<PAGE> 1
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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
JO-ANN STORES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
JO-ANN STORES, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
[JO-ANN STORES, INC.]
5555 Darrow Road
Hudson, Ohio 44236
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 4, 1999
To our Shareholders:
The Annual Meeting of Shareholders of Jo-Ann Stores, Inc. will be held at
our corporate offices located at 5555 Darrow Road, Hudson, Ohio, on Friday, June
4, 1999, at 1:00 p.m., local time, for the following purposes:
1. To elect three Directors to the class whose three-year term of office
will expire in 2002.
2. To transact such other business as may properly come before the meeting.
All shareholders are cordially invited to attend the meeting, although only
those holders of Class A common shares of record at the close of business on
April 16, 1999 will be entitled to vote at the meeting.
IF YOU ARE A HOLDER OF CLASS A COMMON SHARES, YOU WILL ALSO FIND ENCLOSED A
PROXY CARD. YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE RETURN ENVELOPE PROVIDED FOR THAT PURPOSE, WHETHER OR NOT
YOU EXPECT TO BE PRESENT AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE YOUR CLASS A COMMON SHARES IN PERSON.
The Proxy Statement accompanies this Notice.
BETTY ROSSKAMM, Secretary
May 4, 1999
By Order of the
Board of Directors
<PAGE> 3
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THE MEETING........................................... 1
When is the Proxy Statement being mailed?................. 1
What is the purpose of the annual meeting?................ 1
Who may attend the annual meeting?........................ 1
Who is entitled to vote?.................................. 1
What constitutes a quorum?................................ 1
What am I voting on?...................................... 1
How do I vote?............................................ 1
Can I change my vote after I return my proxy card?........ 2
How do I vote my 401(k) shares?........................... 2
What does it mean if I receive more than one proxy
card?.................................................. 2
Who will count the vote?.................................. 2
What is the Board's recommendation?....................... 2
What is the required vote for approval of the proposal?... 2
Are there other matters to be acted upon at the annual
meeting?............................................... 2
PRINCIPAL SHAREHOLDERS...................................... 3
ELECTION OF DIRECTORS....................................... 6
Nominees to the Board of Directors........................ 6
Compensation of Directors................................. 8
EXECUTIVE COMPENSATION...................................... 9
Summary Compensation Table................................ 9
Option Grants in Fiscal Year 1999......................... 11
Aggregate Option Exercises In Last Fiscal Year and Fiscal
Year-end Option Values................................. 12
Change of Control and Employment Agreements............... 12
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION.............................................. 13
STOCK PERFORMANCE GRAPH..................................... 16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS... 17
INDEPENDENT AUDITORS........................................ 17
PROXY SOLICITATION COSTS.................................... 17
SHAREHOLDERS' PROPOSALS..................................... 17
ANNUAL REPORT............................................... 17
</TABLE>
<PAGE> 4
[JO-ANN STORES, INC.]
5555 Darrow Road
Hudson, Ohio 44236
PROXY STATEMENT
This Proxy Statement contains information related to the annual meeting of
shareholders of Jo-Ann Stores, Inc. to be held on Friday, June 4, 1999,
beginning at 1:00 p.m., local time, at 5555 Darrow Road, Hudson, Ohio, and at
any postponements or adjournments thereof.
ABOUT THE MEETING
WHEN IS THE PROXY STATEMENT BEING MAILED?
This Proxy Statement is first being mailed on or about May 4, 1999 to our
shareholders by the Board to solicit proxies for use at the Annual Meeting of
Shareholders.
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At our annual meeting, shareholders will act upon the election of
directors. In addition, our management will report on our performance during
fiscal 1999 and respond to questions from shareholders.
WHO MAY ATTEND THE ANNUAL MEETING?
All shareholders as of the close of business on April 16, 1999, the record
date, may attend the annual meeting.
WHO IS ENTITLED TO VOTE?
Shareholders as of the record date are entitled to vote at the annual
meeting. Each outstanding share of Class A common stock entitles its holder to
cast one vote on each matter to be voted upon.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of Class A common stock outstanding on the record date
will constitute a quorum, permitting the meeting to conduct its business. As of
the record date, 9,250,873 Class A common shares were outstanding. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the meeting.
WHAT AM I VOTING ON?
You will be voting on:
- electing three Directors to the class whose three-year term of office
will expire in 2002;
- transacting such other business as may properly come before the meeting.
HOW DO I VOTE?
You may vote by either attending the annual meeting or signing and dating
each proxy card you receive and returning it in the enclosed prepaid envelope.
We encourage you to complete and send in
1
<PAGE> 5
your proxy card. If you decide to attend the annual meeting, you may revoke your
proxy by voting in person.
All shares represented by valid proxies, unless the shareholder otherwise
specifies, will be voted "FOR" the election of each of the persons identified in
"Election of Directors" as nominees for election of directors to the class whose
term expires in 2002.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing a notice of revocation, or a
duly executed proxy bearing a later date, with the Corporate Secretary. The
powers of the proxy holders will be suspended if you attend the meeting in
person and so request, although attendance at the meeting will not by itself
revoke a previously granted proxy.
HOW DO I VOTE MY 401(K) SHARES?
If you participate in the Jo-Ann Stores, Inc. Savings Plan (401k),
previously known as The Employees' Savings and Profit Sharing Plan, the number
of Class A common shares that you may vote is equivalent to the interest in
Class A common shares credited to your account as of the record date. You may
vote by instructing Institutional Trust Company (a division of Invesco
Retirement and Benefit Services), the trustee of the plan, pursuant to the proxy
card being mailed with this proxy statement to plan participants. The trustee
will vote your shares in accordance with your duly executed instructions. If you
do not send instructions on how to vote your shares, the share equivalents
credited to your account will be voted by the trustee in the same proportion
that the trustee votes share equivalents for which it did receive instructions.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
If you receive more than one proxy card, it is because your shares are in
more than one account. You will need to sign and return all proxy cards to
insure that all your shares are voted.
WHO WILL COUNT THE VOTE?
A representative of Harris Trust and Savings Bank, our transfer agent, will
tabulate the votes and act as inspector of election.
WHAT IS THE BOARD'S RECOMMENDATION?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendation
of the Board of Directors. The Board's recommendation is set forth with the
description of the proposal in "Election of Directors." In summary, the Board
recommends a vote for the nominated slate of directors (see page 6).
WHAT IS THE REQUIRED VOTE FOR APPROVAL OF THE PROPOSAL?
The affirmative vote of a plurality of the votes cast at the meeting is
required for the election of directors. A properly executed proxy card marked
"WITHHOLD AUTHORITY" with respect to the election of one or more directors will
not be voted with respect to the director or directors indicated, although it
will be counted for purposes of determining whether there is a quorum.
ARE THERE OTHER MATTERS TO BE ACTED UPON AT THE ANNUAL MEETING?
We do not know of any other matters to be presented or acted upon at the
annual meeting. If any other matter is presented at the annual meeting on which
a vote may properly be taken, the shares represented by proxies will be voted in
accordance with the judgment of the proxy holders.
2
<PAGE> 6
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of April 16, 1999, the amount of our
common stock beneficially owned by (1) each person or group known to us to be
beneficial owners of more than 5% of our Class A or Class B common shares, (2)
each of our directors and nominees for directors, (3) each of the executive
officers named in the Summary Compensation Table herein not listed as a
director, and (4) all our executive officers and directors as a group. The
information provided in connection with this table has been obtained from our
records and a review of statements filed with the Securities and Exchange
Commission. Unless otherwise indicated, each of the persons listed in the
following table has sole voting and investment power with respect to the common
shares set forth opposite his or her name. As of April 16, 1999, 9,250,873 Class
A common shares were outstanding and 9,210,084 Class B common shares were
outstanding. Class A common shares each have one vote per share and Class B
common shares do not have voting rights.
<TABLE>
<CAPTION>
CLASS A COMMON SHARES CLASS B COMMON SHARES
-------------------------------- --------------------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF
NAME OF COMMON SHARES CLASS IF 1% COMMON SHARES CLASS IF 1%
BENEFICIAL OWNER BENEFICIALLY OWNED OR MORE BENEFICIALLY OWNED OR MORE
---------------- ------------------ ----------- ------------------ -----------
<S> <C> <C> <C> <C>
Alan Rosskamm(1)(2)............... 1,412,923 15.06% 844,741 8.98%
Betty Rosskamm(1)(3)(4)........... 878,335 9.50% 633,039 6.87%
First Pacific Advisors, Inc. (5)
11400 West Olympic Boulevard
Suite 1200
Los Angeles, CA 90064........... 710,300 7.68% n/a n/a
FMR Corp.(5)(6)
Edward C. Johnson 3d
82 Devonshire Street
Boston, MA 02109................ 688,250 7.44% n/a n/a
Mr. Justin and Mrs. Alma
Zimmerman(1)(4)(7).............. 680,707 7.36% 593,846 6.45%
The State Teachers Retirement
Board of Ohio(STRS)(5)
275 East Broad Street
Columbus, OH 43215.............. 580,700 6.28% n/a n/a
The Capital Group Companies,
Inc.(5)(8)
333 South Hope Street
Los Angeles, CA 90071........... 525,000 5.68% n/a n/a
Jane Aggers (1)(9)................ 144,656 1.55% 200,567 2.15%
Brian Carney (1)(10).............. 35,000 * 12,500 *
Dave Bolen (1)(11)................ 32,127 * 37,269 *
Scott Cowen(12)................... 26,425 * 13,425 *
Frank Newman(13).................. 22,125 * 16,125 *
Ira Gumberg(14)................... 13,125 * 1,125 *
Gregg Searle(15).................. 9,750 * 6,750 *
Les Duncan(1)(16)................. 5,000 * 8,000 *
Debra Walker (17)................. -- * -- *
John Hermsen (1)(18).............. -- * -- *
All Executive Officers and
Directors as a group
(13 persons) (1)(19)............ 2,509,928(1)(19) 26.35%(19) 2,057,805(1)(19) 21.39%(19)
</TABLE>
- ---------------
* Less than 1%
3
<PAGE> 7
(1) With respect to common stock beneficially owned by such persons under our
Employees' Savings and Profit Sharing Plan, the shares of common stock
included are as of December 31, 1998, the latest date for which statements
are available.
(2) Mr. Rosskamm's beneficial ownership includes 132,500 Class A common shares
and 196,250 Class B common shares subject to stock options granted that are
exercisable on or prior to June 15, 1999, 32,500 Class A common shares and
12,500 Class B common shares held as restricted stock under our Executive
Incentive Plan, and an aggregate of 182,188 Class A common shares and
211,066 Class B common shares held by his children, spouse, or by Mr.
Rosskamm as trustee for the benefit of family members and charities. His
beneficial ownership also includes 750,245 Class A common shares and 105,500
Class B common shares held by Rosskamm Family Partners, L.P., and 204,082
Class B common shares held by Rosskamm Family Partners, L.P. II. He has
shared voting and dispositive power with regard to Rosskamm Family Partners,
L.P. and Rosskamm Family Partners, L.P. II.
(3) Mrs. Rosskamm's beneficial ownership includes 22,803 Class A common shares
and 28,241 Class B common shares held as custodian for the benefit of her
grandchildren. Her beneficial ownership also includes 25,000 Class A common
shares and 25,000 Class B common shares held by The Rosskamm Family
Partnership, with regard to which she has sole voting and dispositive power,
750,245 Class A common shares and 105,500 Class B common shares held by
Rosskamm Family Partners, L.P., with regard to which she has shared voting
and dispositive power and 204,082 Class B common shares held by Rosskamm
Family Partners, L.P. II, with regard to which she also has shared voting
and dispositive power.
(4) Betty Rosskamm, Alma and Justin Zimmerman and the company have entered into
an agreement, dated September 26, 1997, relating to their shares of Class A
and Class B common stock. Under this agreement, Betty Rosskamm and her
lineal descendants and permitted holders, and Alma and Justin Zimmerman and
their lineal descendants and permitted holders, may each sell up to 200,000
shares of their Class A common stock in any calendar year and may not sell
more than 100,000 of those shares in any 180-day period. Mrs. Rosskamm, and
Mr. and Mrs. Zimmerman collectively, may each sell up to 100,000 of their
shares of Class B common stock in any 60-day period. If either Mrs. Rosskamm
or Mr. and Mrs. Zimmerman sell a number of shares of their Class A common
stock in excess of the number permitted under the agreement, they must first
offer to sell those shares to the other family party to the agreement, and
then with the other family's permission, to the company. If either Mrs.
Rosskamm or Mr. and Mrs. Zimmerman sell a number of shares of their Class B
common stock in excess of the number permitted under the agreement, each
family must first offer to sell those shares to the company.
(5) The Class A common shares listed are reported on a Schedule 13G filed with
the Securities and Exchange Commission with respect to holdings as of
December 31, 1998.
(6) Fidelity Management & Research Company, a wholly owned subsidiary of FMR
Corp. ("Fidelity"), reported beneficial ownership of 545,150 Class A common
shares as a result of acting as investment advisor to several investment
funds that hold such Class A common shares (the "Funds"). The voting of
these 545,150 Class A common shares is directed by each of the Funds' Boards
of Trustees. In addition, Fidelity Management Trust Company, a wholly owned
subsidiary of FMR Corp. ("FMTC"), reported beneficial ownership of 143,100
Class A common shares. FMR has sole voting and dispositive power with regard
to these 143,100 shares.
(7) Of the 680,707 Class A common shares beneficially owned by the Zimmermans,
Mr. Zimmerman disclaims beneficial ownership of 539,513 Class A common
shares beneficially owned by his wife and Mrs. Zimmerman disclaims
beneficial ownership of 141,194 Class A common shares beneficially owned by
her husband. Of the 593,846 Class B common shares beneficially owned by the
Zimmermans, Mr. Zimmerman disclaims beneficial ownership of 488,517 Class B
common shares beneficially owned by his wife and Mrs. Zimmerman disclaims
beneficial ownership of 105,329 Class B common shares beneficially owned by
her husband.
(8) Capital Research and Management Company, a registered investment adviser and
an operating subsidiary of The Capital Group Companies, Inc., exercised as
of December 31, 1998 investment
4
<PAGE> 8
discretion with respect to 525,000 Class A common shares or 5.68% of
outstanding shares of the class, which were owned by various institutional
investors. Such subsidiary has no power to direct the vote of the above
shares.
(9) Ms. Agger's beneficial ownership includes 81,000 Class A common shares and
129,750 Class B common shares subject to stock options granted that are
exercisable on or prior to June 15, 1999 and 35,000 Class A common shares
and 15,000 Class B common shares held as restricted stock under our
Executive Incentive Plan.
(10) Mr. Carney's beneficial ownership includes 12,500 Class A common shares and
12,500 Class B common shares subject to stock options granted that are
exercisable on or prior to June 15, 1999 and 20,000 Class A common shares
held as restricted stock under our Executive Incentive Plan.
(11) Mr. Bolen's beneficial ownership includes 30,625 Class B common shares
subject to stock options granted that are exercisable on or prior to June
15, 1999 and 26,000 Class A common shares held as restricted stock under
our Executive Incentive Plan.
(12) Mr. Cowen's beneficial ownership includes 14,125 Class A common shares and
11,125 Class B common shares subject to stock options granted under our
Stock Option Plan for Non-Employee Directors that are exercisable on or
prior to June 15, 1999.
(13) Mr. Newman's beneficial ownership includes 22,125 Class A common shares and
16,125 Class B common shares subject to stock options granted under our
Stock Option Plan for Non-Employee Directors that are exercisable on or
prior to June 15, 1999.
(14) Mr. Gumberg's beneficial ownership includes 7,125 Class A common shares and
1,125 Class B common shares subject to stock options granted under our
Stock Option Plan for Non-Employee Directors that are exercisable on or
prior to June 15, 1999.
(15) Mr. Searle's beneficial ownership includes 6,750 Class A common shares and
6,750 Class B common shares subject to stock options granted under our
Stock Option Plan for Non-Employee Directors that are exercisable on or
prior to June 15, 1999.
(16) Mr. Duncan's beneficial ownership includes 5,000 Class B common shares
subject to stock options granted that are exercisable on or prior to June
15, 1999 and 5,000 Class A common shares and 3,000 Class B common shares
held as restricted stock under our Executive Incentive Plan and 1998
Incentive Compensation Plan.
(17) Ms. Walker was elected to the Board of Directors on August 28, 1998.
(18) Mr. Hermsen resigned his position as Executive Vice President -- Stores
effective January 1, 1999.
(19) Beneficial ownership for all executive officers and directors as a group
includes 276,125 Class A common shares and 409,250 Class B common shares
subject to stock options granted under our Stock Option Plans that are
exercisable on or prior to June 15, 1999 and 118,500 Class A common shares
and 30,500 Class B common shares of restricted stock awarded under our
Executive Incentive Plan and 1998 Incentive Compensation Plan. Total
excludes 750,245 Class A common shares and 309,582 Class B common shares
with shared voting and dispositive powers between Mr. Rosskamm and Mrs.
Rosskamm held in certain family partnerships.
5
<PAGE> 9
ELECTION OF DIRECTORS
Our Board of Directors is presently comprised of eight members. The Board
is divided into three classes, two of which consist of three members and one
that currently consists of two members. The proxies solicited hereby will not be
voted for a greater number of persons than the number of nominees named herein.
Each of the directors in the class whose term of office expires in 1999,
Frank Newman, Betty Rosskamm and Debra Walker, has been nominated by the Board
for reelection at the annual meeting as a director to serve for a three-year
term expiring at our annual meeting of shareholders in 2002 or until his or her
successor is elected and qualified.
In the event of the death of or inability to serve of any of the nominees,
the proxies will be voted for the election as a director of such other person as
the Board of Directors may recommend. The Board of Directors has no reason,
however, to anticipate that this will occur.
NOMINEES TO THE BOARD OF DIRECTORS
The following table sets forth certain information regarding the nominees
for election as members of the Board of Directors and Directors whose terms of
office will continue after the annual meeting, based upon information furnished
to the company by such persons, except as otherwise noted, as of April 16, 1999.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION PAST FIVE YEARS, DIRECTOR
NAME OTHER DIRECTORSHIP AND AGE SINCE
---- ------------------------------------- --------
<S> <C> <C>
NOMINEES FOR THE TERM TO EXPIRE IN 2002
Frank Newman (1)(2)(3)............... Chairman of the Board since February 1997 and 1991
President and Chief Executive Officer since
February 1996, of Eckerd Corporation, a pharmacy
retailer. He has been President of Eckerd
Corporation since July 1993 and was Chief
Operating Officer from July 1993 to February 1996
and a Director of Eckerd Corporation since July
1993; age 50.
Betty Rosskamm....................... Senior Vice President and Secretary of our company 1967
for more than five years. Betty Rosskamm is the
mother of Alan Rosskamm; age 71.
Debra Walker (1)(2)(3)............... Vice President and Chief Information Officer of 1998
The Goodyear Tire and Rubber Company since March
1997. She was previously Vice President - Retail
for The Goodyear Tire and Rubber Company and was
responsible for the operation of all of its retail
stores from February 1995 to March 1997 and
Manager of Dealer Sales from January 1994 to
February 1997; age 42.
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION PAST FIVE YEARS, DIRECTOR
NAME OTHER DIRECTORSHIP AND AGE SINCE
---- ------------------------------------- --------
<S> <C> <C>
DIRECTORS WHOSE TERM EXPIRES IN 2000
Alan Rosskamm (1)(4)................. Chairman of the Board, President and Chief 1985
Executive Officer of our company for more than
five years. He is a member of one of the two
founding families of our company and has been
employed by us since 1978. Mr. Rosskamm is also a
Director of Charming Shoppes Inc., a women's
apparel retailer; age 49.
Scott Cowen (1)(2)(3)................ President of Tulane University since July 1998. 1987
Previously, he was Dean of the Weatherhead School
of Management and A.J. Weatherhead III Professor
of Management, Case Western Reserve University,
for more than five years. Mr. Cowen is also a
Director of American Greetings Corporation, Forest
City Enterprises, Inc. and Newell Rubbermaid Inc.;
age 53.
Gregg Searle (1)(2)(3)............... President and Chief Operating Officer from 1996
November 1996 to September 1998 and Executive Vice
President from August 1993 to February 1996 of
Diebold, Incorporated. He has been a private
investor since September 1998; age 50.
DIRECTORS WHOSE TERM EXPIRES IN 2001
Alma Zimmerman....................... Senior Vice President of our company for more than 1967
five years; age 86.
Ira Gumberg (1)(2)(5)................ Chief Executive Officer and President of J.J. 1992
Gumberg Co., a real estate management and
development company, for more than five years. He
is also Director of Mellon Bank, N.A.; age 45.
</TABLE>
- ---------------
(1) Member of the Corporate Governance Committee, which met three times during
the fiscal year ended January 30, 1999. This Committee is responsible for
advising and making recommendations to the full Board of Directors on issues
of corporate governance and has the authority to interview and recommend to
the Board of Directors for nomination on behalf of the Board suitable
persons for election as directors when a vacancy exists on the Board. The
Committee and the Board of Directors will also consider individuals
recommended by shareholders of our company. Such recommendations should be
submitted in writing to the Chairman of the Board, who will submit them to
the Committee and the entire Board for their consideration. The
recommendations must be accompanied by the consent of the individual
nominated to be elected and to serve.
(2) Member of the Audit Committee, which met twice during the fiscal year ended
January 30, 1999. This Committee is responsible for reviewing with the
independent auditors of our company the scope and thoroughness of the
auditors' examination, reviewing the adequacy of our company's systems of
internal accounting controls with the independent auditors and recommending
to the Board of Directors the appointment of independent auditors for the
fiscal year.
(3) Member of the Compensation Committee, which met four times during the fiscal
year ended January 30, 1999. This Committee has the authority to set the
compensation for executive officers of our company. The Committee also makes
recommendations to the Board of Directors with respect to the adoption and
amendment of incentive compensation plans and administers those plans
approved by the Board of Directors.
7
<PAGE> 11
(4) Concurrently with our company's settlement of allegations by the Securities
and Exchange Commission in February 1997, Mr. Rosskamm consented to a
separate SEC administrative cease and desist order settling certain
allegations by the SEC, without admitting or denying the allegations. The
SEC contended that Mr. Rosskamm violated certain federal securities laws as
a result of his not making adequate inquiry of his financial staff before
signing management representation letters given to our company's auditors in
connection with the 1992 offering of 6 1/4% Convertible Subordinated
Debentures, and as result of signing our company's Form 10-Q for the quarter
ended May 2, 1992.
(5) Ira Gumberg, one of our directors, is President and Chief Executive Officer
and a principal shareholder of J.J. Gumberg Co., which manages numerous
shopping centers. Eleven of these shopping centers contain stores of our
company. Three of the leases were entered into after Mr. Gumberg became a
director of our company, and we believe such leases are on terms no less
favorable to us than could have been obtained from an unrelated party. The
aggregate rent and related occupancy charges paid during fiscal 1999, fiscal
1998 and fiscal 1997 on those stores amounted to $1.2 million, $1.2 million
and $0.9 million, respectively.
During the fiscal year ended January 30, 1999, there were four meetings of
our company's Board of Directors. Each incumbent director attended at least 75%
of the Board meetings and meetings held by the committees on which he or she
served during the period for which he or she was a director.
COMPENSATION OF DIRECTORS
Our company compensates non-employee directors at a rate of $4,000 per
quarter and $1,000 for each day of Board and committee meetings attended.
Non-employee directors also receive stock options under the 1996 Stock Option
Plan for Non-Employee Directors. Under this plan, our company automatically
grants stock options for 7,500 Class A common shares and 7,500 Class B common
shares to new non-employee directors as of the date of their initial election to
the Board. We also grant stock options for 1,500 Class A common shares and 1,500
Class B common shares to each non-employee director upon completion of each year
of service as a director. A year of service generally ends on the date of the
Annual Meeting of Shareholders. A total of 71,500 Class A common shares and
71,500 Class B common shares are currently available for option grants under the
1996 Stock Option Plan for Non-Employee Directors. Each grant of stock options
will terminate ten years following the date of grant. In the event of the
retirement of a director after more than ten years of continuous service, the
Compensation Committee may accelerate the date on which any stock option
(outstanding for a period of more than twelve months) becomes exercisable. Upon
termination of a director from the Board for any reason, he or she would
continue to have the right to exercise an outstanding stock option during the
three-month period immediately following the date of termination of such
service.
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth information relating to the annual and
long-term compensation for the fiscal years ended January 30, 1999, January 31,
1998 and February 1, 1997, for the Chief Executive Officer and the other named
executive officers of our company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
- --------------------------------------------------------------------- ------------------------------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
COMPEN- RESTRICTED OPTIONS/SARS COMPEN-
NAME AND FISCAL SATION STOCK (E) SATION
PRINCIPAL POSITION YEAR SALARY(A) BONUS(B) (C) AWARDS(D) (COMMON SHARES) (F)
------------------ ------ --------- -------- ------- ---------- ----------------- --------
CLASS A CLASS B
------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alan Rosskamm 1999 $448,107 -- -- -- -- 60,000 $ 95,932
Chairman of the 1998 $432,685 $279,956 -- $415,000 -- 35,000 $ 88,018
Board, President and 1997 $409,751 $310,846 -- -- -- 35,000 $ 84,634
Chief Executive Officer
Jane Aggers 1999 $344,946 -- -- -- -- 40,000 $ 18,524
Executive Vice President, 1998 $328,794 $211,884 -- $376,250 -- 25,000 $ 17,937
Merchandising, 1997 $301,110 $229,385 -- -- -- 25,000 $ 17,760
Marketing and Inventory
Management
John Hermsen (1) 1999 $314,232 -- $56,154 -- -- -- $ 3,715
1998 $310,523 $198,961 -- $207,500 -- 25,000 $ 21,799
1997 $296,625 $224,639 -- -- -- 25,000 $ 13,963
Brian Carney (2) 1999 $295,052 -- -- -- -- 33,000 $ 11,831
Executive Vice 1998 $ 71,482 $ 75,000 -- $420,000 50,000 50,000 --
President and Chief
Financial Officer
Dave Bolen (2) 1999 $268,047 -- -- $ 81,875 -- 33,000 $ 19,738
Executive Vice President, 1998 $218,341 $129,282 $165,849 $473,750 -- 92,500 $ 10,884
Stores and Business
Development
Les Duncan (2) 1999 $224,839 -- -- $ 70,500 -- 10,000 $ 260
Senior Vice President and 1998 $ 62,731 $75,000 $125,950 $105,000 -- 20,000 --
Chief Information Officer
</TABLE>
- ---------------
(1) Mr. Hermsen resigned his position as Executive Vice President -- Stores
effective January 1, 1999.
(2) Mr. Carney's employment began on October 26, 1997, Mr. Bolen's employment
began on March 10, 1997 and Mr. Duncan's employment began October 13, 1997.
(A) Includes amounts earned but deferred under Section 401(k) of the Internal
Revenue Code.
(B) Incentive Bonus Compensation is based on the achievement of pre-established
corporate and individual performance goals and is calculated as a percentage
of an individual's base salary. The Compensation Committee is responsible
for establishing the corporate performance goals and the percentage range
for each level of management eligible for incentive bonus compensation. The
level of incentive bonus compensation is scaled up to a specified maximum
for superior performance. Unless otherwise noted, amounts represent bonuses
earned in the current fiscal year for which payment is not made until the
subsequent fiscal year. For Mr. Carney, the 1998 bonus represents a minimum
guaranteed award paid in fiscal 1999. For Mr. Bolen, such compensation
includes a $50,000 discretionary award paid during fiscal year 1998. For Mr.
Duncan, the 1998 bonus represents a minimum guaranteed award; 50% paid in
fiscal 1998 and 50% paid in fiscal 1999.
(C) Other compensation and benefits are included in this column only if in the
aggregate they are greater than $50,000 or 10 percent of the total salary
and bonus reported for the named executive officer. For Mr. Hermsen, such
compensation represents severance payments made subsequent to his
termination. For Mr. Bolen, such compensation includes a $150,000 relocation
allowance paid during fiscal 1998. For Mr. Duncan, such compensation
includes a $120,000 relocation allowance paid during fiscal 1998.
(D) Restricted stock awards have been granted to named executive officers under
our 1998 Incentive Compensation Plan and 1994 Executive Incentive Plan.
Restricted stock represents stock awards granted without payment to the
company but which are subject to restrictions on their transfer or sale. The
restrictions generally lapse five years from the date of the award. In the
event that the named executive officer terminates employment prior to the
lapse of restrictions, the award is forfeited. The amounts reported in the
table represent the market value at the award date. For the fiscal years
1999, 1998 and 1997, the
9
<PAGE> 13
named executive officers listed in the compensation table received the
following restricted stock awards, respectively: Alan Rosskamm -- 0, 20,000,
0 Class A common shares and 0, 0, 0 Class B common shares; Jane Aggers -- 0,
20,000, 0 Class A common shares and 0, 0, 0 Class B common shares; John
Hermsen -- 0, 10,000, 0 Class A common shares and 0, 0, 0 Class B common
shares; Brian Carney -- 0, 20,000, 0 Class A common shares and 0, 0, 0 Class
B common shares; Dave Bolen -- 5,000, 21,000, 0 Class A common shares and 0,
0, 0 Class B common shares; Les Duncan -- 0, 5,000, 0 Class A common shares
and 3,000, 0, 0 Class B common shares. At January 30, 1999, the aggregate
number and value of restricted stock holdings for each named executive
officer were as follows: Mr. Rosskamm 32,500 Class A common shares at
$495,625 and 12,500 Class B common shares at $157,813; Ms. Aggers 35,000
Class A common shares at $533,750 and 15,000 Class B common shares at
$189,375; Mr. Carney 20,000 Class A common shares at $305,000; Mr. Bolen
26,000 Class A common shares at $396,500; and Mr. Duncan 5,000 Class A
common shares at $76,250 and 3,000 Class B common shares at $37,875. The
shares of restricted stock would participate the same as other shares of our
common stock regarding voting rights and dividend payments.
(E) Our 1998 Incentive Compensation Plan and 1990 Employees Stock Option and
Stock Appreciation Rights Plan, as amended, provide for the award of
incentive and non-qualified stock options which may be Class A common shares
or Class B common shares or a combination thereof. Our 1990 Employees Stock
Option and Stock Appreciation Rights Plan, as amended, also provides for
stock appreciation rights to our key employees.
(F) Unless otherwise noted, this reflects matching contributions we have made
under our Employees' Savings and Profit Sharing Plan and amounts we have
expensed for potential benefits earned under our 1979 Supplemental
Retirement Benefit Plan. Our 1979 Supplemental Retirement Benefit Plan
provides benefits, subject to forfeiture, to such employees upon normal
retirement, early retirement, death or total disability. In fiscal years
1999, 1998 and 1997, we expensed, under this plan, for the named executive
officers listed in the compensation table, the following amounts,
respectively: Alan Rosskamm -- $0, $0, $0; Jane Aggers -- $15,510, $15,510,
$15,510; John Hermsen -- $0, $19,387, $12,925; Brian Carney -- $11,489, $0,
$0; Dave Bolen - $16,326, $10,884, $0; Les Duncan -- $0, $0, $0. Mr.
Rosskamm's participation under this plan has been terminated and replaced
with a split-dollar life insurance arrangement with a trust established by
Mr. Rosskamm. Our company and the trust share in the premium costs of whole
life insurance policies that pay death benefits of not less than $10
million upon the death of Mr. Rosskamm or his wife, Barbara Rosskamm
(whichever occurs later). The split-dollar insurance arrangement is
structured such that all premium payments will be returned to our company.
The present value of Mr. Rosskamm's insurance arrangement for fiscal year
1999 is $92,734.
10
<PAGE> 14
OPTION GRANTS IN FISCAL YEAR 1999
The following table provides information relating to stock option grants
during the last fiscal year to the Chief Executive Officer and the other named
executive officers of our company.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (4)
- -------------------------------------------------------------------------------------------- ---------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS GRANTED TO EMPLOYEES BASE PRICE PER EXPIRATION
NAME (COMMON SHARES)(1) IN FISCAL YEAR COMMON SHARE DATE(3) 5% 10%
---- --------------------- ---------------- -------------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alan Rosskamm Class B 60,000(2) 12.7% $14.31 12/15/2008 $540,082 $1,368,674
Jane Aggers Class B 40,000(2) 8.5% $14.31 12/15/2008 $360,055 $ 912,449
John Hermsen -- -- -- -- -- -- --
Brian Carney Class B 33,000(2) 7.0% $14.31 12/15/2008 $297,045 $ 752,771
Dave Bolen Class B 33,000(2) 7.0% $14.31 12/15/2008 $297,045 $ 752,771
Les Duncan Class B 10,000(2) 2.1% $14.31 12/15/2008 $ 90,014 $ 228,112
</TABLE>
- ---------------
(1) The option holder has the right to pay the exercise price by delivering
previously acquired shares of our common stock and to have shares withheld
to satisfy tax withholding requirements in connection with the exercise of
options. Such options become immediately exercisable upon a change in
control of our company, as defined in the option plan. Options are
nontransferable other than by will or the laws of descent and distribution.
(2) The options granted become exercisable in four equal annual installments
commencing one year after the date of grant.
(3) Options were granted for a term of ten years, subject to earlier termination
in certain events related to termination of employment.
(4) Based upon the exercise price, which was equal to the fair market on the
date of grant, and annual appreciation at the rate stated on such price
through the expiration date of the options. Amounts represent hypothetical
gains that could be achieved for the options if exercised at the end of the
term. The assumed 5% and 10% rates of stock price appreciation are provided
in accordance with the rules of the Securities and Exchange Commission and
do not represent our estimate or projection of the future stock price.
Actual gains, if any, are contingent upon the continued employment of the
named executive officer through the expiration date, as well as being
dependent upon general performance of our common stock. The potential
realizable values have not taken into account amounts required to be paid by
the named executive officer for federal income taxes.
11
<PAGE> 15
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table provides information relating to aggregate option
exercises during the last fiscal year and fiscal year-end option values for the
Chief Executive Officer and the other named executive officers of our company.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
COMMON SHARES AT JANUARY 31, 1999 AT JANUARY 31, 1999
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan Rosskamm Class A 7,500 $ 93,581 132,500 -- $1,036,757 --
Class B 7,500 $ 70,613 196,250 116,250 $2,398,351 $752,939
Jane Aggers Class A 3,000 $ 32,933 81,000 -- $ 531,827 --
Class B 3,000 $ 28,808 129,750 81,250 $ 392,327 $ 11,250
John Hermsen Class A 4,900 $ 65,841 -- -- -- --
Class B 25,000 $212,500 -- -- -- --
Brian Carney Class A -- -- 12,500 37,500 -- --
Class B -- -- 12,500 70,500 -- --
Dave Bolen Class A -- -- -- -- -- --
Class B -- -- 30,625 94,875 -- --
Les Duncan Class A -- -- -- -- -- --
Class B -- -- 5,000 25,000 -- --
</TABLE>
CHANGE OF CONTROL AND EMPLOYMENT AGREEMENTS
Our company has employment agreements with Alan Rosskamm, Jane Aggers, Dave
Bolen and Brian Carney. These employment agreements are designed to retain the
executive officers and provide for continuity of management in the event of any
actual or threatened change in the control of our company. Each agreement
becomes operative only upon a "Change in Control" of our company (as defined in
the employment agreements) and only if the executive officer is then in the
employ of our company. After a Change in Control, each employment agreement
becomes, in effect, a two-year employment agreement, providing a salary, bonus
and other employee benefits at not less than the levels existing prior to the
Change in Control. If the executive officer is terminated by our company without
"cause" as defined in his or her employment agreement or terminates his or her
employment following a significant change in his or her duties, the employee
will be entitled to receive compensation and benefits for the balance of the
two-year period. The executive officer has an obligation to seek comparable
employment elsewhere so as to minimize payments made and benefits provided under
the employment agreement. Any compensation and benefits received from another
employer serve to reduce payments and benefits provided by our company. In each
employee agreement, the executive officer agrees that he or she will forfeit the
foregoing payments and benefits if he or she engages in competition with our
company during the period that any payments are made or benefits provided under
his or her employment agreement.
12
<PAGE> 16
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee"), each member of which is a non-employee director, is responsible for
approving executive management compensation and for administering the incentive
and equity participation plans which make up the variable compensation paid to
the following:
- Chief Executive Officer
- Executive Officers
- Other Operating Officers
The Compensation Committee is accountable to the Board of Directors on all
compensation matters regarding our company's officers.
WHAT IS OUR COMPANY'S PHILOSOPHY ON EXECUTIVE COMPENSATION?
The Compensation Committee's strategy is to design a compensation program
that will enable our company to attract, motivate and retain key executives and
to establish and maintain a performance and achievement-oriented environment.
The Compensation Committee and the Board believe that the executive management
compensation program should support the goals of our company. Accordingly, the
compensation program:
- Establishes compensation performance objectives that are aligned with
corporate goals;
- Provides a high degree of correlation between compensation and
performance; and
- Creates long-term incentives directly linked to shareholder returns.
HOW ARE THE CHIEF EXECUTIVE OFFICER AND OTHER EXECUTIVE OFFICERS COMPENSATED?
Our company's compensation program for executive management consists of
three elements:
- a base salary
- a performance-based annual bonus, and
- periodic grants of stock option and restricted stock awards
BASE SALARY. Base salaries are generally set above the average of the
salaries of comparable officers at companies that are considered to be peers of
our company. Salary information about peer companies is determined by direct
reference to published public information about companies in the specialty
retail industry as well as companies in the fabric and craft industries. In
determining compensation, consideration is given to the relative size of such
companies. In addition, the Compensation Committee from time to time obtains
input on industry salary levels from a nationally recognized employment
consultant who has significant experience in the retail industry.
In general, base salary and other components of compensation are determined
by job responsibility, with the Chief Executive Officer and the Executive Vice
Presidents occupying the top tier. During the 1999 fiscal year, the Compensation
Committee increased the average base salaries during the annual performance
reviews of this top tier by seven percent.
ANNUAL BONUS. Our company awards bonuses to Executive Officers, operating
officers and certain other management employees through the Key Management
Incentive Plan. The plan is administered in such a way as to focus the efforts
of participants on meeting the expectations of customers and shareholders
through teamwork. The plan's foundation on pre-tax profits is intended to
provide a common objective that all participants share and links their interests
with those of our company's shareholders. The level of bonus awarded under this
plan is based on a combination of the pre-tax profit target for each fiscal year
and individual performance goals. However, bonuses are not awarded if the
minimum pre-tax profit is not met.
13
<PAGE> 17
The pre-tax profit target that is established by the Board of Directors is
set at a level that exceeds our company's pre-tax profit from the prior fiscal
year. The pre-tax profit target is comprised of a minimum, midpoint and maximum
target. Executive Officers can earn a minimum bonus of 25 percent of their base
salary up to a maximum bonus of 75 percent. Bonuses for operating officers and
other management employees participating in the plan are designed to amount to a
smaller percentage of their salary. For fiscal year 1999, our company's pre-tax
profit did not meet the minimum target and therefore no bonuses were awarded.
Individual performance goals are determined annually in advance by the
Compensation Committee for the Chief Executive Officer and for all other
participants by the Chief Executive Officer or supervising Executive Officer.
Specific bonuses awarded, if any, to Executive Officers and other participants
are adjusted based on how well they met their pre-determined individual
performance goals suitable for their particular position.
STOCK OPTIONS AND RESTRICTED STOCK. Stock option and restricted stock
awards are granted to Executive Officers and other key employees through the
1998 Incentive Compensation Plan. The Compensation Committee administers the
plan, selects the recipients and determines the level of awards of stock options
and restricted stock. Stock option awards are generally granted to Executive
Officers upon hire, promotion or the assumption of increased responsibility.
Additionally, an award is usually granted to Executive Officers, other operating
officers and certain other management employees during November or December of
each year. By including many levels of management, the stock option program
reflects the Compensation Committee's strong belief that by providing additional
incentives to key employees who have substantial responsibility for the
management and growth of our company, the best interests of the shareholders and
management will be closely aligned. Stock options granted to the Chief Executive
Officer during the 1999 fiscal year represented 13 percent of all stock options
granted during the fiscal year. Grants to all Executive Officers of the Company
during the 1999 fiscal year represented 37 percent of all stock options granted
during the year. Stock option awards are not fully exercisable until four years
following the date of grant and expire in ten years. This helps to reinforce a
long-term perspective and retain key executives.
The Compensation Committee also grants restricted stock awards as a
performance-based compensation vehicle and to attract and retain Executive and
operating officers. Generally, awards are made upon hire, promotion, the
assumption of increased responsibility or to recognize superior performance. All
restrictions on restricted stock awards granted to Executive Officers during the
last three fiscal years lapse five years from the date of the award. Recipients
forfeit their right to the restricted shares if they leave our company before
the date of lapse. Because of this, the Compensation Committee believes that
these awards are a significant factor in the retention of key management
personnel and induce a long-term view among Executive Officers. Restricted stock
awards are also considered a useful compensation vehicle because, even after the
restrictions on the awards lapse, they tend to reinforce the recipient's
commitment to continued growth of our company and appreciation in the market
price of our common stock over the long-term.
HOW WAS THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER COMPENSATED FOR
FISCAL 1999?
During fiscal 1999, Mr. Rosskamm's base salary was increased by four
percent from $433,000 to $450,000 based on the Compensation Committee's positive
assessment of his performance and contributions during fiscal 1998 as Chairman
of the Board, President and Chief Executive Officer. The average salary increase
for all executive officers and other operating officers was nine percent. Mr.
Rosskamm was not awarded a bonus for fiscal 1999 under the Key Management
Incentive Plan. Mr. Rosskamm was granted a stock option award for 60,000 Class B
common shares in December 1998.
As part of his overall compensation package, Mr. Rosskamm is provided a
split dollar life insurance arrangement for which his children are the
beneficiaries. This arrangement replaced the Supplemental Retirement Plan
provided by our company to Mr. Rosskamm prior to fiscal 1995.
14
<PAGE> 18
HOW HAS THE COMPANY RESPONDED TO THE IRS LIMITS ON DEDUCTIBILITY OF
COMPENSATION?
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public corporations for compensation over $1,000,000 paid for any
fiscal year to the corporation's chief executive officer and four other most
highly compensated executive officers. During fiscal 1999, shareholders approved
the 1998 Incentive Compensation Plan which provides for performance-based
awards. Stock option and restricted stock awards made under this Plan are
intended to meet the performance-based compensation exception to the IRS
deduction disallowance.
The names of the Directors who serve on the Compensation Committee are set
forth below.
COMPENSATION COMMITTEE
FRANK NEWMAN (Chairman)
SCOTT COWEN
GREGG SEARLE
DEBRA WALKER
15
<PAGE> 19
STOCK PERFORMANCE GRAPH
The following graph compares the yearly changes in total shareholder return
on our Class A and Class B common shares with the total return of the S&P
Composite -- 500 Stock Index and the S&P Retail (Specialty)-Small Index for the
last five years. Our company changed from the S&P Retail (Specialty-Apparel)
Index to the S&P Retail (Specialty)-Small Index this year because the entities
comprising the S&P Retail (Specialty)-Small Index better reflect the company's
industry. Both the S&P Retail (Specialty)-Small Index and the S&P Retail
(Specialty-Apparel) Index are presented below. In each case, we assumed an
initial investment of $100 on January 31, 1994. Each subsequent date on the
chart represents the last day of the indicated fiscal year. No dividends were
paid by us during such five-year period.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
<TABLE>
<CAPTION>
JO ANN A JO ANN B S&P 500 S&P RETAIL S&P APPAREL
-------- -------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C>
'1994' 100.00 100.00 100.00 100.00 100.00
'1995' 94.00 94.00 101.00 87.00 80.00
'1996' 156.00 140.00 139.00 56.00 95.00
'1997' 183.00 171.00 176.00 64.00 121.00
'1998' 279.00 250.00 224.00 86.00 219.00
'1999' 174.00 146.00 296.00 87.00 454.00
</TABLE>
16
<PAGE> 20
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to us with respect to our most recent fiscal year, and written
representations from reporting persons that no Form 5 was required, we believe
that, during the fiscal year ended January 30, 1999, all filing requirements
under Section 16(a) of the Securities Exchange Act of 1934 applicable to our
executive officers, directors and greater than 10% beneficial owners were met.
INDEPENDENT AUDITORS
Arthur Andersen, LLP has been appointed as our company's independent
auditors for the fiscal year ending January 29, 2000. A representative of Arthur
Andersen, LLP will be present at the annual meeting and will have an opportunity
to make a statement if he desires to do so. Additionally, this representative
will be available to answer appropriate questions that you may have with respect
to his firm's examination of our financial statements and records for the fiscal
year ended January 30, 1999.
PROXY SOLICITATION COSTS
The proxies being solicited hereby are being solicited by our company. We
will bear the expense of preparing, printing and mailing this Proxy Statement.
Further solicitation, if required, may be made by mail, telephone and personal
interview, by the directors, officers and regularly engaged employees of our
company, without extra compensation. We will, upon request, reimburse brokerage
firms and others for their reasonable expenses in forwarding solicitation
materials to the beneficial owners of our common shares.
SHAREHOLDERS' PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for the 2000 annual meeting of shareholders is
January 3, 2000. Proxies for the 2000 annual meeting of shareholders will confer
discretionary authority to vote on any matter that a shareholder does not give
written notice of by March 23, 2000.
ANNUAL REPORT
Our Annual Report for the fiscal year ended January 30, 1999, is being
mailed to holders of both Class A and Class B common shares with this Notice of
Annual Meeting and Proxy Statement.
BETTY ROSSKAMM,
Secretary
By order of the Board of Directors
May 3, 1999
17
<PAGE> 21
JO-ANN STORES, INC.
BOARD OF DIRECTORS PROXY
ANNUAL MEETING, JUNE 4, 1999
P At the Annual Meeting of Shareholders of our company to be held on
June 4, 1999, and at any adjournment, Ira Gumberg, Alma Zimmerman
R and Gregg Searle or any one of them, is hereby authorized to
represent me and thereat to vote my shares on the following:
O
X
Y 1. To elect the following three directors of
the class whose three-year terms of office
will expire in 2002:
Frank Newman, Betty Rosskamm and Debra Walker
(change of address)
---------------------------------
---------------------------------
---------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
PLEASE DATE AND SIGN EXACTLY AS THE NAME APPEARS ON THE FACE OF THE
PROXY AND RETURN BY MAIL PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE.
SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES WILL BE VOTED AS
SPECIFIED. UNLESS OTHERWISE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION AS DIRECTORS
OF THE NOMINEES LISTED ABOVE.
-----------
SEE REVERSE
SIDE
-----------
................................................................................
DETACH CARD
<PAGE> 22
JO-ANN STORES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
<TABLE>
<CAPTION>
FOR WITHHELD FOR ALL
ALL ALL EXCEPT:
<S> <C> <C> <C>
1. Election of Directors -- [ ] [ ] [ ]
(See reverse)
---------------------------------------------
Nominee exception
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Attend Meeting [ ]
Address Change Requested [ ]
Date: , 1999
-----------------
----------------------------
Signature(s)
----------------------------
Signature(s)
Please give title when
signing as executor,
administrator, trustee,
attorney or other
representative. If shares
are registered in the names
of joint tenants or
trustees, each joint tenant
or trustee should sign.
</TABLE>
................................................................................
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
