<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
CPI CORP.
----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CPI CORP.
----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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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:_/
---------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
_/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / 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:
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4) Date Filed:
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<PAGE> 2
CPI CORP.
PRODUCTS AND SERVICES FOR CONSUMERS
1706 WASHINGTON AVENUE
ST. LOUIS, MISSOURI 63103
TELEPHONE (314) 231-1575
May 6, 1994
DEAR CPI CORP. STOCKHOLDER:
You are cordially invited to attend the 1994 Annual Meeting of
Stockholders of CPI Corp.
The meeting will be held on Tuesday, June 7, 1994, at 10:00 a.m. (St.
Louis, Missouri, time) at CPI Corp., 1706 Washington Avenue, St. Louis,
Missouri 63103.
I urge you to attend the meeting, if at all possible, since it
provides an opportunity for you to discuss CPI Corp. with its
management, in person. If you cannot personally attend, please vote
your preference on the enclosed proxy card and return it promptly.
It is important that your shares be voted, whether in person or by
proxy. Your participation in CPI Corp.'s business through its annual
meetings is an essential part of the corporation's governance.
I look forward to seeing you.
Sincerely,
/s/ Alyn V. Essman
...........................................
ALYN V. ESSMAN
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
CPI CORP.
NOTICE OF ANNUAL STOCKHOLDERS MEETING
TO OUR STOCKHOLDERS:
The annual meeting of the stockholders of CPI Corp. (the
"Corporation") will be held on June 7, 1994, at 10:00 a.m., central
daylight savings time, at CPI Corp., 1706 Washington Avenue, St. Louis,
Missouri 63103. The items of business to be transacted at this meeting
are as follows:
1. To elect a Board of Directors for the ensuing year.
2. To act upon a proposal to ratify the appointment of KPMG Peat
Marwick, as the Corporation's independent certified public
accountants for the fiscal year ending February 4, 1995.
3. To act upon such other and further business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has specified April 25, 1994, at the close of
business, as the record date for the purpose of determining the
stockholders who are entitled to receive notice of and to vote at the
annual meeting. A list of the stockholders entitled to vote at the
annual meeting will be available for examination by any stockholder at
the meeting. For ten days prior to the annual meeting, this stockholder
list will also be available for inspection by stockholders at the
Corporation's offices at 1706 Washington Avenue, St. Louis, Missouri
63103, during ordinary business hours.
The Proxy Statement for the annual meeting is set forth on the
following pages.
SO THAT AS MANY SHARES AS POSSIBLE MAY BE REPRESENTED AT THIS
MEETING, WE URGE YOU TO PROMPTLY SIGN, DATE, AND RETURN YOUR PROXY EVEN
IF YOU PLAN TO ATTEND THE MEETING. IF YOU DO ATTEND THE MEETING, YOU
MAY VOTE YOUR SHARES IN PERSON, THEREBY CANCELING THE PROXY. THE PROMPT
RETURN OF PROXIES WILL SAVE THE CORPORATION THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A RETURN
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, IS
ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Directors
/s/ Jane E. Nelson
JANE E. NELSON
Secretary and General Counsel
Dated and mailed: May 6, 1994
<PAGE> 4
CPI CORP.
1706 WASHINGTON AVENUE
ST. LOUIS, MISSOURI 63103
PROXY STATEMENT OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS OF CPI CORP.
TO BE HELD ON JUNE 7, 1994
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement and the accompanying Proxy are being mailed
beginning May 6, 1994, to holders of common stock of CPI Corp., a
Delaware corporation (referred to herein collectively with its
predecessor corporations as the "Corporation"), in connection with the
solicitation of Proxies by the Board of Directors for the Annual
Meeting of Stockholders to be held on June 7, 1994, at 10:00 a.m.,
central daylight savings time, at CPI Corp., 1706 Washington Ave.,
St. Louis, Missouri 63103, or at any adjournment thereof (the
"Meeting"). Proxies are solicited to provide all stockholders of the
Corporation with the opportunity to vote. Shares may only be voted at
the Meeting if the stockholder is present in person or represented by a
Proxy.
The cost of preparing, mailing, and soliciting Proxies will be borne
by the Corporation. In addition to solicitations by the Corporation by
mail, directors, officers, and regular employees of the Corporation may
solicit proxies personally and by telephone, facsimile, telegraph, or
other means, for which they will receive no compensation in addition to
their normal compensation. The Corporation has also retained
Continental Stock Transfer & Trust Company, 2 Broadway, New York, New
York 10004, to assist in the solicitation of Proxies from stockholders,
including brokerage houses and other custodians, nominees, and
fiduciaries and will pay that firm no more than $2,000 in fees.
Arrangements will also be made with brokerage houses and other
custodians, nominees, and fiduciaries for the forwarding of
solicitation material to the beneficial owners of common stock held of
record by such persons, and the Corporation may reimburse them for
their reasonable out-of-pocket and clerical expenses.
The stockholder giving the Proxy may revoke it by (i) delivering a
written notice of revocation to the Secretary of the Corporation at the
principal office of the Corporation at the address set forth above at
any time before the commencement of the Meeting or any adjournment
thereof; (ii) attending the Meeting in person and voting thereat; or
(iii) executing and delivering to the Secretary of the Corporation a
Proxy bearing a date and time later than that of the Proxy to be
revoked. Revocation of the Proxy will not affect any vote previously
taken.
The Meeting has been called for the purposes set forth in the Notice
of Annual Meeting (the "Notice") to which this Proxy Statement is
appended. The Board of Directors does not anticipate that matters other
than those described in the Notice will be brought before the Meeting
for stockholder action, but if any other matters properly come before
the Meeting, votes thereon will be cast by the Proxy holders in
accordance with their best judgment. Any proposals of stockholders
intended to be presented at the 1995 Annual Meeting must be received by
the Company no later than January 4, 1995 for inclusion in the
Company's Proxy Statement and form of proxy.
If a stockholder wishes to give a Proxy to someone other than the
persons indicated on the accompanying Proxy, the stockholder must cross
out both names appearing on the Proxy and insert the name or names of
another person or persons to act as Proxies. The signed Proxy must be
presented at the Meeting by the person or persons representing the
stockholder.
2
<PAGE> 5
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of common stock of the Corporation of record at the
close of business on April 25, 1994, are entitled to notice of, and to
vote at, the Meeting. Each share of common stock outstanding on the
record date is entitled to one vote on all matters properly coming
before the Meeting. As of the close of business on April 25, 1994,
14,433,702 shares of common stock were issued and outstanding, and 50%
of these shares constitutes a quorum, which must be present in person
or by proxy at the Meeting to conduct business. At the Corporation's
1991, 1992 and 1993 annual meetings 84.9%, 85.5% and 93.7%
respectively, of the issued and outstanding shares of common stock were
present and voting. The Corporation has no issued and outstanding
shares of any other class of stock.
Unless you indicate to the contrary, the persons named in the
accompanying Proxy will vote for:
(1) THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED HEREIN; AND
(2) THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK AS
INDEPENDENT AUDITORS FOR THE YEAR 1994.
When a Proxy is returned to the Corporation properly signed and
dated, the persons designated as Proxies shall vote the shares
represented by the Proxy in accordance with the stockholder's
directions. If a Proxy is signed, dated, and returned without
specifying choices on one or more matters presented to the
stockholders, the shares will be voted on such matter or matters as
recommended by the Corporation's Board of Directors.
Directors of the Company shall be elected by a plurality vote. All
other questions shall be determined by a majority of the votes cast
thereon. Proxies for shares marked "abstain" on a matter will be
considered to be represented at the meeting, but not voted, for these
purposes. Shares registered in the names of brokers or other "street
name" nominees for which proxies are voted on some but not all matters
will be considered to be represented at the meeting, but will be
considered to be voted only as to those matters actually voted.
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
Eight directors are to be elected at the Meeting, each to serve for a
term of one year and thereafter until their successors are duly elected
and qualified. Six of the nominees are presently directors of the
Corporation.
Unless authority to vote is withheld, the enclosed Proxy will be
voted for the election of the nominees as directors of the Corporation.
If any one or more of the nominees becomes unavailable for election,
which is not anticipated, the holders of the Proxies, acting pursuant
to the authority granted by the Proxy, will vote for such person or
persons as may be designated by the Board of Directors.
<TABLE>
The name of each nominee, the year each present director first joined
the Board, and the nominees' principal occupations and ages are:
<CAPTION>
DIRECTOR
NAME SINCE PRINCIPAL OCCUPATION AGE
---- -------- -------------------- ---
<C> <C> <S> <C>
Milford Bohm 1942 Managing Partner of Milford Bohm and Associates, 72
personal investments.
Alyn V. Essman 1968 Chairman and Chief Executive Officer of 62
the Corporation.
Russell Isaak 1992 President of the Corporation. 51
Mary Ann Krey - Chief Executive Officer, Krey Distributing Co., an 46
Anheuser-Busch beer distributor in St. Charles and Lincoln Counties,
Missouri.
Lee M. Liberman 1982 Chairman Emeritus of the Board of Laclede Gas 72
Company, a St. Louis, Missouri, public utility.
3
<PAGE> 6
DIRECTOR
NAME SINCE PRINCIPAL OCCUPATION AGE
---- ------- -------------------- ---
Nicholas L. Reding 1992 Vice Chairman of Monsanto Company, a St. Louis, 59
Missouri manufacturer of chemicals, pharmaceuticals, and other
products.
Martin Sneider - President, Edison Brothers Stores, Inc., a St. Louis 51
based company that operates numerous specialty chains throughout the
United States.
Robert L. Virgil 1982 Principal, Edward D. Jones, a full service retail 59
brokerage firm located in St. Louis.
</TABLE>
Mr. Bohm founded the predecessor of the Corporation in 1942 and was
employed by the Corporation from that time until retirement in February
1988 in various positions, including Chief Executive and Chairman until
1973, and then as Chairman of an officers' committee until his election
as Chairman Emeritus in 1978. Since his retirement from CPI, Mr. Bohm
has served as Managing Partner of Milford Bohm & Associates.
Mr. Essman joined the Corporation in 1956 as Controller. He was
appointed President in 1969 and has served as Chairman and Chief
Executive Officer of the Corporation since 1973. He currently chairs
the Corporation's Executive Committee of officers.
Mr. Isaak joined the Corporation as Controller in 1972. He became the
Corporation's Chief Financial Officer in 1978 and was appointed Vice
President/Finance in 1979 and Executive Vice President-Finance/
Administration in February 1982. Effective February 1992, he was
appointed President of the Corporation and is also a member of the
Corporation's Executive Committee of officers.
Ms. Krey is CEO of Krey Distributing Co., an Anheuser-Busch beer
distributor in the metropolitan St. Louis market. She has served in
that capacity since 1986. Ms. Krey is a trustee of Washington
University in St. Louis. She also serves as a director of Commerce
Banks of St. Louis and St. Charles County, Laclede Gas Company, and a
number of other organizations in Missouri.
Mr. Liberman has served as a director of the Corporation since 1982.
He is the Chairman Emeritus of Laclede Gas Company, a St. Louis,
Missouri, public utility, and served as Chairman of the Board of that
company from April 23, 1976 until his retirement from the Board on
January 27, 1994. He is also a director of Angelica Corporation,
Boatmen's Bancshares, Inc., Falcon Products, Inc., Insituform Mid-
America, Inc., and INTERCO Incorporated.
Mr. Reding has served as a director of the Corporation since 1992. He
is the Vice Chairman of Monsanto Company. From 1990 through 1992 he
served as Executive Vice President of Monsanto, with responsibility for
environment, safety, health and manufacturing operations. From 1986
until 1990, he served as president of Monsanto Agricultural Company, an
operating unit of Monsanto Company. Mr. Reding joined Monsanto in 1956.
He also serves as a director of Monsanto Company, Multifoods Corp. and
Meredith Corp.
Mr. Sneider has served as President of Edison Brothers Stores, Inc.,
a St. Louis, Missouri based company that operates numerous specialty
chains nationwide, since 1987. He has held various positions within
Edison Brothers since 1968 and has served on that company's Board of
Directors since 1978. Mr. Sneider also serves as a director of Angelica
Corporation and Mercantile Trust Company, N.A. He is a trustee of
St. Louis Children's Hospital and Washington University in St. Louis.
Mr. Virgil has served as a director of the Corporation since 1982. On
September 1, 1993, Mr. Virgil became a principal with Edward D. Jones,
a full service retail brokerage firm located in St. Louis, Missouri.
Prior to accepting that position, Mr. Virgil served as Executive Vice
Chancellor of University Relations and Dean of the John M. Olin School
of Business of Washington University in St. Louis. He joined the
School's faculty in 1964. He also serves as a director of General
American Life Insurance Company, Maritz, Inc., and Allied Healthcare
Products, Inc.
4
<PAGE> 7
EXECUTIVE OFFICERS
Following is a list of all individuals who served as Executive
Officers during 1993:
Alyn V. Essman (62)........... Chief Executive Officer. Mr. Essman joined the
Corporation in 1956 as Controller. He was
appointed President in 1969 and has
served as Chairman and Chief Executive
Officer of the Corporation since 1973.
He currently chairs the Corporation's
Executive Committee of officers.
Russell Isaak (51)..........President. Mr. Isaak joined the Corporation as
Controller in 1972. He became the Corporation's
Chief Financial Officer in 1978 and was appointed
Vice President/Finance in 1979 and Executive Vice
President-Finance/Administration in February 1982.
In February, 1992 he was appointed President of
the Corporation and is also a member of the
Corporation's Executive Committee of officers.
David E. April (51).......... Senior Executive Vice President. Mr. April joined
the Company in 1963 as a supervisor trainee and
subsequently became Vice President of Laboratory
Operations. In 1981, he became Vice President and
General Manager of Laboratory Operations, in
February 1984, he became President of the
Laboratory Operations, and in February 1987, he
was named President of Manufacturing. Effective
February 1992, Mr. April was appointed Senior
Executive Vice President and is a member of the
Office of the President and of the Executive
Committee of officers.
Patrick J. Morris (54)........Senior Executive Vice President. Mr. Morris
joined the Company in May 1985 as its Executive
Vice President-Marketing. Effective February
1992, he was appointed Senior Executive Vice
President, and is a member of the Office of the
President and of the Executive Committee of
officers.
Barry C. Arthur (51)..........Executive Vice President-Finance and Chief
Financial Officer. Mr. Arthur joined the Company
in 1965 as an accountant and subsequently became
Controller. In 1981, he was appointed Treasurer,
and in July 1983, he was named Vice President-
Finance. He was appointed to his current position
effective February 1992 and is a member of the
Executive Committee of officers.
Jane E. Nelson (44)...........Secretary and General Counsel. Ms. Nelson joined
the Company in 1988 as Assistant General Counsel
and served as Associate General Counsel and
Assistant Secretary. She was promoted to her
current position in February 1993 and is a member
of the Corporate Development Council. Prior to
coming to CPI, Ms. Nelson was an associate with
the St. Louis law firm of Husch and Eppenberger.
Fran Scheper (48).............Executive Vice President-Human Resources. Ms.
Scheper joined the Company in 1967 as Personnel
Assistant. She was promoted to Assistant Personnel
Director in 1982 and in January 1987 became Vice
President-Human Resources. She was appointed to
her current position in February 1992 and is a
member of the Executive Committee of officers.
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
To the Company's best knowledge, the following table sets forth
beneficial owners of more than five percent of the common stock of the
Corporation as reported on Schedules 13-D and 13-G filed with the SEC
by such beneficial owners.
<CAPTION>
(1) (2) (3) (4)
TITLE NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
-------- ------------------- -------------------- ----------
<C> <S> <C> <C>
Common Stock Systematic Financial Management, Inc.,
("Systematic"), Cash Flow Investers, Inc. ("CFI"), and
Kenneth S. Hackel ("Hackel") 1,645,620(1) 11.19%
Two Executive Drive
Fort Lee, New Jersey 07024
Common Stock NewSouth Capital Management 1,607,936(2) 11.0%
755 Crossover Lane, Ste. 233
Memphis, TN 38117
Common Stock Confederation Life Insurance Company 844,150(3) 5.78%
1 Mount Pleasant Rd.
Toronto, Ontario, Canada M4Y 2Y5
Common Stock Dalton, Greiner, Hartman, Maher & Co. 796,400(4) 5.4%
630 Fifth Ave., Ste. 3425
New York, New York 10111
<FN>
- - -----
(1) As reported as a Group in accordance with Rule
240.13d-1(b)(1)(ii)(H) on their Schedule 13D, Amendment No. 1,
dated July 30, 1993, Systematic beneficially owns 1,639,640 shares,
or approximately 11.15% of the total shares outstanding on that
day. CFI beneficially owns 5,980 shares, or approximately .04% of
the total shares outstanding on that day. Hackel, the majority
shareholder, President and principal executive officer of both
Systematic and CFI, may be deemed to beneficially own the 1,645,620
shares owned in the aggregate by Systematic and CFI, representing
approximately 11.19% of the total shares outstanding on that day.
No member of the Group has sole voting power with respect to the
shares. Systematic shares voting power with respect to 157,865
shares. CFI shares voting power with respect to 5,500 shares.
Hackel does not share voting power with respect to any of the
shares. Systematic has sole dispositive power with respect to
1,639,640 shares and CFI has sole dispositive power with respect to
5,980 shares. Hackel does not have sole dispositive power with
respect to any shares. None of the members of the Group shares
dispositive power with respect to the reported shares.
(2) As reported on their Schedule 13G dated February 4, 1994, NewSouth
Capital Management, an Investment Advisor registered under Sec. 203
of the Investment Advisers Act of 1940, was the owner of 1,607,936
shares representing approximately 11% of the total shares
outstanding on that day. NewSouth Capital Management has sole
voting power for 1,537,936 of the shares, shared voting power for
70,000 of the shares, and sole dispositive power for 1,607,936 of
the shares.
(3) As reported on their Schedule 13G dated February 10, 1994,
Confederation Life, an Insurance Company as defined in Section
3(a)(19) of the Securities Exchange Act of 1934, was the owner of
844,150 shares, representing approximately 5.78% of the total
shares outstanding on that day. Confederation Life has shared
voting and shared dispositive power as to all the shares reported.
(4) As reported on their Schedule 13G, Amendment No. 1, dated January
18, 1994, Dalton, Greiner, an Investment Advisor registered under
Sec. 203 of the Investment Advisers Act of 1940, was the beneficial
owner of 796,400 shares, representing approximately 5.4% of the
total shares outstanding on that day. Dalton, Greiner has sole
voting power for 573,700 of the shares, shared voting power for
none of the shares and sole dispositive power for 796,400 of the
shares.
</TABLE>
6
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
Information is set forth below regarding beneficial ownership of
Common Stock of the Company as of March 1, 1994, by (i) each person who
is a director and nominee; (ii) each executive officer named in the
Summary Compensation Table on page 12; and (iii) all directors and
executive officers as a group. Except as otherwise noted, each person
has sole voting and investment power as to his or her shares.
<CAPTION>
(3)
AMOUNT AND
NATURE OF
(1) (2) BENEFICIAL (4)
TITLE NAME OF OWNERSHIP PERCENT
OF CLASS BENEFICIAL OWNER (A)(B) OF CLASS
-------- ---------------- ---------- --------
<C> <S> <C> <C>
Common Stock David E. April............................................... 37,116(c) *
Common Stock Barry C. Arthur.............................................. 7,614 *
Common Stock Milford Bohm................................................. 10,000 *
Common Stock Alyn V. Essman............................................... 308,180(d) 2.1%
Common Stock Russell Isaak................................................ 117,970 *
Common Stock Lee Liberman................................................. 400 *
Common Stock Patrick J. Morris............................................ 17,392 *
Common Stock Nicholas Reding.............................................. 200 *
Common Stock Robert Virgil................................................ 600 *
Common Stock 19 Directors and Executive Officers as a Group............... 570,590(e) 3.9%
<FN>
- - -----
*Percentage does not exceed one percent.
(a) Includes the following shares which such persons have the right to
acquire within 60 days after March 1, 1994 upon the exercise of
employee stock options: Mr. April: 9,822; Mr. Arthur: 4,380;
Mr. Essman: 31,326; Mr. Isaak: 17,970; Mr. Morris: 11,192; and
directors and executive officers as a group: 135,850.
(b) Excludes 4,980 shares for Mr. April, 2,026 shares for Mr. Arthur,
79 shares for Mr. Isaak; 977 shares for Mr. Morris; and 19,850
shares for directors and executive officers as a group, all held
under the CPI Corp. Employees Profit Sharing Plan and Trust. With
respect to such shares, the executives have neither voting power
nor investment power.
(c) Excludes 70 shares beneficially owned by Mr. April's wife in an
IRA, as to which he expressly disclaims beneficial ownership.
(d) Includes 19,116 shares as to which Mr. Essman shares voting and
investment power pursuant to an investment partnership. Excludes
40,000 shares beneficially owned by Mr. Essman's wife, as to which
he expressly disclaims beneficial ownership.
(e) Excludes 43,593 shares beneficially owned by members of the
immediate family of certain executive officers, as to which those
executives expressly disclaim beneficial ownership.
</TABLE>
BOARD AND COMMITTEE MEETINGS
During the fiscal year ended February 5, 1994 ("fiscal year 1993"),
the Corporation's Board of Directors met 14 times. All directors
attended more than 75% of the meetings that they were eligible to
attend. The Board of Directors also acted by unanimous written consent
on two other occasions.
The Board of Directors has three committees, the Audit, Compensation
and Nominating Committees. The Audit Committee's members are Messrs.
Virgil (Chairman), Liberman, and Bohm. The Committee held four meetings
during the last fiscal year. The Audit Committee is responsible for
reviewing the financial statements of the Corporation and the scope of
work of its independent auditors. The Committee also evaluates
recommendations of the auditors, recommends areas of review to the
Corporation's management, and reviews and evaluates the Corporation's
accounting policies, reporting practices, and internal controls.
7
<PAGE> 10
The Compensation Committee's members are Messrs. Liberman (Chairman),
Virgil, Bohm and Reding. The Committee held four meetings during the
last fiscal year and acted by unanimous consent on nine occasions. The
Compensation Committee also serves as the Stock Option Committee under
the Corporation's 1991 Stock Option Plan.
In 1993, the Nominating Committee consisted of the Board of Directors
as a whole. A Nominating Committee was established by the Board of
Directors as of February 3, 1994. The members of the Committee are
Messrs. Reding (Chairman), Liberman and Virgil. The Nominating
Committee is charged with nominating qualified members for the
Corporation's Board of Directors. The Nominating Committee will
consider nominees recommended by security holders. Any security holder
who desires to recommend a prospective nominee should forward the name,
address and telephone number of such prospective nominee, together with
a description of the nominee's qualifications and relevant business and
personal experience, to the Corporation's Secretary.
COMPENSATION OF DIRECTORS
Each director who is not an officer receives a retainer of $10,000
per year plus $850 for each Board and committee meeting he attends.
Directors who are also officers receive no retainer or other
compensation for service as directors.
Effective April 4, 1991, the Corporation established the CPI Corp.
Deferred Compensation and Retirement Plan for Non-Management Directors
(the "Directors' Plan"). Participation in the Directors' Plan is
limited to directors who are not employees of the Corporation. The plan
is administered by a committee composed of directors who are employees
and the Chief Financial Officer and the General Counsel of the Company.
The committee may amend, modify, or terminate the plan at any time.
The Directors' Plan has compensation deferral and phantom stock
components. Under the deferral components, a participating director
must irrevocably elect before the beginning of a fiscal year to defer
up to all (but not less than $5,000) of his retainer, fee, and other
compensation for such fiscal year. The director also selects a deferral
period of not less than three years, although the deferral period will
be shortened by the director's death, total and permanent disability,
or resignation or retirement from the Board or any other termination of
Board service. At the time of the election to defer, the director must
also choose to receive the deferred amount in a lump sum or in a
specified number of installments, not to exceed ten. All such amounts
are payable in cash.
During fiscal year 1993, Mr. Liberman deferred $21,050 in fees and
received dividend equivalents in the amount of $6,247. Mr. Liberman has
elected to defer his fees for fiscal year 1994 and has received
dividend equivalents in the amount of $1,782 during the current fiscal
year. Messrs. Bohm, Reding and Virgil did not elect to defer any fees
for fiscal year 1993. In fiscal 1994 Mr. Bohm has elected not to defer
any fees, Mr. Virgil has elected to defer 50% of his fees, and Mr.
Reding has elected to defer all of his fees. Growth Units on deferred
amounts were credited at $11.75 per unit for deferrals during fiscal
year 1993 and will be credited at $12.01 for deferrals during the
current fiscal year.
Under the Directors' Plan, the participants also receive 200 Phantom
Stock Rights ("Rights") for each year of service as a non-management
director. Accordingly, as of June, 1993, Messrs. Bohm, Liberman, Reding
and Virgil were each credited with 200 Rights. For each future year of
service, participants will receive 200 Rights after the completion of
the year. The Rights mature on the earliest of the director's (i)
death, (ii) total and permanent disability, (iii) reaching age 65 if
the participant is no longer a director, (iv) resignation or retirement
from the Board or any other termination of Board service after age 65,
or (v) reaching age 70 (but in no event in the case of (iii) and (v)
less than six months after the date of the award). At maturity, the
Rights are valued at the average of the last sale price of the
Corporation's common stock on the New York Stock Exchange as reported
in The Wall Street Journal during the six month period immediately
preceding the maturity date multiplied by the number of Rights credited
to the director's account. Before the maturity of his Rights, a
participant must irrevocably elect either to receive a lump sum payment
or to defer payment of all or part of the amount pursuant to the
deferred compensation component of the plan described above. Payments
are made only in cash.
8
<PAGE> 11
During fiscal year 1993, the 200 Rights credited to Mr. Liberman
automatically matured and, pursuant to his deferral election, were
credited to his deferred compensation account. Mr. Liberman's Rights
matured at a value of $15.51 per Right and, accordingly, $3,102 was
credited to Mr. Liberman's deferred compensation account. Growth Units
on the deferred amount were credited at $11.75 per unit. Also during
fiscal year 1993, the 200 Rights credited to Mr. Bohm automatically
matured and were paid out to Mr. Bohm in cash. Mr. Bohm's Rights
matured at a value of $15.51 per Right and, accordingly, Mr. Bohm
received a payment of $3,102.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Pursuant to becoming an insider of the Company as of February 6,
1993, Jane E. Nelson timely filed a Form 3, however through clerical
error the Form 3 failed to disclose 79 shares of stock held indirectly
in the Company's Profit Sharing Plan. The omission was included in an
Amendment to Form 3 filed ten days late on February 26, 1994. No other
incidents of late filing occurred during the fiscal year to the best of
the Company's knowledge.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following disinterested directors served as members of the
Compensation Committee of the Board of Directors during the last fiscal
year: Lee Liberman (Chairman), Milford Bohm, Nicholas Reding, and
Robert Virgil. Mr. Bohm was an officer of the Corporation until his
retirement in February, 1988.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
To Our Stockholders:
General Compensation Policy
Executive compensation at CPI Corp. and its subsidiaries is based on
a variety of factors which contribute to corporate performance and
enhance total return to stockholders. Executive compensation packages
include base salary, annual performance-based bonus, stock options,
company contributions to a stock ownership program and earnings on
Growth Units for compensation deferred from prior years under the
Corporation's deferred compensation program. The Board, on the
recommendation of the Compensation Committee, considered the following
objectives in awarding executive compensation in 1993, each of which
the Board believes contributes to stockholder value:
1. paying for performance, both long-term and short-term;
2. increasing emphasis on variable incentive compensation as opposed
to base compensation;
3. recognizing and rewarding the executive's contributions as
reflected in the performance of his or her unit and in the
performance of the Corporation as a whole;
4. providing a competitive and equitable compensation program to
attract, retain and motivate key executives; and
5. importantly, aligning stockholder, management and employee
interests.
Base Salary
The base salaries paid to the Corporation's executives are reviewed
annually. They are based on a number of factors, including an
evaluation of the individual's effectiveness in performing his or her
responsibilities, external competitiveness, internal equity, tenure in
position, overall responsibility, knowledge, and special assignments.
The external competitiveness is determined on the basis of a review of
CPI's executive compensation programs. The most recent review was
conducted by KPMG Peat
9
<PAGE> 12
Marwick and completed in 1992. External competitiveness was measured
against 50 service companies with revenue of $200 to $500 million.
These companies were selected because they have annual revenues
comparable to CPI and operate in the same service sector as CPI.
Salaries of CPI executive officers fell within the high end of the
comparable range as of the date of comparison.
The review by KPMG Peat Marwick also assisted the Compensation
Committee in tying compensation strategies to CPI's goals and supported
the Compensation Committee's desire to place greater emphasis on long-
term incentives in compensation packages for top executives. The base
salaries of all executives earning $300,000 or more were capped in 1992
for a period of five years.
The Chief Executive Officer and the four named executive officers
voluntarily reduced their 1993 base salaries in the aggregate amount of
$456,250 pursuant to the Corporation's Voluntary Stock Option Plan
described below.
Annual Bonus
The Company's pre-determined earnings per share targets were not
attained in 1993. Accordingly, no performance-based bonuses were
granted. The Compensation Committee has the authority to award
discretionary bonuses, and Barry Arthur received a discretionary bonus
for 1993 in the amount of $9,000 based on his level of compensation and
related responsibilities as compared to the other named executives and
his excellent service to the Corporation in 1993.
Stock Options
The only stock options granted to the named executive officers in
1993 were those awarded under the Voluntary Stock Option Plan approved
by the Corporation's stockholders at their 1993 Annual Meeting. Under
this Plan, options were awarded to CPI executives who voluntarily
elected to reduce their salaries. One option was awarded for each $2.50
in salary reduction, from a minimum of 5% to a maximum of 25% of base
salary.
The Compensation Committee believes the Voluntary Stock Option Plan
further strengthens the link between executive compensation and
corporate performance and return to the stockholders. For 1993, sixteen
executive officers elected total salary reductions of $600,710. Of that
amount, the base salaries paid to the Chief Executive Officer and the
four named executive officers were reduced by a total of $456,250 under
this Plan in 1993. A total of 240,284 options were granted to the
sixteen executives as a result of their salary reductions, of which
188,500 were granted to the Chief Executive Officer and the four named
executive officers. The size of each option award made under this Plan
was dependent on the salary reduction elected by the executive.
Another purpose of the Plan is to reduce compensation expenses. The
Plan was reauthorized for 1994.
A total of 58,972 options were granted to officers of the Corporation
in 1993 pursuant to a Stock Option Plan approved by shareholders in
1992. These awards ranged from 1,406 to 40,000 options per recipient.
No options were awarded under this plan in 1993 to the Chief Executive
Officers or to any other of the four named executives.
As of the end of the 1993 fiscal year, all unexercised options held
by CPI executives were at exercise prices above current price.
Growth Units on Deferred Compensation
Growth Units are created when an executive elects to defer up to 50%
of his or her annual incentive bonus under the Corporation's deferred
compensation program. Executives continue to earn appreciation on these
Growth Units based on increases in the Corporation's book value over
the course of a year and the addition of non-dividend equivalents that
adjust for the dilutive effect of a repurchase of corporate stock in
1989. Executives also earn dividend equivalents at the same rate that
dividends are
10
<PAGE> 13
paid to stockholders based on the number of Growth Units in the
executives' accounts. An executive's earnings under this part of the
Corporation's incentive compensation plan depend upon payment of
dividends and overall corporate performance as reflected in growth of
the stockholders' equity due to the growth in retained earnings. No
Growth Units were issued to the Chief Executive Officer or the four
named executives in 1993.
Company Contributions to Stock Ownership Program
All employees, including executives, who meet minimum age and service
requirements, are eligible to contribute up to 10% of their base
salaries to their individual accounts in the Corporation's Investment
Growth Program. A maximum of 5% of each participant's voluntary
contributions is matched by a minimum of 30% and a maximum of 70% of
corporate stock, depending on achievement of predetermined levels of
net income before taxes and bonuses. For 1993, the match was 30%.
Although each of the named executive officers was eligible to
participate in the Program, only Patrick Morris, David April and Barry
Arthur participated in 1993.
Compensation of the Chief Executive Officer
Mr. Essman's compensation is based on the policies and programs
described above for all executives. His base salary is established
under his current employment agreement and is based on the Board's
evaluation of his effectiveness in performing his responsibilities.
Presently, Mr. Essman's base salary is frozen through 1996. In 1993,
Mr. Essman elected to reduce his base compensation by 25% under the
Corporation's Voluntary Stock Option Plan. Mr. Essman did not receive a
bonus for 1993. No options were granted to Mr. Essman in 1993 except
those for which he elected a salary reduction under the Corporation's
Voluntary Stock Option Plan. Since no bonus was earned by Mr. Essman in
1993, no additional dividend Growth Units were credited to his Deferred
Compensation Accounts in 1993. Mr. Essman did not participate in the
Corporation's Investment Growth Program in 1993, and, therefore, did
not receive a match of CPI stock.
Compliance with IRC Section 162(m)
At this time, the Committee does not anticipate payments in excess of
$1 million to any one executive, and, accordingly, has elected to defer
formulation of a policy regarding compliance under Section 162(m) of
the Internal Revenue Code until such time as it may be relevant.
All compensation actions taken in 1993 were in concert with the
principles identified in the Corporation's General Compensation Policy
described above. In particular, compensation awarded in 1993 furthers
the Compensation Committee's desire to shift emphasis from base
salaries to at-risk compensation which, in the Committee's opinion,
further aligns executive compensation with shareholder interests.
The overriding goal of CPI's pay-for-performance executive
compensation policy, as established by the Committee, is to strengthen
the dependence of executive compensation upon the long-term enhancement
of profitability and stockholder value.
THE CPI CORP. COMPENSATION COMMITTEE
Milford Bohm Nicholas Reding
Lee Liberman, Chair Robert Virgil
11
<PAGE> 14
COMPENSATION OF EXECUTIVE OFFICERS
<TABLE>
The following table sets forth the compensation of the named
executive officers for each of the last three years:
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------- ------------
SECURITIES
(3) UNDERLYING
(2) OTHER ANNUAL OPTIONS/ ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION SARS COMPENSATION
------------------------- ---- ------ ----- ------------ ---------- ------------
($) ($) ($) (#) ($)
(a) (b) (c) (d) (e) (f) (g)
<S> <C> <C> <C> <C> <C> <C>
Alyn V. Essman, Chairman 1993 581,250(1) 0 0 77,500(4) 192(9)
and Chief Executive Officer 1992 775,000 0 0 77,500(5) 360(9)
77,500(6)
1991 735,275 0 43,543(7)
3,448(8)
Russell Isaak, President 1993 400,000(1) 0 4,946 40,000(4) 192(9)
1992 500,000 0 12,728 50,000(5) 360(9)
50,000(6)
1991 426,557 0 24,953(7)
2,000(8)
Patrick J. Morris, Senior 1993 262,500(1) 0 0 35,000(4) 947(10)
Executive Vice President 1992 350,000 0 8,711 35,000(5) 1,115(11)
35,000(6)
1991 292,162 0 15,416(7)
1,370(8)
David E. April, Senior 1993 225,000(1) 0 24,485 30,000(4) 2,114(10)
Executive Vice President 1992 300,000 0 19,513 30,000(5) 1,115(11)
30,000(6)
1991 241,522 0 13,436(7)
1,296(8)
Barry C. Arthur, Executive 1993 135,000(1) 9,000 3,722 6,000(4) 1,755(10)
Vice President-Finance 1992 130,000 9,000 7,978 20,000(5) 958(11)
20,000(6)
1991 85,500 20,000 6,016(7)
555(8)
<FN>
- - -----
(1) Reflects voluntary salary reductions by the named executive
officers under the corporation's Voluntary Stock Option Plan (the
"VSOP"), which was approved by the stockholders on June 11, 1993.
The VSOP provides that officers electing such reductions be
awarded one stock option for every $2.50 in salary reduction.
Participating executives may elect a reduction of 5% to 25% of
their base salaries in exchange for the options. See footnote 4,
below, for corresponding award of options. Eleven officers other
than the named executives also participated in the VSOP in 1993.
(2) Amounts earned for the respective fiscal year, even if deferred
under the Corporation's Deferred Compensation and Stock
Appreciation Rights Plan.
(3) The amounts in this column represent above-market earnings on
deferred compensation paid during the fiscal year.
(4) Options awarded under the VSOP on June 11, 1993 become exercisable
three years after date of award at an exercise price of $18.375
and expire eight years after date of award.
(5) Options awarded on February 2, 1992 become exercisable four years
after date of award at an exercise price of $30.00 and expire six
years after date of award.
(6) Options awarded on February 2, 1992 become exercisable five years
after date of award at an exercise price of $35.00 and expire
seven years after date of award.
12
<PAGE> 15
(7) Options awarded on November 7, 1991 exercisable by one-third each
year commencing November 7, 1992 at an exercise price of $22.375
and expire four years after date of award.
(8) Options awarded on November 7, 1991 exercisable by one-third each
year commencing November 7, 1992 at an exercise price of $29.00
per share and expire four years after date of award.
(9) Life insurance premiums.
(10) Life insurance premiums of $192 plus employer contributions of
stock to the profit sharing plan in the following amounts: Morris-
$755; April-$1,922; and Arthur-$1,563.
(11) Life insurance premiums and employer contributions of stock to the
profit sharing plan, respectively, in the following amounts:
Morris-$360 and $755; April-$360 and $755; and Arthur-$293 and
$665.
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
The following table sets forth information concerning stock option
grants made in the last fiscal year to the individuals named in the
Summary Compensation Table:
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
% OF TOTAL
OPTIONS EXERCISE
(2) GRANTED TO OR BASE POTENTIAL REALIZED VALUE
OPTIONS EMPLOYEES IN PRICE EXPIRATION ASSUMED ANNUAL RATE OF STOCK
NAME GRANTED FISCAL YEAR ($/SHARE) DATE APPRECIATION FOR OPTION TERM
---- ------- ------------- --------- ---------- -------------------------------------------------
0% 5%(3) 10%(3)
(#) ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h)
<S> <C> <C> <C> <C> <C> <C> <C>
Alyn V. Essman......... 77,500 25.6% $18.375 6/11/01 0 178,250 901,325
Russell Isaak.......... 40,000 13.2% 18.375 6/11/01 0 92,000 465,200
Patrick J. Morris...... 35,000 11.5% 18.375 6/11/01 0 80,500 407,050
David E. April......... 30,000 9.9% 18.375 6/11/01 0 69,000 348,900
Barry C. Arthur........ 6,000 2.0% 18.375 6/11/01 0 13,800 69,780
All Stockholders(1).... n/a* n/a n/a n/a 0 8,351,323 144,902,771
All 27 Optionees....... 303,276 100% (2) (2) 0 293,147 2,994,686
Optionee Gain as % of
All Stockholder Gain.. n/a n/a n/a n/a 0 3.51% 2.07%
<FN>
- - -----
* not applicable
(1) Gain for all stockholders was determined based on the number of
shares outstanding and the opening price on June 11, 1993, the date
when the majority of options were granted, a price per share equal
to the average exercise price for all optionees, $20.12, and an
8-year term.
(2) Each non-qualified option awarded to the named executives was
granted on June 11, 1993 under the Company's Voluntary Stock Option
Plan (the "VSOP"). The options become exercisable three years after
the date of grant, remain exercisable for five additional years,
and then expire. Unexercised options become immediately exercisable
upon the occurrence of a Change of Control of the Corporation. If
the optionee's employment is terminated for cause, then the period
for exercising the options shall end (i) three months after the
third anniversary of the date of grant if such termination occurs
prior to such third anniversary, or (ii) three months after
termination of employment if such termination occurs after such
third anniversary. In addition, options were awarded to officers
other than the named executives. On June 11, 1993, 51,784 options
were awarded to executives not named in the table under the VSOP on
the same terms as set forth above. Options were also awarded under
the 1991 Stock Option Plan. On April 1, 1993, 20,000 options were
awarded at $30.00, vesting four years and expiring six years after
date of grant; 20,000 options were awarded at $35.00, vesting five
years and expiring seven years after date of grant; and a total of
18,972 options were awarded at $17.00, vesting in 25% increments
over the succeeding four years and expiring five years after date
of grant. On July 1, 1993, a total of 4,020 options were awarded at
$15.625, vesting in 25% increments over the succeeding four years
and expiring five years after date of grant.
(3) Pre-tax gain. The amounts shown for 5% and 10% appreciation are
projections required by SEC rules and are not intended to forecast
possible future appreciation, if any, of the stock price of the
13
<PAGE> 16
Company. The Company did not use an alternative formula for a grant
date valuation, as the Company is not aware of any formula which
will determine with reasonable accuracy a present value based on
future unknown factors. The market price used for calculating
potential realizable value for options awarded to the named
executives is the closing price listed in The Wall Street Journal
on June 10, 1993 of $14.00, which was the closing price on the last
business day preceding the grant of more than 80% of the awards.
The market price as of April 15, 1994 was 14.875. Based on this
value, the stock would have to increase at least 24% for an
optionee to realize a gain on exercise of the options. Gain
reflected in these columns does not consider initial purchase price
of $2.50 per option paid as a salary reduction by each optionee
under the VSOP.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
The following table sets forth information concerning option and SAR
exercises in the last fiscal year, and options and SARs remaining
unexercised at February 5, 1994, by the individuals named in the
Summary Compensation Table:
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
(1) UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED OPTIONS/SARS OPTIONS/SARS
ON EXERCISE AT FISCAL AT FISCAL
OF OPTIONS/ (2) YEAR-END (#) YEAR-END ($)
# OF SECURITIES VALUE EXERCISABLE/ EXERCISABLE/
NAME UNDERLYING SARS REALIZED UNEXERCISABLE UNEXERCISABLE
---- --------------- -------- ------------- --------------
($)
(a) (b) (c) (d) (e)
<S> <C> <C> <C> <C>
Alyn V. Essman.......................... 0/ - 31,326/170,665(3) n/a*
22,921 $2,082 10,781/0(4) n/a
Russell Isaak........................... 0/ - 17,970/108,983(3) n/a
12,753 1,161 6,296/0(4) n/a
Patrick J. Morris....................... 0/ - 11,192/75,594(3) n/a
7,168 657 4,312/0(4) n/a
David E. April.......................... 0/ - 9,822/64,910(3) n/a
5,286 492 4,392/0(4) n/a
Barry C. Arthur......................... 0/ - 4,380/42,191(3) n/a
2,379 221 1,824/0(4) n/a
<FN>
- - -----
* not applicable because options/SARs were not in-the-money
(1) Under the Deferred Compensation and Stock Appreciation Rights Plan,
SAR Units mature and become automatically payable after five years,
however, receipt of the value underlying the SARs may be deferred
by the executive at his election. SARs listed above matured and
were paid to all named executives on February 6, 1993. In addition,
SARs matured and were paid to Messrs. Essman, Isaak, and Morris on
February 8, 1993.
(2) The dollar value of an SAR Unit is determined as of the date the
SAR matures, and is equal to the amount, if any, by which the lower
of (i) the average fair market value for the six-month period
immediately preceding the date that the SAR Units mature ($17.843
for Units maturing February 6th and $17.848 for Units maturing
February 8th), or (ii) the fair market value as of November 6, 1991
($22.375), exceeds the initial value established by the
Compensation Committee ($17.75) multiplied by the number of SAR
Units credited to a participant's account. Based on this formula,
the value of the February 6 and February 8 SAR Units is $.093 and
$.098, respectively.
(3) Non-qualified stock options.
(4) SAR Units.
</TABLE>
14
<PAGE> 17
RETIREMENT PLAN
<TABLE>
The following table shows the estimated annual pension benefit
payable to a covered participant at normal retirement age (65) under
the Corporation's qualified Retirement Plan and Trust.
PENSION PLAN TABLE
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35 40
------------ -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$ 30,000.................. $3,000 $4,500 $ 6,000 $ 7,500 $ 9,000 $10,500 $12,000
50,000.................. 5,000 7,500 10,000 12,500 15,000 17,500 20,000
100,000.................. 5,000 7,500 10,000 12,500 15,000 17,500 20,000
150,000.................. 5,000 7,500 10,000 12,500 15,000 17,500 20,000
250,000.................. 5,000 7,500 10,000 12,500 15,000 17,500 20,000
</TABLE>
The Corporation maintains a defined benefit Retirement Plan (the
"Plan") for all qualifying employees of the Corporation. Remuneration
in the Pension Plan Table includes annual base salary and bonus as
reported in the Summary and Compensation Table; executive earnings in
excess of $50,000 are not included in calculation of the annual
benefits payable under the Plan. As of the end of the 1993 fiscal year,
the years of credited service for purposes of computing retirement
benefits under the Plan for the named executives are as follows: Alyn
V. Essman-37, Russell Isaak-21, Patrick J. Morris-8, David E. April-30,
and Barry C. Arthur-28.
The Plan entitles a participant to a normal monthly retirement
benefit upon retirement after age 65 equal to 1% of average monthly
gross earnings from and after January 1, 1985, multiplied by the number
of years of the participant's service, provided, however, that
compensation in excess of $50,000 in any year is not counted for
purposes of determining such benefits. Alternatively, a participant may
elect to convert his normal form of benefit to a Contingent Annuitant
Option, which provides for an actuarially adjusted retirement benefit
payable to the participant during his lifetime and for the continuation
of benefit payments to the beneficiary after the participant's death,
or an Option for Life Annuity with Guaranteed Number of Monthly
Payments, which provides for an actuarially adjusted retirement benefit
payable to the participant during his life with a guaranty that not
less than a guaranteed number of monthly retirement benefit payments
will be paid first to the participant and then to his beneficiary. The
Plan provides for a lesser benefit for early retirement beginning at
age 55. Benefits are fully vested after five years of service. The
Corporation periodically makes actuarially determined contributions to
the Plan. No deductions are made for social security benefits.
The Named Executive Officers are also entitled to receive
supplemental retirement benefits pursuant to their employment
agreements, as discussed more fully below.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
During fiscal year 1993, the Corporation employed the named
executives under employment agreements that establish base
compensation, bonus and remuneration in the event of a Change of
Control. Under these agreements, if the Corporation terminates an
employee's employment other than for cause before a Change of Control,
the Corporation is obligated to pay the employee two years' base
compensation over the two year period. The Corporation has no such
obligation if the employee resigns or is terminated for cause. If the
Corporation terminates an employee's employment other than for cause
after a Change of Control, the Corporation must pay the employee a lump
sum equal to two years' base compensation. In the event the named
executive officers are terminated (other than for cause) during fiscal
1994 as a result of a Change of Control, the executives would receive
the following lump sum payments: Alyn V. Essman-$1,550,000; Russell
Isaak-$1,000,000; Patrick J. Morris-$700,000; David E. April-$600,000;
and Barry C. Arthur-$300,000.
15
<PAGE> 18
If a Change of Control occurs but the employee is not terminated, he
is to continue in a position comparable to that held before the change.
The employee's base salary cannot be reduced at any time during the
term of the agreement, and after a Change of Control the employee's
bonus cannot be less than the highest bonus the employee received
during any of the three completed fiscal years preceding the Change of
Control. The employee must also be entitled to continue to participate
in compensation plans and programs and benefit plans that are at least
equivalent to those provided by the Corporation before the Change of
Control.
Under their employment agreements, the named executive officers are
entitled to receive supplemental retirement benefits equal to 40% of
final base salary not to exceed $100,000 annually for ten years. The
Corporation's aggregate liability for these benefits will be offset in
part by the proceeds of life insurance. The Corporation made insurance
premium payments in fiscal year 1993 of $19,429, $9,730, $12,220,
$11,239, and $16,302 on behalf of Messrs. Essman, Isaak, Morris, April,
and Arthur, respectively. Beneficiaries of a named executive officer
who dies receive annually 40% of the executive's final base salary not
to exceed $100,000 until the later of (i) the date he would have
attained age 65, or (ii) ten years after the date of his death. If the
officer retires at age 65 or after, he receives annually 40% of his
final base salary not to exceed $100,000 for ten years. An officer who
becomes disabled receives annually, in addition to the amount payable
on death or retirement, 40% of his final base salary not to exceed
$100,000 until the earlier of (i) the date of his death or (ii) the
date he attains age 65. Supplemental retirement, death and disability
benefits are pro rated if the qualifying event occurs prior to the
executive's tenth anniversary of employment by the Company. Mr. Bohm, a
director of the Corporation and a retired officer, received payment of
$100,000 under this plan during fiscal 1993.
Furthermore, certain of the Corporation's employee benefits plans
provide for the acceleration of the payment of certain benefits upon a
Change of Control, including the Corporation's Restricted Stock Plan
and Deferred Compensation and Stock Appreciation Rights Plan. The
employment agreements provide that if such accelerated benefits plus
the amount payable under the employment agreement in the event of a
Change of Control result in the imposition of an excise tax under
Section 4999 of the Internal Revenue Code or any similar tax, the
amount of such tax shall be added to the amount paid the employee under
the agreement. The amount of this additional payment is to be
determined by an independent certified public accounting firm selected
by members of the Corporation's Board of Directors who are Continuing
Directors as defined in the Corporation's Certificate of Incorporation.
(Continuing directors are those persons who were directors in 1987 or
were nominated by Continuing Directors and who are not affiliates or
associates of the person or entity that effects the Change of Control.)
16
<PAGE> 19
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN*
CPI CORP., S&P 500 STOCK INDEX, AND RUSSEL 2000
[COMPARISON OF FIVE-YEAR CUMULATIVE RETURN*]
<TABLE>
<CAPTION>
1/89 1/90 1/91 1/92 1/93 1/94
<S> <C> <C> <C> <C> <C> <C>
CPI $100 107 137 125 99 79
S&P 500 $100 114 124 152 168 190
Russell 2000 $100 102 98 143 162 192
</TABLE>
The Russel 2000 index was selected because it encompasses similarly-
sized companies to CPI, as well as diversified companies, like CPI.
[FN]
- - -----
*Total return assumes reinvestment of dividends and $100 invested as of
the measurement date in the Corporation's common stock, the S&P 500
and the Russel 2000. The measurement dates for purposes of determining
the stock price for CPI Corp. correspond to the fiscal year-end, as
follows: February 4, 1989, February 2, 1990, February 1, 1991, January
31, 1992, February 5, 1993, and February 4, 1994. The corresponding
measurement dates for the S&P 500 and the Russel 2000 are January 31,
1989-94.
RATIFICATION OF INDEPENDENT AUDITORS (PROXY ITEM NO. 2)
The Board of Directors has selected KPMG Peat Marwick, independent
certified public accountants, to audit the accounts of the Corporation
and its subsidiaries for its current fiscal year ending February 4,
1995. Although the appointment of independent public accountants is not
required to be approved by the stockholders, the Board believes that
stockholders should participate in the appointment through
ratification. If a majority of the stockholders voting do not ratify
the appointment, the Board will reconsider the appointment. No member
of KPMG Peat Marwick, or any associate thereof, has any financial
interest in the Corporation or in its subsidiaries.
A representative of KPMG Peat Marwick will be present at the Meeting
and will be given the opportunity to make a statement and to answer any
questions any stockholder may have with respect to the financial
statements of the Corporation for the fiscal year ended February 5,
1994.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK AS INDEPENDENT AUDITORS FOR FISCAL
1994.
The affirmative vote of the majority of the shares present in person
or represented by proxy at the Annual Meeting is required for
ratification of this appointment.
17
<PAGE> 20
OTHER INFORMATION
Proxies, ballots, and voting tabulations identifying stockholders are
secret and will not be available to anyone, except as necessary to meet
legal requirements.
The Corporation's Annual Report to stockholders, including financial
statements, was mailed simultaneously with this Proxy Statement on or
about May 6, 1994, to stockholders of record as of April 25, 1994.
A COPY OF THE CORPORATION'S ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION ON FORM 10-K MAY BE OBTAINED WITHOUT CHARGE FROM
THE SECRETARY OF THE CORPORATION UPON WRITTEN REQUEST TO HER AT 1706
WASHINGTON, ST. LOUIS, MISSOURI 63103.
By Order of the Board of Directors,
/s/ Jane E. Nelson
JANE E. NELSON
Secretary and General Counsel
Dated: May 6, 1994
18
<PAGE> 21
CPI CORP.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 7, 1994
P The undersigned, revoking all previous proxies, hereby appoints Alyn
V. Essman and Russell Isaak or either of them as Proxy or Proxies of
R the undersigned, each with the power to appoint his substitute, to
vote, as designated below, all of the shares of Common Stock of CPI
O Corp. (the "Corporation") held of record by the undersigned on April
25, 1994, at the annual meeting of stockholders to be held on June 7,
X 1994, at CPI Corp., 1706 Washington, St. Louis, Mo. 63103, and at any
adjournment thereof.
Y
ITEM 1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to
(except as marked to the vote for all nominees
contrary below) listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below.)
Milford Bohm, Alyn V. Essman, Russell Isaak, Mary Ann Krey, Lee M.
Liberman, Nicholas L. Reding, Martin Sneider, Robert L. Virgil
ITEM 2. RATIFICATION OF APPOINTMENT OF KPMG PEAT MARWICK AS THE
CORPORATION'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
/ / FOR / / AGAINST / / ABSTAIN
In their sole discretion, the Proxies are authorized to vote upon
such other business as may properly come before the annual meeting or
any adjournment thereof.
(CONTINUED, AND TO BE SIGNED, ON THE OTHER SIDE.)
<PAGE> 22
THIS PROXY WILL BE VOTED AS SPECIFIED IN THE SPACES PROVIDED THEREFOR
OR, IF NO SUCH SPECIFICATION IS MADE, IT WILL BE VOTED FOR THE ELECTION
OF DIRECTORS AND FOR ITEM 2.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CPI CORP.
SIGN
HERE
------------------------------
(PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON)
SIGN
HERE
----------------------------
EXECUTORS, ADMINISTRATORS,
TRUSTEES, ETC. SHOULD SO
INDICATE WHEN SIGNING
DATED
--------------------------
<PAGE> 23
APPENDIX
Page 17 of the printed proxy contains a Comparison of Five-Year
Cumulative Return graph. The graph has been included in a format that
Edgar can receive.
