<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>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] 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 __, 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 _________ shares of Common Stock and __________ 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 __, 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.
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.
2
<PAGE> 4
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(1) OF CLASS(1) OWNED(1) 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.
(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.
(NOTES CONTINUED ON FOLLOWING PAGE)
3
<PAGE> 5
(3) Includes 368,739 shares 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 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> 6
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 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 OF THE
WITH THE COMPANY, PRINCIPAL COMPANY
NAME AGE OCCUPATION AND BUSINESS EXPERIENCE SINCE
---- --- ---------------------------------- -------
<S> <C> <C> <C>
Rowland Schaefer(1) 81 President, Chief Executive Officer 1961
and Chairman of the Board of Directors
of the Company
Sylvia Schaefer(1) 74 Vice President and Director of the 1961
Company
Bruce G. Miller 55 Director of the Company; Senior 1983
Vice President, 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; 1970
member of 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> 7
<TABLE>
<CAPTION>
DIRECTOR
PRESENT POSITION OF THE
WITH THE COMPANY, PRINCIPAL COMPANY
NAME AGE OCCUPATION AND BUSINESS EXPERIENCE SINCE
---- --- ---------------------------------- -------
<S> <C> <C> <C>
Fred D. Hirt 54 Director of the Company; President 1986
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.
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,
Prsident and Chief Executive
Officer
Mark A. Hoffman 49 President and Chief Operating
Officer of Claire's Boutiques
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C> <C>
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.
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 $100,000 (other than the former executive officer, collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
AWARDS PAYOUTS
------------------------- -----------------------
OTHER
ANNUAL RESTRICTED SECURITIES LTIP ALL OTHER
NAME AND FISCAL COMPENSATION STOCK UNDERLYING PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS ($) (2) ($) AWARD(S)($) OPTIONS (#) ($) ($)(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 Board 1997 1,000,000 0 0 0 37,500 0 0
President and Chief 1996 778,846 200,000 0 0 0 0 0
Executive Officer of the
Company
Ira D. Kaplan 1998 221,757 50,000 0 0 0 0 2,785
Senior Vice President, 1997 200,000 60,000 0 0 75,000 0 2,250
Chief Financial 1996 188,077 30,000 0 0 22,500 0 2,071
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, Inc.
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,
Inc.
</TABLE>
7
<PAGE> 9
- -------------------------
(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 $50,000 or 10% of annual salary and bonus.
(3) Mr. Dunavant retired as President and Chief Operating Officer of
Claire's Boutiques on January 31, 1998.
(4) Effective February 1, 1998, Mr. Hoffman was appointed President and
Chief Operating Officer of Claire's Boutiques. Prior thereto, he served
as Executive Vice President of Claire's Boutiques since May 1994.
STOCK OPTION GRANTS
There were no stock options granted to any of the Named Executive
Officers during the fiscal year ended January 31, 1998.
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth certain information concerning each
exercise of stock options during the fiscal year ended January 31, 1998 by each
of the Named Executive Officers and the number and value of unexercised options
held by each of the Name Executive Officers on January 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL YEAR-
YEAR END (#) END ($)(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.
8
<PAGE> 10
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 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.
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
9
<PAGE> 11
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."
10
<PAGE> 12
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder 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
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 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
[PERFORMANCE GRAPH]
-------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1/93 1/94 1/95 1/96 1/97 1/98
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Claire's Stores, Inc. $100.00 $123.00 $194.00 $132.00 $223.00 $280.00
S&P 500 $100.00 $113.00 $113.00 $157.00 $199.00 $252.00
Retail Specialty-Apparel $100.00 $ 85.00 $ 68.00 $ 81.00 $103.00 $187.00
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* $100 invested on 01/31/93 in stock or index--including reinvestment of
dividends, fiscal year ending January 31.
11
<PAGE> 13
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 the 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.
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 SEC on the
12
<PAGE> 14
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 Exchange Act 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.
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 , 1998
--
13
<PAGE> 15
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> 16
Exhibit B
[FORM OF PROXY]
CLAIRE'S STORES, INC.
PROXY FOR HOLDERS OF COMMON STOCK - 1998 ANNUAL MEETING
SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE 1998 ANNUAL MEETING
OF STOCKHOLDERS OF CLAIRE'S STORES, INC. 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.
THE BOARD OF DIRECTORS RECOMMENDS: A VOTE FOR ALL THE NOMINEES IN ITEM 1 AND FOR
ITEM 2. SHARES REPRESENTED BY THIS PROXY WILL BE SO VOTED UNLESS OTHERWISE
INDICATED, IN WHICH CASE THEY WILL BE VOTED AS MARKED. IF ANY NOMINEE NAMED ON
THIS CARD IS UNABLE OR UNWILLING TO SERVE AS A DIRECTOR, WITH RESPECT TO ITEM 1,
THE BOARD OF DIRECTORS MAY NOMINATE ANOTHER PERSON OR PERSONS IN SUBSTITUTION
FOR SUCH NOMINEE AND PROXIES WILL VOTE FOR THE PERSON OR PERSONS SO NOMINATED OR
DESIGNATED.
The undersigned hereby appoints Harold E. Berritt and Ira D. Kaplan,
and each of them, proxies with full power of substitution to act for the
undersigned, and to vote all shares of any class represented by this proxy which
the undersigned may be entitled to vote, at the 1998 Annual Meeting and at any
adjournment or postponement thereof as instructed herein and, in their
discretion, on such other matters as may properly come before the meeting and at
any adjournment or postponement thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE> 17
\x\ PLEASE MARK YOUR
VOTES AS IN THIS EXAMPLE
Item 1. Election of the following nominees as directors by the holders of
Common Stock and Class A Common Stock, voting together as a single
class.
FOR all nominees at WITHHELD for all
right (except nominees at right Nominees:
as marked below) Rowland Schaefer
Marla L. Schaefer
\ \ \ \ Sylvia Schaefer
Bruce G. Miller
Harold E. Berritt
Fred D. Hirt
Bonnie Schaefer
WITHHELD for the following nominee(s) only: print name(s)
- ----------------------------------------------------------------------------
Item 2. Approval of an amendment to
Claire's Stores, Inc.'s Restated
Certificate of Incorporation, as
amended, to increase the authorized
common stock, $.05 par value, of Claire's
Stores, Inc. 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 as single class.
FOR AGAINST ABSTAIN
\ \ \ \ \ \
IMPORTANT - - PLEASE MARK, SIGN AND DATE AND RETURN PROMPTLY.
SIGNATURE(S) DATE
------------------------------------------------- ------------
NOTE: Please date and sign exactly as the name appears hereon. When
shares are held by joint tenants, all should sign. When
signing as fiduciary (e.g., attorney, executor, administrator,
conservator, trustee or guardian), please give title. If a
corporation or partnership, please sign in corporate or
partnership name by an authorized person.
<PAGE> 18
Exhibit C
[FORM OF PROXY]
CLAIRE'S STORES, INC.
PROXY FOR HOLDERS OF CLASS A COMMON STOCK - 1998 ANNUAL MEETING
SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE 1998 ANNUAL MEETING
OF STOCKHOLDERS OF CLAIRE'S STORES, INC. 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.
THE BOARD OF DIRECTORS RECOMMENDS: A VOTE FOR ALL THE NOMINEES IN ITEM 1 AND FOR
ITEM 2. SHARES REPRESENTED BY THIS PROXY WILL BE SO VOTED UNLESS OTHERWISE
INDICATED, IN WHICH CASE THEY WILL BE VOTED AS MARKED. IF ANY NOMINEE NAMED ON
THIS CARD IS UNABLE OR UNWILLING TO SERVE AS A DIRECTOR, WITH RESPECT TO ITEM 1,
THE BOARD OF DIRECTORS MAY NOMINATE ANOTHER PERSON OR PERSONS IN SUBSTITUTION
FOR SUCH NOMINEE AND PROXIES WILL VOTE FOR THE PERSON OR PERSONS SO NOMINATED OR
DESIGNATED.
The undersigned hereby appoints Harold E. Berritt and Ira D. Kaplan,
and each of them, proxies with full power of substitution to act for the
undersigned, and to vote all shares of any class represented by this proxy which
the undersigned may be entitled to vote, at the 1998 Annual Meeting and at any
adjournment or postponement thereof as instructed herein and, in their
discretion, on such other matters as may properly come before the meeting and at
any adjournment or postponement thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE> 19
\x\ PLEASE MARK YOUR
VOTES AS IN THIS EXAMPLE
Item 1. Election of the following nominees as directors by the holders of
Common Stock and Class A Common Stock, voting together as a single
class.
FOR all nominees at WITHHELD for all
right (except nominees at right Nominees:
as marked below) Rowland Schaefer
Marla L. Schaefer
\ \ \ \ Sylvia Schaefer
Bruce G. Miller
Harold E. Berritt
Fred D. Hirt
Bonnie Schaefer
WITHHELD for the following nominee(s) only: print name(s)
- ----------------------------------------------------------------------------
Item 2. Approval of an amendment to
Claire's Stores, Inc.'s Restated
Certificate of Incorporation, as
amended, to increase the authorized
common stock, $.05 par value, of Claire's
Stores, Inc. 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 as single class.
FOR AGAINST ABSTAIN
\ \ \ \ \ \
IMPORTANT - - PLEASE MARK, SIGN AND DATE AND RETURN PROMPTLY.
SIGNATURE(S) DATE
----------------------------------------------- --------------
NOTE: Please date and sign exactly as the name appears hereon. When
shares are held by joint tenants, all should sign. When
signing as fiduciary (e.g., attorney, executor, administrator,
conservator, trustee or guardian), please give title. If a
corporation or partnership, please sign in corporate or
partnership name by an authorized person.
