee
Director is entitled to receive an annual grant of Brown stock options providing
Black-Scholes option values of approximately $24,000 for Directors and $28,000
for Directors who chair a standing Board committee. During the 1999 Fiscal Year,
stock option grants of 3,400 shares were made to each non-employee Director and
stock option grants of 4,000 shares were made to each non-employee Director
serving as Chairperson of each of the Corporation's Audit, Compensation,
Governance and Nominating and Executive Committees.
Under the Corporation's "Deferred Compensation Plan for Non-Employee
Directors", adopted by the Board of Directors of the Corporation on October 14,
1999 with an effective date of October 31, 1999, three of the Corporation's
seven Non-Employee Directors have elected to defer the receipt of all of their
compensation as Directors of the Corporation. Under the Plan, the Corporation
credits each Participant's Account with the number of units which is equal to
the number of shares of the Corporation's Common Stock, and dividends thereon,
which the Participant could purchase or receive with the amount of the deferred
compensation on the "Payment Date", based upon the then fair market value of the
Corporation's Common Stock. Upon the Participant's termination of service as a
Director, such deferred compensation is paid to him or her, or to his or her
designated beneficiary in the event of his or her death, in annual installments
over a five-year or ten-year period, or in a lump sum, based upon that number of
units of deferred compensation which has been credited to the Participant's
Account, valued on the basis of the fair market value of an equivalent number of
shares of the Corporation's Common Stock at the "Payment Date" coincident with
or next succeeding the date of such termination of service. The Plan also
provides for earlier payment of a Participant's Account if the Board of
Directors of the Corporation determines that the Participant has proved a
demonstrated financial hardship.
STOCK OPTION PLANS
The Corporation has options outstanding under the 1999 Plan, the 1998 Plan,
the 1994 Plan and the 1987 Plan (as described above). 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. With the 1998
Plan having been approved by the Shareholders at the 1998 Annual Meeting of
Shareholders, the Corporation will make no further awards under the 1994 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
15
<PAGE> 17
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 1987 Plan, the 1994
Plan, the 1998 Plan and the 1999 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.
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 pages 9 and 10 during the past Fiscal Year:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------ VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS/SARS PRICE APPRECIATION
GRANTED TO FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN EXERCISE OR EXPIRATION ----------------------
NAME GRANTED* FISCAL YEAR* BASE PRICE DATE 5% ($) 10% ($)
---- ------------ ------------ ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Brian C. Cook............ 15,000/-0- 2.70%/-0- $19.9375 2009 $188,079 $476,629
Ronald A. Fromm.......... 20,000/-0- 3.60%/-0- $19.9375 2009 $250,772 $635,505
Charles C. Gillman....... 6,000/-0- 1.08%/-0- $19.9375 2009 $ 75,232 $190,651
Gary M. Rich............. 10,000/-0- 1.80%/-0- $14.6563 2009 $ 92,172 $233,583
10,000/-0- 1.80%/-0- $19.9375 2009 $125,386 $317,752
Harry E. Rich............ 15,000/-0- 2.70%/-0- $19.9375 2009 $188,079 $476,629
David H. Schwartz........ 10,000/-0- 1.80%/-0- $14.6563 2009 $ 92,172 $233,583
10,000/-0- 1.80%/-0- $19.9375 2009 $125,386 $317,752
</TABLE>
- ------------------------
* All SARs were issued in tandem with options presented in this table.
The following table shows information with respect to the unexercised
options and SARs granted during the past Fiscal Year and in prior years to the
Executive Officers named in the Summary Compensation Table on pages 9 and 10 and
with respect to option/SAR exercises by those persons during the past Fiscal
Year:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED ON AT FY-END (#) AT FY-END ($)(2)
EXERCISE VALUE ------------------------- -------------------------
(#) REALIZED ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
----------- --------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Brian C. Cook.............. -0- -0- 77,250/87,250 -0-/-0-
Ronald A. Fromm............ -0- -0- 82,500/140,000 -0-/-0-
Charles C. Gillman......... -0- -0- 13,750/10,250 -0-/-0-
Gary M. Rich............... -0- -0- 32,750/39,250 -0-/-0-
Harry E. Rich.............. -0- -0- 64,750/72,250 -0-/-0-
David H. Schwartz.......... -0- -0- 25,500/35,500 -0-/-0-
</TABLE>
- ------------------------
(1) Based on the difference between the mean market price on the date of
exercise and the option price.
(2) Based on the difference between the mean price at Fiscal Year-end and the
option price.
16
<PAGE> 18
PERFORMANCE BASED STOCK AWARDS
The following table shows information with respect to Performance Based
Stock Awards which were granted during the past Fiscal Year to the Executive
Officers who are named in the Summary Compensation Table on pages 9 and 10 of
this Proxy Statement:
<TABLE>
<CAPTION>
NAME ON TARGET AWARD
---- ---------------
<S> <C>
Brian C. Cook............................................... 12,000 units
Ronald A. Fromm............................................. 20,000 units
Charles C. Gillman.......................................... 3,000 units
Gary M. Rich................................................ 5,000 units
Harry E. Rich (1)........................................... 9,000 units
David H. Schwartz........................................... 5,000 units
TOTAL UNITS TO GROUP
(OF ALL EXECUTIVE OFFICERS WHO RECEIVED UNITS)............ 84,500 units
</TABLE>
- ------------------------
(1) Mr. Harry E. Rich resigned as the Corporation's Executive Vice President and
Chief Financial Officer on October 14, 1999, resigned as a Director of the
Corporation on October 20, 1999, and retired as an employee of the
Corporation on December 31, 1999.
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 pages 9 and 10 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.
BOARD OF DIRECTORS AND STANDING
COMMITTEES OF THE BOARD
BOARD OF DIRECTORS
During the Fiscal Year ended January 29, 2000, the Board of Directors of
the Corporation met at regular and special meetings on eleven 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. 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 four
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 oversee the
Corporation's financial reporting process on behalf of the Board of Directors;
to foster an overall corporate attitude that embraces quality financial
reporting, sound business risk practices, and ethical behavior; annually to
review and recommend to the Board
17
<PAGE> 19
of Directors the selection of the Corporation's independent auditors; to ensure
that the independent auditors submit on a periodic basis to the Audit Committee
a formal written statement delineating all relationships between the auditors
and the Corporation and to review any disclosed relationships to satisfy itself
of the auditors' independence; to discuss with the internal auditors and the
independent auditors the scope and plans for their respective audits including
the adequacy of staffing and compensation; to discuss with management, the
internal auditors, and the independent auditors the adequacy and effectiveness
of the accounting and financial controls, including the Corporation's system to
monitor and manage business risk, and legal and ethical programs; to meet
separately with the internal auditors and the independent auditors, with and
without management present, to discuss the results of their examinations; to
review with management and the independent auditors the financial statements in
the Corporation's Annual Report to Shareholders, including management's and the
independent auditors' judgments about the quality, not just the acceptability,
of accounting principles, and the reasonableness of significant judgments; and
to discuss the results of the annual audit and any other matters required to be
communicated to the Audit Committee by the independent auditors under generally
accepted auditing standards.
The members of the Audit Committee are Mrs. Julie C. Esrey, Chairperson;
Mr. Richard A. Liddy; Mr. John Peters MacCarthy; and Ms. Patricia G. McGinnis.
During the Fiscal Year ended January 29, 2000, the Audit Committee met on three
separate occasions.
COMPENSATION COMMITTEE
The Compensation 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 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; Mr. John Peters MacCarthy; Mr. W. Patrick McGinnis; and Mr. Jerry E.
Ritter. During the Fiscal Year ended January 29, 2000, 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 or of any of its
subsidiaries.
EXECUTIVE COMMITTEE
The Bylaws of the Corporation provide that the Executive Committee of the
Board of Directors, presently composed of Mr. Richard A. Liddy, Chairman; Mr.
Ronald A. Fromm; and Mr. Jerry E. Ritter; 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
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<PAGE> 20
Committee of the Board of Directors also performs Finance Committee functions.
The Executive Committee met on one occasion during the Fiscal Year ended January
29, 2000.
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 Chairman 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 Mr. Jerry E.
Ritter, Chairman; Mr. Joseph L. Bower; Mrs. Julie C. Esrey; and Mr. Richard A.
Liddy. During the Fiscal Year ended January 29, 2000, the Governance and
Nominating Committee met on two separate occasions.
COMPENSATION COMMITTEE REPORT
The policy of the Compensation Committee of Brown Shoe is to provide for
compensation programs that will attract, motivate, and retain a management team
capable of developing and implementing strategy that creates long term
shareholder value. Competitive salary and incentive opportunities are extended
to management that provide rewards based on the Corporation's financial
performance, growth and shareholder returns. If the Corporation's performance
does not meet planned levels, management's compensation will lag when compared
to the median of peer group companies. Conversely, if the Corporation's
performance exceeds plan, total compensation will exceed the peer group median.
Total compensation consists of the following elements: annual salary and bonus
opportunity; annual stock option grants; annual grants of performance based
stock; and periodic grants of restricted stock.
SALARY
Brown Shoe salaries are targeted to be competitive with comparable
companies in the footwear and retail industry with whom it competes for
management. While salaries are expected to be adequate, they are not intended to
be the primary incentive for exceptional performance. A balance of incentives is
provided by the Annual Incentive Plan, Long Term Performance Based Stock
Incentives and Stock Option Awards to enhance the financial performance of the
Corporation, and thus shareholder value, by aligning the financial interests of
management with the interests of Shareholders.
Salaries are reviewed annually. A survey of competitors' compensation
indicates that these practices have placed Brown Shoe's total cash pay levels
slightly above the median of its peer group, and consistent with the above
stated pay philosophy.
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<PAGE> 21
ANNUAL INCENTIVES
The bonus program is designed to link the interests of management with
those of its Shareholders through cash incentive awards based on budgeted levels
of earnings. The 1999 Annual Incentive Plan provided for cash incentive payments
linked to the achievement of financial objectives as measured by the
consolidated earnings performance of the Corporation and by the earnings
performance of each operating division, as compared to budgeted levels.
Consolidated earnings of the Corporation exceeded budget, in large part as a
result of record earnings performance at Famous Footwear and Brown Pagoda.
Accordingly, the Committee approved incentive payments in excess of target to
Executives responsible for the above performance. Conversely, the Committee
approved below target awards to Executives responsible for divisions which
performed below budget. Each incentive payment was approved based solely on
specific, formula defined performance criteria, established by the Committee.
LONG-TERM STOCK INCENTIVES
The Committee also administers a long-term stock option and performance
based stock program. The objective of the stock option and performance based
stock program is to provide a longer term incentive for key managers, and to
align their interests directly with those of the Shareholders. The Corporation's
stock and option grants are also part of the periodic survey mentioned above.
Over the last several years, our practices in granting stock awards have lagged
those of the peer group companies. Accordingly, in 1999, additional grants were
made to key executives. For the future, it is our intent to continue to shift
emphasis toward stock options and performance based stock awards reflecting
corporate plans for growth.
CEO COMPENSATION
At the close of 1999, the Committee increased the salary of the Chief
Executive Officer from $625,000 to $675,000. This increase was based on a
competitive comprehensive compensation analysis performed by an independent
consulting firm and based on the operating performance achieved in 1999. In
addition, a bonus of $454,410 was paid according to formula. Other incentive
payments made to Senior Executives elsewhere in the Corporation reflect the
progress and performance relative to financial objectives, as described above.
PERFORMANCE BASED STOCK, STOCK OPTIONS AND RESTRICTED STOCK
In 1999, Performance Based Stock Awards for an aggregate of 84,500 shares
were granted to 15 Executive Officers, including a 20,000-Share Performance
Award to the Chief Executive Officer. In addition, Stock Options for 223,500
shares were granted to 16 Executive Officers, including an Option for 20,000
shares granted to the Chief Executive Officer. While no Restricted Stock was
granted to the Chief Executive Officer in 1999, 33,000 shares of Restricted
Stock were granted to five other Executive Officers.
As indicated previously, the policy of the Committee is to establish and
maintain a compensation program that maximizes the creation of long-term
shareholder value. The Compensation Committee believes that executive
compensation programs should serve to achieve the Committee's above intended
objectives, while also minimizing any effect on the Company of Section 162(m) of
the Internal Revenue Code, which section provides for an annual $1 million
limitation on the deduction that an employer may claim for compensation of
Executive Officers. The Brown Shoe Company, Inc. Incentive and Stock
Compensation Plan of 1999, approved by the Shareholders of the Corporation at
the 1999 Annual Meeting of Shareholders on May 27, 1999, complies with the
provisions of Section 162(m), thereby providing for tax deductibility for both
annual incentive payments and performance based stock awarded under the Plan.
All cash bonus awards and non-restricted stock awards made to Executive Officers
are based solely upon the attainment of specific financial results such as
earnings per share, return on investment, return on equity and growth in
revenue.
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<PAGE> 22
THE COMMITTEE BELIEVES A TAX EFFICIENT, PERFORMANCE BASED ANNUAL INCENTIVE
OPPORTUNITY IS AN EFFECTIVE AND A NECESSARY MEANS TO RETAIN AND MOTIVATE STRONG
MANAGEMENT. FURTHERMORE, THE COMMITTEE BELIEVES THE USE OF STOCK OPTIONS AND
PERFORMANCE BASED STOCK AWARDS WILL PLAY A VITAL ROLE IN STRONGLY LINKING
MANAGEMENT INTERESTS DIRECTLY TO IMPROVING THE LONG TERM SUCCESS OF THE
CORPORATION AND DIRECTLY TO INCREASING SHAREHOLDER VALUE. IT IS THE INTENTION OF
THE COMMITTEE TO EMPLOY STOCK OPTIONS AND LONG TERM PERFORMANCE BASED STOCK
AWARDS, RATHER THAN RESTRICTED STOCK AS THE PRIMARY INCENTIVE TO ENHANCE
SHAREHOLDER VALUE.
Respectfully submitted,
COMPENSATION COMMITTEE OF THE
BROWN SHOE COMPANY, INC.
BOARD OF DIRECTORS
MR. JOSEPH L. BOWER, CHAIRMAN
MR. JOHN PETERS MACCARTHY, MEMBER
MR. W. PATRICK MCGINNIS, MEMBER
MR. JERRY E. RITTER, MEMBER
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<PAGE> 23
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 two assumed Peer Group Indices, the
Standard & Poor's 500 Stock Index and the Standard & Poor's Small Cap 600 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.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
[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.
COMPOUND ANNUAL RATES OF TOTAL RETURN TO SHAREHOLDERS*
<TABLE>
<CAPTION>
5 YEAR 4 YEAR 3 YEAR 2 YEAR 1 YEAR
<S> <C> <C> <C> <C> <C>
Brown Shoe Company, Inc. -15.92% -1.46% -10.59% -12.03% -31.82%
Peer Group No. 1 -9.12% -12.48% -27.98% -32.92% -18.19%
Peer Group No. 2 -2.95% -4.71% -19.39% -28.10% -16.52%
S&P 500 Index 25.97% 22.97% 21.86% 19.41% 7.63%
S&P 600 Index 16.80% 13.13% 10.50% 5.54% 12.09%
</TABLE>
- -------------------------
* For indicated holding periods, in Fiscal Years of the Corporation
corresponding to the previous graph, ended January 28, 2000.
Peer Group Index No. 1, which was used in the 1999 Proxy Statement, and as
depicted in the foregoing line graph and table, consisted 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. Peer Group Index No. 2 is
a modification of Peer Group Index No. 1, and includes Footstar, Inc., Payless
ShoeSource, Inc. and Shoe Carnival, Inc. These companies, along with Edison
Brothers Stores, Inc., GENESCO Inc., Nine West Group, Inc., The Stride Rite
Corporation and Wolverine World Wide, Inc., comprise the total Peer Group Index
No. 2. The addition of the three new
22
<PAGE> 24
companies is intended to compensate for the acquisition of Nine West Group, Inc.
in 1999 by Jones Apparel Group, Inc. and the bankruptcy of Edison Brothers
Stores, Inc., also in 1999. The Corporation is also changing the broad equity
market index from the Standard & Poor's 500 Stock Index to the Standard & Poor's
Small Cap 600 Index, which consists of more companies of a similar nature to the
Corporation. 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.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
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 a 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 29, 2000.
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.
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.
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.
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<PAGE> 25
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of eligible Shareholders intended to be presented at the 2001
Annual Meeting, currently scheduled to be held on May 24, 2001, must be received
by the Corporation by December 20, 2000 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 (by March 25, 2001) nor more than 90
days (by February 23, 2001) 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, Post Office Box 29, St. Louis, Missouri 63166-0029. Any Shareholder
desiring a copy of the Corporation's Bylaws will be forwarded one without charge
upon written request from such individual.
INDEPENDENT AUDITORS
Ernst & Young LLP were the auditors for the Corporation for the year ended
January 29, 2000, and the Board of Directors, on the recommendation of its Audit
Committee, has engaged that firm as auditors for the year ending February 3,
2001. Representatives of that firm will be present at the Annual Meeting to
respond to appropriate questions that may be raised, and they will have an
opportunity to make a statement, if they so desire.
MISCELLANEOUS
The Corporation will bear the cost of solicitation of Proxies. Proxies will
be solicited by mail. All expenses of solicitation will be paid by the
Corporation. 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.
Even though you plan to attend the meeting in person, please sign, date and
return the enclosed Proxy promptly or vote electronically in accordance with the
instructions shown on the enclosed Proxy. The person giving a Proxy has the
power to revoke it, at any time before it is exercised, by giving written notice
of
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<PAGE> 26
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
8300 Maryland Avenue
Post Office Box 29
St. Louis, Missouri 63166-0029
April 19, 2000
25
<PAGE> 27
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 stockholders 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 eight. 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 two 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 prevent the designation by the
Board of such person as an Honorary Director, to serve without vote."
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<PAGE> 28
[ X ] Please mark your 2283
votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING:
FOR WITHHELD
1. ELECTION OF [ ] [ ] Nominees:
DIRECTORS 01. Joseph L. Bower
02. W. Patrick McGinnis
03. Jerry E. Rilter
For, except vote withheld from the following nominee(s).
<TABLE>
<S> <C>
- ---------------------------------------- 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 Proposal 1, as
recommended by the Board of Directors.
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.
----------------------------------------------------------------
================================================== ----------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY FORM SIGNATURE(S) DATE
PROMPTLY, USING THE ENCLOSED ENVELOPE.
==================================================
</TABLE>
- --------------------------------------------------------------------------------
/\ PLEASE DETACH PROXY HERE, SIGN AND MAIL /\
Dear Shareholder:
Brown Shoe Company, Inc. encourages you to take advantage of the convenient
ways by which you can vote your shares. You can vote your shares
electronically through the internet or by telephone. This eliminates the need
to return the Proxy card.
To vote your shares electronically, you must use the control number. The control
number is the series of numbers printed in the box above, just below the
perforation. This control number must be used to access the system.
1. To vote over the internet:
- Log on to the Internet and go to the web site
http://www.eproxyvote.com/BWS
2. To vote by telephone:
- On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683)
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the Proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
<PAGE> 29
[BROWN SHOE LOGO]
BROWN SHOE COMPANY, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION FOR
ANNUAL MEETING MAY 25, 2000
The undersigned hereby constitutes and appoints Ronald A. Fromm, Andrew M.
Rosen and Robert D. Pickle, and each of them, his or her 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 SHOE
COMPANY, INC., to be held in the Brown Shoe Company, Inc. Conference
Center, located at 8300 Maryland Avenue, in Clayton, in St. Louis County,
Missouri, on Thursday, May 25, 2000, 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.
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
[BROWN SHOE LOGO]
8300 MARYLAND AVENUE, POST OFFICE BOX 29, ST. LOUIS, MISSOURI 63166-0029
April 19, 2000
Dear Shareholder:
The Annual Meeting of Shareholders of Brown Shoe Company, Inc. will be
held on the 25th day of May, 2000, at 11:00 a.m., in the Brown Shoe Company,
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 above, and return it promptly in
the envelope provided or vote electronically as instructed on the reverse side
hereof.
(over)
