<PAGE> 1
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
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
HARCOURT GENERAL, INC.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ERIC P. GELLER, ESQ., SENIOR VICE PRESIDENT AND GENERAL COUNSEL
HARCOURT GENERAL, INC., 27 BOYLSTON STREET, CHESTNUT HILL, MA 02167
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $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:*
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
*/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------------
<PAGE> 2
[HARCOURT GENERAL LOGO]
Harcourt General, Inc.
27 Boylston Street/Box 1000
Chestnut Hill, MA 02167
(617) 232-8200
February 3, 1994
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 11, 1994
The Annual Meeting of Stockholders of Harcourt General, Inc. will be held
at 10:00 a.m., Eastern Standard Time, on Friday, March 11, 1994, at The First
National Bank of Boston, 100 Federal Street, Boston, Massachusetts, for the
following purposes:
1. To elect four Class A Directors in accordance with the By-Laws of
the Company.
2. To consider and act on a proposal to ratify the appointment by the
Board of Directors of Deloitte & Touche as the Company's independent
auditors for the current fiscal year.
3. To transact such other business as may properly come before the
meeting and any adjournments of the meeting.
Holders of the Company's Common Stock and Class B Stock will be asked to
consider and act upon each of the foregoing items. All stockholders are
cordially invited to attend the meeting.
By Order of the Board of Directors
ERIC P. GELLER
Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE.
<PAGE> 3
[HARCOURT GENERAL LOGO] Harcourt General, Inc.
27 Boylston Street/Box 1000
Chestnut Hill, MA 02167
(617) 232-8200
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MARCH 11, 1994
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Harcourt General, Inc. (the "Company") for
use at the Annual Meeting of Stockholders to be held at 10:00 a.m. on Friday,
March 11, 1994, at The First National Bank of Boston, 100 Federal Street,
Boston, Massachusetts, and at any adjournments thereof. All shares will be voted
in accordance with the instructions contained in the proxy, but if the proxies
which are signed and returned do not specify a vote on any proposal, the proxies
will be voted FOR the election of the nominees for director named herein and FOR
the ratification of the appointment by the Board of Directors of Deloitte &
Touche as the Company's independent auditors for the current fiscal year. Any
proxy may be revoked by a stockholder at any time before it is exercised by
providing written notice of revocation to the Secretary of the Company (at the
address set forth above), by executing a proxy bearing a later date, or by
voting in person at the Annual Meeting. The mailing of this proxy statement and
accompanying form of proxy is expected to commence on or about February 3, 1994.
In addition to solicitations of proxies by mail, the Company's officers,
directors or employees may solicit proxies by telephone or personal
communication. All costs of soliciting proxies, including reimbursement of fees
of certain brokers, fiduciaries and nominees in obtaining voting instructions
from beneficial owners, will be borne by the Company.
Although stock transfer books will remain open, the Board of Directors has
fixed the close of business on January 13, 1994 as the record date for
determining the stockholders having the right to vote at the Annual Meeting. At
the meeting, each share of Common Stock and Class B Stock is entitled to one
vote. At the close of business on January 13, 1994, there were 55,912,202 shares
of Common Stock and 21,906,909 shares of Class B Stock of the Company
outstanding and entitled to vote at the meeting.
Shares of Common Stock and Class B Stock represented in person or by proxy
at the Annual Meeting (including abstentions and broker non-votes) will be
tabulated by the inspectors of election appointed for the meeting and will be
counted in determining that a quorum is present. Votes are counted using written
ballots.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of January 20, 1994, with
respect to the beneficial ownership of the Company's equity securities by (i)
each person known to the Company to own beneficially more than 5% of the
outstanding shares of the Company's Common Stock or Class B Stock, (ii) each
executive officer
<PAGE> 4
named in the Summary Compensation Table, (iii) each director of the Company, and
(iv) all current executive officers and directors as a group.
<TABLE>
<CAPTION>
SHARES AND PERCENT OF CLASS OR
SERIES OF STOCK OWNED BENEFICIALLY(1)
-------------------------------------------------------
NAME COMMON % SERIES A % CLASS B %
- ---------------------------------------------- -------- --- -------- --- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Smith Family Group(2)(3)...................... 372,314 * -- -- 21,854,077 99.8
c/o Richard A. Smith
Harcourt General, Inc.
27 Boylston Street
Chestnut Hill, MA 02167
Richard A. Smith(2)(3)........................ 231,965 * -- -- 16,362,005 74.7
c/o Harcourt General, Inc.
27 Boylston Street
Chestnut Hill, MA 02167
Nancy L. Marks(2)(3).......................... 118,424 * -- -- 10,457,222 47.7
c/o Harcourt General, Inc.
27 Boylston Street
Chestnut Hill, MA 02167
Mark D. Balk, Esq.(4)......................... 118,424 * -- -- 2,680,810 12.2
Goulston & Storrs, P.C.
400 Atlantic Avenue
Boston, MA 02110
Gabelli Funds, Inc.(5)........................ 3,412,954 6.1 -- -- -- --
655 Third Avenue
New York, NY 10017
Robert J. Tarr, Jr.(6)........................ 536,450 * 55,414 3.7 -- --
Richard T. Morgan(7).......................... 5,673 * -- -- -- --
John R. Cook(8)............................... 13,303 * -- -- -- --
Eric P. Geller(9)............................. 56,349 * 6,000 * -- --
William F. Connell............................ 1,500 * -- -- -- --
Jack M. Greenberg............................. 500 * -- -- -- --
Herbert W. Jarvis............................. 4,500 * -- -- -- --
Lynn Morley Martin............................ 200 * -- -- -- --
Maurice Segall................................ 2,000 * -- -- -- --
Robert A. Smith(10)........................... 173,145 * -- -- 539,306 2.5
Paula Stern................................... 100 * -- -- -- --
Sidney Stoneman(11)........................... 1,000,000 1.8 -- -- -- --
Hugo Uyterhoeven.............................. 1,200 * 1,200 * -- --
All current executive officers and directors
as a group (18 persons)(12)................. 2,222,306 4.0 63,622 4.2 17,440,617 79.6
- ---------------
<FN>
* Less than 1%.
(1) Each share of Class B Stock is convertible at any time into one share of
Common Stock. Each share of the Company's Series A Cumulative Convertible
Stock ("Series A Stock"), which is not a voting security of the Company, is
convertible at any time into 1.1 shares of Common Stock. The Company knows
of no person owning Series A Stock who, after conversion of such stock,
would own more than 5% of the Company's outstanding Common Stock. Unless
otherwise indicated in the following footnotes,
</TABLE>
2
<PAGE> 5
each stockholder referred to above has sole voting and investment power
with respect to the shares listed.
(2) Certain of the shares included in the table have been counted twice because
of certain rules and regulations of the Securities and Exchange Commission.
The total number of shares owned by, or for the benefit of, Richard A.
Smith, Nancy L. Marks and members of their families is as shown for the
"Smith Family Group." See Note 3. Mr. Smith and Mrs. Marks are "control"
persons of the Company within the meaning of the rules and regulations of
the Securities and Exchange Commission.
(3) A group consisting primarily of members of the family of Richard A. Smith
has filed a Schedule 13D with the Securities and Exchange Commission. In
the Schedule 13D, the Smith Family Group, as described below, disclosed
that its members have executed the Smith-Lurie/Marks Stockholders'
Agreement dated December 29, 1986, as supplemented (the "Stockholders'
Agreement"). The Smith Family Group consists of Richard A. Smith and his
wife, Susan F. Smith; Nancy L. Marks (the sister of Richard A. Smith) and
her husband, Harry L. Marks; the children of Richard A. Smith and Susan F.
Smith, namely Amy Smith Berylson, Robert A. Smith and Debra Smith Knez; two
children of Nancy L. Marks, namely Cathy J. Lurie and Jeffrey R. Lurie; two
family attorneys who are trustees of family trusts; four family charitable
foundations and two family corporations. The Schedule 13D states that the
Stockholders' Agreement was entered into to permit the retention of the
Class B Stock by the Smith Family Group.
The Stockholders' Agreement imposes certain restrictions on the ability of
the members of the Smith Family Group to convert Class B Stock into Common
Stock without permitting the other members of the Smith Family Group to
acquire the shares proposed to be so converted.
According to the Schedule 13D, not all shares of Class B Stock and none of
the shares of Common Stock owned beneficially by the members of the Smith
Family Group are subject to the Stockholders' Agreement. Thus, while
20,693,952 shares of Class B Stock are subject to the terms of the
Stockholders' Agreement, the total number of shares held by or for the
benefit of the Smith Family Group and as to which the Smith Family Group is
deemed to be the beneficial owner is 21,854,077 shares of Class B Stock and
372,314 shares of Common Stock, of which 19,268 shares of Common Stock are
subject to outstanding options exercisable within 60 days of January 20,
1994 and 800 shares are restricted Common Stock over which the holders
thereof have voting but not investment power. The 21,854,077 shares of
Class B Stock constitute 99.8% of the outstanding Class B Stock and,
together with the 372,314 shares of Common Stock owned by the Smith Family
Group, constitute 28.2% of the aggregate of the shares of the Class B
Stock, Common Stock and Series A Stock outstanding as of January 20, 1994.
Members of the Smith Family Group possess sole or shared voting power over
all of the shares shown in the table.
Each share of Common Stock entitles the holder thereof to one vote on all
matters submitted to the stockholders, and each share of Class B Stock
entitles the holder thereof to one vote on all such matters, except that
each share of Class B Stock entitles the holder thereof to ten votes on the
election of directors at any stockholder' meeting under certain
circumstances which are not present as of the date of this Proxy Statement.
As to any elections in which the Class B Stock carries one vote per share
(as is the case on the date of this Proxy Statement), the Smith Family
Group had, as of January 20, 1994, 28.7% of the combined voting power of
the Common Stock and Class B Stock. As to any elections in which the Class
B Stock would carry ten votes per share, the Smith Family Group had, as of
January 20, 1994, 79.8% of the combined voting power of the Common Stock
and Class B Stock. The effect of this significant voting power is to permit
the Smith Family Group to exert decisive control over the results of
elections for the Board of Directors in the event of a substantial
accumulation of Common Stock by persons unrelated to the Smith Family
Group.
3
<PAGE> 6
The holders of Common Stock and the holders of Class B Stock are each
entitled to vote separately as a class on a number of significant matters.
For example, the holders of Common Stock and Class B Stock will each vote
separately as a class on any (i) merger or consolidation of the Company
with or into any other corporation, any sale, lease, exchange or other
disposition of all or substantially all of the Company's assets to or with
any other person, or any dissolution of the Company, (ii) additional
issuances of Class B Stock other than in connection with stock splits and
stock dividends, and (iii) amendments to the Company's Restated Certificate
of Incorporation.
(4) Mr. Balk, who is an officer and director of the law firm of Goulston &
Storrs, P.C., and is included in the Smith Family Group because he serves
as a trustee and/or director of several Smith family trusts and/or
corporations, shares voting and investment power with respect to all shares
of Class B Stock and Common Stock shown next to his name with various
members of the Smith Family Group. Mr. Balk disclaims beneficial ownership
of all of the shares of Class B Stock and Common Stock set forth next to
his name; all of such shares are included in the number of shares owned
beneficially by or for the benefit of the Smith Family Group. See Note 3.
(5) The information reported is based on an amendment to Schedule 13D, dated
February 19, 1993, filed with the Securities and Exchange Commission by the
Gabelli Funds, Inc. The Amendment states that the Gabelli Funds have sole
voting power with respect to 2,287,454 shares and sole dispositive power
with respect to all the shares.
(6) Includes 229,002 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1994. Also includes
15,000 shares of Common Stock and 15,000 shares of Series A Stock owned by
Mr. Tarr's wife; 10,000 shares of Common Stock owned by a charitable trust
of which Mr. Tarr is a trustee; 30,000 shares of Common Stock held by three
trusts, of which Mr. Tarr's wife is a trustee, for the benefit of their
children and 15,000 shares of Series A Stock owned by Mr. Tarr's wife as
custodian for their three children. Mr. Tarr disclaims beneficial ownership
of the shares described in the preceding sentence.
(7) Includes 5,505 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1994.
(8) Includes 3,303 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1994.
(9) Includes 34,460 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1994 and 500 shares of
restricted Common Stock over which Mr. Geller has voting but not investment
power.
(10) Includes 13,762 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1994, 500 shares of
restricted Common Stock over which Mr. Smith has voting but not investment
power, 160,000 shares of Class B Stock held by a trust of which Mr. Smith
is a trustee and beneficiary and 158,000 shares of Common Stock held by a
private foundation of which Mr. Smith is one of seven trustees and shares
voting and investment power. Mr. Smith disclaims beneficial ownership of
the shares held by the foundation, which shares are included in the shares
owned by the Smith Family Group. See Note 3.
(11) Includes 494,336 shares of Common Stock over which Mr. Stoneman has sole
voting and investment power and 505,664 shares of Common Stock owned by Mr.
Stoneman's wife, as to which shares Mr. Stoneman disclaims beneficial
ownership.
4
<PAGE> 7
(12) Includes 315,102 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1994 and 2,100 shares of
restricted Common Stock over which five executive officers have voting but
not investment power.
1. ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of three
classes. At each Annual Meeting, a class of directors is elected for a full term
of three years to succeed those whose terms are expiring. All of the Company's
directors are listed below with their principal occupations for the last five
years.
Four Class A directors are to be elected for a three-year term at the
Annual Meeting. The persons named in the accompanying proxy will vote each proxy
for the election of the nominees listed below, unless directed otherwise. Each
of the nominees is currently a member of the Board of Directors. The Company has
no reason to believe that the listed nominees will become unavailable for
election, but if for any reason that should be the case, the proxies may be
voted for substitute nominees. In electing directors, holders of the Common
Stock and Class B Stock vote together as a single class. A plurality of the
votes cast at the Annual Meeting is required to elect each director. Proxies
withholding authority to vote for a nominee will be treated as votes cast
against the election of such nominee. Broker non-votes will not be treated as
votes cast and, therefore, will not be counted in calculating a plurality.
The Company's By-Laws provide for the independence of the Board of
Directors and the Audit, Nominating and Compensation Committees. Those persons
who are considered "independent" within the meaning of the Company's By-Laws are
indicated by an asterisk (*) below.
NOMINEES FOR TERMS EXPIRING IN 1997 (CLASS A DIRECTORS)
JACK M. GREENBERG*, age 50, Director since 1993
Vice Chairman and Chief Financial Officer of McDonald's Corporation since
January 1992; Senior Executive Vice President and Chief Financial Officer of
McDonald's Corporation from February 1990 to January 1992 and Executive Vice
President prior thereto; Director of McDonald's Corporation and Arthur J.
Gallagher & Company.
HERBERT W. JARVIS*, age 68, Director since 1981
Retired President and Chief Executive Officer of Sybron Corporation;
Adjunct Professor of Management at the Rochester Institute of Technology from
1987 to 1991; Director of Berkshire Life Insurance Company, Shawmut National
Corporation and various other corporations and organizations.
RICHARD A. SMITH, age 69, Director since 1950
Chairman of the Board of the Company and of The Neiman Marcus Group, Inc.;
Chief Executive Officer of the Company and of The Neiman Marcus Group, Inc.
until November 25, 1991; Chairman of the Board, President and Chief Executive
Officer of GC Companies, Inc. since December 1993; Director of The Neiman Marcus
Group, Inc., Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance
Company, Bank of Boston Corporation and its principal subsidiary, The First
National Bank of Boston, and GC Companies, Inc. Mr. Smith is the father of
Robert A. Smith, who is Group Vice President and a director of the Company, and
the father-in-law of Brian J. Knez, who is Group Vice President of the Company.
(continued)
5
<PAGE> 8
ROBERT J. TARR, JR., age 50, Director since 1982
President, Chief Executive Officer (since November 25, 1991) and Chief
Operating Officer of the Company and of The Neiman Marcus Group, Inc.; Director
of The Neiman Marcus Group, Inc. and GC Companies, Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 1995 (CLASS B DIRECTORS)
WILLIAM F. CONNELL*, age 55, Director since 1992
Chairman and Chief Executive Officer of Connell Limited Partnership;
Director of Boston Edison Company, Bank of Boston Corporation and its principal
subsidiary, The First National Bank of Boston, and North American Mortgage
Company.
MAURICE SEGALL*, age 64, Director since 1986
Senior Lecturer, Massachusetts Institute of Technology since September
1989; Chairman of the Board of Directors of Zayre Corp. from February 1987 to
June 1989; President and Chief Executive Officer of Zayre Corp. from February
1978 to June 1989; Chairman of the Board of Directors of TJX Companies, Inc.
from May 1987 to June 1989; Director of AMR Corporation and Shawmut National
Corporation.
ROBERT A. SMITH, age 34, Director since 1989
Group Vice President of the Company since December 1991; Group Vice
President of The Neiman Marcus Group, Inc. since January 1992; Vice President -
Corporate Development of the Company from December 1988 to December 1991; Vice
President - Corporate Development of The Neiman Marcus Group, Inc. from March
1989 to January 1992. Mr. Smith is the son of Richard A. Smith, Chairman of the
Board of Directors of the Company, and the brother-in-law of Brian J. Knez,
Group Vice President of the Company.
HUGO UYTERHOEVEN*, age 62, Director since 1980
Timken Professor of Business Administration, Graduate School of Business
Administration, Harvard University; Director of Bombardier, Inc., Brown Boveri &
Cie, Ciba-Geigy AG, The Stanley Works and Ecolab, Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 1996 (CLASS C DIRECTORS)
LYNN MORLEY MARTIN*, age 54, Director since 1993
Davee Chair, F. L. Kellogg School of Management, Northwestern University
since September 1993; Advisor, Deloitte & Touche since June 1993; Fellow at the
Kennedy School of Government, Harvard University, since February 1993; United
States Secretary of Labor from February 1991 to January 1993; Member of the
United States House of Representatives (Illinois 16th Congressional District)
from 1981 to February 1991; Director of Ameritech Corporation, Ryder Systems,
Inc. and various Dreyfus mutual funds.
PAULA STERN*, age 48, Director since 1993
President of The Stern Group, Inc., an economic analysis and trade advisory
firm; Senior Fellow, Progressive Policy Institute, since October 1993; Former
Chairwoman of the U.S. International Trade Commission; Director of Westinghouse
Electric Corporation, Scott Paper Company and Dynatech Corporation.
SIDNEY STONEMAN, age 82, Director since 1950
Vice Chairman of the Board of Directors since December 1991; Chairman of
the Executive Committee of the Board of Directors prior thereto.
6
<PAGE> 9
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended October 31, 1993, the Board of Directors held
five meetings. Each of the directors of the Company attended at least 75% of the
aggregate number of meetings of the Board and committees of which he or she is a
member which were held during the period for which he or she was a director. The
Board of Directors has designated four principal standing committees. Set forth
below are descriptions of the functions of such committees and the names of
their current members.
Audit Committee. The members of the Audit Committee, which met three times
during fiscal 1993, are Messrs. Jarvis (Chairman), Connell, Greenberg and
Uyterhoeven and Ms. Stern. The functions of the Audit Committee include the
review of the scope of the services of the Company's independent auditors and
the responsibilities of the Company's internal audit department and a continuing
review of the Company's internal procedures and controls. The Audit Committee
annually reviews the Company's audited financial statements, considers the
qualifications and fees of the independent auditors of the Company and makes
recommendations to the Board of Directors as to the selection of the auditors
and the scope of their audit services.
Compensation Committee. The members of the Compensation Committee, which
met two times during fiscal 1993, are Messrs. Segall (Chairman), Greenberg and
Uyterhoeven and Ms. Martin. The functions of the Compensation Committee are to
review or determine salaries, benefits and other compensation for officers and
key employees of the Company and its subsidiaries and to administer the
Company's stock incentive plans.
Nominating Committee. The members of the Nominating Committee, which met
four times during fiscal 1993, are Messrs. Uyterhoeven (Chairman), Connell,
Jarvis, Richard A. Smith and Stoneman and Ms. Martin. The functions of the
Nominating Committee, in addition to nominating directors and making
recommendations concerning the structure and membership of the various
committees of the Board of Directors, include consulting with the Chief
Executive Officer on questions of management, organization and succession and
providing the Board of Directors with such guidance on these matters as the
Board of Directors may seek from time to time. The Company's By-Laws provide
that the Nominating Committee must carefully consider all suggestions timely
received from any stockholder of nominees for director of the Company when the
nominee confirms in writing to the Nominating Committee his or her desire to
serve as a director of the Company and where the credentials of the nominee meet
the standards generally applied by the Nominating Committee. Written suggestions
for candidates, accompanied by the consent of the proposed candidate to serve as
a director if nominated and elected, and a detailed description of his or her
qualifications and background, should be sent to the Company, c/o Secretary,
P.O. Box 1000, Chestnut Hill, Massachusetts 02167 (see "Deadline for Submission
of 1995 Stockholder Proposals and Nominations").
Executive Committee. The members of the Executive Committee, which did not
act during fiscal 1993, are Messrs. Richard A. Smith (Chairman), Robert J. Tarr,
Jr. and Robert A. Smith. The By-Laws confer upon the Executive Committee the
authority to manage the affairs of the Company in the intervals between meetings
of the Board of Directors, except that the Committee may not effect certain
fundamental corporate actions such as (a) declaring a dividend, (b) amending the
Restated Certificate of Incorporation or the By-Laws, (c) adopting an agreement
of merger or consolidation, or (d) imposing a lien on substantially all the
assets of the Company. In practice, the Executive Committee meets infrequently
and does not act except on matters which must be dealt with prior to the next
scheduled Board of Directors meeting and which are not sufficiently important to
require action by the full Board of Directors.
7
<PAGE> 10
DIRECTORS COMPENSATION
Those directors who are not employees of the Company receive an annual
retainer of $22,500 each and a fee of $1,750 per meeting attended, plus travel
and incidental expenses (an aggregate of $3,940 in fiscal 1993) incurred in
attending meetings and carrying out their duties as directors. They also receive
a fee of $750 (the Chairmen receive $1,250, with the exception of the Chairmen
of the Audit and Compensation Committees, who receive $1,750) for each committee
meeting attended. If a director is unable to attend a meeting in person but
participates by telephone, he or she receives one-half of the fee that would
otherwise be payable. Mr. Stoneman receives an additional annual retainer of
$25,000 as Vice Chairman of the Board of Directors.
The Company offers non-employee directors the alternative of receiving
directors' fees on a deferred basis. Those directors may elect to defer receipt
of all or a specified portion of their fees (i) in the form of cash with
interest at a rate equal to the average of the top rates paid by major New York
banks on primary new issues of three month negotiable certificates of deposit,
or (ii) in the form of units, the value of each unit initially being equal to
the fair market value of one share of Common Stock of the Company on the date
the fees would otherwise be payable. To date, Messrs. Greenberg, Jarvis,
Stoneman and Uyterhoeven and Ms. Stern have elected to receive their fees on a
deferred basis.
The Company also maintains a retirement plan for its non-employee
directors. Directors who have served on the Board for at least ten years are
entitled to receive an annual retirement benefit equal to the annual retainer in
effect during the year in which they retire. This benefit continues for a period
of time equal to the director's length of service on the Board. Retirement
benefits are not payable after death or in the event a director joins the board
of directors or becomes an executive officer of a competitor of the Company
within three years of his or her retirement as a director of the Company.
SECTION 16 REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of the Company's Common Stock to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. The Company believes that all such filing requirements were
complied with in fiscal 1993, except that the initial report on Form 3 for Ms.
Martin was filed two days after the report was due following her election as a
director of the Company in March 1993.
8
<PAGE> 11
<TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information on the compensation provided by
the Company during fiscal 1993, 1992 and 1991 to the Company's Chief Executive
Officer and the four most highly paid executive officers of the Company during
fiscal 1993.
<CAPTION>
LONG-TERM
COMPENSATION(1)
ANNUAL COMPENSATION ------------------------
------------------------------------- AWARDS
OTHER ------------------------ ALL
ANNUAL RESTRICTED SECURITIES OTHER
COMPEN- STOCK UNDERLYING COMPEN-
NAME AND FISCAL SATION AWARD(S) OPTIONS SATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) ($)(3)(4) ($)(5) (#) ($)(6)
- ------------------------------ ------ --------- ----------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Tarr, Jr............ 1993 $1,250,000 $ 937,500 $147,100 -- -- $ 89,521
President and Chief 1992 1,100,000 825,000 -- $1,750,000 200,000(7) 66,560
Executive Officer 1991 867,500 650,625 -- 218,625 22,000 --
Richard A. Smith.............. 1993 $ 750,000 $ 525,000 -- -- -- $253,483 (8)
Chairman of the Board 1992 750,000 525,000 -- -- -- 154,546 (8)
of Directors 1991 750,000 525,000 -- -- -- --
Richard T. Morgan(9).......... 1993 $ 525,000 $ 350,000 -- -- -- $ 22,330
President and Chief Executive 1992 211,538 105,769 -- -- 25,000 --
Officer of Harcourt Brace & 1991 -- -- -- -- -- --
Company
John R. Cook(10).............. 1993 $ 315,000 $ 157,500 -- -- 15,000 $ 15,331
Senior Vice President and 1992 47,250 -- -- -- -- --
Chief Financial Officer 1991 -- -- -- -- -- --
Eric P. Geller(11)............ 1993 $ 262,500 $ 165,000 $118,380 -- -- $ 15,251
Senior Vice President, 1992 209,375 87,812 -- -- 14,000 9,180
General Counsel and Secretary 1991 155,048 46,514 -- $ 24,844 2,500 --
- ---------------
<FN>
(1) The Company does not have a long-term compensation program that includes
long-term incentive payouts. No stock appreciation rights not in tandem
with stock options were granted to any of the named executive officers
during the years reported in the table. See Note 7.
(2) Bonus payments are reported with respect to the year in which the related
services were performed.
(3) Under the Securities and Exchange Commission rules on executive
compensation disclosure, no disclosure regarding items included in this
column is required for fiscal 1991 and no disclosure is required unless the
amount in any year exceeds the lesser of $50,000 or 10% of annual salary
and bonus for any named officer.
(4) Includes the estimated cost to the Company of medical, dental and financial
counseling reimbursements, personal legal fees reimbursed, tax offset
bonuses ($77,331 and $109,148 to Messrs. Tarr and Geller, respectively)
and, with respect to Mr. Tarr only, reimbursement for auto expenses and
bargain interest ($40,340) on a Company loan. For information regarding the
loan made to Mr. Tarr, see paragraph A under "Transactions Involving
Management and Others."
(5) Calculated by multiplying the closing price of the Company's Common Stock
on the New York Stock Exchange on the date of grant by the number of shares
awarded. Twenty percent of an award of restricted Common Stock is freed
from the restrictions on transfer each year, commencing one year after the
date of grant, provided that the recipient continues to be employed by the
Company on the anniversary date of the grant. In the event of termination
of employment for any reason, other than death or permanent disability,
restricted shares are forfeited by the holder and revert to the Company. At
the end of fiscal 1993, the only executive officer included in this table
who held restricted shares of Common Stock was Mr. Geller, who had 750
shares of restricted Common Stock with a market value
</TABLE>
9
<PAGE> 12
(based on the New York Stock Exchange closing price of the Company's Common
Stock of $44.00 at fiscal year end) of $33,000. In December 1992, the
vesting of all of Mr. Tarr's restricted shares of Common Stock was
accelerated as explained in the description of his Employment Agreement in
paragraph A under "Transactions Involving Management and Others."
(6) Under the Securities and Exchange Commission rules on executive
compensation disclosure, no disclosure regarding items included in this
column is required for fiscal 1991. The items accounted for in this column
include the value of allocated ESOP shares, the cost to the Company of
matching contributions under the Key Employee Deferred Compensation Plan
and group life insurance premiums. For fiscal 1993, such amounts for each
of the named executive officers were, respectively, as follows: Mr. Tarr --
$500, $65,538 and $23,483; Mr. Smith -- $500, $0 and $8,137; Mr. Morgan --
$0, $17,163 and $5,167; Mr. Cook -- $0, $12,358 and $2,973 and Mr. Geller
-- $500, $12,818 and $1,933. Also included in this column for fiscal 1993
and 1992 is $244,846 and $153,046, respectively, for Mr. Smith, which
represents a calculation of the benefit to Mr. Smith of the premium
advanced by the Company in those years for the life insurance policy
referred to in Note 8 below. The benefit is determined for the period,
projected on an actuarial basis, between the date the premium is paid by
the Company and the date the Company will be entitled to reimbursement of
the premium.
(7) These options were granted with tandem stock appreciation rights. The stock
appreciation rights cannot be exercised without surrendering a like number
of options.
(8) For information regarding advances made to Mr. Smith of a portion of the
premiums payable on a split dollar life insurance policy, see paragraph B
under "Transactions Involving Management and Others."
(9) Mr. Morgan's employment with the Company commenced on June 1, 1992.
(10) Mr. Cook's employment with the Company commenced on September 8, 1992.
(11) Mr. Geller first became an executive officer of the Company on May 1, 1992,
when he was named Senior Vice President and General Counsel. Prior to that
time, he was Vice President and Associate General Counsel. The compensation
set forth in the table for Mr. Geller for the period prior to May 1, 1992
is for his services in that capacity.
10
<PAGE> 13
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR(1)
The following table provides information regarding options granted under
the Company's 1988 Stock Incentive Plan during the fiscal year ended October 31,
1993 to the executive officers named in the Summary Compensation Table.
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF ANNUAL RATES
SECURITIES OPTIONS OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION
OPTIONS EMPLOYEES OR BASE FOR OPTION TERM(2)
GRANTED IN FISCAL PRICE EXPIRATION -----------------------
NAME (#)(3) YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------ ------ ----- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Mr. Tarr(4)....... -- -- -- -- -- --
Mr. Smith(5)...... -- -- -- -- -- --
Mr. Morgan(6)..... -- -- -- -- -- --
Mr. Cook.......... 15,000 14.25% $31.625 12/18/02 $298,332 $756,032
Mr. Geller(7)..... -- -- -- -- -- --
- ---------------
<FN>
(1) No stock appreciation rights were granted to any named executive officer
during fiscal 1993.
(2) These potential realizable values are based on assumed rates of appreciation
required by applicable regulations of the Securities and Exchange
Commission.
(3) All option grants are non-qualified stock options having a term of 10 years
and one day. They become exercisable at the rate of 20% on each of the
first five anniversary dates of the grant.
(4) Pursuant to Mr. Tarr's Employment Agreement, following the grants of options
and restricted stock to Mr. Tarr in fiscal 1992, he is not eligible to
receive any additional restricted stock or stock options during the initial
term of his Employment Agreement. For a description of Mr. Tarr's
Employment Agreement, see paragraph A under "Transactions Involving
Management and Others."
(5) Mr. Smith does not participate in the Company's Stock Incentive Plan.
(6) Mr. Morgan received an option to purchase 25,000 shares of Common Stock at
an exercise price of $25.75 per share in June 1992 in connection with his
employment by the Company. These options expire in June 2002. The potential
realizable values at the 5% and 10% assumed rates of stock price
appreciation for that option are $404,851 and $1,025,972, respectively.
(7) Mr. Geller received an option to purchase 10,000 shares of Common Stock at
an exercise price of $25.75 per share in June 1992 in connection with his
promotion to Senior Vice President and General Counsel of the Company.
These options expire in June 2002. The potential realizable values at the
5% and 10% assumed rates of stock price appreciation for that option are
$161,940 and $410,389, respectively.
</TABLE>
11
<PAGE> 14
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table provides information regarding stock options exercised
during fiscal 1993 and the number and value of stock options held at October 31,
1993 by the executive officers named in the Summary Compensation Table.
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
OCT. 31, 1993(#) OCT. 31, 1993($)
---------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE(2) UNEXERCISABLE(3)
- ----------------------- ------ --------- ---------------- ----------------
<S> <C> <C> <C> <C>
Mr. Tarr(4)............ 38,596 $1,134,865 193,996/ $4,730,898/
147,600 3,795,300
Mr. Smith(5)........... -- -- -- --
Mr. Morgan............. -- -- 5,000/ $ 91,250/
20,000 365,000
Mr. Cook............... -- -- 0/ $ 0/
15,000 185,625
Mr. Geller............. 6,000 $ 199,875 28,400/ $ 674,061/
15,100 316,125
- ---------------
<FN>
(1) Represents the difference between the closing price of the Company's Common
Stock on the New York Stock Exchange on the date of exercise and the option
exercise price.
(2) No stock appreciation rights were exercised or held, other than those
discussed at Note 4 below, by any of the named executive officers during
fiscal 1993.
(3) The value of unexercised in-the-money options is calculated by multiplying
the number of underlying shares by the difference between the closing price
of the Company's Common Stock on the New York Stock Exchange at fiscal year
end ($44.00) and the option exercise price for those shares. These values
have not been realized. Moreover, these values reflect the market value of
the Company's Common Stock prior to the spinoff of the Company's motion
picture exhibition business to the stockholders of the Company on December
15, 1993. In connection with that spinoff, all unexercised options to
purchase Common Stock of the Company have been increased pursuant to a
formula based on the relative trading prices of the Company's Common Stock
and the Common Stock of GC Companies, Inc., which owns General Cinema
Theatres, during a three week period subsequent to the spinoff. Pursuant to
the formula, all unexercised options have been increased by multiplying the
number of underlying shares by 1.101 and the exercise price for each option
has been adjusted downward so that the aggregate exercise prices for each
officer's options before and after the adjustment are equivalent. The
closing price of the Company's Common Stock on January 20, 1994 was $34.50.
(4) On November 25, 1991, Mr. Tarr was granted stock appreciation rights in
tandem with 200,000 non-qualified stock options. The value of these stock
appreciation rights is not separately listed in this table since an equal
number of options must be surrendered if the stock appreciation rights are
exercised.
(5) Mr. Smith does not participate in the Company's Stock Incentive Plan.
</TABLE>
12
<PAGE> 15
PENSION PLANS
The Company maintains a funded, qualified pension plan known as the
Harcourt General Retirement Plan (the "Retirement Plan"). Non-union employees of
the Company who have reached the age of 21 and completed one year of service
with 1,000 or more hours participate in the Retirement Plan, which pays benefits
upon retirement or termination of employment by reason of disability. Benefits
under the Retirement Plan become fully vested after five years of service with
the Company.
The Company also maintains a Supplemental Executive Retirement Plan (the
"SERP"). The SERP is an unfunded, non-qualified plan under which benefits are
paid from the Company's general assets to supplement Retirement Plan benefits
and Social Security. Executive, administrative and professional employees with
an annual base salary at least equal to a self-adjusting minimum ($96,368 as of
December 31, 1992) are eligible to participate in the SERP. Benefits under the
SERP become fully vested after five years of service with the Company. At normal
retirement age (generally age 65), a participant with 25 or more years of
service is entitled to payments under the SERP sufficient to bring his or her
combined annual benefit from the Retirement Plan and the SERP, computed as a
straight life annuity, up to 50% of the participant's highest consecutive 60
month average of pensionable earnings, less 60% of his or her estimated primary
Social Security benefit. If the participant has fewer than 25 years of service,
the combined benefit is proportionately reduced. In computing the combined
benefit, "pensionable earnings" means base salary, including any salary which
may have been deferred.
<TABLE>
The following table shows the estimated annual pension benefits payable to
employees in various compensation and years of service categories. The estimated
benefits apply to an employee retiring at age 65 in 1993 who elects to receive
his or her benefit in the form of a straight life annuity. These benefits
include amounts attributable to both the Retirement Plan and the SERP and are in
addition to any retirement benefits that might be received from Social Security.
ESTIMATED ANNUAL RETIREMENT BENEFITS
UNDER RETIREMENT PLAN AND SERP(1)(2)
<CAPTION>
TOTAL CREDITED YEARS OF SERVICE
AVERAGE ------------------------------------------------------------
PENSIONABLE 25
EARNINGS 5 10 15 20 OR MORE
- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000 ......................... $ 20,000 $ 40,000 $ 60,000 $ 80,000 $100,000
400,000 ......................... 40,000 80,000 120,000 160,000 200,000
600,000 ......................... 60,000 120,000 180,000 240,000 300,000
800,000 ......................... 80,000 160,000 240,000 320,000 400,000
1,000,000 ......................... 100,000 200,000 300,000 400,000 500,000
1,200,000 ......................... 120,000 240,000 360,000 480,000 600,000
1,400,000 ......................... 140,000 280,000 420,000 560,000 700,000
- ---------------
<FN>
(1) The amounts actually payable will be somewhat lower than the amounts shown
above, since the above amounts will be reduced by 60% of the participant's
estimated primary Social Security benefit.
(2) Richard A. Smith will have a smaller Social Security reduction due to
certain guaranty provisions contained in a prior pension plan in which he
participated. In 1990, Mr. Smith received a distribution of the present
value of excess retirement benefits then accrued under an agreement between
Mr. Smith and the Company; his future combined retirement benefits will
thus be reduced accordingly.
</TABLE>
13
<PAGE> 16
<TABLE>
The following table shows the pensionable earnings and credited years of
service for the executive officers named in the Summary Compensation Table as of
October 31, 1993 and years of service creditable at age 65. Credited service may
not exceed 25 years for the purpose of calculating retirement benefits under any
of the Company's retirement plans.
<CAPTION>
YEARS OF SERVICE
----------------------
PENSIONABLE EARNINGS AT
FOR YEAR ENDED OCTOBER 31, AT
NAME OCTOBER 31, 1993 1993 AGE 65
- ------------------------------------------------- -------------------- ----------- ------
<S> <C> <C> <C>
Mr. Tarr(1)...................................... $1,250,000 17 25
Mr. Smith........................................ 750,000 25(2) 25
Mr. Morgan....................................... 525,000 1 10
Mr. Cook......................................... 315,000 1 14
Mr. Geller....................................... 262,500 14 25
- ---------------
<FN>
(1) See "Transactions Involving Management and Others" for a description of Mr.
Tarr's retirement benefits under his Employment Agreement.
(2) Mr. Smith had 46 years of actual service at October 31, 1993. As previously
mentioned, however, credited service may not exceed 25 years for the
purpose of calculating retirement benefits under any of the Company's
plans.
</TABLE>
TRANSACTIONS INVOLVING MANAGEMENT AND OTHERS
A. The Company and Mr. Tarr have entered into an Employment Agreement
effective as of November 25, 1991 (the "Employment Agreement"), as modified by a
Supplemental Agreement effective as of December 17, 1992 (the "Supplemental
Agreement"). The initial term continues until October 31, 1996, but the Board of
Directors may extend the initial term for up to two additional 12-month periods
(each such period is referred to as an "Extension"). The initial term, as so
extended, is referred to herein as the "Term."
Under the Employment Agreement, Mr. Tarr shall be the President, Chief
Executive Officer and Chief Operating Officer of the Company. The Employment
Agreement provides that Mr. Tarr's base salary will be $1,250,000 for fiscal
1993; $1,400,000 for fiscal 1994; $1,500,000 for fiscal 1995 and $1,600,000 for
each of fiscal 1996, 1997 and 1998.
Mr. Tarr is eligible to receive an annual cash bonus for each fiscal year
during the Term. Each annual bonus is based on the achievement of performance
objectives to be agreed on by the Compensation Committee and Mr. Tarr. For
fiscal years 1993 through 1996, Mr. Tarr is entitled to a maximum annual bonus
equal to 75% of his base salary if the performance objectives are achieved.
During the Extensions, the 75% figure will be increased to 100%. All annual
bonuses will be reduced to the extent that performance objectives are not
achieved, except that in no event shall the bonus paid for fiscal 1996 be less
than $800,000. Mr. Tarr's bonus for fiscal 1993 is included in the Summary
Compensation Table.
Mr. Tarr is entitled to participate in all benefit plans maintained by the
Company for its senior executives. Mr. Tarr received a loan from the Company
pursuant to his Employment Agreement in the amount of $1,000,000, which bears
interest at an annual rate of 5% and is payable 12 months after the end of the
Term. Mr. Tarr has secured his obligation to repay this loan with a mortgage on
real property owned by him. As of January 20, 1994, there was $500,000 principal
amount outstanding on this loan. In addition, the Company pays all premiums on a
$450,000 life insurance policy in Mr. Tarr's name until the policy is fully
paid-up.
At the end of the Term, Mr. Tarr will receive an annual retirement benefit
during his lifetime of 50% of his final average compensation, which is defined
as 1/5 of the total of his base salary plus annual bonuses
14
<PAGE> 17
received for the five consecutive 12-month periods during the Term for which
such total is the highest. If Mr. Tarr is survived by his spouse, then she will
receive a retirement benefit during her lifetime in an annual amount equal to
50% of the benefit being paid to Mr. Tarr at the time of his death.
If Mr. Tarr dies during the Term, the Company will provide to Mr. Tarr's
surviving spouse a retirement benefit for her lifetime in an annual amount equal
to 50% of the benefit which Mr. Tarr would have received under the preceding
paragraph if he had remained employed by the Company until October 31, 1996 (or
if such death occurs after October 31, 1996, then until the expiration of the
Extension during which such death occurs) and had received his full base salary
and 50% of his maximum bonus (or in the case of fiscal 1996, the full guaranteed
bonus described above).
In the event the Company terminates Mr. Tarr's employment without Cause, as
defined below, or in the event Mr. Tarr terminates his employment for Good
Reason, as defined below, then the Company will (a) pay to Mr. Tarr his base
salary and the maximum annual bonuses as though he had remained employed until
October 31, 1996 (or, if such termination occurs after October 31, 1996, then
until the expiration of the Extension during which such termination occurs), (b)
pay to Mr. Tarr from and after October 31, 1996 (or the expiration of the
Extension, as the case may be) the consulting fees that would have been payable
to him, as described below, and (c) pay retirement and survivor benefits as
though he had remained employed until October 31, 1996 or until the expiration
of the Extension during which such termination occurs.
If a change in control of the Company occurs and, within two years
following such change in control, the Company terminates Mr. Tarr's employment
without Cause, or Mr. Tarr terminates his employment for Good Reason, the
Company will pay to Mr. Tarr a lump sum equal to the greater of (a) the total
amount he would have received had he remained in the employ of the Company until
October 31, 1996 (or the expiration of the Extension in which the termination
occurred) and received his full base salary and 50% of the maximum annual
bonuses (or, in the case of fiscal 1996, the full guaranteed bonus) or (b) three
times the sum of his base salary and maximum annual bonus for the year in which
termination occurs. Mr. Tarr is also entitled to receive the actuarial
equivalent of the retirement and survivor benefits to which he and his surviving
spouse would have been entitled had he not been terminated.
Pursuant to the definition of Cause in the Employment Agreement, Mr. Tarr's
employment may be terminated by the Company for Cause only in the event of his
willful and continuing failure to perform his duties under the Employment
Agreement or his conviction for or plea of nolo contendere to a felony or any
other crime which involves fraud, dishonesty, or moral turpitude. Pursuant to
the definition of Good Reason in the Employment Agreement, Mr. Tarr may
terminate his employment for Good Reason only if (a) he is assigned duties which
are inconsistent with his position as President and Chief Executive Officer of
the Company, (b) the Company fails to comply with its obligations under the
Employment Agreement, (c) the Company requires Mr. Tarr to relocate beyond a 15
mile radius from Chestnut Hill, Massachusetts, (d) the Board of Directors of the
Company fails to appoint Mr. Tarr as Chairman of the Board and assign to him the
powers and duties of that position when Richard A. Smith ceases to serve in that
position, (e) the Company fails to obtain a satisfactory agreement from any
successor to substantially all of the business of the Company to assume the
Company's obligations under the Employment Agreement, or (f) the Company
purports to terminate Mr. Tarr's employment other than as expressly permitted by
the Employment Agreement.
During the 12-month period following the expiration of the Term, Mr. Tarr
will be bound by certain non-competition provisions and will provide consulting
services to the Company for a consulting fee equal to 50% of his base salary for
the last 12 months of his employment and $4,000 per day for each day he renders
services in excess of 10 days per month.
On November 25, 1991, Mr. Tarr received a grant of 100,000 shares of
restricted Common Stock under the Company's 1988 Stock Incentive Plan and a
nonqualified stock option (together with stock appreciation
15
<PAGE> 18
rights) under that Plan to purchase 200,000 shares of the Company's Common Stock
at a price of $17.50 per share (the closing price of the Company's Common Stock
on the New York Stock Exchange on the date of the grant). Mr. Tarr is not
entitled to receive any additional restricted stock or stock option grants
during the initial term of the Employment Agreement. On each of June 25, 1992
and May 1, 1993, 20% of the stock options (and related stock appreciation
rights) became exercisable. The balance of the stock options and related stock
appreciation rights become exercisable at the rate of 20% of the original number
on May 1, 1994, May 1, 1995 and May 1, 1996, subject to acceleration in certain
events, such as termination of Mr. Tarr's employment by the Company without
Cause or by Mr. Tarr for Good Reason.
Effective December 17, 1992, pursuant to the recommendation of the
Compensation Committee, Mr. Tarr and the Company entered into a Supplemental
Agreement providing for the immediate vesting of all of the shares of restricted
Common Stock previously granted to Mr. Tarr, including the remaining 80,000
restricted shares granted under his Employment Agreement and 8,800 of the 11,000
restricted shares granted to Mr. Tarr in January 1991 (2,200 of said shares
vested in January 1992). As a result of the foregoing, Mr. Tarr recognized
taxable income, and the Company recognized a corresponding deduction, in the
amount of $2,830,500.
The Company took this action in part to preserve tax benefits which might
have been lost in the event certain tax policies were enacted into law which
would have limited the Company's right to deduct compensation amounts over
certain levels.
As a result of the accelerated vesting of the restricted shares, Mr. Tarr
paid $1,018,980 in federal and state income taxes for 1992, and the Company
subsequently loaned this amount (the "Reimbursement Loan") to Mr. Tarr, without
interest. The Supplemental Agreement provides that Mr. Tarr will repay the
Reimbursement Loan in 16 equal consecutive quarterly installments of principal
beginning June 15, 1993, subject to acceleration of the full amount in the event
Mr. Tarr's employment with the Company should terminate for any reason. At
January 20, 1994, $827,922 remained outstanding under this loan. In addition, in
consideration of the immediate vesting of the 88,800 shares of restricted stock,
should Mr. Tarr's employment with the Company terminate because of a breach by
him of the Employment Agreement, he will pay to the Company an amount, in cash
or Company stock (the "Restricted Stock Obligation"), equal to the value of the
restricted shares which would have not yet vested under the terms of Mr. Tarr's
Employment Agreement and his previous restricted stock grant before they were
modified by the Supplemental Agreement. This is intended to put the Company in
the same position it would have been had the Supplemental Agreement not been
executed. Both the Reimbursement Loan and the Restricted Stock Obligation are
secured by the Company's right to set off any amounts payable by the Company to
Mr. Tarr.
B. In August 1990, a trust established by Mr. and Mrs. Richard A. Smith
entered into an agreement with the Company whereby the Company, with the
approval of the Compensation Committee of the Board of Directors, agreed to make
advances of a portion of the premiums payable on a split dollar life insurance
policy purchased by the trust on the joint lives of Mr. and Mrs. Smith. The
Company will make such advances for not more than nine years, after which time
the premiums may be paid through policy loans. The Company is entitled to
reimbursement of the amounts advanced, without interest, upon the first to occur
of (a) the death of the survivor of Mr. and Mrs. Smith or (b) the surrender of
the policy. These advances are secured by a collateral assignment of the policy
to the Company. During fiscal 1993, 1992 and 1991, the Company advanced
$426,216, $429,221 and $447,158, respectively, toward the payment of such
premiums.
C. The Company has two Key Executive Stock Purchase Loan Plans -- the 1975
Key Executive Stock Purchase Loan Plan, as amended (the "1975 Loan Plan"), and
the 1983 Key Executive Stock Purchase Loan Plan, as amended (the "1983 Loan
Plan"). No further loans may be made under the 1975 Loan Plan. The principal
purpose of the Loan Plans, which provide loans to key employees to finance the
purchase of shares of
16
<PAGE> 19
the Company's stock, is to encourage the acquisition and retention of Company
stock by such employees so that the continuing proprietary interest of such
employees in the Company may serve as an additional incentive to them.
A feature of the 1983 Loan Plan (and one principal difference from the 1975
Loan Plan) is to allow the Committee of the Board administering the 1983 Loan
Plan to require loan participants to collateralize their loans by pledging to
the Company the shares of Company stock purchased with loan proceeds. Loans
outstanding under the 1975 Loan Plan are unsecured and continue to be so. The
Company has not experienced any difficulty in obtaining repayment of any loans
under either Loan Plan.
The amount of any stock purchase loan granted under the 1983 Loan Plan may
not exceed the sum of (a) the price of the securities purchased with the
proceeds of the loan, (b) brokerage fees and similar expenses incurred in
connection with such purchase and (c) in the case of an exercise of a
nonqualified stock option, that percentage of the difference between the
aggregate fair market value of the securities purchased on the date of exercise
and the aggregate option exercise price which equals the highest marginal
federal income tax rate prevailing on the date of exercise. The Committee may
determine the aggregate amount of loans which may be made to any loan
participant.
Each loan under the 1975 Loan Plan is evidenced by an unsecured promissory
note and each loan made to date under the 1983 Loan Plan is evidenced by a
secured promissory note bearing interest at a rate determined by the Committee.
The unpaid principal amount of any loan becomes due and payable seven months
after the loan participant's employment with the Company or any of its
subsidiaries has terminated. The Committee, in its discretion, may extend any
loan which becomes due and payable by reason of such termination for an
additional term not exceeding five months. The unpaid principal amount of a loan
of a participant who ceases to be a Company employee by reason of retirement,
disability, involuntary discharge or death, or who resigns more than four years
after the date of the loan, shall be repayable at the option of the participant
(or his legal representative, as the case may be) either in cash or in the
number of Company shares obtained with the proceeds of the loan.
The aggregate unpaid principal amount of all stock purchase loans
outstanding under the Loan Plans may not exceed $5,000,000 at any time, subject,
however, to the right of the Board of Directors upon the recommendation of the
Committee to increase the aggregate outstanding loan limitation to not more than
3/4 of 1% of the Company's total assets as most recently made public by the
Company at the time of such action, excluding for this purpose the assets of The
Neiman Marcus Group, Inc., the insurance subsidiaries of Harcourt Brace &
Company and the motion picture exhibition business. The total potential amount
of loans which the Board of Directors could have authorized under the Loan Plans
during fiscal 1993 was $9,805,477. The aggregate amount of indebtedness to the
Company outstanding on January 20, 1994 under the Loan Plans was $1,836,406.
<TABLE>
The following table describes (a) the largest amount of indebtedness
outstanding under the Loan Plans during fiscal 1993, (b) the amount of
indebtedness outstanding on January 20, 1994, and (c) the weighted average rate
of interest on indebtedness outstanding on January 20, 1994, for the executive
officers of the Company who had loans in excess of $60,000 during fiscal 1993 or
subsequent thereto.
<CAPTION>
LARGEST WEIGHTED
INDEBTEDNESS INDEBTEDNESS AVERAGE
OUTSTANDING OUTSTANDING AT INTEREST RATE
IN FISCAL 1993 JANUARY 20, 1994 PER ANNUM
--------- -------- ----
<S> <C> <C> <C>
Mr. Tarr(1)............................. $1,213,471 $985,928 2.44%
Mr. Cook................................ 0 334,752 5.00
Mr. Geller.............................. 244,856 244,856 5.54
Mr. Sawin(2)............................ 72,416 72,416 5.00
(continued)
</TABLE>
17
<PAGE> 20
- ---------------
[FN]
(1) The Company has also made loans to Mr. Tarr pursuant to his Employment
Agreement and Supplemental Agreement. At January 20, 1994, the principal
amount outstanding under such loans aggregated $1,327,922. See paragraph A
under "Transactions Involving Management and Others."
(2) Mr. Sawin is the Vice President - Planning and Analysis of the Company.
------------------------
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934, each as amended, that might incorporate future filings, including this
proxy statement, in whole or in part, the following Compensation Committee
Report on Executive Compensation and Stock Performance Graph shall not be deemed
to be incorporated by reference into any such filings, nor shall such sections
of this proxy statement be deemed to be incorporated into any future filings
made by the Company under the Securities Act of 1933 or the Securities Exchange
Act of 1934.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of Maurice Segall, Jack M.
Greenberg, Lynn Morley Martin and Hugo Uyterhoeven. Mr. Segall is the Chairman
of the Committee. Ms. Martin and Mr. Greenberg were first elected directors of
the Company and members of the Compensation Committee on March 12, 1993 and June
17, 1993, respectively. Mr. Greenberg and Ms. Martin did not participate in any
of the Committee's decisions prior to their respective elections. The members of
the Compensation Committee are all independent directors.
Compensation Policies
The principal objectives of the Company's executive compensation program
are to reward competitively its executive officers in order to attract and
retain excellent management and to provide incentives to executive officers that
will most sharply focus their attention on the goals of building profitability
and shareholder value.
Early in each fiscal year, the Committee considers the recommendations of
the Chief Executive Officer, which are supported by data generated by the
Company's Human Resources Department, for each component of compensation of the
Company's principal executive officers. The Committee reviews those
recommendations and then approves them or makes such modifications as it deems
appropriate.
The Committee is mindful of the new provision of the Internal Revenue Code
which may have the effect of disallowing the Company's deduction for executive
compensation over $1 million in any year for each of the executive officers
named in the Summary Compensation Table under certain circumstances. This
provision will not apply to the Company in fiscal 1994. The Committee will
monitor this issue closely and determine what actions, if any, should be taken
by the Company with respect to its executive compensation policies in order to
preserve this deduction.
The principal components of the Company's compensation program are:
Base Salary:
This is determined with reference both to salary survey information
from recognized compensation consulting firms and to each executive
officer's level of responsibility, experience and performance. The salary
survey data is used to establish benchmark amounts for both base salary and
total cash compensation for each executive position. Comparisons are made
to a broad range of companies or, depending on an executive's level of
responsibility, to groups of profit centers or divisions within such
companies, with the principal selection criterion for comparisons being
similar revenues to the Company
18
<PAGE> 21
or to the group or division within the Company. While there are no hard and
fast rules which bind the Committee, the Company generally sets its salary
and total cash compensation benchmarks (assuming that maximum bonuses are
achieved) for executive officers at the 75th percentile of the comparison
group of companies in order to both reflect the size and complexity of the
Company and to compete for and retain the best management talent available.
Because the Company is involved in a variety of businesses and competes for
executives with all major U.S. companies, the Committee believes that
comparison information from the broadest group of companies is the most
appropriate reference for setting cash compensation amounts. The Committee
accordingly does not limit its comparison information for compensation
purposes to the companies included in the peer group in the Stock
Performance Graph.
The Committee reviews in detail the base salary levels for each of the
principal executive officers of the Company. While the Committee uses the
benchmarks as a reference point, a particular individual's base salary may
vary from the benchmark depending upon his salary history, experience,
individual performance, contractual obligations of the Company and salary
guidelines imposed by the budget for a particular fiscal year.
Executive Incentive Bonus Plan:
Bonuses are awarded under this plan based on the achievement of
performance objectives by the Company and individual executives. The bonus
program is intended to put increasing amounts of total cash compensation at
risk for senior executive officers, with the intent of focusing their
attention on achieving both the Company's performance goals and their
individual goals, thereby contributing to profitability and building
shareholder value.
Shortly after the beginning of each fiscal year, the Compensation
Committee considers the recommendations of the Chief Executive Officer for
the Company's performance goals for the current year, the officers who
should participate in the plan for that year, and the maximum bonus values
attainable by them. The Committee reviews those recommendations and then
approves them or makes such modifications as it deems appropriate. The plan
allows for maximum bonuses ranging from 30% to 75% of base salary.
The principal performance measure which determines the payment of
bonuses for corporate level executives is the Company's earnings goal
established by the Committee shortly after the beginning of the fiscal
year. The earnings goal established for fiscal 1993 was an amount of net
income that was exceeded by the Company's actual net income for that year
as it appears on the line "Net earnings (loss) applicable to common
shareholders" in the Company's financial statements. For executives with
responsibilities at the group or division level, a performance target
relating to the financial results of that group or division is established.
In addition, each of the Company's senior executive officers prepares
and reaches agreement with the Chief Executive Officer on individual
performance goals which must be achieved in addition to the Company's
performance target in order for an executive to get his full bonus.
Individual performance goals typically include achievement of specific
tasks.
Absent extraordinary circumstances, if the corporate performance
target is exceeded, bonus awards are not increased over the maximum bonus
values established by the Committee. If the performance target is not met,
bonus awards will, in all probability, be reduced at the discretion of the
Committee. If the Company falls sufficiently short of its performance
target, there is a presumption that bonuses would not be paid absent
special circumstances. Depending on the individual officer, factors such as
the performance of a business unit or units for which the executive is
responsible and achievement of individual performance goals are considered
in the decision to award a bonus. If corporate and/or
19
<PAGE> 22
business unit performance targets are met, but an individual falls short of
his performance goals, the individual's bonus could be reduced or
eliminated in the discretion of the Committee.
The bonuses awarded to the named executive officers in fiscal 1993
were determined by an assessment of all of the factors described above.
Because the Company achieved exceptional financial results in fiscal 1992
and 1993, the Committee determined that certain executive officers who made
significant individual contributions to those results should receive
bonuses for fiscal 1993 in excess of the maximum bonus values established
for them at the beginning of the year.
Stock Incentives:
The Committee's purpose in awarding equity based incentives,
principally in the form of stock options which vest over a period of five
years and terminate ten years from the date of grant, is to achieve as much
as possible an identity of interest between the executives and the long
term interest of the stockholders. The Company's senior executive officers
have always had a very significant equity ownership in the Company, and the
Committee is of the view that this has been and continues to be a key
factor in focusing the efforts of management in building shareholder value.
The principal factors considered in determining which executive officers
(including the named executive officers) were awarded equity based
compensation in fiscal 1993, and in determining the types and amounts of
such awards, were salary levels, special circumstances such as promotions
and contractual commitments, as well as the performance, experience and
level of responsibility of each executive.
Compensation of the Chief Executive Officer
Mr. Tarr's compensation for fiscal 1993 was determined by his Employment
Agreement with the Company which was entered into after approval by the
Compensation Committee in November 1991. Mr. Tarr's Employment Agreement is
described earlier in this proxy statement.
When the Committee approved Mr. Tarr's agreement, it considered all of the
factors described above under the Compensation Policies caption as well as
detailed information for chief executive officer positions at other large and
complex companies which was developed by the Company's Human Resources
Department acting under the ultimate supervision of Richard A. Smith, the
Company's then Chairman and Chief Executive Officer. This information included
special reviews of chief executive officer compensation conducted at the request
of the Company by William M. Mercer Incorporated and Hewitt Associates, two
nationally recognized executive compensation consulting firms. Other factors
which the Committee considered in approving Mr. Tarr's contract were his
experience and performance with the Company, competition for chief executive
officers of similar experience and ability, and planning for management
succession.
It is important to note that Mr. Tarr's Employment Agreement became
effective only after the Company completed the acquisition of Harcourt Brace &
Company in November 1991. In approving Mr. Tarr's agreement, the Committee
considered the Company's need for continuity of strong and experienced senior
management to focus on the integration of Harcourt Brace & Company into the
Company's operations. Specifically, the Committee was of the view that a long
term agreement with Mr. Tarr met the Company's need for stability during the
period following the acquisition of Harcourt Brace & Company.
Mr. Tarr was paid his full contractual bonus of 75% of base salary for 1993
because the Company exceeded the earnings goal established by the Committee for
the 1993 fiscal year.
In November 1991, Mr. Tarr received 100,000 shares of restricted stock and
an option grant for 200,000 shares of stock pursuant to his Employment
Agreement. The purpose of these grants was to put a substantial portion of Mr.
Tarr's total compensation at risk and to sharply focus his attention on building
shareholder value over the long term. Under the terms of his Employment
Agreement Mr. Tarr is not entitled to receive any further grants of restricted
stock or stock options during the initial term of his contract, which runs
through October 31, 1996.
20
<PAGE> 23
In December 1992, the Compensation Committee approved a Supplemental
Agreement to Mr. Tarr's Employment Agreement which provided for the immediate
vesting of all of Mr. Tarr's restricted stock. This action was taken in order to
preserve certain tax benefits for the Company. Mr. Tarr's Employment Agreement
and the Supplemental Agreement are described earlier in this proxy statement.
COMPENSATION COMMITTEE
Maurice Segall, Chairman
Jack M. Greenberg
Lynn Morley Martin
Hugo Uyterhoeven
<TABLE>
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total return on the Company's
Common Stock against the cumulative total return of the Standard & Poor's 500
Stock Index and a Peer Index during the five fiscal years ended October 31,
1993. The graph assumes a $100 investment in the Company's Common Stock and in
each index at October 31, 1988 and that all dividends were reinvested.
<CAPTION>
Measurement Period Harcourt
(Fiscal Year Covered) General, Inc. S&P 500 Index Peer Index
<S> <C> <C> <C>
31-Oct-88 100.00 100.00 100.00
31-Oct-89 130.96 126.37 126.21
31-Oct-90 93.74 116.93 86.27
31-Oct-91 103.56 156.10 126.09
31-Oct-92 154.23 171.65 139.91
31-Oct-93 233.44 197.29 182.75
</TABLE>
21
<PAGE> 24
The comparisons provided in this graph are not intended to be indicative of
possible future performance of the Company's stock. In addition, it should be
noted that the Company had no publishing or insurance operations prior to the
acquisition of Harcourt Brace & Company in November 1991, and that the Company
completed the spinoff of its motion picture exhibition business to its
shareholders on December 15, 1993.
<TABLE>
The Company's Peer Index is made up of companies in the publishing,
specialty retail and motion picture exhibition industries as well as the
companies in the Standard & Poor's Life Insurance Index. The common stocks of
the companies in each group have been weighted annually at the beginning of each
fiscal year to reflect relative stock market capitalization. The groups in the
Peer Index have been weighted as follows: 50% publishing, 30% specialty retail,
15% insurance, and 5% motion picture exhibition. This weighting is based on the
approximate contribution to the Company's fiscal 1993 operating earnings of each
of those sectors. The companies which comprise the Peer Index are as follows:
<CAPTION>
PUBLISHING SPECIALTY RETAIL
------------------------------- -------------------------------
<S> <C>
Houghton Mifflin Company The Limited, Inc.
McGraw-Hill, Inc. Nordstrom, Inc.
Paramount Communications, Inc. Tiffany & Co.
</TABLE>
<TABLE>
<CAPTION>
INSURANCE MOTION PICTURE EXHIBITION
------------------------------- -------------------------------
<S> <C>
Capital Holding Corp. AMC Entertainment, Inc.
Jefferson-Pilot Corp. Carmike Cinemas, Inc.
Lincoln National Corp. Cineplex Odeon Corp.
Torchmark Corp.
USLIFE Corp.
</TABLE>
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Although Delaware law does not require that the selection by the Board of
Directors of the Company's auditors be approved each year by the stockholders,
the Board of Directors believes it is appropriate to submit its selection to the
stockholders for their approval and to abide by the result of the stockholders'
vote. The Board of Directors recommends that the stockholders ratify the
appointment of Deloitte & Touche as independent auditors to audit the financial
statements of the Company for the fiscal year ending October 31, 1994.
Representatives of Deloitte & Touche will be present at the Annual Meeting,
will have an opportunity to make a statement if they wish, and will be available
to respond to appropriate questions from stockholders. The Company paid, or
accrued, approximately $3,482,100 on account of professional services rendered
by Deloitte & Touche for the fiscal year ended October 31, 1993. Deloitte &
Touche also serves as the independent auditors for The Neiman Marcus Group, Inc.
Approval of the proposal to ratify the selection of Deloitte & Touche as
the Company's independent auditors for the current fiscal year requires a
favorable vote of a majority of the issued and outstanding Common Stock and
Class B Stock, voting together as a single class, represented and entitled to
vote at the meeting. Abstentions will be treated as votes cast. Broker non-votes
will be treated as present but not voting. On this proposal, abstentions and
broker non-votes will have the same effect as votes against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO RATIFY THE SELECTION OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING OCTOBER 31, 1994.
22
<PAGE> 25
3. OTHER MATTERS
The Board of Directors knows of no other matters which are likely to be
brought before the meeting. If any other matters should be properly brought
before the meeting, it is the intention of the persons named in the enclosed
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
DEADLINE FOR SUBMISSION OF
1995 STOCKHOLDER PROPOSALS AND NOMINATIONS
In order for stockholder proposals to be considered by the Company for
inclusion in the proxy material for the Annual Meeting of Stockholders to be
held in 1995, they must be received by the Company at its principal executive
offices by November 1, 1994. Any nominations for the Board of Directors must
also be received no later than November 1, 1994. See "Meetings and Committees of
the Board of Directors -- Nominating Committee."
By Order of The Board of Directors
ERIC P. GELLER
Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, IF YOU ARE A HOLDER OF
COMMON STOCK OR CLASS B STOCK, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE. STOCKHOLDERS WHO
ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN
THEIR PROXIES.
23
<PAGE> 26
PROXY
-----
HARCOURT GENERAL, INC.
COMMON STOCK AND COMMON STOCK AND
CLASS B STOCK CLASS B STOCK
PROXY PROXY
ANNUAL MEETING OF STOCKHOLDERS -- MARCH 11, 1994
Richard A. Smith, Robert J. Tarr, Jr. and Eric P. Geller, and each of
them (a majority of those present and acting to have all the powers hereunder),
with several powers of substitution, are hereby authorized to represent and
vote all shares of Common Stock and/or Class B Stock of the undersigned at the
Annual Meeting of Stockholders of Harcourt General, Inc. to be held at the
First National Bank of Boston, 100 Federal Street, Boston, Massachusetts, on
Friday, March 11, 1994 at 10:00 a.m. and at any adjournments thereof. The
undersigned hereby revokes any Proxy previously given and acknowledges receipt
of the Notice of Annual Meeting and Proxy Statement dated February 3, 1994 and
a copy of the Annual Report for the year ended October 31, 1993.
The shares represented by this Proxy will be voted as directed by the
undersigned. The Board of Directors of Harcourt General, Inc. recommends a vote
FOR the nominees set forth below and FOR proposal 2. If this Proxy is signed
and returned and does not specify a vote on any proposal, the Proxy will be so
voted.
ELECTION OF CLASS A DIRECTORS
Nominees: Jack M. Greenberg
Herbert W. Jarvis
Richard A. Smith
Robert J. Tarr, Jr.
(SEE REVERSE SIDE TO CAST VOTE.)
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE
<PAGE> 27
<TABLE>
<CAPTION>
[X] Please mark
votes as in
this example. Harcourt General, Inc. Proxy
- -----------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1 and 2.
- -----------------------------------------------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. Election of [ ] [ ] 2. Approval of the appointment of [ ] [ ] [ ]
Directors (See Deloitte & Touche as independent
Reverse). auditors of the Company for the
current fiscal year.
[ ]____________________________
For all nominees except as noted above
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
This Proxy is solicited by the
Board of Directors
<S> <C> <C> <C> <C>
MARK HERE [ ] MARK HERE [ ]
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
For joint accounts, each owner should sign. Executors, Signature:__________________________Date:_________________
Adminstrators, Trustees, etc., should give full title. Signature:__________________________Date:_________________
</TABLE>
<PAGE> 28
CONFIDENTIAL VOTING INSTRUCTIONS
TO: WACHOVIA BANK OF NORTH CAROLINA, N.A.
AS TRUSTEE UNDER THE
HARCOURT GENERAL, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
WITH RESPECT TO THE ANNUAL MEETING OF STOCKHOLDERS OF
HARCOURT GENERAL, INC. - MARCH 11, 1994
I hereby instruct the Trustee to vote (in person or by proxy) all
shares of Common Stock of Harcourt General, Inc. which are credited to my
account under the above-referenced Plan at the Annual Meeting of Stockholders
of Harcourt General, Inc. to be held at the First National Bank of Boston, 100
Federal Street, Boston, Massachusetts on Friday, March 11, 1994 at 10:00 a.m.
and at any adjournments thereof. The undersigned hereby revokes any Proxy
previously given and acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated February 3, 1994 and a copy of the Annual Report for the
year ended October 31, 1993.
The shares represented by this Proxy will be voted by the Trustee as
directed by the undersigned. The Board of Directors of Harcourt General, Inc.
recommends a vote FOR the nominees set forth below and FOR proposal 2. If this
Proxy is signed and returned and does not specify a vote on any proposal, the
Proxy will be so voted.
ELECTION OF CLASS A DIRECTORS
Nominees: Jack M. Greenberg
Herbert W. Jarvis
Richard A. Smith
Robert J. Tarr, Jr.
(SEE REVERSE SIDE TO CAST VOTE)
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE
<PAGE> 29
<TABLE>
<CAPTION>
[X] Please mark
votes as in
this example.
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1 and 2.
- -----------------------------------------------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. Election of [ ] [ ] 2. Approval of the appointment of [ ] [ ] [ ]
Directors (See Deloitte & Touche as independent
Reverse). auditors of the Company for the
current fiscal year.
[ ]____________________________
For all nominees except as noted above
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
This Proxy is solicited by the
Board of Directors
<S> <C> <C> <C> <C>
MARK HERE [ ] MARK HERE [ ]
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
For joint accounts, each owner should sign. Executors, Signature:__________________________Date:_________________
Adminstrators, Trustees, etc., should give full title. Signature:__________________________Date:_________________
</TABLE>
<PAGE> 30
WACHOVIA
- --------------------------------------------------------------------------------
Employee Benefit Trust Services
301 North Main Street
Winston-Salem, NC 27150-3099
February 3, 1994
TO: Participants in Harcourt General, Inc.
Employees' Stock Ownership Plan
FROM: Wachovia Bank of North Carolina, N.A.
Trustee of the Employees' Stock Ownership Plan
As a participant in the Harcourt General, Inc. Employees' Stock Ownership Plan,
which owns shares of Harcourt General Common Stock, you are entitled to
instruct the Trustee on how to vote the shares of Common Stock in your account
on matters scheduled to come before the Annual Meeting of Stockholders of
Harcourt General, Inc. to be held on Friday, March 11, 1994.
A proxy statement, confidential voting instruction card and return envelope are
enclosed. If you wish to exercise your right to vote, please complete, date and
sign the voting instruction card and mail it promptly in the return envelope to
arrive no later than March 8, 1994 at the Bank of Boston.
If you own shares of Harcourt General, Inc. outside of the Employees' Stock
Ownership Plan, you will receive similar materials for those shares in a
separate mailing. Please return both cards in their separate return envelopes
if you wish to fully participate in the matters being submitted to the
stockholders of Harcourt General, Inc.
Enclosure
