SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-12
FAMILY DOLLAR STORES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] 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.
<PAGE>
[ ] 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:
November 22, 1995
<PAGE>
FAMILY DOLLAR STORES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 18, 1996
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Family Dollar Stores, Inc. (the Company), will be held at 2:00
o'clock p.m. on Thursday, January 18, 1996, at the office of the
Company at 10401 Old Monroe Road, Matthews, North Carolina, for the
following purposes:
(1) To elect a Board of six directors;
(2) To ratify the action of the Board of Directors in
selecting Price Waterhouse LLP as independent
accountants to audit the consolidated financial
statements of the Company and its subsidiaries for
the current fiscal year; and
(3) To transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on
November 20, 1995, as the record date for the determination of
Stockholders entitled to notice of and to vote at the meeting or any
adjournments thereof. The voting list of Stockholders will be
available for inspection in accordance with the By-Laws at the
Company's office at 10401 Old Monroe Road, Matthews, North Carolina,
at least ten days prior to the meeting.
Each Stockholder who does not plan to attend the meeting is
requested to date, sign and return the accompanying proxy in the
enclosed postage-paid return envelope.
By Order of the Board of Directors
GEORGE R. MAHONEY, JR.
Executive Vice President-
General Counsel and Secretary
Matthews, North Carolina
November 22, 1995
<PAGE>
FAMILY DOLLAR STORES, INC.
Post Office Box 1017
Charlotte, North Carolina 28201-1017
PROXY STATEMENT
This Proxy Statement is furnished to the holders of the Common
Stock of Family Dollar Stores, Inc. (the Company) in connection with
the solicitation on behalf of the Board of Directors of the Company
of proxies to be used in voting at the Annual Meeting of Stock-
holders to be held on January 18, 1996, or any adjournments thereof.
This Proxy Statement and the enclosed proxy were first sent to
Stockholders on or about November 22, 1995.
The enclosed proxy is for use at the meeting if the Stockholder
will not be able to attend in person. Any Stockholder giving a proxy
may revoke it at any time before it is exercised by delivering writ-
ten notice of such revocation to the Secretary of the Company or by
attending the meeting and voting. All shares represented by valid
proxies received pursuant to this solicitation and not revoked before
they are exercised will be voted in the manner specified therein.
If no specification is made, the proxies will be voted in favor of:
1. The election to the Board of Directors of the six nominees
named in the Proxy Statement; and
2. The ratification of the action of the Board of Directors in
selecting Price Waterhouse LLP as independent accountants
to audit the consolidated financial statements of the
Company and its subsidiaries for the current fiscal year.
The presence, in person or by proxy, of the holders of a
majority of the shares entitled to vote is necessary for a quorum at
the meeting. Directors are elected by a plurality of the votes of
shares present in person or represented by proxy at the meeting.
Ratification of the selection of the accountants requires the
affirmative vote of a majority of shares present or represented by
proxy at the meeting. Abstentions will be counted only for the
purpose of determining the existence of a quorum. If a nominee
holding shares for a beneficial owner indicates on the proxy that it
does not have discretionary authority as to certain shares to vote
on a particular matter, these shares will not be considered as
present and entitled to vote in respect to that matter.
The cost of soliciting proxies for the meeting will be borne by
the Company. In addition to solicitation by mail, arrangements may
be made with brokerage firms, banks and other custodians, nominees
and fiduciaries to send proxy material to their principals. The
Company will reimburse these institutions for their reasonable costs
in doing so. No solicitation is to be made by specially engaged
employees or other paid solicitors.
<PAGE>
Only the holders of Common Stock of record at the close of busi-
ness on November 20, 1995, will be entitled to vote at the meeting.
On such date, 56,787,102 shares of Common Stock were outstanding and
Stockholders will be entitled to one vote for each share held.
OWNERSHIP OF THE COMPANY'S SECURITIES
Ownership by Directors and Officers
The following table sets forth, with respect to each director
of the Company, each of the executive officers named in the Summary
Compensation Table and all executive officers and directors as a
group, the number of shares beneficially owned and the percent of
Common Stock so owned, all as of November 1, 1995:
<TABLE>
<CAPTION>
Amount and
Nature of Beneficial Percent of
Name Ownership (1) Class
<S> <C> <C>
Leon Levine 8,856,458 (2) 15.6%
John D. Reier 56,600 *
George R. Mahoney, Jr. 199,050 *
Albert S. Rorie 31,900 *
Phillip W. Thompson 20,500 *
Stephen G. Simms 108,100 (3) *
Mark R. Bernstein 14,570 (4) *
Thomas R. Payne 2,700 *
James H. Hance, Jr. 0 *
All Executive Officers and 9,355,340 16.5%
Directors of the Company
as a Group (18 persons)
* Less than one percent.
</TABLE>
<PAGE>
(1) All shares are held with sole voting and investment power,
except that Mr. Bernstein has shared voting power with respect
to 12,070 shares held in the Profit Sharing Plan as set forth in
note (4) below. Includes those shares listed in the table which
the following persons have the right to acquire beneficial
ownership of as of November 1, 1995, or within 60 days
thereafter, pursuant to the exercise of stock options:
(i) Mr. Reier-36,600 shares, Mr. Mahoney-34,300 shares,
Mr. Rorie-9,400 shares and Mr. Thompson-10,500 shares; and (ii)
all executive officers and directors as a group-122,420 shares.
(2) Does not include the 5,585,191 shares listed in the table under
the caption "Ownership by Others" below as being held in
irrevocable trusts by NationsBank, N.A., as Trustee, for the
benefit of certain of Mr. Levine's children and grandchildren,
60,900 shares owned by Mr. Levine's wife, 80,550 shares held in
trust by Mr. Levine's daughter for the benefit of another
daughter, and 810,000 shares held in trust by Mr. Levine's wife
and one of his children for the benefit of another child of
Mr. Levine. Mr. Levine disclaims beneficial ownership of the
shares referred to in this note (2).
(3) This amount does not include 750 shares held in trust by
Mr. Simms' wife for the benefit of his daughter. Mr. Simms
disclaims beneficial ownership of such shares. Mr. Simms
resigned from the Company in July 1995.
(4) This amount includes 12,070 shares held under the Parker, Poe,
Adams & Bernstein L.L.P. Profit Sharing Plan, but does not
include 7,500 shares owned by Mr. Bernstein's wife. Mr.
Bernstein disclaims beneficial ownership of the shares owned by
his wife.
<PAGE>
Ownership by Others
On the basis of filings with the Securities and Exchange
Commission and other information, the Company believes that as of
November 1, 1995, the following Stockholders in addition to Leon
Levine beneficially owned more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
Amount and
Nature of Beneficial Percent
Name and Address Ownership of Class
<S> <C> <C>
NationsBank, N.A., as Trustee 5,585,191 (1) 9.8%
One NationsBank Plaza
Charlotte, North Carolina 28255
Chancellor Capital Management, Inc. 6,028,150 (2) 10.6%
and Chancellor Trust Company
1166 Avenue of the Americas
New York, New York 10036
SC Fundamental Inc. 3,863,600 (3) 6.8%
The SC Fundamental Value Fund, L.P.
SC Fundamental Value BVI, Inc.
Gary N. Siegler and Peter M. Collery
712 Fifth Avenue
New York, New York 10019
</TABLE>
(1) These shares are held with sole voting and investment power
under irrevocable trusts for the benefit of certain of
Mr. Leon Levine's children and grandchildren.
(2) A Schedule 13G dated October 9, 1995, filed by the Stockholders
with the Securities and Exchange Commission states that as of
September 30, 1995, the Stockholders, as investment advisers for
various fiduciary accounts, had sole voting and dispositive
power with respect to 6,028,150 shares.
(3) An Amendment dated October 25, 1995, to a Schedule 13D, filed by
the Stockholders with the Securities and Exchange Commission
states that as of October 18, 1995, SC Fundamental Inc. ("SC")
had shared voting and dispositive power with respect to
2,524,000 shares; that The SC Fundamental Value Fund, L.P. had
<PAGE>
shared voting and dispositive power with respect to 2,524,000
shares; that SC Fundamental Value BVI, Inc. ("BVI") had sole
voting and dispositive power with respect to 1,339,600 shares;
and that Gary N. Siegler and Peter M. Collery each had shared
voting and dispositive power with respect to 3,863,600 shares.
The Schedule 13D states that Mr. Siegler is a controlling
stockholder, the president and a director of SC and of BVI, and
that Mr. Collery is a controlling stockholder, vice president,
and a director of SC and BVI.
ELECTION OF DIRECTORS
At the meeting, all six directors are to be elected to serve for
the ensuing year and until their respective successors are elected
and qualified. The number of directors has been set at six by the
Board of Directors in accordance with provisions of the Company's
By-Laws. Votes pursuant to the enclosed proxy will be cast for the
election as directors of the six nominees named below unless
authority is withheld. All six nominees are now members of the Board
of Directors. If for any reason any nominee shall not be a candidate
for election as a director at the meeting, an event not now
anticipated, the enclosed proxy will be voted for such substitute
as shall be designated by the Board of Directors.
The following information is furnished with respect to the
nominees:
<TABLE>
<CAPTION>
Year First
Elected
Name of Nominee Principal Occupation Age Director
<S> <C> <C> <C>
Leon Levine (1)(2) Chairman of the Board, 58 1969
Chief Executive Officer and
Treasurer of the Company
John D. Reier (1) President and 55 1994 (3)
Chief Operating Officer
of the Company
George R. Mahoney, Jr. (1) Executive Vice President- 53 1987 (4)
General Counsel and
Secretary of the Company
Thomas R. Payne (2)(5)(6) Retired Special Counsel 73 1971 (7)
in the law firm of
Kennedy Covington
Lobdell & Hickman, L.L.P.
<PAGE>
<S> <C> <C> <C>
Mark R. Bernstein (6) Partner in the law firm 65 1980 (8)
of Parker, Poe,
Adams & Bernstein L.L.P.
James H. Hance, Jr. (5) Vice Chairman- 51 1995 (9)
Chief Financial Officer
NationsBank Corporation
</TABLE>
(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Stock Option Committee of the Board of Directors.
(3) Mr. Reier was employed by the Company as Senior Vice President-
General Merchandise Manager in 1987, and was promoted to Senior
Vice President-Merchandising and Advertising in that year.
He was elected President and Chief Operating Officer in
November 1994.
(4) Mr. Mahoney was employed by the Company as General Counsel in
1976, and also has served as Vice President and Secretary since
1977, Senior Vice President since 1984, and Executive Vice
President since October 1991.
(5) Member of the Audit Committee of the Board of Directors.
(6) Member of the Compensation Committee of the Board of Directors.
(7) Mr. Payne had been special counsel in the law firm of Kennedy
Covington Lobdell & Hickman, L.L.P. for more than the last five
years prior to his retirement in January 1993.
(8) Mr. Bernstein has been a partner in the law firm named above for
more than the last five years. He also is a director of Rauch
Industries, Inc.
(9) Mr. Hance has been Vice Chairman of NationsBank Corporation
since 1993 and Chief Financial Officer since 1988. He also is a
director of NationsBank, N.A. (Carolinas), Lance, Inc. and
Summit Properties, Inc.
(10) Directors who are not employees of the Company are paid $2,000
for each Board meeting attended and $500 for each Audit Committee
and Compensation Committee meeting attended. Directors who are
employees of the Company receive no additional compensation for
each Board or Committee meeting attended.
<PAGE>
Committees of the Board of Directors
The Executive Committee, which met on two occasions during the
fiscal year ended August 31, 1995, is authorized under Delaware
corporate laws and the Company's By-Laws to exercise certain of the
powers of the Board of Directors.
The principal functions of the Audit Committee, which met with
the Company's independent accountants two times during fiscal 1995
are to (i) recommend to the Board of Directors the firm to be engaged
as the Company's independent accountants, (ii) review with the
independent accountants the scope of the audit and the audit report,
(iii) consult with the independent accountants regarding internal
accounting controls, and (iv) review non-audit services to be
performed by the independent accountants.
The principal function of the Stock Option Committee, which
acted by unanimous written consent in lieu of meetings on twenty
occasions during fiscal 1995, is to administer the 1989 Non-Qualified
Stock Option Plan, including determination of the employees who are
to be granted options under the Plan and the number of shares subject
to each option.
The principal functions of the Compensation Committee, which met
three times during fiscal 1995, are to review compensation policies
for executive officers of the Company, establish the compensation of
the Chairman of the Board and Chief Executive Officer and review and
approve the pre-tax earnings goal and the payment of bonuses under
the Incentive Profit Sharing Plan.
There was no nominating committee of the Board of Directors nor
any other committee which performed a similar function during fiscal
1995.
The Board of Directors met four times, and acted by unanimous
written consent in lieu of meetings on three occasions, during fiscal
1995.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the
compensation during fiscal years 1995, 1994 and 1993 of the
Company's Chief Executive Officer and the four other most highly
compensated executive officers who served in such capacities as of
August 31, 1995, and one former executive officer who would have
been one of the most highly compensated executive officers but for
the fact that he resigned prior to August 31, 1995.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
Fiscal Other Long-Term All Other
Year Annual Restricted Securities Incentive Compen-
Name and Principal Ended Compen- Stock Underlying Plan sation
Position August 31, Salary($) Bonus($) sation($) Award(s)($) Options(#)(1) Payouts($) (2)($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leon Levine 1995 800,000 0 - - - - 12,678
Chairman of the Board, 1994 800,000 0 - - - - 8,986
Treasurer and Chief 1993 800,000 254,400 - - - - 11,986
Executive Officer
John D. Reier 1995(3) 285,006 0 - - 75,000 - 4,233
President and Chief 1994 224,561 0 - - 8,000 - 2,463
Operating Officer 1993 216,462 51,775 - - 10,000 - 4,955
George R. Mahoney, Jr. 1995 211,597 0 - - 30,000 - 12,801
Executive Vice President- 1994 205,646 0 - - 13,500 - 10,090
General Counsel and 1993 197,162 56,104 - - 13,500 - 11,568
Secretary
Albert S. Rorie 1995 161,504 0 - - 9,000 - 5,074
Senior Vice President- 1994 156,789 0 - - 6,000 - 6,997
Data Processing 1993 150,846 36,038 - - 6,000 - 6,368
Phillip W. Thompson 1995 175,654 0 - - 10,000 - 4,578
Senior Vice President- 1994 168,320 0 - - 5,000 - 6,978
Store Operations 1993 161,138 34,646 - - 5,000 - 6,291
Stephen G. Simms 1995(4) 183,637 0 - - 10,000 - 5,821
Former Senior Vice 1994 185,112 0 - - 8,000 - 5,014
President-Real Estate 1993 178,985 37,945 - - 8,000 - 5,949
</TABLE>
<PAGE>
(1) Stock options were granted pursuant to the Company's 1989
Non-Qualified Stock Option Plan.
(2) Includes (a) Company contributions to the Employee Savings and
Retirement Plan and Trust for fiscal years 1995, 1994 and 1993,
respectively, as follows: Mr. Levine-$2,250, $2,250 and
$3,538, Mr. Reier-$3,410, $1,942 and $4,085, Mr. Mahoney-$2,217,
$3,616 and $2,930, Mr. Rorie-$2,216, $2,957 and $3,020,
Mr. Thompson-$2,212, $3,208 and $3,151, and Mr. Simms-$1,913,
$3,451 and $2,841 and (b) reimbursement of expenses under the
Company's Medical Expense Reimbursement Plan of certain medical
care costs for fiscal years 1995, 1994 and 1993, respectively,
as follows: Mr. Levine-$10,428, $6,736 and $8,448, Mr. Reier-
$823, $521 and $870, Mr. Mahoney-$10,584, $6,474 and $8,638,
Mr. Rorie-$2,858, $4,040 and $3,348, Mr. Thompson-$2,366,
$3,770 and $3,140 and Mr. Simms-$3,908, $1,563 and $3,108.
(3) Mr. Reier was elected President and Chief Operating Officer in
November 1994.
(4) Mr. Simms resigned from the Company in July 1995.
<PAGE>
Option Grants During the Fiscal Year Ended August 31, 1995
The following table sets forth all options to acquire shares of
the Company's Common Stock granted during the fiscal year ended
August 31, 1995, to the executive officers named in the Summary
Compensation Table. No options have been granted to Leon Levine.
The potential realizable value amounts shown in the table are the
values that might be realized upon exercise of options immediately
prior to the expiration of their term based on arbitrarily assumed
annualized rates of appreciation in the price of the Company's
Common Stock of five percent and ten percent over the term of the
options, as set forth in the rules of the Securities and Exchange
Commission. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock. There can
be no assurance that the potential realizable values shown in the
table will be achieved.
<TABLE>
<CAPTION>
Individual Grants(1) Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates of Stock
Securities Options Price Appreciation
Underlying Granted to Exercise or for Option Term
Options Employees in Base Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
John D. Reier 50,000 11.8% 11.50 11/9/99 158,862 351,043
25,000 5.9% 13.00 1/23/00 89,792 198,416
George R. Mahoney, Jr. 10,000 2.4% 11.50 11/9/99 31,772 70,209
20,000 4.7% 13.00 1/23/00 71,833 158,733
Albert S. Rorie 9,000 2.1% 13.00 1/23/00 32,325 71,430
Phillip W. Thompson 10,000 2.4% 13.00 1/23/00 35,917 79,366
Stephen G. Simms 10,000 2.4% 13.00 (2) (2) (2)
</TABLE>
(1) Stock options were granted pursuant to the Company's 1989
Non-Qualified Stock Option Plan. The exercise price for each
option is the fair market value per share of Common Stock on
the date of the grant. See "Report of the Compensation
Committee and Stock Option Committee of the Board of Directors
on Executive Compensation" for a description of other material
terms of the Plan.
<PAGE>
(2) In accordance with the provisions of the Company's 1989
Non-Qualified Stock Option Plan, Mr. Simms' option grant was
cancelled upon his resignation from the Company in July 1995.
Option Exercises and Fiscal Year-End Values
The following table sets forth all options exercised during the
fiscal year ended August 31, 1995, by the executive officers named
in the Summary Compensation Table, and the number and value of
unexercised options held by such executive officers at fiscal
year-end. No options have been granted to, or exercised by,
Leon Levine.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Value Underlying Unexercised In-the-Money
Acquired on Realized Options at FY-End(#) Options at FY-End($)(2)
Name Exercise(#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
John D. Reier 14,000 96,250 36,600 94,400 226,725 489,525
George R. Mahoney, Jr. 14,000 96,250 34,300 59,700 154,463 205,913
Albert S. Rorie 6,000 57,000 9,400 21,600 11,375 61,125
Phillip W. Thompson 0 0 10,500 21,000 29,938 64,875
Stephen G. Simms 14,000 96,250 24,400 0 141,950 0
</TABLE>
(1) The value realized is calculated based on the difference
between the option exercise price and the closing market price
of the Company's Common Stock on the date prior to the date of
the exercise multiplied by the number of shares to which the
exercise relates.
(2) The closing price of the Company's Common Stock as reported on
the New York Stock Exchange Composite tape on August 31, 1995,
was $18.25 and is used in calculating the value of unexercised
options.
<PAGE>
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
John D. Reier's compensation arrangement with the Company
provided that from the date he was elected President of the Company
in November 1994, through the end of the fiscal year on August 31,
1995, he was to be paid a base salary of $5,769 per week ($300,000
per annum). The compensation arrangement provides for the same base
salary for the fiscal year ending August 31, 1996. In addition,
under the Company's Incentive Profit Sharing Plan, he may receive a
bonus for each fiscal year based on approximately 50% of the base
salary he receives for the fiscal year, subject to the achievement
of pre-tax earnings goals established by the Company. In the
event Mr. Reier's employment is terminated by the Company prior to
August 31, 1996, for reasons other than for cause or medical
disability, the Company will pay Mr. Reier sixty days of his base
salary then in effect in two equal monthly installments. If
Mr. Reier accepts new employment, the unpaid balance of the payments
is reduced by the compensation Mr. Reier receives from the new
employment.
Compensation Committee and Stock Option Committee Interlocks
and Insider Participation
The Compensation Committee of the Board of Directors during the
fiscal year ended August 31, 1995, was composed of Mark R. Bernstein
and Thomas R. Payne. Neither member of the Compensation Committee
was an officer or employee of the Company. Mr. Bernstein is a
partner in the law firm of Parker, Poe, Adams & Bernstein L.L.P.,
which rendered legal services to the Company during the last fiscal
year and which is performing legal services for the Company during
the current fiscal year.
The Stock Option Committee of the Board of Directors during the
fiscal year ended August 31, 1995, was composed of Leon Levine and
Thomas R. Payne. Mr. Levine is Chairman of the Board and Chief
Executive Officer of the Company. Neither Mr. Levine nor Mr. Payne
is eligible to receive options under the Company's 1989
Non-Qualified Stock Option Plan.
Report of the Compensation Committee and Stock Option Committee
of the Board of Directors on Executive Compensation
The objectives of the Company's executive compensation program
are to provide a competitive total compensation package that enables
the Company to attract and retain key executives, and to offer
compensation opportunities that are directly related to the annual
and long-term performance of the Company. The Company seeks to link
a significant portion of compensation to the Company's performance
such that executive officers will have a strong incentive to meet
<PAGE>
the Company's goals and their compensation will then be aligned with
the interests of the Company's shareholders. With these objectives,
the compensation of executive officers consists primarily of (i) a
base salary; (ii) annual incentive compensation in the form of a
bonus based on the achievement of pre-tax earnings goals and the
executive's contributions to meeting the goals; and (iii) long-term
incentive compensation in the form of stock options.
Base Salary. The base salary of executive officers is reviewed
annually by the Compensation Committee. In determining the salary
level, the Compensation Committee takes into consideration the
responsibilities, experience and performance of the executives,
their contributions to the Company's operating performance,
including the achievement of pre-tax earnings goals, and competitive
salary practices of other companies in the retail industry,
including companies in the S&P Retail Stores-Composite Index and
other companies in the retail industry with sales comparable to the
sales of the Company.
Incentive Profit Sharing Plan. The Compensation Committee also
reviews and approves a pre-tax earnings goal established by the
Company each year under the Company's Incentive Profit Sharing
Plan. This Plan provides for payments, not exceeding 5% of the
Company's consolidated earnings before income taxes and before
deducting payments under the Plan or any other incentive
compensation arrangement, to executive officers and other
supervisory personnel if such goal is achieved. The amount of the
bonus is based on a percentage of the employee's base salary, and
for executive officers the percentage ranges from 20% to 50%. The
percentage is higher for the more senior executive officers as a
greater portion of the senior executives' compensation is tied to
the achievement of pre-tax earnings goals. In the event the pre-tax
earnings goal is exceeded, the amount of the bonus increases by 2%
for each 1% by which the goal is exceeded, to a maximum of 50%
additional bonus for exceeding the goal by 25%. If the pre-tax
earnings goal is not achieved, the amount of the bonus decreases by
5% for each 1% by which the goal is not achieved, with no bonus
being paid if pre-tax earnings are below 90% of the goal. As less
than 90% of the pre-tax earnings goal for the fiscal year ended
August 31, 1995, was achieved, no bonuses were paid for that fiscal
year. Except for the Chairman of the Board and Chief Executive
Officer and the President and Chief Operating Officer, the annual
individual performance rating of each executive officer by that
officer's supervisor may increase or decrease the amount of bonus
paid. The performance rating is based on a variety of criteria,
including the effectiveness of the officers in executing their
managerial responsibilities and their impact on the financial
results of the Company (such as sales, pre-tax earnings and
shareholders' return on average equity). The Compensation Committee
reviews and approves the payment of bonuses under the Incentive
Profit Sharing Plan.
<PAGE>
Stock Options. To establish another link between compensation
and management's performance in creating value for shareholders,
evidenced by increases in the Company's stock price, executive
officers, other than the Chairman and Chief Executive Officer,
receive grants of stock options typically on an annual basis. The
Company encourages stock ownership by executives, but has not
established target levels for equity holdings by executives. Grants
are made by the Stock Option Committee of the Board of Directors in
order for the grants to satisfy tax and securities law requirements.
The Compensation Committee considers the grant of stock options by
the Stock Option Committee in reviewing the compensation of
executive officers. Under the Company's 1989 Non-Qualified Stock
Option Plan, the exercise price for each option is the fair market
value per share of Common Stock on the date of the grant. Fair
market value per share is the average of the highest price and
lowest price at which the Common Stock is sold regular way on the
New York Stock Exchange on the date of the grant. Options have a
term of five years, and may not be exercised prior to the expiration
of two years from the date of the grant. Thereafter, each option
becomes exercisable in cumulative installments of not more than 40%
of the number of shares subject to the option after two years, 70%
after three years and 100% after four years. Such vesting schedule
encourages executives to remain in the employ of the Company. With
limited exceptions, no option is exercisable unless the optionee has
been continuously employed by the Company from the date of grant to
the date of exercise. In determining the number of options to be
granted, the Stock Option Committee takes into account the
executive's base salary and level of responsibilities and the annual
individual performance rating of the executive, as well as the
number of options granted in prior years.
Compensation of Chief Executive Officer. In determining the
compensation of Leon Levine, the Chairman of the Board and Chief
Executive Officer of the Company, the Compensation Committee takes
into account the fact that long-term compensation in the form of
stock options, retirement plans and similar benefits is an important
element of the compensation of most Chief Executive Officers.
Mr. Levine has never been granted stock options in view of the fact
that as the founder of the Company, he always has owned a
substantial percentage of the Company's Common Stock. As of
November 1, 1995, he owned directly 8,856,458 shares representing
approximately 15.6% of the outstanding Common Stock. See "Ownership
of the Company's Securities." With this ownership interest, Mr.
Levine has the incentive without the grant of stock options to
maximize stock price appreciation. In addition, the Company does
not have any retirement plan or similar benefits for the Chief
Executive Officer or any executive officers, other than the Employee
Savings and Retirement Plan, a 401(k) Plan under which contributions
by the Company are limited. In the fiscal year ended August 31,
1995, the amount of the Company's contribution for Mr. Levine was
$2,250. Accordingly, the substantial portion of Mr. Levine's
compensation is his base salary and bonus under the Incentive Profit
Sharing Plan.
<PAGE>
The base salary of the Chief Executive Officer is established
by the Compensation Committee annually based on consideration of the
same general factors as are described above with respect to the
determination of the base salary of other executive officers. For
the fiscal year ended August 31, 1995, Mr. Levine received the same
base salary of $800,000 that he received for the fiscal years ended
August 31, 1994 and 1993. Mr. Levine will receive a base salary for
the fiscal year ending August 31, 1996, of $850,000.
The incentive compensation element of the compensation of the
Chief Executive Officer is based solely on the Company's achievement
of its pre-tax earnings goal. Under the Company's Incentive Profit
Sharing Plan, the Chief Executive Officer's bonus is based on 50% of
his base salary. The amount of the bonus is subject to increase or
decrease based on the level of pre-tax earnings in the manner
described above with respect to the bonus for other executive
officers. For the fiscal year ended August 31, 1995, the Chief
Executive Officer received no bonus as the Company achieved less
than 90% of the pre-tax earnings goal.
Deductibility of Compensation. Internal Revenue Code Section
162(m) provides that publicly held companies may not deduct in any
taxable year compensation in excess of $1 million paid to the Chief
Executive Officer or any of the four other highest paid executive
officers which is not "performance-based" as defined in Section
162(m). No such officer was paid compensation in excess of the
deductibility limit during the fiscal year ended August 31, 1995.
It is not anticipated that the compensation paid to any such officer
during the fiscal year ending August 31, 1996, will exceed the
deductibility limit. The Compensation Committee will continue to
monitor this issue and will determine what steps, if any, it may
take in response to such provision.
This report is submitted by the following members of the
Compensation Committee and Stock Option Committee:
Thomas R. Payne - Compensation Committee and Stock Option Committee
Mark R. Bernstein - Compensation Committee
Leon Levine - Stock Option Committee
<PAGE>
Stock Performance Graph
The following graph sets forth the yearly percentage change in
the cumulative total shareholder return on the Company's Common
Stock during the five fiscal years ended August 31, 1995, compared
with the cumulative total returns of the S&P Midcap 400 Index and
the S&P Retail Stores-Composite Index. The comparison assumes $100
was invested on August 31, 1990, in the Company's Common Stock and
in each of the foregoing indices, and that dividends were reinvested.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR
CUMULATIVE TOTAL RETURN
AMONG FAMILY DOLLAR STORES, INC.,
THE S & P MIDCAP 400 INDEX
AND THE S & P RETAIL
STORES-COMPOSITE INDEX
8/90 8/91 8/92 8/93 8/94 8/95
<S> <C> <C> <C> <C> <C> <C>
Family Dollar Stores, Inc. 100 228 318 362 240 358
S & P Midcap 400 100 l42 156 195 204 246
S & P Retail Stores-Composite 100 156 164 181 183 186
</TABLE>
Related Transactions
Legal services were rendered to the Company during the year
ended August 31, 1995, and are being rendered to the Company during
the year ending August 31, 1996, by Parker, Poe, Adams & Bernstein
L.L.P., of which Mark R. Bernstein, a director of the Company, is a
partner.
The Company has commercial banking relationships with subsid-
iaries of NationsBank Corporation, of which James H. Hance, Jr.,
a director of the Company, is Vice Chairman and Chief Financial
Officer.
Since December 1994, a subsidiary of the Company has leased
space in a building in Charlotte, North Carolina, from 9517
Monroe, LLC, for processing merchandise returned from stores.
9517 Monroe, LLC is a limited liability company in which
Leon Levine, the Chairman of the Board of the Company, and his
brother, Alvin E. Levine, each owns a 50% interest. A total of
$115,204 in rents was paid to 9517 Monroe, LLC, for the year ended
<PAGE>
August 31, 1995. The current rent payable for the lease of
approximately 57,000 square feet is $13,704 per month ($164,448
annually). The present term of the lease is for one year expiring
March 31, 1996, and the Company's subsidiary has three successive
one-year options to extend the term. The Company believes that the
rents for this leased space are competitive with amounts that would
be paid to an unaffiliated entity to lease similar space.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price
Waterhouse LLP as independent accountants to audit and report on
the consolidated financial statements of the Company and its
subsidiaries for the year ending August 31, 1996, and to perform
such other appropriate accounting and related services as may be
required by the Board of Directors. The Board of Directors
recommends that the Stockholders vote for ratification of the
selection of Price Waterhouse LLP for the purposes set forth above.
Price Waterhouse LLP served as the Company's independent
accountants for the year ended August 31, 1991, and for each
subsequent fiscal year.
Representatives of Price Waterhouse LLP are expected to be
present at the Annual Meeting of Stockholders and will have an
opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the next
Annual Meeting of Stockholders in January 1997, and to be included
in the Proxy Statement and form of proxy, must be received by the
Company on or before July 28, 1996. Any such proposals should be in
writing and be sent to the Secretary, Family Dollar Stores, Inc.,
P. O. Box 1017, Charlotte, North Carolina 28201-1017.
OTHER MATTERS
Management knows of no other matters to be brought before the
meeting. However, if any other matters do properly come before the
meeting, it is intended that the shares represented by the proxies
in the accompanying form will be voted in accordance with the best
judgment of the person voting the proxies.
Whether Stockholders plan to attend the meeting or not, they
are respectfully urged to sign, date and return the enclosed proxy
which will, of course, be returned to them at the meeting if they
are present and so request.
<PAGE>
PROXY
FAMILY DOLLAR STORES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON JANUARY 18, 1996
The undersigned hereby appoints Leon Levine, John D. Reier and
George R. Mahoney, Jr., or any one of them, with full power of
substitution, proxies of the undersigned to the Annual Meeting of
Stockholders of Family Dollar Stores, Inc. to be held at 2:00 p.m. on
Thursday, January 18, 1996, at the office of the Company at 10401 Old
Monroe Road, Matthews, North Carolina, or at any adjournments thereof,
with all the powers which the undersigned would possess if personally
present, and instructs them to vote upon any matter which may properly
be acted upon at this meeting, and specifically as indicated below:
<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF DIRECTORS [ ] [ ]
(Mark only one) FOR ALL NOMINEES WITHHOLD AUTHORITY
listed below (except as to vote for all
shown to the contrary nominees listed below
below)
</TABLE>
Nominees: Leon Levine, John D. Reier, George R. Mahoney, Jr., Thomas R. Payne,
Mark R. Bernstein, James H. Hance, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name below.)
2. Ratification of the selection of Price Waterhouse LLP as Independent
Accountants:
<TABLE>
<CAPTION>
<S> <C> <C>
FOR [ ] AGAINST [ ] ABSTAIN [ ]
</TABLE>
3. In their discretion, upon such other business as may properly come before
the meeting or any adjournments thereof.
This Proxy, if received and correctly signed, will be voted in accordance
with the choices specified above. If a choice is not specified, this Proxy
will be voted in favor of the election of the Directors named and for the
ratification of the selection of the independent accountants.
(Please Sign on Reverse Side)
<PAGE>
(Continued from other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This proxy is revocable, and the undersigned retains the right to attend this
meeting and to vote his stock in person.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement.
Dated this day of , 19
(Please sign exactly as your name appears at left.
If there is more than one owner, each should sign.
When signing as a fiduciary or representative,
please give full title as such. If the signer is a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.)
PLEASE SIGN AND RETURN PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE.
NO POSTAGE IS REQUIRED.
