DOLLAR GENERAL CORPORATION
Nashville, Tennessee
Telephone (615) 783-2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 1997
The Annual Meeting of Stockholders of Dollar General Corporation
will be held in the corporate auditorium of Dollar General
Corporation, 427 Beech Street, Scottsville, Kentucky, on June 2,
1997, at 11:00 a.m., local time, for the following purposes:
1. To elect nine (9) directors to serve until the next
Annual Meeting of Stockholders and until their successors are duly
elected and qualified; and
2. To transact such other business as may properly come
before the meeting or any adjournments thereof.
Only stockholders of record at the close of business on April
14, 1997 are entitled to notice of and to vote at the Annual
Meeting. Your attention is directed to the Proxy Statement
accompanying this notice for a more complete statement regarding
the matters to be acted upon at the Annual Meeting.
By order of the Board of Directors
April 28, 1997 Bob Carpenter
Vice President,
Chief Administrative Officer
and Secretary
We urge you to attend the Annual Meeting. Whether you plan to
attend, please complete, date and sign the enclosed proxy card and
return it in the enclosed postage-paid envelope. You may revoke
the proxy at any time before it is voted.
<PAGE>1<PAGE>
DOLLAR GENERAL CORPORATION
Nashville, Tennessee
Telephone (615) 783-2000
Proxy Statement for
Annual Meeting of Stockholders
The enclosed proxy is solicited by the Board of Directors of
Dollar General Corporation (the "Company") for use at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held in the
corporate auditorium at Dollar General Corporation, 427 Beech
Street, Scottsville, Kentucky, on June 2, 1997, at 11:00 a.m.,
local time, and any adjournments thereof. This proxy material was
first mailed to stockholders on or about April 28, 1997.
The purposes of the Annual Meeting are to elect nine (9)
directors and transact such other business as may properly be
brought before the Annual Meeting or any adjournments thereof. The
Board of Directors recommends a vote "FOR" the election of the
nominees as directors.
All valid proxies which are received will be voted in
accordance with the recommendations of the Board of Directors
unless otherwise specified thereon. Any stockholder giving a proxy
is entitled to revoke it by giving the Secretary of the Company
written notice of such revocation at any time before it has been
voted.
Only holders of the Company's Common Stock, $.50 par value per
share (the "Common Stock"), and Series A Convertible Junior
Preferred Stock, no par value per share (the "Series A Preferred
Stock"), of record at the close of business on April 14, 1997, are
entitled to vote at the meeting. On such date, the Company had
108,567,948 outstanding shares of Common Stock, the holders of
which are entitled to one vote for each share held and to
cumulative voting in the election of directors. On such date, the
Company had 1,715,742 issued and outstanding shares of Series A
Preferred Stock, the holders of which are entitled to 9.76 votes
for each share of Series A Preferred Stock held (an aggregate
voting power equal to 16,775,291 shares of Common Stock) and to
cumulative voting in the election of directors. Pursuant to the
Company's Restated Articles of Incorporation, each share of Series
A Preferred Stock shall entitle the holder thereof to vote with the
holders of Common Stock on all matters submitted to a vote of the
holders of the Common Stock.
The mailing address of the principal executive offices of the
Company is 104 Woodmont Boulevard, Suite 500, Nashville, Tennessee
37205. The Company also maintains an operations office at 427
Beech Street, Scottsville, Kentucky 42164.
<PAGE>2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information furnished
to the Company as of January 31, 1997 concerning persons who are
the beneficial owners of more than five percent (5%) of the
Company's Common Stock. Unless otherwise indicated, the person for
whom information is provided had sole voting and investment power
over the Common Stock and/or Series A Preferred Stock shares as
beneficially owned.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership - Percent of Class -
Name and Address of Common Stock/Series Common Stock/Series A
Beneficial Owner A Preferred Stock(1) Preferred Stock
<S> <C> <C>
Cal Turner, Jr. 19,323,053/1,715,742(2) 18.2%/100.0%
104 Woodmont Blvd., Suite 500
Nashville, TN 37205
James Stephen Turner 16,312,532/1,643,037(3) 15.4%/95.8%
138 Second Avenue
Nashville, TN 37201
Turner Children Trust 15,750,121/1,613,742(4) 14.8%/94.1%
dated January 21, 1980,
Cal Turner, Jr. and James
Stephen Turner, Co-Trustees
104 Woodmont Blvd., Suite 355
Nashville, TN 37205
W. P. Stewart 6,308,972/NA(5) 7.4%/NA
527 Madison Avenue
New York, NY 10022
_____________________
</TABLE>
(1)The Common Stock is the only equity security of the Company
registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended. The Series A Preferred Stock is (i) convertible
into Common Stock pursuant to the terms and conditions set forth in
the Restated Articles of Incorporation (currently, the conversion
ratio is 9.76 shares of Common Stock for each share of Series A
Preferred Stock) and (ii) is voted with the Common Stock on all
matters presented to the holders of Common Stock.
(2)Includes 15,750,121 shares of Common Stock issuable upon
conversion of the Series A Preferred Stock held by the Turner
Children Trust (for which Mr. Turner serves as Co-Trustee with Mr.
James Stephen Turner); 709,600 shares of Common Stock issuable upon
conversion of the Series A Preferred Stock held by the Cal Turner
Family Foundation (for which Mr. Turner serves as Trustee); 285,919
shares of Common Stock issuable upon conversion of the Series A
Preferred Stock held by the Turner Foundation for Lindsey Wilson
College, Inc. (for which Mr. Turner serves as Co-Trustee with Mr.
James Stephen Turner); 283,443 shares of Common Stock held by
various trusts and foundations for which Mr. Turner has sole voting
and investment power; 238,416 shares of Common Stock held by Mr.
Turner's wife; 3,572 shares of Common Stock held in the Employee
Stock Ownership Plan; and 429,142 shares of Common Stock which may
be acquired upon the exercise of options which are currently
exercisable or exercisable within 60 days of the date hereof. Mr.
Turner disclaims ownership of the shares of Common Stock and/or
Series A Preferred Stock held by the various trusts and
foundations, except to the extent of his pecuniary interests.
<PAGE>3SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS (Continued)
(3)Includes 15,750,121 shares of Common Stock issuable upon
conversion of the Series A Preferred Stock held by the Turner
Children Trust (for which Mr. Turner serves as Co-Trustee); 285,919
shares of Common Stock issuable upon conversion of the Series A
Preferred Stock held by the Turner Foundation for Lindsey Wilson
College, Inc. (for which Mr. Turner serves as a Co-Trustee);
157,338 shares of Common Stock held by various trusts for which Mr.
Turner has sole voting and investment power; and 18,496 shares of
Common Stock held by Mr. Turner's wife. Mr. Turner disclaims
ownership of the shares of Common Stock and/or Series A Preferred
Stock held by the various trust and foundations, except to the
extent of his pecuniary interests.
(4)The shares of Common Stock represented are the number of shares
issuable upon conversion of the Series A Preferred Stock held by
the Turner Children Trust. See notes (2) and (3) above.
(5)Pursuant to the Schedule 13G filed on February 18, 1997 by W. P.
Stewart & Co., Inc., it reported sole voting and dispositive power
with respect to all 6,308,972 shares.
<PAGE>4
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains certain information (furnished by
the individuals named) concerning each of the director nominees,
the executive officers named in the Summary Compensation Table (the
"Named Executive Officers") and all executive officers and
directors as a group. Unless otherwise indicated, the persons for
whom information is provided had sole voting and investment power
over the shares of Common Stock and/or Series A Preferred Stock
shown as beneficially owned. Computations are based on 106,210,000
shares of Common Stock and 1,715,742 shares of Series A Preferred
Stock outstanding as of January 31, 1997.
<TABLE>
<CAPTION>
Shares of Stock Beneficially Owned
Director
Nominee/Executive or Officer Series A Percent of Common Percent of
Officer Age Since Preferred Stock Class Stock Class(1)
(S> <C> <C> <C> <C> <C> <C>
James L. Clayton 63 1989 168,888(2) *
Reginald D. Dickson 51 1993 14,822(3) *
John B. Holland 65 1988 185,896(4) *
Barbara M. Knuckles 49 1995 4,728(5) *
Wallace N. Rasmussen 82 1990 25,318 *
Cal Turner 81 1995 2,238,370(6) 2.1
David M. Wilds 56 1991 84,656(7) *
William S. Wire, II 65 1989 21,038(8) *
Cal Turner, Jr. 56 1966 1,715,742 100.0 19,323,053(9) 18.2
Bob Carpenter 49 1981 465,810(10) *
Walter S. Carter, III 49 1994 143,682(11) *
Mike Ennis 43 1988 210,372(12) *
Leigh Stelmach 57 1989 262,210(13) *
All directors and 1,715,742 100.0 23,778,586(14) 22.4
executive officers as a
group (21) persons
</TABLE>
(1)*Denotes less than 1% of class.
(2)Includes 92,102 shares of Common Stock issuable upon the
exercise of outstanding options currently exercisable or
exercisable within 60 days.
(3)Includes 9,572 shares of Common Stock issuable upon the exercise
of outstanding options currently exercisable or exercisable within
60 days.
(4)Includes 92,101 shares of Common Stock issuable upon the
exercise of outstanding options currently exercisable or
exercisable within 60 days.
(5)Includes 4,572 shares of Common Stock issuable upon the exercise
of outstanding options currently exercisable or exercisable within
60 days.
<PAGE>5
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(Continued)
(6)Includes 2,238,298 shares beneficially owned by trusts
established for the benefit of his children for which Mr. Turner
serves as Trustee. Mr. Turner is the father of Cal Turner, Jr.
(7)Includes 60,632 shares of Common Stock issuable upon the
exercise of outstanding options currently exercisable or
exercisable within 60 days.
(8)Includes 15,800 shares of Common Stock issuable upon the
exercise of outstanding options currently exercisable or
exercisable within 60 days.
(9)See Note 2 on page 2. Cal Turner, Jr. is the son of Cal Turner.
(10)Includes 251,245 shares of Common Stock issuable upon the
exercise of outstanding options currently exercisable or
exercisable within 60 days. Also includes 165,032 shares for which
Mr. Carpenter has shared voting and investment rights as a Co-Trustee of
the Calister Turner, III 1994 Generation Skipping Trust.
(11)Includes 132,746 shares of Common Stock issuable upon the
exercise of outstanding options currently exercisable or
exercisable within 60 days. Mr. Carter resigned in March 1997.
(12)Includes 9,584 shares of Common Stock issuable upon the
exercise of outstanding options currently exercisable or
exercisable within 60 days
(13)Includes 129,721 shares of Common Stock issuable upon the
exercise of outstanding options currently exercisable or
exercisable within 60 days.
(14)Includes 1,516,843 shares of Common Stock issuable upon the
exercise of outstanding options currently exercisable or
exercisable within 60 days and 15,750,121 shares of Common Stock
issuable upon conversion of the Series A Preferred Stock.
<PAGE>6
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Directors are elected each year to hold office until the next
Annual Meeting of Stockholders and until their successors are duly
elected and qualified. The current Board of Directors consists of
nine members, and at its March 1997 meeting, the Board of Directors
nominated each of the current directors as nominees to stand for
election at the 1997 Annual Meeting.
In the election of directors, pursuant to the Kentucky
Business Corporation Act, each stockholder shall have the right to
cast as many votes in the aggregate as he shall hold shares of
Common Stock (or Series A Preferred Stock as adjusted for its
voting rights) multiplied by the number of directors to be elected;
and each stockholder may cast the whole number of votes for any one
nominee or distribute such votes among two or more nominees.
Unless contrary instructions are received, the enclosed proxy will
be voted in favor of electing as directors the nominees listed
below. Each nominee has consented to be a candidate and to serve,
if elected. While the Board has no reason to believe any nominee
will be unable to accept nomination or election as a director, if
such an event should occur, the proxies will be voted with
discretionary authority for a substitute or substitutes as shall be
designated by the current Board of Directors.
Certain information concerning each of the nominees is set
forth below:
James L. Clayton serves as Chief Executive Officer of Clayton
Homes, Inc. Clayton Homes, Inc. produces, sells and finances
manufactured homes. Mr. Clayton served as President of Clayton
Homes, Inc. from 1956 through 1993. Mr. Clayton also serves as
Chairman of BankFirst (formerly First Heritage Bank) and has held
such position since 1992. In addition, Mr. Clayton is a director
of ROC Communities, Inc., a manufactured housing company, and
Goody's Family Clothing, Inc., a retail clothing store chain.
Reginald D. Dickson is Chairman of Buford, Dickson, Harper &
Sparrow, Inc., investment advisors, and President Emeritus of
Inroads, Inc., a non-profit organization supporting minority
education. Mr. Dickson served as President and Chief Executive
Officer of Inroads, Inc. from 1983 to 1993. He also serves as a
director of First American Corporation, a bank holding company.
John B. Holland served as President and Chief Operating
Officer of Fruit of the Loom, Inc. a manufacturer of underwear and
other soft goods, until his retirement in February 1996, at which
time he became a consultant to that corporation. Mr. Holland is a
member of the board of directors of Camping World, Inc., a camping
supply outfitter, and Fruit of the Loom, Inc.
Barbara M. Knuckles is the Director of Corporate and External
Relations for North Central College in Naperville, Illinois. From
1988 to 1992, Ms. Knuckles was a private investor managing several
family businesses. Ms. Knuckles serves as a member of the board of
directors of J. R. Short Milling Company, a privately-held
specialty corn-milling company, and Harris Bank of Naperville,
Illinois.
Wallace N. Rasmussen served as Chairman of the Board and Chief
Executive Officer of Beatrice Foods, Inc., until his retirement in
June 1979.
Cal Turner, the founder of the Company, served as Chairman of
the Board from 1955 until December 1988. He is currently a
consultant to the Company.
Cal Turner, Jr. is the Chief Executive Officer of the Company.
Mr. Turner joined the Company in 1965 and has held the office of
Chief Executive Officer since 1977. Mr. Turner has served as
Chairman of the Board since January 1989 and served as President
from 1977 to 1997. Mr. Turner is a member of the board of
<PAGE>7
directors of First American Corporation, Thomas Nelson, Inc., a
publishing company, and Shoney's, Inc., a family dining restaurant
company.
David M. Wilds is a principal of Nelson Capital Corp., a
merchant banking company. From 1990 to 1995, Mr. Wilds served as
Chairman of the Board of Cumberland Health Systems, Inc., an owner
and operator of psychiatric hospitals. Mr. Wilds is a director of
Phillips & Brooks, Inc., a telecommunications company.
William S. Wire, II served from 1986 until his retirement on
January 31, 1994 as Chairman of the Board of Genesco, Inc., a
manufacturer, wholesaler and retailer of footwear and clothing.
Mr. Wire served as Chief Executive Officer of Genesco, Inc. from
April, 1986 to January 31, 1993. Mr. Wire serves as a director of
First American Corporation, and Genesco, Inc.
COMMITTEES OF THE BOARD. The Company has a Corporate
Governance and Compensation Committee ("CGC Committee") and an
Audit Committee.
The CGC Committee consists of Messrs. Rasmussen, Wilds and
Wire (Chairman). The CGC Committee reviews and recommends policies
and practices for the Company's corporate governance profile and
sets the total compensation of, and reports to the Board of
Directors initial and proposed salary changes paid to, all
executive officers and any employee whose annual compensation
exceeds that of the lowest paid executive officer. The CGC
Committee reviews the compensation policies of the Company and
compensation programs in which officers may participate. In
addition, the CGC Committee develops general criteria concerning
the qualifications and selection of Board members and officers, and
recommends candidates for such positions to the Board of Directors.
The CGC Committee will consider persons recommended by stockholders
as potential nominees for directors, if the names of such persons
are submitted in writing to the chairman of the CGC Committee or
the Secretary of the Company. The recommendations must be
accompanied by a full statement of qualifications and an indication
of the person's willingness to serve. The CGC Committee also
administers the Company's stock option plans, excluding the 1988
Outside Directors' Plan, the 1993 Outside Directors' Plan, and the
1995 Outside Directors' Stock Option Plan which are administered by
Cal Turner and Cal Turner, Jr. At least one time per year, the CGC
Committee specifically reviews the standards of performance of the
President and the Chief Executive Officer ("CEO") for compensation
purposes. (See "Report of the Corporate Governance and
Compensation Committee of the Board of Directors on Executive
Compensation.") The CGC Committee met eight times during fiscal
1997.
The Audit Committee is composed of Messrs. Clayton, Dickson,
Holland (Chairman) and Ms. Knuckles. The functions of the Audit
Committee include providing advice and assistance regarding
accounting, auditing, corporate compliance and financial reporting
practices of the Company. Annually, the Audit Committee recommends
to the Board a firm of independent certified public accountants to
serve as auditors. The Audit Committee will review with the
auditors the scope and results of the auditors's annual audit, fees
in connection with their audit and nonaudit services, and the
independence of the Company's auditors. The Audit Committee met
three times during fiscal 1997.
During fiscal 1997, the Board of Directors held five meetings.
All directors attended more than 75% of the aggregate number of
meetings of the Board and the committees on which they served.
COMPENSATION OF DIRECTORS. Directors receive a $5,000
quarterly retainer plus $1,250 for attending each regular meeting
of the Board or any committee meeting. Committee Chairmen receive
an additional $250 for each committee meeting attended.
Compensation for telephonic meetings is one-half the above rates.
Board members who are officers of the Company do not receive any
separate compensation for attending Board meetings, or committee
meetings if requested by the committee to participate therein. In
<PAGE>8
addition, the directors who are not employees of the Company are
entitled to receive nondiscretionary options for the purchase of
Common Stock pursuant to the 1995 Outside Directors' Stock Option
Plan.
DEFERRED COMPENSATION PLAN FOR DIRECTORS. In December 1993,
the Board of Directors unanimously approved a voluntary,
nonqualified compensation plan for director compensation. All
outside directors are eligible to participate in the plan. Under
the plan, each director may voluntarily defer receipt of all or a
part of any fees normally paid by the Company to the director. The
fees eligible for deferral are defined as retainer, board meeting
fees and committee meeting fees. The compensation deferred is
credited to a liability account which is increased quarterly at a
minimum rate of 6% per year. The benefits will be paid, upon
termination from the Board, as deferred compensation to the
director as a lump sum of the accumulated account, as follows: (a)
upon attaining age 65 or any age thereafter; (b) in the event of
total disability; (c) in the event of death; or (d) in the event of
voluntary termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
During fiscal 1997, the CGC Committee was comprised of Messrs.
Rasmussen, Wilds and Wire. None of these persons has at any time
been an officer or employee of the Company or any subsidiary. No
executive officer of the Company served during fiscal 1997 as a
member of a compensation committee or as a director of any entity
of which any of the Company's directors served as an executive
officer.
REPORT OF THE CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE OF
THE
BOARD OF DIRECTORS OF EXECUTIVE COMPENSATION
The three-member CGC Committee prepared the following
executive compensation report.
A. COMPENSATION PHILOSOPHY
The Company has adopted the concept of pay-for-performance
linking management compensation, Company performance and
stockholder return. This strategy reflects the Company's desire to
pay for results that are consistent with the key goals of the
Company and the stockholders. The CGC Committee and the Company
believe that combining variable, direct and indirect pay components
of its compensation program enables the Company to attract, retain
and motivate results-orientated employees to achieve higher levels
of performance.
1. VARIABLE COMPENSATION PHILOSOPHY
At nearly all levels of the Company, a significant
portion of pay is variable being contingent upon Company (or store
unit) performance. The performance-based component, whether annual
incentive or long-term incentive, is significant enough to serve as
a strong incentive for excellent performance. Additionally,
performance-based compensation through the granting of stock
options to employees serves to increase employee ownership of the
Company.
2. DIRECT COMPENSATION PHILOSOPHY
Though performance-based compensation is to be
emphasized, base pay is competitive. The Company believes base pay
should relate to the skills required to perform a job and to the
value of each job performed relative to the industry, market and
strategic importance to the Company. This method of valuation
allows the Company to respond to changes in its employment needs
and changes in the labor market. Increases in base pay require a
satisfactory or better level of performance as determined by the
CGC Committee.
<PAGE>9
3. INDIRECT COMPENSATION PHILOSOPHY
The Company's indirect-compensation programs are intended
to protect its employees from extreme financial hardship in the
event of a catastrophic illness or injury and provide limited
income security for retirement years. Health, life and disability
benefit programs should provide competitive levels of protection
without jeopardizing the Company's position as a low-cost retailer.
The Company manages health care costs aggressively and enlists
employee assistance in cost management. Employees have various
opportunities to share in health care cost-reductions and are
encouraged to adopt healthy lifestyles.
The Company's retirement plans should provide limited income
security at retirement for the typical employee. The Employee
Stock Ownership Plan reflects the Company's commitment to
widespread stock ownership of the Company by employees at all
levels of employment. Employees are also invited to share in
ownership of the Company through participation in the Dollar
General Employee Stock Purchase Plan.
B. EXECUTIVE OFFICER COMPENSATION
Under the supervision of the CGC Committee, the Company has
developed compensation policies and programs designed to provide
competitive levels of compensation that integrate pay with the
Company's annual and long-term performance goals. The Company is
committed to creating an incentive for its employees to contribute
to the overall results of the Company thereby encouraging a team
approach toward accomplishment of corporate objectives and creating
value for stockholders.
The executive officers' compensation for fiscal 1997 reflected
the Company's increasing emphasis on tying pay to both short-term
and long-term incentives. The short-term incentive is an annual
cash bonus based on a percentage of the executive officer's salary.
The long-term incentives are performance-accelerated stock options.
Incentive pay awarded to the CEO and the other Named Executive
Officers was controlled by Company performance goals which are
established annually. While the CGC Committee's approach to base
compensation is to offer competitive (although slightly lower-than-average)
salaries to the CEO and the other Named Executive Officers
in comparison with market practices, base salaries have become a
relatively smaller element in the total executive officer
compensation package as compared with the Company's pay-for-performance
component. The fiscal 1997 average base salaries for
the Named Executive Officers (not including the CEO) increased
8.3%. The increase in base salaries in fiscal 1997 was determined
based upon recommendations made by the human resources department
to the CGC Committee, a review of peer group comparison data (using
the peer group compensation survey published by Management
Compensation Services) (1) and the subjective analysis of the CGC
Committee after evaluating the recommendations, peer group data,
the Company's overall performance and the respective individual
performance criteria of the Named Executive Officers.
____________________
(1)The peer group compensation survey is published annually by
Management Compensation Services. The 1996 survey included the
following mass-merchandising companies: Ames Department Stores,
Bradlees, Caldor, Consolidated Stores, Dayton Hudson, Filene's
Basement, Garden Ridge, Hills Department Stores, K-Mart Stores, Mac
Frugal's Bargains/Closeouts, Meijer, Montgomery Ward, Pamida,
Quality Stores, Ross Stores, Sears Roebuck, Service Merchandise,
ShopKo Stores, TJX Companies, Venture Stores, and Wal-Mart Stores.
For the past seven years the Company has used this well-known peer-group
annual salary survey when reviewing and establishing the
Company's executive compensation policies. Because the Company
uses this survey for executive compensation comparison and because
the Company ties executive compensation directly to Company
performance, the same peer group survey, with the exception of
those companies that are not publicly traded (and for which stock
comparison data are therefore unavailable), is used for Company
performance comparison purposes.
<PAGE>10
1. ANNUAL CASH BONUSES
The Company's annual cash bonus opportunity for the
executive officers makes up the short-term incentive component of
their cash compensation. The payment of annual cash bonuses is
based on both objective and subjective criteria.
Objective criteria include actual earnings-per-share results
versus target earnings-per-share results as established by the CGC
Committee at the end of the prior fiscal year. The Company uses
earnings-per-share improvement for determining target goals for the
executive officers' variable pay for primarily two reasons: first,
it is a defined measure of total Company performance and second, it
is a measure that can be easily identified and reviewed by
stockholders.
Under the cash bonus incentive program effective for fiscal
1997, there were three earnings-per-share goals established by the
Committee, each exceeding the prior year's performance. If the
Company reached the first established or "target" goal, which was
considered by the CGC Committee to be challenging, then 25% of
salary was to be awarded as a cash bonus. If the mid-level goal
was met, the executive officers were to receive 50% of salary as a
cash bonus, and if the Company reached the third, or "stretch"
goal, which was considered by the Committee to be extremely
challenging, then the executive officers receive 75% of salary as a
cash bonus.
Subjective performance criteria include the results of each
executive officer's performance review pursuant to the Company's
Performance Development Process ("PDP"). The Company's PDP is a
comprehensive program that focuses on total performance improvement
by concentrating on "Key Development Areas" ("KDA") and "Key
Results Areas" ("KRAs). KDAs emphasize skill enhancement,
leadership development, and career goal aspirations of employees.
KRAs focus on the key results required to actively pursue the
Company's mission. KDAs and KRAs are set annually for each
management employee by the employee's supervisor, and the payment
of an annual bonus is dependent upon each executive officer
achieving his individual goals. That is, Company performance is
not the sole criterion by which an executive officer's annual cash
bonus payout is determined. Two factors determine whether an
executive officer would receive an annual cash bonus: (a) The
Company must achieve an established earnings-per-share improvement
goal; and (b) the individual must achieve a satisfactory
performance evaluation based upon the above-described PDP factors.
Therefore, full weight is given to each of these factors.
Because the Company did not reach its cash bonus target goal for
fiscal 1996, the CEO and executive officers did not receive a cash
bonus in fiscal 1997. Because the Company reached its stretch goal
for fiscal 1997, the CEO and executive officers will receive the
maximum cash bonus award (paid in fiscal 1998).
2. EMPLOYEE STOCK INCENTIVE PLAN
The Company's 1989 Employee Stock Incentive Plan ("1989
Plan"), 1993 Employee Stock Incentive Plan ("1993 Plan") and 1995
Employee Stock Incentive Plan ("1995 Plan") award non-qualified
performance-accelerated stock options to the executive officers,
department directors and other personnel considered to be in key
positions, as approved by the CGC Committee.
In fiscal 1994, the CGC Committee granted performance-accelerated
stock options under its "Stock Incentive" program with
three annual accelerated vesting schedules (fiscal 1995, fiscal
1996, and fiscal 1997) based on the achievement of corporate
performance goals (as measured by earnings-per-share improvement)
and individual performance goals (as measured by a comprehensive
review process, the PDP). To further encourage outstanding
performance, the CGC Committee adopted a compensation program that
ties the acceleration of stock option vesting to earnings-per-share
goals. Each executive officer receives stock option
<PAGE>11
grants with a nine and one-half year vesting schedule. However, if
the executive officer meets his individual goal and the Company
meets or exceeds its established earnings-per-share goal then the
stock option grant tied to that goal will vest earlier than nine
and one-half years. If the CGC Committee-established target
earnings-per-share goal for the Stock Incentive program is met,
then one of the grants (equaling approximately 67% of the total
stock-based award tied to that fiscal year's performance) will vest
on an accelerated basis.
In determining the number of the shares subject to stock options
granted to the employees eligible to participate in the stock
incentive plans, the CGC Committee takes into account the
respective scope of accountability, the strategic and operational
responsibilities of such employees, as well as the salary levels of
such employees.
Compensation data from the Management Compensation Services
compensation survey reveals that annual stock grants (calculated as
grant price times the number of shares granted) for the peer group
companies are typically expressed as a multiple of salary. For the
CEO, annual grant amounts fall within a range of one to three times
the CEO's annual salary, and executive officers' grant amounts fall
within a range of one-half to one and one-half times the executive
officer's salary. Because the CGC Committee has decided to place
greater emphasis on the performance-based component of
compensation, it pays lower-than-average salaries for the CEO and
other executive officers but sets incentive compensation multiples
at or above the high end of the peer group survey ranges for these
positions. Specifically, the CGC Committee has established an
incentive compensation multiple of approximately three to four-and-one-half
times salary for determining annual stock option grants
for the CEO and the other executive officers. These options are
valued by multiplying the option exercise price (fair market value
at the time of grant) by the number of shares granted.
In addition, the CGC Committee established a stock-option
program called the "Stock Plus" program. This program, which is
composed of option grants under the 1989 Plan, the 1993 Plan and
the 1995 Plan, awards each executive officer additional stock
options if the executive officer maintains from May 1 to April 30
of the grant year a level of Company-stock ownership (determined by
the fair market value as set by the New York Stock Exchange trading
price at the close of business on April 1) equal to at least
two-and-one-half times his salary. The CEO is required to maintain
ownership of four times his salary to be eligible to participate in
this program.
Because (1) the Company exceeded its stock option program
stretch earnings-per-share improvement goals for fiscal 1997, (2)
each Named Executive Officer achieved his previously-established
performance goals, and (3) each Named Executive Officer met the
ownership requirements of the Stock Plus program, the maximum
number of options which could vest on an accelerated basis or
otherwise in fiscal 1997 became fully vested.
Because (1) the Company met, but did not exceed, its stock
option program target earnings-per-share goals for fiscal 1996, (2)
each Named Executive Officer achieved his previously-established
performance goals, and (3) each Named Executive Officer met the
ownership requirements of the Stock Plus program, the first-level
stock option grants vested in fiscal 1996 on an accelerated basis
for each Named Executive Officer.
C. CHIEF EXECUTIVE OFFICER COMPENSATION
As with the other executive officers, the CEO's compensation
reflects the Company's increasing emphasis on tying compensation to
both short-term and long-term performance goals. When determining
the CEO's salary, the CGC Committee considers the CEO's prior-year
performance and expected future contributions to the Company as
well as peer-industry survey results published annually. As
compared to the industry comparison group, the CEO's salary was
18.3% less than the group median. The 9.1% increase in the CEO's
salary in 1997 compared with 1996 was a result of the CGC
Committee's decision to reward him for his
<PAGE>12
leadership and the Company's outstanding performance, is measured
by, but not limited to, such factors as earnings-per-share
improvement, sales and profit increases and expense reduction.
The CGC Committee, believing that the CEO should have some
compensation at risk in order to encourage performance that
maximizes stockholder return, has created a significant opportunity
for additional compensation through performance-based incentives.
The performance-based compensation for which the CEO ie eligible
takes the form of both short-term and long-term incentives. Like
the other executive officers, the CEO is eligible for a cash bonus
(the short-term incentive) based on the attainment of individual
goals and earnings-per-share improvement goals. Also like the
other officers, the CEO is eligible for Stock Incentive program
non-qualified performance-accelerated stock options and stock-ownership-based
Stock Plus program stock options (the long-term
incentive). The Stock Incentive program stock options, which has a
nine and one-half year vesting schedule, can be accelerated to an
earlier year upon the attainment of Committee-established earnings-per-share
improvement goals, and individual performance goals.
The CGC Committee believes that in order to maximize the CEO's
performance, a substantial portion of the CEO's compensation should
be tied directly to overall Company performance. Consistent with
this philosophy, the CGC Committee has established a lower-than-average
salary for the CEO (as compared to CEOs of the peer-group
compensation survey participants) while emphasizing the
pay-for-performance components of the CEO's total compensation package.
When considering the CEO's pay-for-performance component of his
compensation package, the Committee took into consideration prior
pay-for-performance awards. The CGC Committee determined that
based on the CEO's individual performance and the performance of
the Company, it was important to continue its incentive
compensation program in a manner that is competitive in the
industry and that continues to motivate and reward outstanding
performance.
Under the Company's short-term incentive program (cash bonus),
the CEO's total possible cash-bonus incentive is 100% of his
salary. To be eligible for an earnings-per-share improvement cash
bonus award, the CEO must achieve personal performance goals
established by the CGC Committee, and the Company must meet at
least one of its cash bonus program earnings-per-share improvement
goals. If the CEO meets his individual performance goals and the
Company meets its Committee-established cash bonus program "target"
goal, the CEO will receive a cash bonus equal to 25% of his annual
salary. If the CEO's individual goals and the CGC
Committee-established cash bonus program "mid'level" earnings-per-share
improvement goal are met, then the CEO will receive a cash bonus
equal to 50% of his annual salary. If the CEO's individual goals
are met and the CGC Committee-established cash bonus program
"stretch" earnings-per-share improvement goal is met, then the CEO
will receive a cash bonus equal to 100% of his annual salary.
Because the Company achieved its stretch earnings-per-share goal
set for fical 1997 and the CEO achieved his personal performance
goals set for fiscal 1997, the CEO's short-term incentive
compensation program rewarded the CEO with a cash bonus (paid in
fiscal 1998) of 100% of his annual salary. Because the Company did
not reach its cash bonus "target" earnings-per-share improvement
goals for fiscal 1996, the CEO was not paid a cash bonus in fiscal
1997 for fiscal 1996 performance.
The CEO's long-term incentive compensation program effective for
fiscal 1996 rewards the CEO with stock option grants up to
approximately three to four and one-half times his annual salary.
If the CGC Committee-established stock option program"target"
earnings-per-share goals are met and the CEO meets his individual
performance goals, he will vest on an accelerated basis in a stock
option grant that represents approximately 67% of the total non-Stock
Plus stock option benefit. If both individual and stock
option program "stretch" earnings-per-share goals are met, then the
CEO will vest on an accelerated basis in a stock option grant that
represents the remaining possible stock option benefit
(approximately 33% of the total benefit).
<PAGE>13
The CEO is also eligible to participate in the Company's Stock
Plus program. This program, which is composed of option grants
under the 1989 Plan, the 1993 Plan and the 1995 Plan, rewards the
CEO with additional stock options if the CEO maintains a level of
Company-stock ownership equal to at least four times his salary.
For fiscal 1997, because the Company exceeded the Committee-established
stretch earnings-per-share improvement goals, the CEO
achieved previously-established subjective performance goals and
the CEO met the Company stock ownership requirement, the CEO
vested, on an accelerated basis, in the maximum number of the
available stock option grants.
In fiscal 1996, because the Company met its stock option program
target earnings-per-share improvement goal, the CEO met his
individual performance goals and the CEO met the Company stock
ownership requirements, the CEO vested on an accelerated basis, in
the first-level stock option grants.
D. DEDUCTIBILITY
The CGC Committee continues to analyze the potential impact of
the $1,000,000 limit on the deductibility of executive compensation
for federal income tax purposes enacted as part of the 1993 Omnibus
Budget Reconciliation Act ("OBRA"). Under the regulations,
compensation pursuant to the Company's stock plans should qualify
as "performance-based" and, therefore, should be excluded from the
$1,000,000 limit. Other forms of compensation provided by the
Company to its executives, however, are not excluded from such
limit. While the Company does not believe that the impact of the
$1,000,000 limit will be material in any year, the CGC Committee is
evaluating the possibility of allowing any affected executive to
defer that portion of the executive's compensation in excess of the
$1,000,000 limit to a year in which the limit would not be
exceeded.
William S. Wire, II - Committee Chairman
Wallace N. Ramussen
David M. Wilds
<PAGE>14
COMMON STOCK PERFORMANCE
As a part of the executive compensation information presented in
this Proxy Statement, the Securities and Exchange Commission
requires the Company to prepare a performance graph that compares
its cumulative total stockholders' return during the previous five
years with a performance indicator of the overall stock market and
the Company's peer group. For the overall stock market performance
indicator, the Company has chosen to use the S&P Midcap 400 Index.
For the peer group, the Company has chosen to use the publicly-held
participants of the compensation survey published by Management
Compensation Services used by the Committee when reviewing and
establishing the Company's executive compensation policies. See
"Report of the Corporate Governance and Compensation Committee of
the Board of Directors on Executive Compensation."
<TABLE>
<CAPTION>
1/92 1/93 1/94 1/95 1/96 1/97
<S> <C> <C> <C> <C> <C> <C>
Dollar General 100 152 233 347 337 528
Corporation
S & P Midcap 400 100 111 128 122 160 196
</TABLE>
<PAGE>15<PAGE>
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term
or other compensation paid or accrued during fiscal years 1997,
1996 and 1995 for the Company's Chief Executive Officer and the
persons who, at the end of fiscal 1997, were the other four most
highly-compensated executive officers of the Company (collectively
the "Named Executive Officers"). (Please see table notes on the
following page.)
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
Securities
Name Other Annual Underlying All Other
and Fiscal Salary Bonus Compensation Options Compensation
Principal Position Year ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Cal Turner, Jr.(1) 1997 586,564 0 9,425 188,334 60,795
Chairman, President and 1996 537,500 500,000 9,508 184,147 59,420
Chief Executive Officer 1995 474,220 200,000 10,034 488,657 59,420
Bob Carpenter 1997 174,168 0 9,305 64,346 6,000
Chief Administrative 1996 157,500 112,500 8,534 61,945 6,000
Officer, Corporate 1995 147,082 70,000 8,773 64,557 6,000
Secretary and Chief
Counsel
Walter S. Carter(2) 1997 151,562 0 5,004 64,346 6,000
Vice President 1996 135,830 62,500 23,132 61,945 6,000
Distribution and 1995 23,991 2,169 7,747 101,560 0
Mike Ennis 1997 157,064 0 3,369 46,767 6,000
Vice President 1996 147,500 105,000 2,636 46,875 6,000
Merchandising Operations 1995 139,379 62,500 2,636 69,056 6,000
Leigh Stelmach 1997 270,314 0 9,588 64,346 6,000
Executive Vice President 1996 251,250 168,750 8,851 61,945 6,000
Operations 1995 212,832 87,500 8,851 64,557 6,000
Logistics
</TABLE>
(1)Effective January 13, 1997, Mr. Turner resigned as President and
continues in his capacity as CEO. Mr. Bruce Krysiak was elected by
the Board of Directors to serve as President effective January 13,
1997.
(2)Mr. Carter resigned in March 1997.
<PAGE>16
NOTES TO SUMMARY COMPENSATION TABLE:
OTHER ANNUAL COMPENSATION - The amounts reported in this column
reflect gross-ups for tax reimbursements.
SECURITIES UNDERLYING OPTIONS - The Stock Incentive Program and
Stock Plus Program stock option grants granted in fiscal 1997 will
vest nine and one-half years after the date of grant provided the
executive officer is still employed by the Company. The vesting
dates for each Stock Incentive program grant can be accelerated to
April 1 in the year immediately following the associated year-end
if the individual officer meets his individual performance goals
and the Company meets its earnings-per-share improvement goals set
for that year. The Stock Plus program grants have the additional
requirement that the holder must maintain a specified level of
Company stock ownership for vesting to be accelerated.
ALL OTHER COMPENSATION - Includes $5,250 contributed in fiscal
1997, fiscal 1996 and fiscal 1995 to each executive officer's
retirement account. Includes a $750 contribution for each
executive officer's Employee Stock Ownership Plan account in fiscal
1997, fiscal 1996 and fiscal 1995. Includes for Mr. Turner the
following amounts paid as premiums on a split-dollar life insurance
policy: 1997: $54,795, 1996: $75,290 and 1995: $53,420.
<PAGE>17
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table provides information as to options granted
to the Named Executive Officers during fiscal 1997. The Company
granted no SARs in fiscal 1997, and no Named Executive Officer
holds any SARs.
<TABLE>
Individual Grants
% of Total
Number of Options
Securities Granted to
Underlying Employees In Potential Realizable Value at
Options Fiscal Year Exercise or Assumed Annual Rates of Stock
Granted 1997 Base Price Expiration Price Appreciation for Option Term
Name (#)(1) (%)(2) ($/Sh) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Cal Turner, Jr. 100,446 6.09 19.20 3/25/06 2,274,091 5,762,993
50,222
37,666
Bob Carpenter 34,318 2.08 19.20 3/25/06 776,964 1,968,978
17,158
12,870
Walter S. Carter(3) 34,318 2.08 19.20 3/25/06 776,964 1,968,978
17,158
12,870
Mike Ennis 24,943 2.08 19.20 3/25/06 564,701 1,431,063
12,471
9,353
Leigh Stelmach 34,318 2.08 19.20 3/25/06 776,964 1,968,978
17,158
12,870
</TABLE>
(1)These options for the purchase of Common Stock will vest on an
accelerated basis upon the attainment of individual and Company
performance (earnings-per-share improvement) goals. Accelerated
vesting for a portion of the grants to each Named Executive Officer
(the Stock Plus program grants) is based on Company stock ownership
goals. The above-identified stock option grants for each Named
Executive Officer are listed in the following order: (1) Stock
Incentive Program grant which, for purposes of accelerated vesting,
is tied to earnings-per-share improvement goals one, (2) Stock
Incentive Program grant which, for purposes of accelerated vesting,
is tied to earnings per share improvement goals two, and (3) the
Stock Plus Program grant.
(2)Reflects the aggregate options for the purchase of Common Stock
of such employee granted in fiscal 1997 to the percentage of total
options granted to all employees in fiscal 1997.
(3)Mr. Carter resigned in March 1997.
<PAGE>18
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND YEAR-END
VALUES
The following table provides information as to options exercised
or held by the Named Executive Officers during fiscal 1997.
<TABLE>
Number of Securiites
Underlying Unexercised Value of Unexercised In-the-Money
Shares Options at FY End(#) Options at Fiscal YE End ($)
Acquired on
Exercise Value Realized
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable(1)
<S> <C> <C> <C> <C> <C> <C>
Cal Turner, Jr. 249,932 $2,832,692 0 895,005 0 $9,769,314
Bob Carpenter 43,750 $862,845 118,399 287,232 $1,682,869 $3,202,610
Walter S. Carter(2) 122,635 $1,106,179 0 287,232 0 $2,642,992
Mike Ennis 118,491 $1,613,504 0 210,733 0 $2,344,207
Leigh Stelmach 162,149 $2,265,849 0 287,232 0 $3,202,610
</TABLE>
(1)Market value of underlying securities at exercise or year-end
(as applicable), minus the exercise price.
(2)Mr. Carter resigned in March 1997
<PAGE>19
EMPLOYEE RETIREMENT PLAN
The Company has a non-contributory defined contribution plan
which covers substantially all employees, including the Named
Executive Officers. The plan provides retirement, disability,
termination and death benefits. Each year, as of December 31, the
Company contributes for the benefit of each eligible participating
employee 3-1/2% of calendar year gross wages to such participant's
retirement account under the plan. At least once each year, each
participating employee's retirement account is adjusted to reflect
investment gains or losses.
A participating employee will be paid the full value of his
account if the employee retires at the normal retirement age of 65,
dies while an active member of the plan, or becomes totally and
permanently disabled. If a participating employee leaves the
Company for reasons other than retirement, death or disability, the
employee will be entitled to the full value of his vested pension
account. The employee's right to all or part of the value of his
retirement account will depend on his years of service with the
Company as provided in the following chart:
Years of Credited Non-forfeitable
Service Percentage
Less than 4 0%
4 40%
5 or more 100%
As of January 31, 1997, Messrs. Cal Turner, Jr., Bob Carpenter,
Walter S. Carter, Mike Ennis and Leigh Stelmach had 31, 16, 2, 9,
and 7 years of credited service, respectively. The estimated
present value of benefits under the plan as of January 31, 1997 was
$305,426 for Cal Turner, Jr., $116,763 for Bob Carpenter, $0 for
Walter S. Carter, $67,489 for Mike Ennis, and $66,145 for Leigh
Stelmach. Upon retirement, each participant has the option of
taking a lump sum or an average annual payment over a ten-year
period.
OTHER EXECUTIVE BENEFIT PLANS
Since 1988, the Company has provided the Master Retirement Plan
for Select Key Employees, a salary continuation plan (the "Select
Retirement Plan") for eligible employees which will continue to
operate in fiscal 1998 The Select Retirement Plan generally
provides for an annual retirement benefit of 75% of the employee's
salary on the date of entry into the plan with adjustments based on
certain subsequent salary increases. The retirement benefit for
each eligible participant, which cannot exceed an amount greater
than the cash value of the life insurance policy for such person,
is payable over 10 years commencing at age 65. The Select
Retirement Plan also provides that in the event an employee dies
while in the employ of the Company after entering the Select
Retirement Plan but before retirement, his beneficiaries will
receive 50% of such employee's annual retirement benefit for a
period of 10 years. The Named Executive Officers are eligible to
participate in the Select Retirement Plan, which is funded by life
insurance purchased by the Company and payable to the Company on
the life of the employee. Participants in the Select Retirement
Plan are vested only upon reaching retirement age or, if retirement
occurs prior to age 65, the CGC Committee may decide in its sole
discretion whether to pay benefits under the plan equal to a value
no greater than the cash value of the life insurance policy for
such person. Directors of the Company who are not also executive
officers or employees do not participate in the Select Retirement
Plan. If the annual salary levels reported in the Summary
Compensation Table for the named executive officers were applicable
at retirement, the estimated annual benefits payable over a ten-year
period for Messrs. Cal Turner, Jr., Bob Carpenter, Mike Ennis
and
<PAGE>20
Leigh Stelmach are $439,923, $130,626, $117,798, and $202,735,
respectively. Mr. Carter is no longer employed by the Company.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Cal Turner, Chairman Emeritus, is engaged as a consultant to the
Company and receives annual compensation of $60,000. This amount
is for consulting services unrelated to Mr. Turner's service as a
member of the Company's Board of Directors.
John B. Holland, a director of the Company, was President and
Chief Operating Officer of Fruit of the Loom, Inc., a manufacturer
of underwear and other soft goods, until his retirement in February
1996. In fiscal 1997, the Company purchased approximately
$35,323,549 in goods from Fruit of the Loom, Inc.
During 1986, the Company moved certain of its executive
personnel to Nashville, Tennessee. In connection with such
relocation, the Company agreed to make a loan to Cal Turner, Jr. to
assist in the purchase of a new home. The loan is in the form of a
junior mortgage secured by the real property and home. The
mortgage will be fully paid upon a 15-year amortization of the
loan. The borrower is liable for the unpaid balance of the
mortgage at all times. The Company forgives a portion of the
amortized principal and interest annually, and such amount is
included as income to the borrower. The Company's agreement to
periodically forgive mortgage amounts will terminate if the
borrower leaves the Company. In the opinion of management, the
loan was made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and does not involve
more than the normal risk of collectability or present other
unfavorable features. The outstanding loan carries an annual
interest rate of 9.0% and the amount forgiven by the Company in
fiscal 1997 was $11,667. On January 31, 1997, the current balance
of this junior mortgage was $58,333. The largest aggregate amount
of indebtedness outstanding at any time during fiscal 1997 was
$70,000.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Stockholders' proposals intended for presentation at the 1998
Annual Meeting of Stockholders must be received by Bob Carpenter,
Chief Administrative Officer and Corporate Secretary, at 104
Woodmont Boulevard, Suite 500, Nashville, Tennessee 37205 not later
than December 29, 1997 for inclusion in the proxy statement and
form of proxy relating to that meeting. All such proposals must be
in writing and mailed by certified mail, return receipt requested,
and must comply with Rule 14a-8 of Regulation 14A of the proxy
rules of the Securities and Exchange Commission.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and the
disclosure requirements of Item 405 of Regulation S-K require the
Company's executive officers and directors, and any person who owns
more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership
on Forms 3, 4 and 5 with the Securities and Exchange Commission,
the applicable market or exchange upon which the Company's shares
are listed, and the Company. Based solely on the Company's review
of copies of such forms it has received and based on written
representations from certain reporting persons that they were not
required to file Forms 5 for specified fiscal years, the Company
believes that all its officers, directors, and greater-than-ten-percent
beneficial owners complied with all filing requirements
applicable to them with respect to transactions during fiscal 1997.
<PAGE>21
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies
will be voted in accordance with the instructions set forth on the
back side of the proxy card. Abstentions and "non-votes" are counted
as present only for purposes of determining a quorum. Because
directors are elected by a plurality of the votes cast, abstentions
are not considered in the election of directors. A "non-vote" occurs
when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the nominee
does not have discretionary voting power and has not received
instruction from the beneficial owner.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company. In
addition to this solicitation by mail, proxies may be solicited by
officers, directors and regular employees of the Company, without
extra compensation, personally and by mail, telephone or telegraph.
Brokers, nominees, fiduciaries and other custodians will be requested
to forward soliciting material to the beneficial owners of shares and
will be reimbursed for their expenses. The Company's regularly
retained investor relations firm, Registrar and Transfer Company, may
also be called upon to solicit proxies by telephone and mail.
The Board of Directors is not aware of any matter to be submitted
for consideration at the Annual Meeting other than those set forth in
the accompanying notice. If any other matter properly comes before
the meeting for action, proxies will be voted on such matter in
accordance with the best judgment of the persons named as proxies.
Any stockholder has the unconditional right to revoke his or her
proxy at any time prior to the voting thereof by giving the Secretary
of the Company written notice of such revocation.
The Annual Report of the Company is mailed herewith. A copy of the
Company's Annual Report on Form 10-K for the year ended January 31,
1997 (as filed with the Securities and Exchange Commission) is
available without charge to any stockholder upon request. Requests
for the Company's Annual Report on Form 10-K should be directed to
Bob Carpenter, Chief Administrative Officer and Corporate Secretary.
Whether or not you expect to be present at the Annual Meeting of
Stockholders in person, please sign, date and return the enclosed
proxy promptly in the enclosed business reply envelope. No postage
is necessary if the proxy is mailed within the United States.
