<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 [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
CLAIRE'S STORES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
CLAIRE'S STORES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 10, 1998
------------------------
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Claire's Stores, Inc. (the "Company") will be held in the Spellman
Room of the New York Palace Hotel, 455 Madison Avenue, New York, New York, on
June 10, 1998 at 9:30 a.m., New York City time, or at any adjournment or
postponement thereof, for the following purposes:
1. To elect seven directors to the Board of Directors of the Company for a
one-year term;
2. To approve an amendment to the Company's Restated Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), to
increase the authorized common stock, $.05 par value (the "Common
Stock"), of the Company to One Hundred Fifty Million (150,000,000)
shares from Fifty Million (50,000,000) shares; and
3. To transact such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
Every holder of record of Common Stock and Class A Common Stock , par value
$.05 (the "Class A Common Stock"), as of the close of business on May 1, 1998 is
entitled to notice of the Meeting or any adjournment or postponement thereof,
and to vote, in person or by proxy, one vote for each share of Common Stock and
ten votes for each share of Class A Common Stock, as the case may be, held by
such holder. A complete list of stockholders entitled to vote at the Meeting
will be available to any stockholder for any purpose germane to the Meeting
during ordinary business hours at the offices of the Company, 350 Fifth Avenue,
New York, New York, for a period of at least ten days prior to the Meeting. A
proxy statement, proxy or proxies, as the case may be, and the Company's 1998
Annual Report to Stockholders are enclosed herewith.
By order of the Board of Directors,
HAROLD E. BERRITT
Secretary
May 12, 1998
YOUR VOTE IS IMPORTANT
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY OR PROXIES, AS THE CASE MAY BE, AS SOON AS POSSIBLE IN THE
ENCLOSED POSTAGE PRE-PAID ENVELOPE.
<PAGE> 3
CLAIRE'S STORES, INC.
3 S.W. 129TH AVENUE
PEMBROKE PINES, FLORIDA 33027
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 10, 1998
------------------------
INTRODUCTION
The accompanying proxy or proxies, as the case may be, are solicited by and
on behalf of the Board of Directors of Claire's Stores, Inc., a Delaware
corporation (the "Company"), in connection with the Annual Meeting of
Stockholders (the "Meeting") to be held in the Spellman Room of the New York
Palace Hotel, 455 Madison Avenue, New York, New York, on June 10, 1998 at 9:30
a.m., New York City time, or at any adjournment or postponement thereof.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Every holder of record of Common Stock, par value $.05 (the "Common
Stock"), and Class A Common Stock, par value $.05 (the "Class A Common Stock"),
of the Company at the close of business on May 1, 1998 (the "Record Date") is
entitled to notice of the Meeting and to vote, in person or by proxy, one vote
for each share of Common Stock and ten votes for each share of Class A Common
Stock, as the case may be, held by such holder. At the Record Date, the Company
had outstanding 47,861,952 shares of Common Stock and 2,900,575 shares of Class
A Common Stock (in each case, excluding treasury shares). The approximate date
on which this proxy statement, accompanying notice and proxy or proxies, as the
case may be, and the Company's 1998 Annual Report to Stockholders (the "Annual
Report"), are first being mailed to stockholders is May 12, 1998.
Each proxy signed and returned by a stockholder 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 Meeting, a written
notice of revocation relating to the proxy, (ii) duly executing a subsequent
proxy bearing a later date relating to the same shares of Common Stock or Class
A Common Stock, as the case may be, and delivering it to the Secretary of the
Company at or before the Meeting, or (iii) voting in person at the Meeting
(although attendance at the Meeting will not in and of itself constitute a
revocation of a proxy). No such revocation will be effective, however, with
respect to any matter or matters upon which, prior to such revocation, a vote
shall have been cast pursuant to the authority conferred by such proxy.
Abstentions and broker non-votes will be included in the determination of the
number of shares present and voting for the purpose of determining whether a
quorum is present. A quorum of the stockholders, present in person or by proxy,
consists of holders of the outstanding shares of Common Stock and Class A Common
Stock representing a majority of the number of votes entitled to be cast at the
Meeting.
<PAGE> 4
All proxies received and not revoked will be voted as directed. If no
directions are specified, such proxies will be voted FOR the election of the
Board's nominees as specified in Board Proposal 1, and FOR the approval of the
amendment to the Certificate of Incorporation as specified in Board Proposal 2.
With respect to Board Proposal 1, the nominees receiving a plurality of the
votes cast by holders of the outstanding shares of Common Stock (one vote per
share) and Class A Common Stock (ten votes per share), voting together as a
single class, will be elected as directors. The approval of Board Proposal 2
requires that such Proposal receive the affirmative vote of holders of a
majority of the outstanding shares of Common Stock (one vote per share) and
Class A Common Stock (ten votes per share), voting together as a single class,
so entitled to vote at the Meeting. An affirmative vote of the majority of votes
present at the Meeting is necessary for approval of any other matters to be
considered at the Meeting. In all cases, neither abstentions nor broker
non-votes will be counted as "for" or "against" a proposal; however, their
effect on the outcome will be the same as a vote "against" a proposal.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, some of the directors, officers and regular
employees of the Company may, without additional compensation, solicit proxies
personally or by telephone. The Company will reimburse brokerage houses, banks
and other custodians, nominees and fiduciaries for expenses incurred in
forwarding soliciting material to the beneficial owners of shares of Common
Stock and Class A Common Stock. The Company has engaged D.F. King & Co., Inc.,
77 Water Street, New York, New York 10005 (telephone: 212-493-6923) to assist
with the solicitation of proxies for an estimated fee of $3,500, plus
reimbursement of out-of-pocket expenses.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock and Class A Common Stock as of April 15,
1998 by (i) each person known to the Company to beneficially own more than five
percent, (ii) each of the Company's directors and nominees for director, (iii)
each of the Company's Named Executive Officers (as such term is defined in the
Summary Compensation Table below) and (iv) by all directors and executive
officers of the Company as a group. Unless otherwise indicated, each person
possesses sole voting power and investment power with respect to the shares
indicated as beneficially owned, and the business address of each person is c/o
Claire's Stores, Inc., 3 S.W. 129th Avenue, Pembroke Pines, Florida 33027.
<TABLE>
<CAPTION>
COMMON STOCK CLASS A COMMON STOCK
--------------------------- ---------------------------
SHARES SHARES
BENEFICIALLY PERCENT BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OF CLASS(1) OWNED OF CLASS(1)
---------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Rowland Schaefer(14).......................... 4,213,487(2) 9.2% 1,970,251(3) 67.9%
Ira D. Kaplan(15)............................. 133,050(4) * -- --
Mark A. Hoffman(16)........................... 73,815(5) * -- --
c/o Claire's Boutiques, Inc.
2500 West Central Road
Hoffman Estates, Illinois 60195
Sylvia Schaefer(14)........................... 4,213,487(6) 9.2 1,970,251(7) 67.9
Harold E. Berritt(17)......................... -- * -- --
c/o Greenberg Traurig
1221 Brickell Avenue
Miami, Florida 33131
Bruce G. Miller(17)........................... 285,750 * -- --
c/o Ryan Beck & Co.
80 Main Street West Orange,
New Jersey 07052
Fred D. Hirt(17).............................. 56,250 * 3,937 *
c/o Mt. Sinai Medical Center
4300 Alton Road
Miami Beach, Florida 33140
Marla L. Schaefer(17)......................... 58,125(8) * 5,692(9) *
Charles L. Ruffner............................ 1,503,562(10) 3.3 375,889(11) 13.0
c/o Charles L. Ruffner, P.A.
601 Brickell Key Drive
Suite 507
Miami, Florida 33131
All directors and executive officers as a
group (8 persons).......................... 4,820,477(12) 10.5 1,979,880(13) 68.3
</TABLE>
- ---------------
* Less than 1% of the shares outstanding of such class.
(1) The percentage of each class is calculated based upon the total number of
shares of each class outstanding on April 15, 1998.
(Notes continued on following page)
3
<PAGE> 6
(2) Includes 992,537 shares beneficially owned by Mrs. Schaefer. Also includes
9,375 shares subject to currently exercisable options. Does not include
1,503,562 shares held in a trust for the benefit of Mr. Schaefer's
children. Mr. Schaefer disclaims beneficial ownership of all such shares.
(3) Includes 368,739 shares beneficially owned by Mrs. Schaefer and 189,843
shares held in a trust for the benefit of Mr. Schaefer's children for which
Mrs. Schaefer is the trustee. Does not include 375,889 shares held in a
trust for the benefit of Mr. Schaefer's children. Mr. Schaefer disclaims
beneficial ownership of all such shares.
(4) Includes 78,375 shares issuable upon the exercise of currently exercisable
stock options and options exercisable within 60 days.
(5) Includes 72,915 shares subject to stock options currently exercisable and
options exercisable within 60 days.
(6) Includes 3,220,950 shares beneficially owned by Mr. Schaefer, but not
1,503,562 shares held in a trust for the benefit of Mrs. Schaefer's
children. Mrs. Schaefer disclaims beneficial ownership as to all such
shares.
(7) Includes 189,843 shares held in a trust for the benefit of Mrs. Schaefer's
children for which Mrs. Schaefer is the trustee and 1,411,669 shares
beneficially owned by Mr. Schaefer, but not 375,889 shares held in a trust
for the benefit of Mrs. Schaefer's children. Mrs. Schaefer disclaims
beneficial ownership as to all such shares.
(8) Includes 12,500 shares subject to currently exercisable stock options and
options exercisable within 60 days. Does not include 501,187 shares held
for the benefit of Ms. Schaefer under the trust referred to in footnotes
(2) and (6) to the table, as to which Ms. Schaefer has no present voting or
investment power.
(9) Does not include 163,264 shares held for the benefit of Ms. Schaefer under
the trusts referred to in footnotes (3) and (7) to the table, as to which
Ms. Schaefer has no present voting or investment power.
(10) Represents 1,503,562 shares held in a trust for the benefit of certain of
Mr. and Mrs. Schaefer's children for which Mr. Ruffner is trustee and as to
which shares he disclaims beneficial ownership.
(11) Represents 375,889 shares held in a trust for the benefit of certain of Mr.
and Mrs. Schaefer's children for which Mr. Ruffner is trustee and as to
which shares he disclaims beneficial ownership.
(12) Includes an aggregate of 173,165 shares issuable upon the exercise of stock
options currently exercisable and exercisable within 60 days. Does not
include those shares held in the trusts referred to in notes (2) and (6) to
the table.
(13) Does not include those shares held in the trusts referred to in notes (3)
and (7) to the table.
(14) The named individual is a director and an executive officer of the Company.
(15) The named individual is an executive officer of the Company.
(16) The named individual is an executive officer of the Company's subsidiary,
Claire's Boutiques, Inc. ("Claire's Boutiques").
(17) The named individual is a director of the Company.
4
<PAGE> 7
BOARD PROPOSAL 1
NOMINATION AND ELECTION OF DIRECTORS
The By-Laws of the Company provide for a Board of Directors consisting of
not less than three and not more than nine persons as the Board of Directors
from time to time shall decide. At present, the Board of Directors consists of
six members.
The present term of all directors will expire at the Meeting. Seven
directors are to be elected at the Meeting to serve until the next annual
meeting of stockholders and until their successors are duly elected and
qualified.
The nominees for election as directors by holders of shares of Common Stock
and Class A Common Stock, voting together as a single class, under Board
Proposal 1 are discussed below.
It is intended that proxies received will be voted for election of the
nominees named below unless marked to the contrary.
The Board of Directors expects that the nominees named below will be
available for election for a one-year term, but in the event of the refusal or
inability of any such nominee to stand for election, proxies may be voted for
substitute nominees designated by the present Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
Information with Respect to Nominees
The following table sets forth certain information, as of the Record Date,
with respect to each of the nominees. Each nominee is a citizen of the United
States of America.
<TABLE>
<CAPTION>
DIRECTOR
PRESENT POSITION WITH THE OF THE
COMPANY, PRINCIPAL OCCUPATION AND COMPANY
NAME AGE BUSINESS EXPERIENCE SINCE
- ---- --- --------------------------------- --------
<S> <C> <C> <C>
Rowland Schaefer(1)............... 81 President, Chief Executive Officer and Chairman of 1961
the Board of Directors of the Company
Sylvia Schaefer(1)................ 74 Vice President and Director of the Company 1961
Bruce G. Miller................... 55 Director of the Company; Senior Vice President, 1983
Corporate Finance, of Ryan, Beck & Co. since
July 1992; Vice President, Corporate Finance, of
First Albany Corporation from January 1988 to
July 1992
Harold E. Berritt................. 62 Secretary and Director of the Company; member of 1970
the law firm of Greenberg Traurig Hoffman Lipoff
Rosen & Quentel, P.A., counsel to the Company;
also a director of Biscayne Apparel, Inc., an
apparel manufacturer; prior to April 1, 1997,
Mr. Berritt was a member of the law firm of
Rubin Baum Levin Constant & Friedman; prior to
April 1, 1995 Mr. Berritt was a member of the
law firm of Pryor, Cashman, Sherman & Flynn
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
DIRECTOR
PRESENT POSITION WITH THE OF THE
COMPANY, PRINCIPAL OCCUPATION AND COMPANY
NAME AGE BUSINESS EXPERIENCE SINCE
- ---- --- --------------------------------- --------
<S> <C> <C> <C>
Fred D. Hirt...................... 54 Director of the Company; health care consultant; 1986
prior to May 1, 1998, Mr. Hirt was President and
Chief Executive Officer of Mt. Sinai Medical
Center, Miami Beach, Florida
Marla L. Schaefer(2).............. 48 Vice Chairman of the Board of Directors since 1990
March 20, 1998; Senior Vice President of Claire's
Boutiques since April 1998; Vice President of
Fashion Merchandising of Claire's Boutiques,
Inc., since April 1990; Merchandise buyer for
Claire's Boutiques prior to April 1990
Bonnie Schaefer(3)................ 45 Vice President -- Real Estate of Claire's --(3)
Boutiques since 1994
</TABLE>
- ---------------
(1) Mr. Rowland Schaefer and Mrs. Sylvia Schaefer are husband and wife.
(2) Marla L. Schaefer is the daughter of Mr. Rowland Schaefer and Mrs. Sylvia
Schaefer.
(3) Bonnie Schaefer, a nominee of the Board of Directors, is the daughter of Mr.
Rowland Schaefer and Mrs. Sylvia Schaefer.
6
<PAGE> 9
CERTAIN MATTERS RELATING TO THE COMPANY AND
ITS DIRECTORS AND EXECUTIVE OFFICERS
Board of Directors and Committees
During the Company's last fiscal year, six meetings of the Board of
Directors were held, and each incumbent director attended 75% or more of the
meetings of the Board held during that period.
The Board of Directors has a standing Audit Committee, which consists of
Messrs. Miller and Hirt. The Audit Committee represents the Board of Directors
in its relations with the Company's independent public accountants and oversees
the financial reporting and disclosures prepared by the Company's management.
The Audit Committee also reviews the scope and results of the examination of the
Company's financial statements by its independent accountants, oversees the
adequacy of the Company's internal accounting controls and reviews and monitors
any other activity that the Committee deems necessary or appropriate. During the
year ended January 31, 1998, the Audit Committee met one time. The Company has
no standing executive, nominating or compensation committees or committees
performing similar functions.
Executive Officers
The following table, together with the accompanying text, present certain
information regarding all current executive officers of the Company and of
Claire's Boutiques as of the Record Date. Each of the executive officers of the
Company and Claire's Boutiques serves until the election and qualification of
such individual's successor or until such individual's death, resignation or
removal by the Board of Directors of the respective company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Rowland Schaefer....................... 81 Chairman of the Board, President and Chief Executive
Officer
Mark A. Hoffman........................ 49 President and Chief Operating Officer of Claire's
Boutiques
Ira D. Kaplan.......................... 39 Senior Vice President, Chief Financial Officer and
Treasurer
</TABLE>
Rowland Schaefer has been Chairman of the Board, President and Chief
Executive Officer of the Company since the inception of the Company in 1961.
Mark A. Hoffman joined Claire's Boutiques as Executive Vice President in
May 1994 and was elected President and Chief Operating Officer of Claire's
Boutiques in February 1998. From April 1990 to December 1991 Mr. Hoffman served
as Executive Vice President and Chief Operating Officer, and from December 1991
to January 1994 as President and Chief Executive Officer, of Accessory Place
Inc. From February 1988 to January 1990 Mr. Hoffman served as Executive Vice
President, Managing Director of Country Road Australia Inc.
Ira D. Kaplan has been Chief Financial Officer of the Company since
September 1990 and Treasurer since September 1987. Mr. Kaplan was elected Senior
Vice President in April 1997.
7
<PAGE> 10
Executive Compensation
The following sets forth information concerning compensation awarded to,
earned by or paid during the three past fiscal years to the Company's Chief
Executive Officer, the other executive officer of the Company and an executive
officer and a former executive officer of Claire's Boutiques whose compensation
exceeded $100,000 (other than the former executive officer, collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------------- ------------------------ ----------
OTHER
ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION STOCK UNDERLYING LTIP COMPENSATION
POSITION YEAR SALARY($) BONUS($) (2)($) AWARD(S)($) OPTIONS(#) PAYOUTS($) ($)(1)
------------------ ------ ---------- -------- ------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rowland Schaefer...... 1998 $1,000,000 $ 0 0 0 0 0 0
Chairman of the 1997 1,000,000 0 0 0 37,500 0 0
Board, 1996 778,846 200,000 0 0 0 0 0
President and Chief
Executive Officer of
the Company
Ira D. Kaplan......... 1998 221,757 50,000 0 0 0 0 $2,785
Senior Vice 1997 200,000 60,000 0 0 75,000 0 2,250
President, 1996 188,077 30,000 0 0 22,500 0 2,071
Chief Financial
Officer and
Treasurer of the
Company
Leslie D.
Dunavant(3)......... 1998 528,443 0 0 0 0 0 2,400
Former President and 1997 550,000 100,000 0 0 0 0 2,250
Chief Operating 1996 360,715 250,000 0 0 562,500 0 3,779
Officer of Claire's
Boutiques
Mark A. Hoffman(4).... 1998 284,694 75,000 0 0 0 0 3,200
President and Chief 1997 276,950 20,000 0 0 150,000 0 2,512
Operating Officer of 1996 229,536 50,000 0 0 0 0 3,654
Claire's Boutiques
</TABLE>
- ---------------
(1) Consists of matching Company contributions under the Company's 401(k) Profit
Sharing Plan.
(2) Except as otherwise provided herein, no amounts for executive perquisites
and other personal benefits, securities or property are shown because the
aggregate dollar amount per executive is the lesser of either $50,000 or
10% of annual salary and bonus.
(3) Mr. Dunavant retired as President and Chief Operating Officer of Claire's
Boutiques on January 31, 1998.
(4) Effective February 1, 1998, Mr. Hoffman was appointed President and Chief
Operating Officer of Claire's Boutiques. Prior thereto, he served as
Executive Vice President of Claire's Boutiques since May 1994.
Stock Option Grants
There were no stock options granted to any of the Named Executive Officers
during the fiscal year ended January 31, 1998.
8
<PAGE> 11
Option Exercises and Year-End Values
The following table sets forth certain information concerning each exercise
of stock options during the fiscal year ended January 31, 1998 by each of the
Named Executive Officers and the number and value of unexercised options held by
each of the Name Executive Officers on January 31, 1998.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END(#) YEAR-END($)(2)
SHARES ----------------- -----------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($)(1) UNEXERCISBLE UNEXERCISABLE
---- ----------- -------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Rowland Schaefer.................... 0 NA 9,375/ 28,125 0 / 0
Ira Kaplan.......................... 16,875 303,634 72,750/ 81,000 682,814/280,001
Mark A. Hoffman..................... 0 NA 58,853/203,647 512,120/853,517
</TABLE>
- ---------------
(1) Represents the difference between the exercise price and the fair market
value of the Common Stock on the date of exercise.
(2) Represents the difference between the closing price of the Common Stock on
the New York Stock Exchange on January 30, 1998 ($17.75) and the exercise
price of the options.
Compensation of Directors
Directors of the Company who are not employees (other than Mr. Berritt)
currently receive an annual retainer of $35,000 and are entitled to
reimbursement for out-of-pocket expenses incurred in connection with the
attendance at Board of Directors and committee meetings.
Compensation Committee Interlocks and Insider Participation
The Board of Directors has not established a compensation committee. All
decisions regarding the compensation of executive officers are determined by the
Board of Directors as a whole. All directors participated in deliberations of
the Board of Directors concerning annual performance-based compensation for the
year ended January 31, 1998. Rowland Schaefer, Sylvia Schaefer and Marla L.
Schaefer are officers and employees of the Company or Claire's Boutiques. Each
management director is asked to excuse himself or herself from discussions and
decisions regarding his or her performance and compensation. During the fiscal
year ended January 31, 1998, Mr. Berritt was a member of Greenberg Traurig
Hoffman Lipoff Rosen & Quentel, P.A., a law firm which has been engaged to
perform legal services for the Company in the past and which may be so engaged
in the future. The fees received for such legal services in fiscal 1997 did not
exceed five percent of the law firm's revenues.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the Board
of Directors and is structured to promote the achievement of the Company's
business goals and, thereby, to maximize corporate performance and stockholder
return. The Company's executive compensation is based primarily upon base
salary, grants of stock options and, to a lesser extent, special achievement
bonuses. The Board of Directors believes that it is important to have stock
incentives constitute a portion of each executive's compensation package in
order to help align executive and stockholder interests. In determining the
total amount and
9
<PAGE> 12
mixture of the compensation package for each executive officer, the Board of
Directors considers the overall value to each executive of his or her
compensation package in light of numerous factors such as (i) competitive
position, (ii) individual performance, including the expected contribution to
the Company's goals of each executive officer, and (iii) the Company's long-term
needs and goals, including attracting and retaining key management personnel.
The overall objectives of this strategy are to attract and retain the best
possible executive talent, to motivate the Company's executives to achieve goals
inherent in the Company's business strategy, to link executive and stockholder
interests and to provide a compensation package that recognizes individual
contributions as well as overall business results.
In the final quarter of each fiscal year, the Board of Directors reviews
and approves an annual salary plan for the Company's senior executives for the
succeeding fiscal year. In formulating the plan, key executive positions within
the Company are defined carefully in terms of scope and responsibility, job
complexity, knowledge and experience required, and other relevant factors.
Executive positions are ranked internally on the basis of these criteria, and a
logical value relationship is established among them. The Board also obtains and
analyzes comparative industry, peer group and national compensation surveys. By
reviewing the comparative industry data and other surveys, the Board develops
salary ranges for all senior executive positions in the Company, and agrees upon
each executive's base salary within the range, taking into account certain past
performance factors, including how well objectives contributing to the Company's
success have been met by the executive, how well the executive's
responsibilities have been fulfilled, the executive's growth in qualifications
for the job, the executive's experience and accomplishment of personal goals and
other aspects of performance, and the anticipated future contributions of the
executive.
The Company has also relied upon stock options to reward and incentivize
the performance of executives. The Board of Directors believes that stock
options have been and remain an excellent vehicle for compensating its
employees. Because the option exercise price for the employees generally equals
or exceeds the price of the stock on the date of grant, employees recognize a
gain only if the value of the stock increases. As a result, options effectively
align the interests of executive officers with the Company's stockholders by
tying a significant portion of each executive's total long-term compensation to
the continued growth of the Company and appreciation of its shares. Also, the
stock ownership gives employees a greater personal stake in the Company.
In general, stock options granted to executive officers vest in equal
annual installments over periods of four to nine years commencing on the first
anniversary of the date of grant, so long as the optionee remains employed with
the Company. The size of the individual option grants are generally based upon
competitive practice and the position level of the executive officer.
The compensation paid to Rowland Schaefer, the Company's Chief Executive
Officer, in the fiscal year ended January 31, 1998 is reflected in the table
under "Executive Compensation -- Summary Compensation Table" above. The base
salary paid to Mr. Schaefer during the fiscal year ended January 31, 1998, was
within the salary range developed by the Board of Directors based upon the base
salaries of chief executive officers of comparable companies in the compensation
surveys reviewed by the Board of Directors and took into account Mr. Schaefer's
active role in Company management, the Company's financial performance during
the prior fiscal year and the challenges and expectations for the Company in
fiscal 1998, Mr. Schaefer's stature within the industry as a spokesman for the
Company and his more than 30 years of service as the Company's senior executive
officer. The base salaries of Messrs. Hoffman and Kaplan have been fixed at
levels which the Board of Directors believes are competitive with amounts paid
to senior executives with comparable qualifications, experience and
responsibilities.
10
<PAGE> 13
In 1993, Section 162(m) was added to the Internal Revenue Code of 1986, as
amended (the "Code"). This Section generally provides that no publicly held
company shall be permitted to deduct compensation in excess of $1 million paid
in any taxable year to its chief executive officer or any of its four other
highest paid officers unless: (i) the compensation is payable solely on account
of the attainment of performance goals; (ii) the performance goals are
determined by a compensation committee of two or more outside directors; (iii)
the material terms under which compensation is to be paid are disclosed to and
approved by the stockholders of the Company; and (iv) the compensation committee
certifies that the performance goals were met. The effect of the Code Section
162(m) limitation is not applicable to the Company as none of its current
executive officers receive compensation in excess of $1 million.
The foregoing information is provided by the Board of Directors of the
Company.
Rowland Schaefer
Marla L. Schaefer
Sylvia Schaefer
Bruce G. Miller
Harold E. Berritt
Fred D. Hirt
Certain Relationships and Related Transactions
The Company leases from Rowland Schaefer & Associates (formerly Two Centrum
Plaza Associates) approximately 31,000 square feet in Pembroke Pines, Florida,
where it maintains its executive and accounting and finance offices. Rowland
Schaefer & Associates is a general partnership of two corporate general partners
which are owned by immediate family members of the Chairman of the Board and
President of the Company, one of whom, namely Marla L. Schaefer is a director of
the Company, and one of whom, namely Bonnie Schaefer, is a nominee for election
as a director of the Company. The lease provides for the payment by the Company
of annual base rent of approximately $518,000, which is subject to annual
cost-of-living increases, and a proportionate share of all taxes and operating
expenses of the building. The lease expires on July 31, 2000 and may be
extended, at the option of the Company, for an additional five-year term. The
Board of Directors of the Company believes, based upon the report of an
independent committee of the Board, that the terms of the lease are no less
favorable to the Company than those which would be obtained from an independent
third party.
See also "Compensation Committee Interlocks and Insider Participation."
11
<PAGE> 14
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock with the cumulative total return of
companies on the Standard & Poor's 500 (S&P 500) Stock Index and the S&P Retail
(Specialty-Apparel) Index for the five fiscal years ended January 31, 1998. This
graph assumes the investment of $100 in the Company's Common Stock, the S&P 500
and the S&P Retail (Specialty-Apparel) Index on January 31, 1993 and assumes
dividends are reinvested. Measurement points are on the last trading day of each
of the five fiscal years.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG CLAIRE'S STORES, INC., THE S&P 500 INDEX
AND THE S&P RETAIL (SPECIALTY-APPAREL) INDEX
<TABLE>
<CAPTION>
S&P RETAIL
MEASUREMENT PERIOD CLAIRE'S STORES, (SPECIALTY-
(FISCAL YEAR COVERED) INC. S&P 500 APPAREL)
<S> <C> <C> <C>
1/93 $100.00 $100.00 $100.00
1/94 $123.00 $113.00 $85.00
1/95 $194.00 $113.00 $68.00
1/96 $132.00 $157.00 $81.00
1/97 $223.00 $199.00 $103.00
1/98 $280.00 $252.00 $187.00
</TABLE>
- ---------------
* $100 invested on 01/31/93 in stock or index -- including reinvestment of
dividends, fiscal year ending January 31.
12
<PAGE> 15
BOARD PROPOSAL 2
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO EFFECT AN
INCREASE OF AUTHORIZED COMMON STOCK
The Board of Directors has determined that it is in the best interest of
the Company to amend the Certificate of Incorporation to increase the authorized
Common Stock of the Company. The Company currently has 50,000,000 shares of
authorized Common Stock, of which 45,617,374 were issued and outstanding as of
April 15, 1998. The Board of Directors has approved and adopted an amendment to
the Certificate of Incorporation as set forth in Exhibit A hereto, pursuant to
which the authorized Common Stock would be increased to 150,000,000 shares from
50,000,000 shares and has directed that this proposal be submitted to the
stockholders for approval. The full text of Section (1) of Article FOURTH of the
Certificate of Incorporation, as it is proposed to be amended, is set forth in
Exhibit A hereto.
VOTE REQUIRED AND RECOMMENDATION
The approval of the proposal to amend the Certificate of Incorporation to
increase the authorized Common Stock requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock and Class A
Common Stock, voting together as a single class.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED
COMMON STOCK.
PURPOSES AND EFFECTS OF THE PROPOSED INCREASE OF AUTHORIZED COMMON STOCK
The additional shares of Common Stock may be issued for general corporate
purposes from time to time or in connection with acquisitions, business
combinations and other extraordinary corporate transactions. There are no
current commitments to issue additional shares of Common Stock. The Board of
Directors does not intend to solicit further approval from stockholders of the
Company for the issuance of any of the shares of Common Stock to be authorized
by such proposed Amendment to the Certificate of Incorporation.
Stockholders of the Company have no preemptive rights with respect to the
additional shares being authorized. The issuance of any additional shares of
Common Stock will have the effect of diluting the percentage of stock ownership
and voting rights of the present holders of the Common Stock and Class A Common
Stock
While the Board believes it advisable to increase the number of authorized
shares of Common Stock for the reasons set forth above, the Board of Directors
is aware that the increase in the number of authorized shares of Common Stock of
the Company may have a potential anti-takeover effect in that it would enhance
the ability of the Company to issue additional shares which could be used to
thwart persons, or otherwise dilute the stock ownership of stockholders, seeking
to control the Company, and thus impede the removal of incumbent management. The
Company is not aware of any effort to accumulate the Company's shares of Common
Stock or to obtain control of the Company by means of a tender offer, proxy
contest or otherwise.
13
<PAGE> 16
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP, has been the independent accountants for
the Company since 1993 and will serve in such capacity for the 1998 fiscal year
unless the Board of Directors deems it advisable to make a substitution. It is
expected that one or more representatives of such firm will attend the Meeting
and be available to respond to any questions. These representatives will be
given an opportunity to make statements at the Meeting if they so desire.
MISCELLANEOUS
ANNUAL REPORT ON FORM 10-K
The Company has mailed, with this proxy statement, copies of its Annual
Report to holders of shares of Common Stock and Class A Common Stock as of the
Record Date. THE COMPANY WILL PROVIDE WITHOUT CHARGE, TO EACH HOLDER OF SHARES
OF COMMON STOCK AND CLASS A COMMON STOCK AS OF THE RECORD DATE, A COPY OF THE
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 1998 AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") ON THE WRITTEN REQUEST
OF ANY SUCH HOLDER ADDRESSED TO THE COMPANY'S DIRECTOR OF INVESTOR RELATIONS AT
CLAIRE'S STORES, INC., 3 S.W. 129TH AVENUE, PEMBROKE PINES, FLORIDA 33027.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, as well as persons who own more
than 10% of a registered class of the Company's equity securities (the
"Reporting Persons"), to file reports of initial beneficial ownership and
changes in beneficial ownership on Forms 3, 4 and 5 with the SEC and the New
York Stock Exchange. Such Reporting Persons are also required by SEC regulations
to furnish the Company with copies of all such reports that they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during and with respect to the fiscal year ended January 31, 1998, all
Reporting Persons have timely complied with all filing requirements applicable
to them.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders of the Company must be received by the Company at its
principal executive offices, 3 S.W. 129th Avenue, Pembroke Pines, Florida 33027,
Attention: Ira D. Kaplan, Senior Vice President, on or before January 15, 1999,
in order to be considered for inclusion in the Company's proxy statement and
accompanying proxy card relating to that meeting.
14
<PAGE> 17
OTHER MATTERS
The Board of Directors knows of no other matters which will be presented at
the Meeting. If, however, any other matter is properly presented at the Meeting,
the proxy or proxies, as the case may be, solicited by this proxy statement will
be voted on such matters in accordance with the judgment of the person or
persons holding such proxy or proxies, as the case may be.
By order of the Board of Directors,
Rowland Schaefer
Chairman of the Board and President
Dated: May 12, 1998
15
<PAGE> 18
EXHIBIT A
PROPOSED AMENDMENT TO
CERTIFICATE OF INCORPORATION
RESOLVED, that Section (1) of Article FOURTH of the Restated Certificate of
Incorporation, as amended, of the Corporation be amended to read in its entirety
as follows:
(1) The aggregate number of shares of capital stock which the
corporation shall have authority to issue is 171,000,000 shares, consisting
of 150,000,000 shares of Common Stock, par value $.05 per share (the
"Common Stock"), 20,000,000 shares of Class A Common Stock, par value $.05
per share (the "Class A Common Stock"), and 1,000,000 shares of Preferred
Stock, par value $1 per share (the "Preferred Stock").
<PAGE> 19
USE ONLY FOR CLASS A COMMON STOCK
CLAIRE'S STORES, INC.
ANNUAL MEETING OF STOCKHOLDERS -- JUNE 10, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a stockholder of CLAIRE'S STORES, INC. (the "Company"),
hereby revoking any proxy heretofore given, does hereby appoint Messrs. Rowland
Schaefer and Harold E. Berritt, or either of them, proxies with power of
substitution, for and in the name of the undersigned to attend the Annual
Meeting of Stockholders of the Company to be held in the Spellman Room of the
New York Palace Hotel, 455 Madison Avenue, New York, New York, on June 10, 1998
at 9:30 a.m., New York City time, or at any adjournment or postponement thereof,
and there to vote, as designated below, all shares of Class A Common Stock of
said Company which the undersigned would be entitled to vote if personally
present at said meeting, all as described in the Proxy Statement dated May 12,
1998, receipt of which is hereby acknowledged, as follows:
1. Election of Directors by the holders of the Common Stock and the Class A
Common Stock, voting together as a single class.
[ ] FOR the nominees listed below: [ ] WITHHOLD AUTHORITY to vote for the
nominees listed below:
Rowland Schaefer Sylvia Schaefer Harold E. Berritt Fred D. Hirt
Marla L. Schaefer Bruce G. Miller Bonnie Schaefer
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
(Continued and to be SIGNED on the OTHER SIDE)
2. Approval of the Amendment to the Company's Restated Certificate of
Incorporation, as amended, to increase the authorized common stock, $.05 par
value, of the Company to One Hundred Fifty Million (150,000,000) shares from
Fifty Million (50,000,000) shares by the holders of Common Stock and Class A
Common Stock, voting together as a single class.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, said proxies are authorized to vote upon any other
business which may properly come before the Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO CONTRARY INSTRUCTION IS
INDICATED, THE VOTE OF THE UNDERSIGNED WILL BE CAST "FOR" THE ELECTION OF
THE NOMINEES FOR DIRECTOR NAMED HEREIN AND "FOR" APPROVAL OF THE AMENDMENT
TO THE COMPANY'S CERTIFICATE OF INCORPORATION.
DATED: ____________________ , 1998
----------------------------------
SIGNATURE
----------------------------------
SIGNATURE IF HELD JOINTLY
NOTE: Your signature should appear
as your name appears hereon. When
shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such. If a
corporation, please sign in full
corporate name by the President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
THE BOARD OF DIRECTORS REQUESTS THAT YOU FILL IN, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 20
USE ONLY FOR COMMON STOCK
CLAIRE'S STORES, INC.
ANNUAL MEETING OF STOCKHOLDERS -- JUNE 10, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a stockholder of CLAIRE'S STORES, INC. (the "Company"),
hereby revoking any proxy heretofore given, does hereby appoint Messrs. Rowland
Schaefer and Harold E. Berritt, or either of them, proxies with power of
substitution, for and in the name of the undersigned to attend the Annual
Meeting of Stockholders of the Company to be held in the Spellman Room of the
New York Palace Hotel, 455 Madison Avenue, New York, New York, on June 10, 1998
at 9:30 a.m., New York City time, or at any adjournment or postponement thereof,
and there to vote, as designated below, all shares of Common Stock of said
Company which the undersigned would be entitled to vote if personally present at
said meeting, all as described in the Proxy Statement dated May 12, 1998,
receipt of which is hereby acknowledged, as follows:
1. Election of Directors by the holders of the Common Stock and the Class A
Common Stock, voting together as a single class.
[ ] FOR the nominees listed below: [ ] WITHHOLD AUTHORITY to vote for the
nominees listed below:
Rowland Schaefer Sylvia Schaefer Harold E. Berritt Fred D. Hirt
Marla L. Schaefer Bruce G. Miller Bonnie Schaefer
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
(Continued and to be SIGNED on the OTHER SIDE)
2. Approval of the Amendment to the Company's Restated Certificate of
Incorporation, as amended, to increase the authorized common stock, $.05 par
value, of the Company to One Hundred Fifty Million (150,000,000) shares from
Fifty Million (50,000,000) shares by the holders of Common Stock and Class A
Common Stock, voting together as a single class.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, said proxies are authorized to vote upon any other
business which may properly come before the Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO CONTRARY INSTRUCTION IS
INDICATED, THE VOTE OF THE UNDERSIGNED WILL BE CAST "FOR" THE ELECTION OF
THE NOMINEES FOR DIRECTOR NAMED HEREIN AND "FOR" APPROVAL OF THE AMENDMENT
TO THE COMPANY'S CERTIFICATE OF INCORPORATION.
DATED: , 1998
---------------------
---------------------------------
SIGNATURE
---------------------------------
SIGNATURE IF HELD JOINTLY
NOTE: Your signature should appear
as your name appears hereon. When
shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such. If a
corporation, please sign in full
corporate name by the President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
THE BOARD OF DIRECTORS REQUESTS THAT YOU FILL IN, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
