<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 / / Confidential, for Use of the
Commission Only (as permitted by
/X/ Definitive Proxy Statement Rule 14a-6(e)(2))
/ / 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)
----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
2) Aggregate number of securities to which 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.:
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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 5, 1995
DEAR CPI CORP. STOCKHOLDER:
You are cordially invited to attend the 1995 Annual Meeting of
Stockholders of CPI Corp.
The meeting will be held on Tuesday, June 13, 1995, at 10:00 a.m.,
(CDT) 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 13, 1995, 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 LLP as the Corporation's independent certified public
accountants for the fiscal year ending February 3, 1996;
3. To act upon a proposed annual incentive program for key executives
to further strengthen the alignment of executive compensation with
shareholder interests; and
4. 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 24, 1995, 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 5, 1995
<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 13, 1995
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement and the accompanying Proxy are being mailed
beginning May 5, 1995, 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 13, 1995, at 10:00 a.m.,
central daylight savings time, at CPI Corp., 1706 Washington Avenue,
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 Boatmen's
Trust Company, 510 Locust, P.O. Box 14764, St. Louis, Missouri
63178-4764, 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 $3,000 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 1996 Annual Meeting must be received by
the Company no later than January 5, 1996 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 24, 1995, 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 24, 1995,
13,862,941 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
1992, 1993 and 1994 annual meetings 85.5%, 93.7% and 84.3%
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;
(2) THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS
INDEPENDENT AUDITORS FOR THE CORPORATION'S FISCAL YEAR 1995; AND
(3) APPROVAL OF AN ANNUAL INCENTIVE PROGRAM FOR KEY EXECUTIVES TO
FURTHER STRENGTHEN THE ALIGNMENT OF EXECUTIVE COMPENSATION WITH
SHAREHOLDER INTERESTS.
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. All 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, 73
personal investments
Alyn V. Essman 1968 Chairman and Chief Executive Officer of 63
the Corporation
Russell Isaak 1992 President of the Corporation 52
Mary Ann Krey 1994 Chief Executive Officer, Krey Distributing Co., an 47
Anheuser-Busch beer distributor in St. Charles and Lincoln Counties,
Missouri
Lee M. Liberman 1982 Chairman Emeritus of the Board of Laclede Gas 73
Company, a St. Louis, Missouri public utility
3
<PAGE> 6
<CAPTION>
DIRECTOR
NAME SINCE PRINCIPAL OCCUPATION AGE
---- -------- -------------------- ---
<C> <C> <S> <C>
Nicholas L. Reding 1992 Vice Chairman of Monsanto Company, a St. Louis, 60
Missouri based manufacturer of chemicals, pharmaceuticals, and other
products
Martin Sneider 1994 Co-chairman of the Executive Committee of Edison 52
Brothers Stores, Inc., a St. Louis, Missouri based company that
operates specialty chains nationwide
Robert L. Virgil 1982 Principal, Edward D. Jones, a full service retail 60
brokerage firm located in St. Louis, Missouri
</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 Chief Executive Officer 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 is Chairman Emeritus of Laclede Gas Company, a St.
Louis, Missouri public utility. He 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., INTERCO Incorporated and DT Industries.
Mr. Reding is Vice Chairman of Monsanto Company, a St. Louis,
Missouri based manufacturer of chemicals, pharmaceuticals and other
products distributed worldwide. 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 is Co-chairman of the Executive Committee of Edison
Brothers Stores, Inc., a St. Louis, Missouri based company that
operates numerous specialty chains nationwide. He served as President
of that company from 1987 until 1995 and has held various positions
within Edison Brothers since 1968. Mr. Sneider has served on Edison
Brothers' Board of Directors since 1978. Mr. Sneider also serves as a
director of Angelica Corporation and Mercantile Trust Company, N.A. He
is Chairman of the Board of Trustees of St. Louis Children's Hospital.
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 Washington University faculty in 1961. He also serves as a
director of General American Life Insurance Company and Maritz, Inc.
4
<PAGE> 7
EXECUTIVE OFFICERS
<TABLE>
Following is a list of all individuals who served as Corporate
Executive Officers during 1994:
<C> <S>
Alyn V. Essman (63)............... 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 (52)................ 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 (52)............... Senior Executive Vice President. Mr. April joined
the Corporation 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 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 (55)............ Senior Executive Vice President. Mr. Morris
joined the Corporation 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 (52).............. Executive Vice President-Finance and Chief
Financial Officer. Mr. Arthur joined the
Corporation 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. Mr. Arthur was
appointed to his current position effective
February 1992 and is a member of the Executive
Committee of officers.
Jane E. Nelson (45)............... Secretary and General Counsel. Ms. Nelson joined
the Corporation in 1988 as Assistant General
Counsel and subsequently 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.
Fran Scheper (49)................. Executive Vice President-Human Resources. Ms.
Scheper joined the Corporation 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
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.
</TABLE>
<TABLE>
<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 New South Capital Management 1,865,417<F1> 13.4%
755 Crossover Lane, Ste. 233
Memphis, Tennessee 38117
Common Stock FMR Corp. 1,616,200<F2> 11.8%
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock Systematic Financial Management, Inc.
("Systematic"), Cash Flow Investers, Inc. ("CFI"), and
Kenneth S. Hackel ("Hackel") 1,312,579<F3> 9.45%
Two Executive Drive
Fort Lee, New Jersey 07024
Common Stock Dalton, Greiner, Hartman, Maher & Co. 787,800<F4> 5.75%
630 Fifth Ave., Ste. 3425
New York, New York 10111
<FN>
- -----
<F1> New South Capital Management, an Investment Advisor registered
under Sec. 203 of the Investment Advisers Act of 1940, was the
owner of 1,865,417 shares as of December 31, 1994, representing
approximately 13.4% of the total shares outstanding on that day.
New South Capital Management has sole voting power and sole
dispositive power for all of the shares.
<F2> As reported on its Schedule 13G dated February 13, 1995, FMR Corp.,
a parent holding company in accordance with Section
240.13d-1(b)(ii)(G), was the owner of 1,616,200 shares,
representing approximately 11.8% of the total shares outstanding on
that day. FMR has sole voting power as to 415,400 shares, shared
voting and dispositive power as to none of the shares and sole
dispositive power as to all the shares reported.
<F3> As reported as a Group in accordance with Rule
240.13d-1(b)(1)(ii)(H) on their Schedule 13D, Amendment No. 2,
dated December 2, 1994, Systematic beneficially owns 1,307,079
shares, or approximately 9.41% of the total shares outstanding on
that day. CFI beneficially owns 5,500 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 1,312,579
shares owned in the aggregate by Systematic and CFI, representing
approximately 9.45% of the total shares outstanding on that day. No
member of the Group has sole voting power with respect to any of
the shares. Systematic shares voting power with respect to 101,335
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
1,307,079 shares and CFI has sole dispositive power with respect to
5,500 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.
<F4> As reported on its Schedule 13G, Amendment No. 2, dated February 2,
1995, Dalton, Greiner, an Investment Advisor registered under Sec.
203 of the Investment Advisers Act of 1940, was the beneficial
owner of 787,800 shares, representing approximately 5.75% of the
total shares outstanding on that day. Dalton, Greiner has sole
voting power for 547,300 of the shares, shared voting power for
none of the shares and sole dispositive power for all 787,800
shares.
</TABLE>
6
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
Information is set forth below regarding beneficial ownership of
Common Stock of the Company as of April 24, 1995, by (i) each person
who is a director and nominee; (ii) each executive officer named in the
Summary Compensation Table on page 13; 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.
<TABLE>
<CAPTION>
(3)
AMOUNT AND
NATURE OF
(1) (2) BENEFICIAL (4)
TITLE NAME OF OWNERSHIP PERCENT
OF CLASS BENEFICIAL OWNER <Fa><Fb> OF CLASS
-------- ---------------- ---------- --------
<C> <S> <C> <C>
Common Stock David E. April............................................... 61,296<Fc> .44
Common Stock Barry C. Arthur.............................................. 12,305 .09
Common Stock Milford Bohm................................................. 30,000 <F*>
Common Stock Alyn V. Essman............................................... 371,142<Fd> 2.69
Common Stock Russell Isaak................................................ 153,980 1.12
Common Stock Mary Ann Krey................................................ 1,000 *
Common Stock Lee Liberman................................................. 400 *
Common Stock Patrick J. Morris............................................ 41,500<Fe> .30
Common Stock Nicholas Reding.............................................. 1,200 *
Common Stock Martin Sneider............................................... 500 *
Common Stock Robert Virgil................................................ 600 *
Common Stock 21 Directors and Executive Officers as a Group............... 786,015<Ff> 5.62
<FN>
- -----
<F*> Percentage owned by director does not exceed one percent.
<Fa> Includes the following shares which such persons have the right to
acquire within 60 days after April 24, 1995 upon the exercise of
employee stock options: Mr. April: 14,732; Mr. Arthur: 6,571; Mr.
Essman: 46,991; Mr. Isaak: 26,953; Mr. Morris: 16,786; and
directors and executive officers as a group: 188,586. The exercise
prices for all options exercisable within 60 days range from
$22.375 to $29.00. Market price as of April 24, 1995 was $16.625.
<Fb> Excludes 5,090 shares for Mr. April; 2,108 shares for Mr. Arthur;
79 shares for Mr. Isaak; 998 shares for Mr. Morris; and 20,586
shares for 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.
<Fc> Excludes 70 shares beneficially owned by Mr. April's wife in an
IRA, as to which he expressly disclaims beneficial ownership.
<Fd> Excludes 40,000 shares beneficially owned by Mr. Essman's wife, as
to which he expressly disclaims beneficial ownership.
<Fe> Excludes 1,000 shares beneficially owned by Mr. Morris' daughter as
to which he expressly disclaims beneficial ownership.
<Ff> Excludes 44,622 shares beneficially owned by members of the
immediate family of certain executive officers, as to which those
executives expressly disclaim beneficial ownership.
</TABLE>
7
<PAGE> 10
BOARD AND COMMITTEE MEETINGS
During the fiscal year ended February 4, 1995 ("fiscal year 1994"),
the Corporation's Board of Directors met 13 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 four committees: the Audit, the
Compensation, the Nominating and Governance, and the Finance and
Investment Committees. The Audit Committee's members are Messrs. Virgil
(Chairman) and Bohm and Ms. Krey. 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.
The Compensation Committee's members are Messrs. Liberman (Chairman),
Reding and Sneider. The Committee held nine meetings during the last
fiscal year and acted by unanimous consent on three occasions. The
Compensation Committee reviews annually the performance of principal
officers, establishes annual salaries and incentives for principal
officers and reviews periodically compensation and benefit programs.
The Compensation Committee also serves as the Stock Option Committee
under the Corporation's 1991 Stock Option Plan and the Voluntary Stock
Option Plan.
The Nominating and Governance Committee's members are Messrs. Reding
(Chairman) and Liberman and Ms. Krey. This Committee met twice in
fiscal year 1994. The Nominating Committee is charged with nominating
qualified members for the Corporation's Board of Directors and
monitoring developments in governance of publicly held companies. 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.
The Finance and Investment Committee, whose members are Messrs. Bohm
(Chairman), Sneider and Virgil, met two times during fiscal year 1994.
This Committee reviews dividend policy, financing plans, investment
policy and investment performance. It also makes recommendations to
management as necessary to insure that the Company's pension and profit
sharing plans meet the business needs of the Company and are adequately
funded.
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 or she
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 component, 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 or her retainer, fees, 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.
8
<PAGE> 11
During fiscal year 1994, Mr. Liberman deferred a total of $31,250 in
retainer and fees and received dividend equivalents in the amount of
$7,700. Mr. Liberman has elected to defer his retainer and fees for
fiscal year 1995 and has received dividend equivalents in the amount of
$2,189 during the current fiscal year. During fiscal year 1994, Mr.
Reding deferred $29,550 in retainer and fees and received dividend
equivalents in the amount of $543. For the current year Mr. Reding has
elected to defer his retainer only and has received dividend
equivalents in the amount of $345. In fiscal year 1994, Mr. Virgil
deferred $12,650 in retainer and fees and received dividend equivalents
in the amount of $246. Mr. Virgil has elected to defer 50% of his
retainer and fees for fiscal year 1995 and has received dividend
equivalents in the amount of $148 during the current fiscal year. In
fiscal 1995 Mr. Sneider elected not to defer any fees. Mr. Bohm and Ms.
Krey elected to defer all of their retainer and fees. Growth Units on
deferred amounts were credited at $12.01 per unit for deferrals during
fiscal year 1994 and will be credited at $12.12 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 1994, 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 Rights, a director
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.
During fiscal year 1994, 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 $18.27 per Right and, accordingly, 304 Growth
Units were credited to Mr. Liberman's deferred compensation account.
The total number of Growth Units was determined by dividing the dollar
value of his deferral, $3,654, by the book value, $12.01. Also during
fiscal year 1994, 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 $18.27 per Right; he received a payment of
$3,654.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
In fiscal year 1994 the following transactions were inadvertently
reported late as a result of clerical error: Mr. Morris reported 1,000
shares purchased by his daughter who was away at college on April 15,
1994, five days after the reporting deadline. Another 5,000 shares
purchased by Mr. Morris on January 31, 1995, were not reported until
filing of his Form 4 for February 1995, transactions because the
original purchase date was erroneously thought to be February 1, 1995.
Options awarded to Ed Chase upon his appointment to the Company's
Executive Committee were not reported on his initial Form 3. Those
options were reported on the Form 4 filed by Mr. Chase on December 9,
1994, which was the first report due subsequent to learning of the
error. The Form 3 required of Ted deBuhr upon becoming a reporting
person was filed April 29, 1994, nineteen days after the filing
deadline.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served as members of the Compensation
Committee of the Board of Directors during the last fiscal year: Lee
Liberman (Chairman), Nicholas Reding and Martin Sneider. Milford Bohm
and Robert Virgil served on the Compensation Committee until July 7,
1994. Mr. Bohm was an officer of the Corporation until his retirement
in February, 1988.
9
<PAGE> 12
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 reflect contributions to corporate
performance and enhance total return to stockholders. Executive
compensation packages include base salary, annual performance-based
bonus, stock options, restricted stock, company contributions to a
stock ownership program and earnings on Growth Units from compensation
deferred from prior years under the Corporation's deferred compensation
program. The Board, on the recommendation of the Compensation
Committee, continued to adhere to the following objectives in awarding
executive compensation in 1994, 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.
All compensation actions taken in 1994 were in concert with the
principles identified in the Corporation's General Compensation Policy
described above. In particular, compensation awarded in 1994 furthers
the Compensation Committee's desire to shift emphasis from base
salaries to at-risk compensation which, in the Committee's opinion,
strengthens the alignment between executive compensation and
shareholder interests.
To help ensure that the Corporation's Executive Compensation
practices continue to serve the objectives set forth above, in 1994 the
Compensation Committee retained an independent consultant, Towers
Perrin, to evaluate key components of CPI's executive compensation
package. The review included an assessment of the effectiveness of the
Corporation's compensation strategy and a comparison of CPI's executive
base salaries, bonuses and long-term incentives to market data for
general industry, consumer products and specialty retail organizations.
Upon completion of their review, Towers Perrin made a number of
recommendations to the Committee.
At the end of fiscal year 1994, the Committee adopted a fundamental
restructuring of key components of CPI's executive compensation package
to further strengthen the link between executive compensation and
performance and the alignment with shareholder value. Those changes
included a substantial decrease in base salaries, a three year freeze
on such salaries at the reduced level, increased bonus potential
related to earnings improvement and a grant of market value restricted
stock. With these changes, more than 50% of the executives'
compensation may be at-risk if maximum bonuses are earned and the value
of the restricted stock increases to reflect the performance of the
Company as earnings improve enabling maximum bonus targets to be
achieved. This restructuring of compensation reflects the Committee's
belief that the executives' success must depend on the success of the
Company for the benefit of all shareholders.
Base Salary
The base salaries paid to the Corporation's executives are based on a
number of factors, including an evaluation of the individual's
effectiveness in performing his or her responsibilities, comparison to
salaries paid by other companies to their executives who hold similar
positions, internal equity, tenure in position, overall responsibility,
knowledge, and special assignments. The Committee retained KPMG Peat
Marwick LLP in 1992 to evaluate the base salaries paid to the Company's
executives as compared to those paid to top executives of 50 service
companies with revenue of $200 to $500 million. These companies were
selected because they had annual revenues comparable to CPI and operate
in the same service sector as CPI. Salaries of CPI executive officers
were at the high end of the comparable range as
10
<PAGE> 13
of the date of comparison. Accordingly, base salaries of the
Corporation's top executives were frozen at 1992 levels through 1994.
Additionally, the Chief Executive Officer and the four named executive
officers voluntarily reduced their 1994 base salaries in the aggregate
amount of $471,250 pursuant to the Corporation's Voluntary Stock Option
Plan described below.
<TABLE>
In order to further align executive compensation closely with
stockholders' interests, base salaries paid to the Chairman and Chief
Executive Officer and to members of the Office of the President (the
President and two Senior Executive Vice Presidents) have been reduced,
effective February 5, 1995, by a total of $400,000 annually and frozen
for a period of three years. The following table reflects base salaries
in 1994 (before voluntary salary reductions) and annual base salaries
for 1995 through 1997:
<CAPTION>
NAME 1994 BASE 1995-1997 BASE
---- --------- --------------
<S> <C> <C>
Alyn Essman......................................................... $775,000 $600,000
Russell Isaak....................................................... $500,000 $400,000
Patrick J. Morris................................................... $350,000 $300,000
David E. April...................................................... $300,000 $225,000
</TABLE>
Annual Bonus
With the Company's achievement of pre-determined earnings targets,
performance bonuses were earned in fiscal year 1994 for the first time
in three years. In conjunction with lowering base salaries and
increasing emphasis on performance-based compensation in 1995 and in
furtherance of efforts to align stockholder and executive interests,
the Compensation Committee increased the bonus potential for the
Chairman and Chief Executive Officer and executives in the Office of
the President. This restructuring of base salary and annual incentives
provides for total compensation comparable to 1994 but with a
significantly greater emphasis on performance-based compensation. If
the Company earnings do not reach target levels, no bonuses will be
earned and the aforementioned executives will lose total cash compensation
in an amount equivalent to the reduction in their base salaries. The
Committee is recommending shareholder approval of its proposal to
increase the at-risk portion of total executive compensation by
increasing bonus potential for the Chairman and Chief Executive Officer
and for members of the Office of the President, commencing with fiscal
year 1995.
Restricted Stock
At the end of fiscal year 1994, the Committee granted restricted
stock to the Chairman and Chief Executive Officer and the members of
the Office of the President in connection with their permanent
reduction of base salaries and increased emphasis on performance-based
compensation. The restricted stock will vest in increments of one-third
each year over the next three years. This grant reflects the
Committee's belief that the exchange of future salary for restricted
stock and performance-based compensation strengthens the link between
shareholder value and executive performance.
Stock Options
The named executive officers were awarded options in 1994 under the
Corporation's 1991 Stock Option Plan as part of a one-time long-term
incentive grant to all executives of the Corporation and its operating
divisions. Stock options were granted to the named executive officers
and other senior officers in 1994 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. Executives could participate by
reducing their salaries by 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, while reducing
compensation expense. For 1994, nineteen executive officers elected
total salary reductions of $659,708. Of that amount, the base salaries
paid to the Chief Executive Officer and the four named executive
officers were reduced by a total of $471,250. A total of 263,883
options with an exercise price of $15.50 were granted to the nineteen
executives as a result of their salary reductions, of which 188,500
11
<PAGE> 14
were granted to the Chairman and 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.
Options granted under this plan vest three years after the date of
award and expire five years later.
Growth Units on Deferred Compensation
Under the Corporation's Deferred Compensation and Stock Appreciation
Rights Plan, which was approved by shareholders in 1992, an executive
who elects to defer up to 50% of his or her annual incentive bonus
receives Growth Units. Executives earn appreciation on these Growth
Units based on increases in the Corporation's book value, as adjusted
for any dilutive effect of the Company's repurchase of stock.
Executives also receive dividend equivalents at the same rate that
dividends are paid to stockholders. Since no bonuses were earned for
1993 (and payable in 1994), no Growth Units were issued to the Chief
Executive Officer or the four named executives.
Company Contributions to Stock Ownership Program
All employees, including the named executives, who meet minimum age
and service requirements, are eligible to contribute up to 15% 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 corporate stock in an amount
equal to 50% of the participant's contributions. Although each of the
named executive officers was eligible to participate in the Program,
only Mr. Morris, Mr. April and Mr. Arthur participated in 1994.
Compensation of the Chief Executive Officer
Mr. Essman's compensation is based on the policies and programs
described above for all executives and includes base salary and annual
and long-term incentives. His base salary was established under his
employment agreement and is based on the Board's evaluation of his
effectiveness in performing his responsibilities. In 1994, Mr. Essman's
base salary remained frozen at the level established in 1992; however,
he elected to reduce his base compensation by 25% under the
Corporation's Voluntary Stock Option Plan. Pursuant to that voluntary
salary reduction, Mr. Essman received 77,500 options with an exercise
price of $15.50. As part of a one-time long-term incentive grant of
options to 95 executives and managers, Mr. Essman received 43,662
options with an exercise price of $17.75. Pursuant to the
aforementioned significant reduction of his base salary for fiscal
years 1995 through 1997 (as described on page 11) and increased
emphasis on at-risk compensation, Mr. Essman received 47,297 shares of
restricted stock at the end of fiscal year 1994.
Compliance with IRC Section 162(m)
The Compensation Committee's current intent is to qualify all
compensation paid to executives for current income tax deductibility
pursuant to Section 162(m) of the Internal Revenue Code. Under that
section, subject to specific exclusions, compensation in excess of $1
million paid to any executive will not be deductible for income tax
purposes except to the extent such compensation is performance-based
compensation awarded by an independent committee of directors pursuant
to a plan approved by shareholders.
While the Compensation Committee believes this limitation will have
limited application to compensation paid to the Company's executives,
the overall compensation program, as earlier described, has been
designed to be heavily related to the Corporation's earnings
performance, and the annual incentive component is being submitted for
shareholder approval at the 1995 Annual Meeting of Shareholders.
Approval of this program by shareholders should enable the Company to
avail itself of deductions for all executive compensation paid in the
foreseeable future. See pages 19 and 20 for additional information
regarding the plan. The Board has also adopted a new salary deferral
plan under which key executives may defer base salary on the same terms
they may now defer bonuses pursuant to the Corporation's Deferred
Compensation and Stock Appreciation Rights Plan.
THE CPI CORP. COMPENSATION COMMITTEE
Lee Liberman, Chair Nicholas Reding Martin Sneider
12
<PAGE> 15
COMPENSATION OF EXECUTIVE OFFICERS
<TABLE>
The following table sets forth the compensation of the named
executive officers for each of the last three years:
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- -----------------------
<F4> SECURITIES
<F3> RESTRICTED UNDERLYING
<F1> OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) SARS COMPENSATION
------------------------- ---- ------ ----- ------------ ---------- ---------- ------------
($) ($) ($) ($) (#) ($)
(a) (b) (c) (d) (e) (f) (g) (h)
<S> <C> <C> <C> <C> <C> <C> <C>
Alyn V. Essman, Chairman 1994 581,250<F1> 87,187<F2> 9,594 656,250 77,500<F5> 167 <F11>
and Chief Executive Officer 43,662<F6>
1993 581,250<F1> 0 0 0 77,500<F8> 192 <F11>
1992 775,000 0 0 0 77,500<F9> 360 <F11>
77,500<F10>
Russell Isaak, President 1994 400,000<F1> 56,250<F2> 0 375,000 40,000<F5> 167 <F11>
19,718<F6>
4,225<F7>
1993 400,000<F1> 0 4,946 0 40,000<F8> 192 <F11>
1992 500,000 0 12,728 0 50,000<F9> 360 <F11>
50,000<F10>
Patrick J. Morris, Senior 1994 262,500<F1> 39,375<F2> 0 187,500 35,000<F5> 1,519 <F12>
Executive Vice President 19,718<F6>
4,225<F7>
1993 262,500<F1> 0 0 0 35,000<F8> 539 <F13>
1992 350,000 0 8,711 0 35,000<F9> 1,115 <F14>
35,000<F10>
David E. April, Senior 1994 225,000<F1> 33,750<F2> 18,977 281,250 30,000<F5> 3,065 <F12>
Executive Vice President 16,901<F6>
1993 225,000<F1> 0 24,485 0 30,000<F8> 2,053 <F13>
1992 300,000 0 19,513 0 30,000<F9> 2,282 <F14>
30,000<F10>
Barry C. Arthur, Executive 1994 135,000<F1> 55,478<F2> 0 34,688 6,000<F5> 2,614 <F12>
Vice President-Finance 8,451<F6>
1993 135,000<F1> 9,000 3,722 0 6,000<F8> 1,577 <F13>
1992 130,000 9,000 7,978 0 20,000<F9> 2,149 <F14>
20,000<F10>
<FN>
- -----
<F1> 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 awards officers electing such reductions 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 5, below, for corresponding award of
options.
<F2> Cash amounts earned for the respective fiscal year, even if
deferred under the Corporation's Deferred Compensation and Stock
Appreciation Rights Plan. The executives also earned options for
1994 performance as follows: Mr. Essman-13,136; Mr. Isaak-8,475;
Mr. Morris-5,932; Mr. April-5,085 and Mr. Arthur-2,542. Although
earned in 1994, those options were awarded as of the first day of
fiscal year 1995. They vest February 5, 1999, with an exercise
price of $14.75, and expire February 5, 2001.
<F3> The amounts in this column represent above-market earnings on
deferred compensation paid during the fiscal year.
<F4> Amounts awarded in 1994 reflect total market value of restricted
stock holdings of each named executive as of the date of award.
The number of shares awarded and the respective aggregate value as
of the close of fiscal year 1994 were: Mr. Essman-47,297
($697,631); Mr. Isaak-27,027 ($398,648); Mr. Morris-13,514
($199,332); Mr. April-20,270 ($298,983); and Mr. Arthur-2,500
($36,875). Restricted stock vests as follows: one-third on
February 2, 1996, one-third on February 2,
13
<PAGE> 16
1997, and the final one-third on February 2, 1998. Fair Market
Value as of the close of fiscal year 1994 was $14.75 per share.
Dividends will be paid on the restricted stock.
<F5> Options awarded under the VSOP on February 6, 1994 become
exercisable three years after the date of award at an exercise
price of $15.50 and expire eight years after the date of award.
One option awarded for each $2.50 voluntary stock reduction.
<F6> Options awarded on August 11, 1994 become exercisable four years
after date of award at an exercise price of $17.75 and expire
eight years after date of award.
<F7> Options awarded on October 6, 1994 become exercisable four years
after date of award at an exercise price of $18.625 and expire
eight years after date of award.
<F8> 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. One option awarded for
each $2.50 voluntary stock reduction.
<F9> 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.
<F10> 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.
<F11> Life insurance premiums.
<F12> Life insurance premiums of $167 plus employer contributions of
stock to the profit sharing plan in the following amounts: Morris-
$1,352; April-$2,898; and Arthur-$2,447.
<F13> Life insurance premiums of $192 plus employer contributions of
stock to the profit sharing plan in the following amounts: Morris-
$347; April-$1,861; and Arthur-$1,385.
<F14> 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 $1,922; and Arthur-$293 and
$1,856.
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
The following table sets forth information concerning stock option
grants made in the last fiscal year to the individuals named in the
Summary Compensation Table:
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
% OF TOTAL
OPTIONS EXERCISE
GRANTED TO OR BASE POTENTIAL REALIZED VALUE
OPTIONS EMPLOYEES IN PRICE EXPIRATION ASSUMED ANNUAL RATE OF STOCK
NAME GRANTED FISCAL YEAR ($/SHARE) DATE APPRECIATION FOR OPTION TERM
---- ------- ------------ --------- ---------- --------------------------------------
0% 5%<F6> 10%<F6>
(#) ($) ($) ($)
(a) (b) (c) (d) (e) (f) (h) (h)
<S> <C> <C> <C> <C> <C> <C> <C>
Alyn V. Essman......... 77,500<F2> 9.05% $ 15.50 2/6/02 0 573,500 1,374,075
43,662<F3> 5.1% 17.75 8/11/02 0 369,817 886,339
Russell Isaak.......... 40,000<F2> 4.67% 15.50 2/6/02 0 296,000 709,200
19,718<F3> 2.3% 17.75 8/11/02 0 167,011 400,275
4,225<F4> .49% 18.625 10/6/02 0 37,560 89,950
Patrick J. Morris...... 35,000<F2> 4.09% 15.50 2/6/02 0 259,000 620,550
19,718<F3> 2.3% 17.75 8/11/02 0 167,011 400,275
4,225<F4> .49% 18.625 10/6/02 0 37,560 89,950
David E. April......... 30,000<F2> 3.5% 15.50 2/6/02 0 222,000 531,900
16,901<F3> 1.97% 17.75 8/11/02 0 143,151 343,090
Barry C. Arthur........ 6,000<F2> .7% 15.50 2/6/02 0 44,400 106,380
8,451<F3> .99% 17.75 8/11/02 0 71,580 171,555
All Stockholders<F1>... n/a<F*> n/a n/a n/a 0 106,571,114 255,381,627
All 95 Optionees....... 855,960<F5> 100% <F2> <F2> 0 6,565,259 15,732,655
Gain for all 95
Optionees as % of All
Stockholder Gain...... n/a n/a n/a n/a 0 6.16% 6.16%
<FN>
- -----
<F*> not applicable
14
<PAGE> 17
<F1> Gain for all stockholders was determined based on the number of
shares outstanding on August 11, 1994, the date when the majority
of options were granted, a price per share equal to the average
exercise price for all options, $16.07, and an 8-year term.
<F2> Options awarded to the named executives on February 6, 1994 under
the Company's non-qualified Voluntary Stock Option Plan (the
"VSOP"). Options are issued to executives who elect base salary
reduction from 5% to 25% of salary. One option is granted for each
$2.50 of salary reduction. The options become exercisable three
years after the date of grant and expire eight years after the date
of grant. 75,383 options were awarded to executives not named in
the table under the VSOP on the same terms as set forth above.
<F3> Options were awarded on August 11, 1994 to all executives and
managers of the Company and its operating divisions pursuant to a
one-time long-term incentive grant. These options become
exercisable four years after date of award at $17.75 per share and
expire eight years after the award date.
<F4> Options awarded October 6, 1994 vest four years after date of award
at $18.375 and expire eight years after date of award.
<F5> Includes 75,383 options awarded under the VSOP on February 6, 1994
and 475,177 options under the 1991 Stock Option Plan, all of which
were awarded to executives not named in the table. On March 3,
1994, 16,553 options were awarded to eight mid-level managers.
These options vest in increments of one-fourth of the total award,
commencing 1995, and expire in 1999. They carry an exercise price
of $15.50. On August 11, 1994, 164,972 options were awarded at
$17.75, vesting four years and expiring eight years after date of
grant; and a total of 208,652 options were awarded at $17.75,
vesting in 25% increments over the succeeding four years and
expiring eight years after date of grant. A total of 85,000 options
were granted as of February 2, 1995, to executives not named in the
table. These options have an exercise price of $13.875, vest in
four years and expire in eight years.
<F6> 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
Company. The Company did not use an alternative formula for a grant
date valuation, because 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 February 5, 1994-$15.50; August 10, 1995-$17.75; and October 5,
1994-$18.375, which was the closing price on the last business day
preceding each grant. Gain reflected in connection with the VSOP
does not consider initial purchase price of $2.50 per option
incurred as a salary reduction by each optionee under the VSOP.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
The following table sets forth information concerning option and SAR
exercises in the last fiscal year, and options and SARs remaining
unexercised at February 4, 1995, by the individuals named in the
Summary Compensation Table:
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
<F1> UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED OPTIONS OPTIONS
ON EXERCISE AT FISCAL AT FISCAL
OF OPTIONS/ <F2> YEAR-END (#) YEAR-END ($)
# OF SECURITIES VALUE EXERCISABLE/ EXERCISABLE/
NAME UNDERLYING SARS REALIZED UNEXERCISABLE<F*> UNEXERCISABLE<F*>
---- --------------- -------- -------------- --------------
($)
(a) (b) (c) (d) (e)
<S> <C> <C> <C> <C>
Alyn V. Essman.......................... 0/ 0 46,991/353,662<F3,4> 0
10,781 0
Russell Isaak........................... 0/ 0 26,953/203,943<F3,4> 0
6,296 0
Patrick J. Morris....................... 0/ 0 16,786/163,943<F3,4> 0
4,312 0
David E. April.......................... 0/ 0 14,732/136,901<F3,4> 0
4,392 0
Barry C. Arthur......................... 0/ 0 6,571/60,451<F3,4> 0
1,824 0 0
<FN>
- -----
<F*> No SARs were held at fiscal year-end.
15
<PAGE> 18
<F1> No options were exercised by the named executives in 1994. 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 on
February 4, 1994, but were of no value.
<F2> The SARs were of no value on the date of maturity.
<F3> All exercisable options were issued November 7, 1991 in conjunction
with capping of Stock Appreciation Rights and expire November 7,
1995. These options have exercise prices ranging from $22.375 to
$29.00. Market price as of April 24, 1995, was $16.625, thus
requiring a market value increase of more than 34% prior to
November of this year to be of any value.
<F4> A. Unexercisable options include options received by the named
executives in exchange for voluntary salary reductions in 1993
and 1994 pursuant to the Corporation's Voluntary Stock Option
Plan as follows:
<CAPTION>
TOTAL VOLUNTARY
OPTIONS SALARY REDUCTION
EXECUTIVES RECEIVED 1993-1994
---------- -------- ----------------
<S> <C> <C>
Alyn V. Essman...................................................... 155,000 $387,500
Russell Isaak....................................................... 80,000 $200,000
Patrick J. Morris................................................... 70,000 $175,000
David E. April...................................................... 60,000 $150,000
Barry C. Arthur..................................................... 12,000 $ 30,000
------- --------
Total............................................................. 377,000 $942,500
======= ========
B. Unexercised options held by the named executives also include a
total of 425,000 options issued in 1992 in conjunction with a
freeze of base salaries. The exercise prices for these options
of $30 and $35 were substantially above market value as of the
date of issue and, as of the record date, remain approximately
200% of current market price.
C. With exercise prices ranging from $15.50 to $35.00, most
unexercised options remain at or above current market price. The
188,500 unexercised options with an exercise price of $15.50
were those issued to executives in 1994 pursuant to their
voluntary base salary reductions of $471,250 under the
Corporation's Voluntary Stock Option Plan.
</TABLE>
RETIREMENT PLAN
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.
<TABLE>
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 1994 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-38, Russell Isaak-22, Patrick J. Morris-9, David E. April-31,
and Barry C. Arthur-29.
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
16
<PAGE> 19
of years of the participant's service, provided, however, that through
1994 compensation in excess of $50,000 in any year is not counted for
purposes of determining such benefits. Effective as of 1995, the
$50,000 ceiling will increase annually to reflect a cost of living
adjustment. 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 1994, 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
executive's employment other than for cause before a Change of Control,
the Corporation is obligated to pay the executive two years' base
compensation over the two year period. The Corporation has no such
obligation if the executive resigns or is terminated for cause. If the
Corporation terminates an executive's employment other than for cause
after a Change of Control, the Corporation must pay the executive a
lump sum equal to two years' base compensation. In the event the named
executive officers are terminated (other than for cause) during fiscal
1995 as a result of a Change of Control, the executives would receive
the following lump sum payments: Alyn V. Essman-$1,200,000; Russell
Isaak-$800,000; Patrick J. Morris-$600,000; David E. April-$450,000;
and Barry C. Arthur-$320,000.
If a Change of Control occurs but employment is not terminated, the
executive is to continue in a position comparable to that held before
the change. The executive's base salary cannot be reduced at any time
during the term of the agreement, and after a Change of Control the
executive's bonus cannot be less than the highest bonus the executive
received during any of the three completed fiscal years preceding the
Change of Control. The executive is also 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 1994 of $19,429, $9,730, $12,220,
$11,239, and $17,780 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 the executive would
have attained age 65, or (ii) ten years after the date of the
executive's death. If the officer retires at age 65 or after, he or she
receives annually 40% of his or her 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 or her final base salary not to exceed $100,000 until the
earlier of (i) the date of his or her death or (ii) the date he or she
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 1994.
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 Restricted Stock Plan and the Deferred
17
<PAGE> 20
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 executive 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.)
<TABLE>
COMPARISON OF TEN-YEAR CUMULATIVE RETURN
AMONG CPI CORP., S&P 500 STOCK INDEX AND RUSSELL 2000 INDEX
<CAPTION>
Measurement Period CPI Corp. S&P 500 RUSSELL 2000
(Fiscal Year Covered) Index Index
<S> <C> <C> <C>
Measurement PT-2-2-85<F*> $100 $100 $100
FYE 1/31/86 $142 $123 $118
FYE 1/31/87 $252 $165 $137
FYE 1/31/88 $206 $160 $116
FYE 1/31/89 $259 $192 $146
FYE 1/31/90 $277 $219 $148
FYE 1/31/91 $353 $238 $142
FYE 1/31/92 $323 $292 $206
FYE 1/31/93 $275 $322 $233
FYE 1/31/94 $205 $364 $277
FYE 1/31/95 $203 $366 $260
<FN>
<F*> Each measurement for CPI Corp. is the first Saturday in February,
which is the Corporation's fiscal year end.
</TABLE>
The Russell 2000 index was selected because it encompasses similarly-
sized companies to CPI, as well as diversified companies, like CPI.
[FN]
- -----
<F*> 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 Russell 2000. The measurement dates for purposes of
determining the stock price for CPI Corp. correspond to the fiscal
year-end (i.e. the Saturday preceding the first Sunday in February of
each year reflected). The corresponding measurement dates for the S&P
500 and the Russell 2000 are January 31st of each of the years
reflected.
18
<PAGE> 21
RATIFICATION OF INDEPENDENT AUDITORS (PROXY ITEM NO. 2)
The Board of Directors has selected KPMG Peat Marwick LLP, independent
certified public accountants, to audit the accounts of the Corporation
and its subsidiaries for its current fiscal year ending February 3,
1996. 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 LLP, or any associate thereof, has any financial
interest in the Corporation or in its subsidiaries.
A representative of KPMG Peat Marwick LLP 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 4, 1995.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR
FISCAL 1995.
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.
PROPOSED ANNUAL INCENTIVE PROGRAM FOR KEY EXECUTIVES (PROXY ITEM NO. 3)
Since its adoption in 1992, the annual compensation package for the
Chairman and Chief Executive Officer and for members of the Office of
the President (the President and two Senior Executive Vice Presidents)
has provided for base salaries above the median for similarly sized
companies and relatively limited maximum annual bonuses. In fiscal year
1994 the Compensation Committee approved a restructured compensation
package for the Chairman and Chief Executive Officer and for members of
the Office of the President to be implemented as of fiscal year 1995.
The first component of the restructured package is a three year
reduction of $1,200,000 in base salaries paid to these executives.
The second component of the restructured annual compensation package
provides for an increase in maximum bonus potential. While maintaining
comparable total compensation potential, this provision increases
emphasis on at-risk compensation and further aligns a greater portion
of compensation with performance. It also reflects the common practice
among corporations of establishing higher bonus ceilings for top
management.
For 1995, the Compensation Committee has approved a preestablished,
objective, performance-based formula for awarding annual incentives
earned under the plan by the Chairman and Chief Executive Officer and
each member of the Office of the President. All bonuses will be
determined by reference to the Corporation's earnings per share for
fiscal year 1995 as compared to those for 1994. The 1995 formula
identifies seven, preestablished earnings levels and the amount of
bonus payable at each level (from 0% to 80% of the reduced base
salary). A nominal bonus would be triggered by earnings approximating
those realized in fiscal year 1994. Each subsequent level requires
progressively greater increases in earnings per share, with more than a
45% increase required to achieve the maximum bonus. The Committee
believes that the actual targets reflect confidential business
information, the disclosure of which would adversely affect the
Corporation. No bonus will be paid to these executives except in
accordance with the preestablished formula approved by the Compensation
Committee, and the Committee will certify attainment of the
preestablished targets prior to awarding any bonuses under this
program. If this proposal is approved, the Compensation Committee will
establish new objective, pre-determined targets for fiscal years 1996
and 1997.
The maximum amounts that may be earned under this proposal in each of
the fiscal years through fiscal year 1997 upon attainment of a very
substantial improvement in earnings are: Mr. Essman-$480,000; Mr.
Isaak-$320,000; Mr. Morris-$240,000 and Mr. April-$180,000.
The Committee seeks shareholder approval of the revised annual
incentive program for the Chairman and Chief Executive Officer and for
members of the Office of the President because it believes the
restructured compensation package will serve shareholder interests, as
well as those of the
19
<PAGE> 22
Corporation. Under this proposal, at-risk compensation, including
annual performance-based compensation and the value of the executives'
restricted stock, may exceed 50% of total compensation if maximum
bonuses are earned and the value of the restricted stock increases to
reflect the performance of the Company as earnings improve, enabling
maximum bonus targets to be achieved. In addition, with shareholder
approval of the annual incentive plan, any amounts paid to executives
under the program will be excluded from calculations of total
compensation subject to the $1 million ceiling on deductibility under
Section 162(m) of the Internal Revenue Code.
The Board of Directors intends to present the following resolution to
the stockholders for action at the Annual Meeting:
RESOLVED, that an annual incentive program for fiscal years 1995,
1996 and 1997 for the Chairman and Chief Executive Officer and for
members of the Office of the President of the Corporation,
authorizing annual bonuses ranging from 0% to 80% of base salaries,
with the following maximum bonuses: Mr. Essman-$480,000; Mr. Isaak-
$320,000; Mr. Morris-$240,000; and Mr. April-$180,000; upon
attainment of predetermined, objective earnings targets established
by the independent Directors who serve on the Compensation Committee,
is hereby approved by the stockholders of the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THIS
PROPOSAL.
The affirmative vote of the majority of the votes cast at the meeting
by the stockholders entitled to vote thereon shall be sufficient for
the approval of the proposed annual incentive program for the Chairman
and Chief Executive Officer and for members of the Office of the
President, as described above.
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 5, 1995, to stockholders of record as of April 24, 1995.
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 AVENUE, ST. LOUIS, MISSOURI 63103.
By Order of the Board of Directors,
/s/ Jane E. Nelson
JANE E. NELSON
Secretary and General Counsel
Dated: May 5, 1995
20
<PAGE> 23
CPI CORP.
PRODUCTS AND SERVICES FOR CONSUMERS
1706 WASHINGTON AVENUE
ST. LOUIS, MISSOURI 63103
TELEPHONE (314) 231-1575
May 5, 1995
DEAR CPI CORP. STOCKHOLDER:
You are cordially invited and encouraged to attend the 1995 Annual
Meeting of Stockholders of CPI Corp. The meeting will held on Tuesday,
June 13, 1995, at 10:00 a.m., central daylight time at the offices of
CPI Corp., 1706 Washington Avenue, St. Louis, Missouri.
If you cannot personally attend the meeting, please vote your
preference on the proxy card attached below and return it promptly.
Your participation in CPI Corp.'s business, whether in person or by
proxy, is an important part of the Corporation's governance.
I look forward to and appreciate your participation in CPI's 1995
Annual Meeting of Stockholders.
Very Truly Yours,
/s/ Alyn V. Essman
...........................................
ALYN V. ESSMAN
Chairman of the Board and
Chief Executive Officer
Detach Proxy Form Here
- ------------------------------------------------------------------------
PROXY
CPI CORP.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 13, 1995
The undersigned, revoking all previous proxies, hereby appoints Alyn
V. Essman and Russell Isaak or either of them as Proxy or Proxies of
the undersigned, each with the power to appoint his substitute, to
vote, as designated below, all of the shares of Common Stock of CPI
Corp. (the "Corporation") held of record by the undersigned on April
24, 1995, at the annual meeting of stockholders to be held at 10 a.m.
central daylight time on June 13, 1995, at CPI Corp., 1706 Washington,
St. Louis, Mo. 63103, and at any adjournment thereof.
ITEM 1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote
(except as marked to the contrary for all nominees listed
below) 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
ITEM 3. APPROVAL OF RESOLUTION TO PROVIDE FOR ANNUAL INCENTIVE PROGRAM
FOR CHAIRMAN AND CHIEF EXECUTIVE OFFICER AND MEMBERS OF THE
OFFICE OF THE PRESIDENT (PRESIDENT AND TWO SENIOR EXECUTIVE
VICE PRESIDENTS)
/ / 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> 24
Detach Proxy Form Here
- ------------------------------------------------------------------------
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 ITEMS 2 AND 3.
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 __________________________
