<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CROWLEY, MILNER & COMPANY
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
CROWLEY MILNER&COMPANY LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Crowley,
Milner and Company, a Michigan corporation (the "Company"), will be held at the
principal offices of the Company, 2301 West Lafayette Boulevard, Detroit,
Michigan 48216, on Thursday, May 22, 1997, at 11:00 a.m., Eastern Daylight
Savings Time, for the following purposes:
1. To elect four directors to hold office until the Annual Meeting of
Shareholders in 2000;
2. To appoint the firm of Ernst & Young LLP to audit the financial records
of the Company for the fiscal year ending January 31, 1998;
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 9, 1997, as
the record date for the determination of shareholders entitled to vote at the
Annual Meeting and any adjournment thereof (the "Record Date").
You are cordially invited to attend the meeting in person. If you do not
expect to be present, please sign, date and mark the enclosed proxy and return
it immediately. Your proxy may be revoked by filing with the Secretary a written
revocation or a proxy bearing a later date at any time prior to the time it is
voted or by attending the Annual Meeting and voting in person.
By order of the Board of Directors,
/s/ J. DALLACQUA
JOHN R. DALLACQUA, Secretary
Detroit, Michigan
April 22, 1997
<PAGE> 3
[CROWLEY MILNER & COMPANY LOGO]
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1997
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Crowley, Milner and Company, a Michigan corporation
(the "Company"), of proxies to be used at the Annual Meeting of Shareholders
which will be held on May 22, 1997, or at any adjournment of the meeting. The
mailing address of the principal executive offices of the Company is 2301 West
Lafayette Boulevard, Detroit, Michigan 48216. This Proxy Statement and the
enclosed Proxy were first sent or given to shareholders on April 22, 1997.
The cost of soliciting proxies, whether by mail, telephone, telegraph, in
person or otherwise, will be borne by the Company. In addition to solicitation
by mail, the Company will reimburse brokerage houses and other nominees for
their expenses incurred in sending proxies and proxy material to the beneficial
owners of shares held by them.
Holders of Common Stock of record at the close of business on April 9,
1997, will be entitled to vote at the meeting (the "Record Date"). On that
Record Date, 1,511,054 shares of Common Stock were issued and outstanding. Each
shareholder is entitled to one vote for each share of Common Stock held by him.
Cumulative voting for the election of directors is not available under the
Company's Articles of Incorporation. Shares cannot be voted at the meeting
unless the holder is present in person or represented by proxy. Any shareholder
giving a proxy may revoke it at any time prior to its use. Unless revoked, the
shares represented by the proxy will be voted in accordance with the
specifications made. If no specifications are made, such shares will be voted
(i) FOR the election of the Company's nominees as directors, and (ii) FOR the
appointment of Ernst & Young LLP as auditors. The Board of Directors does not
intend to present any other matters at the Annual Meeting. However, should any
other matters properly come before the Annual Meeting, the proxy holders will
have discretionary authority to vote upon such matters and, in such event, it is
the intention of such proxy holders to vote the proxy in accordance with their
best judgment.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the taking of the vote at the
Annual Meeting, a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company before the taking of the vote at
the Annual Meeting, or (iii) attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself constitute
a revocation of a proxy). Any written notice of revocation or subsequent proxy
should be sent so as to be delivered to Crowley, Milner and Company, 2301 West
Lafayette Boulevard, Detroit, Michigan 48216, Attention: Secretary, or hand
delivered to the Secretary of the Company at or before the taking of the vote at
the Annual Meeting.
For purposes of determining the number of votes cast with respect to any
voting matter, except as otherwise expressly described herein, (a) only those
cast "for" or "against" are included, (b) abstentions are counted only for
purposes of determining whether a quorum is present at the Annual Meeting, and
(c) broker non-votes are not counted for any purpose. A majority of the
outstanding shares of the Company Common Stock, represented in person or by
proxy, will constitute a quorum at the meeting.
1
<PAGE> 4
MATTERS TO COME BEFORE THE MEETING
PROPOSAL 1: ELECTION OF DIRECTORS.
General; Plurality and Voting
The Bylaws of the Company provide that the Board of Directors shall consist
of not less than nine members nor more than twelve members as shall be fixed
from time to time by the Board and that the Board of Directors shall be divided
into three classes as nearly equal in number as possible. The term of office of
each class of directors is three years, and the terms of office of the three
classes overlap. The Board of Directors is presently comprised of twelve
directors. Four directors will be elected at this year's Annual Meeting to hold
office until the Annual Meeting in 2000. The nominees named below have been
selected by the Board of Directors. If, due to circumstances not now foreseen,
any of the nominees named below will not be available for election, the proxies
will be voted for such other person or persons as the Board of Directors may
select. Provided that a quorum is present, the four nominees receiving the
highest number of votes cast at the Annual Meeting will be elected as directors
of the Company. If no instructions are indicated in any properly executed proxy,
such proxy will be voted FOR the election of the individuals nominated by the
Board of Directors.
The following table sets forth the name, age, principal occupation for the
past five years, other directorships with publicly owned companies and with
public institutions, term of service as a director of the Company, and
beneficial shareholdings with respect to the four individuals who will be
nominated for election, the eight directors who were previously elected or
appointed and who will continue for the terms indicated and the two directors,
Messrs. Ebert and Soffel, who have determined not to stand for re-election, as
provided to the Company by each such person. Except as otherwise described, the
individuals named above have been principally engaged in the occupations
described above for the past five years.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR
ELECTION.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
HAS APRIL 9, 1997
SERVED ------------------------
NOMINEE FOR ELECTION AS A PERCENT
AS A DIRECTOR UNTIL THE PRINCIPAL OCCUPATION DIRECTOR OF
2000 ANNUAL MEETING AND OTHER DIRECTORSHIPS AGE SINCE NUMBER CLASS(1)
----------------------- ----------------------- --- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Donald N. Bailey............... First Vice President, NBD Bank and
NBD Bank Community Development
Corporation since April 1997;
Vice President and General Man-
ager, NBD Bank Community
Development Corporation since
April 1990. Also serves as
Director of Michigan Capital
Fund for Housing................ 56 -- 0 *
Thomas Ketteler................ Chief Operating Officer,
Schottenstein Stores Corporation
since February 1995; Vice
President -- Finance and
Treasurer of Schottenstein
Stores Corporation since October
1981. Also serves as Director of
Schottenstein Stores
Corporation, American Eagle
Outfitters, Inc. and Valley Fair
Corporation..................... 54 -- 0 *
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
HAS APRIL 9, 1997
SERVED ------------------------
NOMINEE FOR ELECTION AS A PERCENT
AS A DIRECTOR UNTIL THE PRINCIPAL OCCUPATION DIRECTOR OF
2000 ANNUAL MEETING AND OTHER DIRECTORSHIPS AGE SINCE NUMBER CLASS(1)
----------------------- ----------------------- --- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Julius L. Pallone.............. Management consultant since June
1993; President and Chief
Executive Officer of Royal
Financial Services, Inc. from
January 1989 to June 1993;
Chairman of the Board and
President of its wholly-owned
subsidiary, Royal Maccabees Life
Insurance Co. from 1968 to June
1993. Also serves as a trustee
of the Pegasus Funds............ 66 1988 8,000(2) *
Jerome L. Schostak............. Chairman of the Board and Chief
Executive Officer of Schostak
Brothers & Company, Inc. (com-
mercial and industrial real
estate sales, leasing, and
development). Also serves as a
director and the Vice Chairman
of Charter One Financial,
Inc. ........................... 63 1995 1,000 *
<CAPTION>
DIRECTORS WHOSE TERMS
CONTINUE UNTIL THE
1998 ANNUAL MEETING
- -------------------------------
<S> <C> <C> <C> <C> <C>
Dennis P. Callahan............. President and Chief Executive
Officer of the Company since
November 1992; previously
employed as Senior Vice
President -- Merchandising of
Hess's Department Stores, Allen-
town, Pennsylvania, from May
1990 to November 1992........... 53 1992 111,193(3) 7.15%
Benton E. Kraner............... Partner, Swanson, Kraner & Gesler,
Inc., Certified Public
Accountants, Columbus, Ohio..... 42 1996 0 *
JoAnn S. Cousino............... Private investor; former buyer for
the Company..................... 58 1983 135,526(2)(4) 8.95%
Alfred M. Entenman, Jr. ....... Executive Consultant to BEI
Associates, Inc. (architectural
and engineering services)....... 76 1973 5,000(2) *
<CAPTION>
DIRECTORS WHOSE TERMS
CONTINUE UNTIL THE
1999 ANNUAL MEETING
- -------------------------------
<S> <C> <C> <C> <C> <C>
Joseph C. Keys................. Buyer for the Company............. 56 1983 134,113(2)(4) 8.85%
Richard S. Keys................ Buyer for the Company............. 58 1991 134,353(2)(4) 8.87%
Paul R. Rentenbach............. Member of the firm of Dykema
Gossett PLLC, Detroit, Michigan
(attorneys)..................... 51 1991 5,000(5) *
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
HAS APRIL 9, 1997
SERVED ------------------------
DIRECTORS WHOSE TERMS AS A PERCENT
CONTINUE UNTIL THE PRINCIPAL OCCUPATION DIRECTOR OF
1999 ANNUAL MEETING AND OTHER DIRECTORSHIPS AGE SINCE NUMBER CLASS(1)
--------------------- ----------------------- --- -------- ------ --------
<S> <C> <C> <C> <C> <C>
James L. Schaye, Jr............ Vice President, Schottenstein
Professional Asset Management,
Corporation since 1990.......... 48 1993 3,450(5) *
<CAPTION>
DIRECTORS WHOSE TERMS
CONTINUE UNTIL THE
1997 ANNUAL MEETING
- -------------------------------
<S> <C> <C> <C> <C> <C>
Andrew J. Soffel............... Chairman of the Board of Directors
of the Company from March 1991
through August 1996 and
consultant to the Company since
January 31, 1993; President and
Chief Executive Officer of the
Company from March 1988 to
November 1992................... 66 1988 16,000(2) 1.06%
Carroll E. Ebert............... Retired Chairman, Carson Pirie
Scott & Co. .................... 73 1991 5,500(2) *
</TABLE>
- -------------------------
* Less than 1%.
(1) For purposes of computing the applicable percentages of the named persons,
shares which can be acquired upon the exercise of any option within the
60-day period beginning April 9, 1997, are added to the shares owned
beneficially by such persons and to the total shares outstanding on that
date, provided that such shares were not deemed to be outstanding for
purposes of computing the percentages of any other person.
(2) Includes options to purchase 4,000 shares of Common Stock granted under the
1995 Director Stock Option Plan.
(3) Includes shares held indirectly by members of Mr. Callahan's immediate
family and 43,333 shares as to which Mr. Callahan has the right to acquire
within the 60-day period beginning April 9, 1997, pursuant to outstanding
stock options.
(4) See "Principal Shareholders".
(5) Includes options to purchase 2,000 shares of Common Stock granted under the
1995 Director Stock Option Plan.
Richard and Joseph Keys are brothers and JoAnn S. Cousino is their cousin.
None of the above individuals is a party to any contract, arrangement, or
understanding with any person with respect to any securities of the Company
except for the Shareholder Agreement (the "Shareholder Agreement"), dated August
18, 1992, as amended, among Ms. Cousino and Messrs. Joseph Keys and Richard
Keys. Pursuant to the Shareholder Agreement, Ms. Cousino and Messrs. Joseph Keys
and Richard Keys have agreed to restrict the disposition of, and regulate the
voting of, the 390,062 shares (approximately 25.8%) of the Company's outstanding
Common Stock subject to the Shareholder Agreement. In particular, these shares
may only be transferred to certain revocable trusts, to the immediate family of
one of these shareholders, or upon the approval of all of these shareholders.
Moreover, in connection with the execution of the Shareholder Agreement, each of
these shareholders executed an irrevocable proxy whereby any two of them have
the power to vote all of such shares; provided, however, that with respect to
certain proposals involving the Company (i.e., a merger or business combination,
a sale of substantially all the assets, or a dissolution and liquidation), all
of these shareholders acting together must agree to vote such shares. The
Shareholder Agreement, and accompanying irrevocable proxy, shall continue in
force through August 18, 1998, unless
4
<PAGE> 7
sooner terminated as provided therein. No cash was involved in the execution and
delivery of the Shareholder Agreement. See "Principal Shareholders".
The law firm of Dykema Gossett PLLC, of which Mr. Rentenbach is an equity
member, has performed legal services for the Company during its last fiscal year
and is expected to perform such services during the current year. The amounts
paid to Dykema Gossett during the fiscal year ended February 1, 1997 by the
Company for legal services did not exceed five percent of that firm's gross
revenues for its last fiscal year.
Meetings and Committees of the Board.
The Board of Directors has established an Executive Committee, a
Compensation Committee, an Audit Committee, and a Nominating Committee. During
the fiscal year ended February 1, 1997, the Board of Directors met eight times,
the Executive Committee met three times, the Nominating Committee met once, the
Compensation Committee met once and the Audit Committee met once.
Directors other than officers are currently paid a retainer of $12,000 per
year and $500 per meeting for attending meetings of the Board and any committees
on which they serve. In the case of Mr. Rentenbach, amounts paid to him as
director's fees are credited against fees for legal services charged by the law
firm of which he is a member.
The present members of the Executive Committee are Messrs. Callahan
(Chairman), Rentenbach, Pallone, Schaye and Schostak. The function of the
Executive Committee is to exercise the authority of the Board of Directors in
the management of the business of the Company between meetings of the Board of
Directors.
The present members of the Compensation Committee are Messrs. Pallone
(Chairman), Ebert, Entenman, Kraner, Soffel and Ms. Cousino. The Compensation
Committee establishes from time to time the salaries of the Company's executive
officers, recommends to the Board of Directors the schedule of discretionary
annual bonuses to be paid under the Company's discretionary bonus program, and
administers the 1992 Incentive Stock Plan and the Crowley, Milner and Company
1995 Director Stock Option Plan.
The present members of the Audit Committee are Messrs. Entenman (Chairman),
Ebert, Joseph C. Keys, Kraner and Soffel. The Audit Committee nominates the
independent auditors, reviews with the independent auditors the scope and
results of the auditing engagement and any non-audit services to be performed by
the independent auditors and evaluates the independence of the independent
auditors and their fees for audit and non-audit services.
The present members of the Nominating Committee are Messrs. Rentenbach
(Chairman), Callahan, Pallone, Schaye, Richard S. Keys and Schostak. The
Nominating Committee is responsible for identifying and recommending to the
Board qualified candidates for election as directors of the Company. In carrying
out its responsibilities, the Nominating Committee will consider candidates
suggested by other directors, employees and shareholders. Suggestions for
candidates, accompanied by biographical material for evaluation, may be sent to
the Secretary of the Company at the Company's principal executive offices.
PROPOSAL 2: APPOINTMENT OF AUDITORS
The Board of Directors, upon the recommendation of its Audit Committee,
will propose at the meeting that the shareholders appoint the firm of Ernst &
Young LLP to audit the financial records of the Company for the fiscal year
ending January 31, 1998. Ernst & Young audited the Company's financial records
for the prior fiscal year.
A representative of Ernst & Young LLP is expected to be present at the
meeting and will have the opportunity to make a statement, if he or she so
desires, and will be available to answer appropriate questions by shareholders.
5
<PAGE> 8
The affirmative vote of a majority of the shares present at the meeting is
required to appoint Ernst & Young LLP as the Company's auditors. If the
necessary approval by shareholders is not received the Board of Directors will
select and appoint another independent public accounting firm for such purpose
without further shareholder action. If no instructions are indicated in any
properly executed proxy, such proxy will be voted FOR the appointment of Ernst &
Young LLP as auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF ERNST &
YOUNG LLP AS AUDITORS.
6
<PAGE> 9
FURTHER INFORMATION
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning the ownership
of the Company's Common Stock as of April 9, 1997, (i) by those persons who were
believed by the Company to be beneficial owners of more than 5% of the Company's
outstanding Common Stock, as reported to the Securities and Exchange Commission
("the SEC") and/or to the Company by such persons, (ii) by the Named Executive
Officer (as defined below in "Executive Compensation"), and (iii) by all
directors and officers (including the Named Executive Officer) of the Company as
a group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED
AS OF APRIL 9, 1997(1)
--------------------------
NUMBER PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES OF CLASS
------------------------------------ --------- --------
<S> <C> <C>
JoAnn S. Cousino............................................ 135,526 8.95%
500 St. Clair
Grosse Pointe, Michigan 48230
Joseph C. Keys.............................................. 134,113 8.85%
701 N. Oxford Road
Grosse Pointe Woods, Michigan 48236
Richard S. Keys............................................. 134,353 8.87%
414 Notre Dame Ave.
Grosse Pointe, Michigan 48230
Dennis P. Callahan(2)....................................... 111,193 7.15%
All directors and executive officers (including the Named
Executive Officer) of the Company as a group (20 in
number)................................................... 584,333 36.65%
Jay L. Schottenstein(3)..................................... 514,800 34.07%
c/o 1800 Moler Road
Columbus, Ohio 43207
</TABLE>
- -------------------------
(1) Includes shares which can be acquired within the 60-day period beginning
April 9, 1997, pursuant to outstanding options.
(2) Includes shares held indirectly by members of Mr. Callahan's immediate
family and 43,333 shares as to which Mr. Callahan has the right to acquire
within the 60-day period beginning April 9, 1997, pursuant to outstanding
stock options.
(3) Mr. Schottenstein, as the sole trustee of the several trusts, is deemed to
be the beneficial owner of 514,800 shares. Mr. Schottenstein acquired the
514,800 shares of the Company's Common Stock pursuant to an Agreement and
Plan of Reorganization between the Company and several shareholders of
Steinbach Stores, Inc., dated November 17, 1995. The issuance of the 514,800
shares was approved by the Company's shareholders at the Company's 1996
Annual Meeting. The acquisition of such shares by Mr. Schottenstein, as sole
trustee for several trusts, may be deemed to have been a change in ownership
of the Company under the rules and regulations of the Securities Exchange
Commission.
7
<PAGE> 10
EXECUTIVE OFFICERS
Set forth below is certain information concerning the Company's present
executive officers, including name, age, principal occupation and business
experience during the past five years and length of service as an officer of the
Company.
<TABLE>
<CAPTION>
NAME AND AGE OFFICE(S) AND LENGTH OF SERVICE
------------ -------------------------------
<S> <C>
Dennis P. Callahan, 53.................... President and Chief Executive since November 1992;
previously employed as Senior Vice President --
Merchandising of Hess's Department Stores, Allentown,
Pennsylvania, from May 1990 to November 1992, and as
President of Bon Ton Stores, York, Pennsylvania, from
July 1985 to January 1989.
John R. Dallacqua, 41..................... Vice President -- Finance, Chief Financial Officer,
Secretary and Treasurer since July 1996; previously self
employed as an attorney, Livonia, Michigan, from
February 1995 to July 1996; Vice President -- Portfolio
Manager, Great Lakes Bancorp, FSB, from December 1990 to
February 1995.
Nancy L. Borchers, 50..................... Vice President -- Stores (Steinbach) since March 1996,
although hired by the Company in January 1996; Store
Manager, Steinbach, from June 1995 to December 1995,
previously employed as a real estate salesperson,
Johnson & Johnson, Point Pleasant, New Jersey, from May
1994 to May 1995 and as Merchandise Manager -- Stores,
Royal Doulton, Somerset, New Jersey, from January 1991
to May 1994.
June A. Ley, 45........................... Vice President -- General Merchandise Manager since
March 1995; General Merchandise Manager from April 1994
to March 1995; Divisional Merchandise Manager from June
1993 to April 1994; previously self-employed as Retail
Consultant, Pittsburgh, Pennsylvania, from February 1992
to June 1993, and as Divisional Merchandise Manager of
Streets of Oklahoma City, Oklahoma City, Oklahoma, from
February 1990 to November 1991.
Stephen J. Mechavich, 46.................. Vice President -- General Merchandise Manager since
March 1996; General Merchandise Manager from April 1994
to March 1996; Divisional Merchandise Manager from
August 1991 to April 1994; and Merchandise Advisor from
April 1990 to July 1991.
John E. Godfrey, Jr., 59.................. Vice President -- General Merchandise Manager since
April 1996; previously employed as Senior Vice President
-- General Merchandise Manager, Bon Ton Stores
Corporation, York, Pennsylvania, from April 1984 to
January 1996.
Edward J. Pestovic, 58.................... Vice President -- Advertising since March 1996, although
hired by the Company in January 1996; previously
employed as Director of Advertising and Sales Promotion,
Steinbach, from September 1981 to January 1996.
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
NAME AND AGE OFFICE(S) AND LENGTH OF SERVICE
------------ -------------------------------
<S> <C>
Ray Attebery, 55.......................... Vice President -- Operations since November 1996;
Previously employed as President, Wholesale Windows and
Siding, Kalamazoo, Michigan, from April 1996 to November
1996; General Manager, Men's Clothing Warehouse, Royal
Oak, Michigan, January 1994 to March 1996; Vice
President -- Sales, Mrs. Kay's Windows & Blinds,
Farmington Hills, Michigan, from December 1992 to
January 1994; Executive Vice President -- Franchise
Operations, Custom Ts, Waco, Texas, from January 1990 to
January 1994.
Don DeLaura, 43........................... Vice President -- Stores (Crowley's) since August 1995;
previously employed as Vice President -- Divisional
Merchandise Manager, Pamida Stores -- Omaha, Nebraska,
from August 1993 to August 1995; Vice President --
Divisional Merchandise Manager, Goody's Family Clothing,
Knoxville, Tennessee, from April 1992 to August 1993;
Vice President -- General Merchandise Manager, Ames
Department Stores, Rocky Hill, Connecticut, from April
1988 to April 1992.
</TABLE>
EXECUTIVE COMPENSATION
The following information about the Company's method of compensating its
executive officers is intended to both comply with the disclosure rules of the
Securities and Exchange Commission ("SEC") and provide shareholders with a
better understanding of the Company's objectives, policies and arrangements for
executive compensation.
Summary Compensation Table
The following table sets forth, for the fiscal years ended February 1, 1997
("fiscal year 1996"), February 3, 1996 ("fiscal year 1995") and January 28, 1995
("fiscal year 1994"), information with respect to the cash and other
compensation paid to, or accrued for, the Chief Executive Officer, the only
executive officer whose total annual salary and bonuses exceeded $100,000 (the
"Named Executive Officer").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------------------
ANNUAL AWARDS PAYOUTS
COMPENSATION ------------------------ -------
------------------- RESTRICTED SECURITIES
STOCK UNDERLYING LTIP
NAME AND PRINCIPAL AWARDS OPTIONS PAYOUTS ALL OTHER
POSITION FISCAL YEAR SALARY BONUS ($) (#) ($) COMPENSATION($)
- ------------------------ ----------- -------- ------- ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dennis P. Callahan...... 1996 $329,980 $50,000 -- 100,000 -- $7,797(1)
President and Chief 1995 $292,677 $50,000 -- 30,000 -- $4,901(1)
Executive Officer 1994 $286,273 $75,000 (2) (3) $50,000(4) $4,901(1)
</TABLE>
- -------------------------
(1) Includes $4,200 (or $350 per month) for a car allowance for the years 1996,
1995 and 1994, $511, $501 and $501 of premiums paid by the Company on a term
life insurance policy maintained for the benefit of Mr. Callahan for the
years 1996, 1995 and 1994, and $3,086, $200 and $200 contributed by the
Company on Mr. Callahan's behalf to the Company's profit-sharing plan for
the years 1996, 1995 and 1994.
(2) The award of restricted stock was made as of August 24, 1994, pursuant to
the terms of the 1992 Incentive Stock Plan and the Restrictive Stock
Agreement, dated August 24, 1994, between the Company and Mr. Callahan (the
"Restricted Stock Agreement"). Such terms contain the following general
provisions relative to vesting and transfer restrictions: (i) effective as
of the fiscal year ended
9
<PAGE> 12
January 28, 1995 and the fiscal years ended February 3, 1996, and February
1, 1997, as the case may be, one-third of the 30,000 shares in the award
shall be automatically forfeited to the Company unless certain performance
objectives are satisfied; in the event the performance objectives are
satisfied, such one-third portion not so forfeited shall be deemed vested;
and (ii) the 30,000 shares in the award (including any vested shares)
generally are restricted from transfer for a period of five years from
January 30, 1994, except that such transfer restrictions shall lapse at such
time, if any, as the Company's Board of Directors shall, in their sole
discretion, determine from time to time, and, in certain cases, upon
termination of employment. During the five-year restriction period, Callahan
retains full voting rights and is entitled to receive all dividends and
distributions with respect to the shares in the award. With respect to the
fiscal years ended January 28, 1995, and February 1, 1997, the performance
objectives were satisfied. However, with respect to the fiscal year ended
February 3, 1996, the performance objectives were not satisfied and 10,000
shares were forfeited.
(3) Effective March 19, 1996, the Company and Mr. Callahan agreed to cancel
incentive stock options granted on April 13, 1994 to purchase 20,000 shares
at a per share purchase price of $10.00.
(4) As of January 28, 1995, 10,000 shares of Common Stock subject to an award of
restricted stock vested subject to certain restrictions on transfer. For a
description of such award, see note (2) above. The dollar value reflected in
the table was calculated by multiplying such 10,000 shares by the closing
price of the Common Stock reported on the American Stock Exchange on
February 2, 1996 (the last reported trade prior to February 3, 1996), or
$5.00 per share. With respect to the payout reported in the table, the
performance objective related to the vesting of such 10,000 shares was
reduced by the Company and by Mr. Callahan.
Unexercised Options and Holdings
The following table sets forth information with respect to the Named
Executive Officer concerning the exercise of options previously granted under
the 1992 Incentive Stock Plan during the fiscal year ended February 1, 1997, and
unexercised options held as of that date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND 1996 FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Dennis P. Callahan........ 20,000 $98,125 0/120,000 $0/$108,000
</TABLE>
- -------------------------
(1) The estimated value of the unexercised option shares (i.e., the difference
between the fair market value of the securities underlying the options and
the exercise price of the option at fiscal year-end) was based on the
closing price of the Common Stock reported on the American Stock Exchange on
January 31, 1997 (the last reported trade date prior to February 1, 1997),
or $6.38 per share. The dollar values in this table (and all others
contained in this report) are calculated on a pre-tax basis.
Employment Contracts, Termination of Employment, and Change-in-Control
Arrangement
Executive officers of the Company (including the Named Executive Officer)
are appointed annually by the Board of Directors and, subject to the employment
agreement with Mr. Callahan described below, serve at the pleasure of the Board.
The Company has entered into a written employment agreement with Mr.
Callahan employing him as the President and Chief Executive Officer of the
Company. This agreement provides for a two year term of employment (initially,
from November 1, 1992 to October 31, 1994, subject to certain automatic renewal
provisions) unless he is terminated due to permanent disability (as defined in
the agreement), he is terminated without cause (as defined in the agreement), he
voluntarily terminates his employment or he is terminated for
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<PAGE> 13
good reason or for cause (as defined in the agreement, including the willful
engagement in dishonest or fraudulent actions or omissions). Termination for
good reason includes (a) a change in control (generally, (i) the acquisition by
a person or group of more than 50% of the fair market value or total voting
power of the Company, (ii) the acquisition within a twelve-month period by a
person or group of more than one-third in fair market value of the Company's
assets, or (iii) the replacement of a majority of the directors within a
twelve-month period) followed by a diminution or adverse change in the
employee's duties and responsibilities, in the employee's rights or benefits
under certain bonus, stock, and other employee benefit plans or by a requirement
that the employee relocate his principal place of employment beyond a 100 mile
radius of Detroit, Michigan, (b) a material breach of the employment agreement,
and (c) the failure by the Company to obtain a satisfactory agreement from any
successor to perform the employment agreement. If the employee is terminated
without cause or for good reason, the employee would be entitled to receive a
single cash payment, within ten business days following the date of termination,
equal to the present value of two years' base salary and, further, the employee
would be entitled to exercise any previously granted outstanding stock options.
The agreement restricts employee disclosure of material or secret information
and employee competition within a fifteen-mile radius of any of the Company's
stores for a period of one year after employment.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Messrs. Pallone
(Chairman), Ebert, Entenman, Kraner, Soffel and Ms. Cousino. None of these
individuals was an employee of the Company during 1996.
Compensation Committee Report on Executive Compensation
General. The compensation of the Company's executive officers (including
the Named Executive Officer) is determined annually by the Compensation
Committee of the Board of Directors. The Compensation Committee consists of six
directors, none of whom are employed by the Company or are eligible to
participate in any of the Company's benefit plans except for the 1995 Director
Stock Plan. The Board of Directors, with the guidance and supervision of the
Compensation Committee, has developed and implemented compensation policies that
seek to provide fair and competitive compensation, encourage the retention of
qualified individuals and enhance stockholder value by encouraging executive
officers to focus their effort on achieving profitability for the Company. The
Company's compensation policies are intended to align the financial interest of
the Company's officers (including its executive officers) with those of the
shareholders as well as to create an atmosphere which recognizes the individual
contribution and/or performance of each executive officer.
In addition to merit-based promotions, the essential components of the
compensation policy for the Company's executive officers are base compensation,
discretionary annual cash bonus awards and long-term stock incentive awards in
the form of stock options and/or restricted stock.
Base Compensation. The base compensation for the executive officers of the
Company, including the Chief Executive Officer, is reviewed in March of each
year by the Compensation Committee. Each year, the Compensation Committee
reviews with the Chief Executive Officer and approves, with any modifications it
deems appropriate, annual salaries for the Company's executive officers
(excluding the Chief Executive Officer) for the following year. Annual salaries
are developed after a review of several factors, including the overall salary
increase for Company personnel, comparative competitive industry data and
assessments of the executive's individual performance. The general salary
increase for Company employees as a whole is primarily dependent upon the
Company's earnings performance, the inflation rate for southeastern Michigan and
any reported trends reflecting general increases in compensation among retailers
of comparable size. The peer group of retailers used for compensation analysis
is not generally the same as the Peer Group Index discussed below in the Stock
Performance Graph. The Compensation Committee believes that the Company's most
direct competitors for executive talent are not necessarily comprised of all of
the companies included in a peer group established for comparing shareholder
returns, due primarily to the fact that most of the public companies included in
the peer index are much larger than the Company. In particular, the Compensation
Committee believes that approximately eight to twelve retailers of relatively
the same size as the Company and approximately fifteen to twenty other
non-manufacturing companies doing business in Southeastern
11
<PAGE> 14
Michigan are the Company's most direct competitors for executive talent, and
therefore information about compensation levels paid by such organizations is
considered by the Committee. The Compensation Committee, where appropriate, also
considers certain other non-financial measures, such as increases in market
share, improvements in service quality, and improvements in relations with
customers, suppliers and employees.
The base compensation of the Chief Executive Officer under his employment
agreement is determined by reference to the same factors applicable to the
executive officers, but such determination is made by the Compensation Committee
without the involvement by the Chief Executive Officer. Each year the
Committee's determination on base compensation is presented to and approved by
the Company's Board of Directors, without participation by any affected employee
directors.
Discretionary Cash Bonus Awards. For several years, the Company has
maintained a program of providing incentives to selected officers and employees
who have principal responsibility for profitability and growth in the form of
annual discretionary cash bonuses. Annual cash bonuses are recommended to the
Compensation Committee in March each year by the Chief Executive Officer for all
officers to the Compensation Committee, which evaluates the appropriateness of
the recommended bonuses in light of each person's performance evaluation for the
prior fiscal year, as well as general market and economic considerations. For
the fiscal year ended February 1, 1997, the Compensation Committee approved a
discretionary bonus to the Chief Executive Officer of $50,000 and discretionary
bonuses to seven other officers and key employees totaling $19,000.
For the fiscal year ending January 31, 1998, the Board of Directors has
approved a short-term cash bonus program pursuant to which a bonus pool equal to
10% of the Company's consolidated pre-tax income in excess of $2 million will be
set aside for cash bonus awards to 18 officers and designated key employees. The
allocation of this bonus pool will be made by the Compensation Committee in
March 1998, based on the recommendation of the Chief Executive Officer.
Stock Incentive Awards. The Company's incentive program includes the 1992
Incentive Stock Plan, which is intended to retain qualified executive officers
and to motivate such officers to improve the operating results of the Company
and, thereby, improve the long term stock performance of the Company through the
grant of stock options and/or the award of restricted stock. Under this Plan,
which is administered by the Compensation Committee, grants of incentive stock
options and awards of restricted stock have been made to eligible participants
as follows: (i) during the fiscal year ended January 28, 1995, options were
granted to acquire 40,000 shares (of which, options to acquire 20,000 shares
were granted to the Chief Executive Officer) and a restricted stock award was
made to the Chief Executive Officer for 30,000 shares of Common Stock subject to
certain performance objectives and vesting requirements, (ii) during the fiscal
year ending February 3, 1996, options were granted to acquire 40,000 shares (of
which, options to acquire 30,000 shares were made to the Chief Executive Officer
and, in connection therewith, options previously granted to the Chief Executive
Officer on April 13, 1994, to acquire 20,000 shares at a per share exercise
price of $10.00 were canceled), and (iii) during the fiscal year ending February
1, 1997, options were granted to acquire 119,000 shares (of which, options to
acquire 100,000 shares were made to the Chief Executive Officer).
As is the case with respect to cash compensation, the amount of any grants
of stock options and/or awards of restricted stock to the Chief Executive
Officer will be established separately by the Compensation Committee without the
participation of the Chief Executive Officer. Any such award will be based,
among other things, upon factors applicable to executive officer awards as well
as information regarding option grants to chief executive officers of retailers
of similar size or performance, the Chief Executive Officer's base compensation
and his anticipated future contribution to the Company.
Conclusion. Through the compensation programs described above, a
significant portion of the executive compensation is based on individual and
corporate performance and on stock performance. In the case of the Chief
Executive Officer, approximately 13.0% of his compensation (excluding long-term
compensation awards and payouts) for the fiscal year ended February 1, 1997,
consisted of a performance-based element. The
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<PAGE> 15
Compensation Committee intends to continue the policy of linking the executive
compensation to corporate performance and shareholder returns.
Members of the Compensation Committee:
Jules L. Pallone, Chairman
JoAnn S. Cousino
Carroll E. Ebert
Alfred M. Entenman, Jr.
Benton E. Kraner
Andrew J. Soffel
13
<PAGE> 16
Stock Performance Graph
The following graph compares the percentage change in the cumulative total
shareholder return on the Company's Common Stock during the Company's last five
fiscal years with the cumulative total return on the American Stock Exchange
(the "AMEX Index") and the Media General Retail Trade -- Department Stores Index
(the "Peer Group Index"), which is comprised of 26 department stores, many of
which are of significantly larger size than the Company, in terms of total
revenues. The comparison assumes the investment of $100 in the Company's Common
Stock and in each index on February 1, 1992, and the reinvestment of all
dividends, if any, through February 1, 1997.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
CROWLEY, MILNER AND COMPANY, THE AMERICAN STOCK EXCHANGE INDEX,
AND MEDIA GENERAL RETAIL TRADE -- DEPARTMENT STORES INDEX
(PERFORMANCE RESULTS FROM FEBRUARY 1, 1992
THROUGH FEBRUARY 1, 1997)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CROWLEY, MILNER PEER GROUP INDEX AMEX INDEX
(FISCAL YEAR COVERED) AND COMPANY
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 145.00 115.73 98.21
1994 185.00 148.70 117.27
1995 82.50 125.94 102.35
1996 100.00 163.13 131.19
1997 127.50 180.65 141.19
</TABLE>
CERTAIN TRANSACTIONS
Pursuant to two long-term store leases (one of which was executed in 1964
and terminates in 2001 and the other of which was executed in 1980 and was
terminated in November 1996) between the Company and two partnerships in which
Jerome L. Schostak, a director of the Company since 1995, is a partner, the
Company paid an aggregate of $1,097,000 in rentals during the fiscal year ended
February 1, 1997. Mr. Schostak has a substantial interest in such partnerships.
The terms of the two leases were negotiated by the Company with such
partnerships at a time when the partnerships were not an affiliated person or
entity.
INDEBTEDNESS OF MANAGEMENT
In June 1996, the Company provided John E. Godfrey, an Executive Officer of
the Company, with a personal loan of $100,000 at an interest rate of 8.25%. In
February 1997, Mr. Godfrey repaid such loan in full.
14
<PAGE> 17
SECTION 16(A) BENEFICIAL OWNERSHIP AND REPORTING COMPLIANCE
Under the federal securities laws, the Company's directors and executive
officers and any persons holding more than 10% of the Company's Common Stock
(collectively, the "Reporting Persons") are required to file reports with the
Securities and Exchange Commission and with the American Stock Exchange relative
to their ownership of the Common Stock. Specific due dates for filing these
reports have been established and the Company is required to disclose in this
Proxy Statement any failure to timely file these reports.
Based upon the written representations of its Reporting Persons and on
copies of the reports filed with the Securities and Exchange Commission, the
Company believes that all of these requirements were satisfied by the Company's
Reporting Persons, except that Jerome L. Schostak, a Director of the Company,
filed two late Form 4 reports, each of which disclosed one transaction, Don
DeLaura, an Executive Officer of the Company, filed a late Form 3 report, and
Jay L. Schottenstein, a beneficial owner of more than 10% of the Company's
Common Stock, filed a late Form 3 report.
OTHER MATTERS AND SHAREHOLDER PROPOSALS
At the date of this Proxy Statement, management is not aware of any matters
to be presented for action at the meeting other than those described above,
except for routine matters. If other business does properly come before the
meeting, however, the persons named in the accompanying proxy intend to vote the
proxy in accordance with their best judgment on such matters.
Any proposals of shareholders to be presented at the Annual Meeting to be
held in May 1998 which are eligible for inclusion in the Company's proxy
statement for that meeting under applicable rules of the Securities and Exchange
Commission must be received by the Company no later than 120 days prior to April
20, 1998 (the anticipated mailing date for the 1998 Annual Meeting proxy
materials), and should be sent to the Secretary of the Company at its principal
executive offices by certified mail, return-receipt requested.
Detroit, Michigan
April 22, 1997
15
<PAGE> 18
PROXY PROXY
CROWLEY, MILNER AND COMPANY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
CROWLEY, MILNER AND COMPANY
The undersigned shareholder hereby appoints DENNIS P. CALLAHAN and JOHN R.
DALLACQUA, or either one of them, the attorneys and proxies of the undersigned,
with power of substitution, to vote all of the shares of Common Stock of
Crowley, Milner and Company standing in the name of the undersigned at the close
of business on April 9, 1997, at the Annual Meeting of Shareholders of the
Company to be held on Thursday, May 22, 1997 at 11:00 a.m., Eastern Daylight
Savings Time, and at any and all adjournments thereof, with all the powers the
undersigned would possess if then and there present.
The shareholder instructs the proxies to vote as specified on this proxy on
the matters described in the Proxy Statement dated April 22, 1997. Proxies will
be voted as instructed.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION ON THE
COMPANY'S NOMINEES AS DIRECTORS AND FOR THE APPOINTMENT OF ERNST & YOUNG LLP AS
AUDITORS.
BY EXECUTION OF THIS PROXY, THE UNDERSIGNED SHAREHOLDER CONFERS UPON THE
ABOVE-APPOINTED PROXIES THE DISCRETIONARY AUTHORITY TO VOTE UPON ANY OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
The undersigned acknowledges receipt of the Proxy Statement and Notice of
said meeting, both dated April 22, 1997.
Brokers executing proxies should indicate in the space below the number of
shares with respect to which authority is conferred by this Proxy if less than
all shares held as nominees are to be voted.
Please sign exactly as your name appears. If acting as attorney, executor,
trustee or in other representation capacity, sign name and title.
PLEASE EXECUTE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE PROMPTLY.
Comments/Address Change:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE> 19
[X] PLEASE MARK VOTES AS
IN THIS EXAMPLE
WITH- FOR ALL
1. Election of directors to hold office until the FOR HOLD EXCEPT
Annual Meeting of Shareholders in 2000. / / / / / /
Nominee:
JULIUS L. PALLONE JEROME SCHOSTAK
DONALD N. BAILEY THOMAS KETTELER
If you do not wish your shares to be voted "FOR" a particular nominee, mark
the "For All Except" box and strike a line through the nominee(s) name.
Your shares will be voted for the remaining nominee(s).
2. Appointment of Ernst & Young LLP as FOR AGAINST ABSTAIN
independent auditors for the fiscal / / / / / /
year ending January 31, 1998.
Be sure to sign and date this Proxy Date_____________________
______Shareholder sign here_____________________ Co-owner sign here_____________
Mark box at right if comments or address change have been noted on the
reverse side of this card. [ ]
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DETACH CARD
