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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 Rule 14a-11(c) or Rule 14a-12
Harcourt General, Inc.
(Name of Registrant as Specified In Its Charter)
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) or
Item 22(i)(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.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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[HARCOURT GENERAL LOGO]
Harcourt General, Inc.
27 Boylston Street/Box 1000
Chestnut Hill, MA 02167
(617) 232-8200
February 3, 1995
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 10, 1995
The Annual Meeting of Stockholders of Harcourt General, Inc. will be held
at 10:00 a.m., Eastern Standard Time, on Friday, March 10, 1995, at The First
National Bank of Boston, 100 Federal Street, Boston, Massachusetts, for the
following purposes:
1. To elect four Class B directors and one Class C director 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 LLP 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 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 10, 1995
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 10, 1995, 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 LLP 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, 1995.
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 12, 1995 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 12, 1995, there were 56,602,263 shares
of Common Stock and 21,316,581 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, 1995 (except
as indicated in Note 5 below) 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
<PAGE> 4
Class B Stock, (ii) each executive officer named in the Summary Compensation
Table, (iii) each director and nominee for 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)................. 853,567 1.5 -- -- 21,277,038 99.8
c/o Richard A. Smith
Harcourt General, Inc.
27 Boylston Street
Chestnut Hill, MA 02167
Richard A. Smith(2)(3)................... 329,090 * -- -- 14,833,177 69.6
c/o Harcourt General, Inc.
27 Boylston Street
Chestnut Hill, MA 02167
Nancy L. Marks(2)(3)..................... 148,424 * -- -- 10,229,582 48.0
c/o Harcourt General, Inc.
27 Boylston Street
Chestnut Hill, MA 02167
Mark D. Balk, Esq.(2)(4)................. 148,424 * -- -- 3,127,166 14.7
Goulston & Storrs, P.C.
400 Atlantic Avenue
Boston, MA 02110
Gabelli Funds, Inc.(5)................... 3,086,895 5.5 -- -- -- --
One Corporate Center
Rye, NY 10580
Robert J. Tarr, Jr.(6)................... 590,705 1.0 55,414 3.8 -- --
Richard T. Morgan(7)..................... 52,693 * -- -- -- --
John R. Cook(8).......................... 19,606 * -- -- -- --
Eric P. Geller(9)........................ 57,432 * 6,000 * -- --
William F. Connell....................... 1,500 * -- -- -- --
Jack M. Greenberg........................ 500 * -- -- -- --
Herbert W. Jarvis........................ 4,500 * -- -- -- --
Brian J. Knez(3)(10)..................... 166,626 * -- -- 539,306 2.5
Lynn Morley Martin....................... 500 * -- -- -- --
Maurice Segall........................... 2,000 * -- -- -- --
Robert A. Smith(3)(11)................... 176,968 * -- -- 775,373 3.6
Paula Stern.............................. 100 * -- -- -- --
Sidney Stoneman(12)...................... 1,000,000 1.8 -- -- -- --
Hugo Uyterhoeven......................... 1,200 * 1,200 * -- --
Clifton R. Wharton, Jr................... 1,500 * -- -- -- --
All current executive officers and
directors as a group
(19 persons)(13)....................... 2,297,328 4.1 63,622 4.4 16,147,856 75.8
</TABLE>
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* 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,
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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 more than
once 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) The Smith Family Group includes Richard A. Smith, Chairman of the Board of
the Company; Nancy L. Marks, Mr. Smith's sister; Robert A. Smith, Group
Vice President and a director of the Company, who is the son of Richard A.
Smith; Brian J. Knez, Vice President and a nominee for director of the
Company, who is the son-in-law of Richard A. Smith; other members of their
families and various Smith family corporations, trusts and charitable
foundations. Certain members of the Smith Family Group have filed a
Schedule 13D, as amended, with the Securities and Exchange Commission. The
Schedule 13D discloses that certain members of the Smith Family Group have
executed the Smith-Lurie/Marks Stockholders' Agreement dated December 29,
1986, as supplemented (the "Stockholders' Agreement"). The Stockholders'
Agreement imposes certain restrictions on the ability of the parties
thereto to convert their Class B Stock into Common Stock without permitting
the other parties to acquire the shares proposed to be so converted.
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 19,734,912 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 21,277,038
shares of Class B Stock and 853,567 shares of Common Stock, which includes
25,321 shares of Common Stock subject to outstanding options exercisable
within 60 days of January 20, 1995. The 21,277,038 shares of Class B Stock
constitute 99.8% of the outstanding Class B Stock and, together with the
853,567 shares of Common Stock owned by the Smith Family Group, constitute
27.8% of the aggregate of the shares of the Class B Stock, Common Stock and
Series A Stock outstanding as of January 20, 1995. 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 stockholders' 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, 1995, 28.4% 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, 1995, 79.2% 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.
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
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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 such shares, all of which 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 information provided to the Company by
the Gabelli Funds, Inc. and its affiliates (the "Gabelli Affiliates") in
December 1994. The Gabelli Affiliates have sole voting power with respect
to substantially all of the shares and sole dispositive power with respect
to all the shares reported in the table.
(6) Includes 283,171 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1995. Also includes
15,000 shares of Common Stock and 15,000 shares of Series A Stock owned by
Mr. Tarr's wife; 12,248 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 52,525 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1995. In connection with
Mr. Morgan's resignation from the Company effective January 15, 1995, the
Compensation Committee of the Board of Directors authorized the vesting of
all stock options held by Mr. Morgan. See paragraph C under "Transactions
Involving Management" for additional information.
(8) Includes 9,606 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1995.
(9) Includes 29,965 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1995 and 250 shares of
restricted Common Stock over which Mr. Geller has voting but not investment
power.
(10) Includes 7,765 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1995, 150 shares of
restricted Common Stock over which Mr. Knez has voting but not investment
power, 18,536 shares of Class B Stock held by Mr. Knez's wife, 510,000
shares of Class B Stock held by trusts of which Mr. Knez's wife is the
beneficiary and 10,770 shares of Class B Stock held by a trust, of which
Mr. Knez is a trustee, for the benefit of Mr. Knez's children. Also
includes 158,000 shares of Common Stock held by a private foundation of
which Mr. Knez is one of seven trustees and shares voting and investment
power. Mr. Knez disclaims beneficial ownership of the shares held by the
foundation. All of the shares reported for Mr. Knez are included in the
shares owned by the Smith Family Group. See Note 3.
(11) Includes 17,556 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1995, 250 shares of
restricted Common Stock over which Mr. Smith has voting but not investment
power, 660,000 shares of Class B Stock held by trusts of which Mr. Smith is
a trustee and beneficiary, 545 shares of Class B Stock held by a trust, of
which Mr. Smith's wife is a trustee, for the benefit of Mr. Smith's
daughter and 158,000 shares of Common Stock held by a private foundation
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<PAGE> 7
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. All of the shares reported for Mr. Smith are
included in the shares owned by the Smith Family Group. See Note 3.
(12) 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.
(13) Includes 379,067 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of January 20, 1995 and 1,125 shares of
restricted Common Stock over which six 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.
At the 1995 Annual Meeting, four Class B directors are to be elected for
three year terms and one Class C director is to be elected for a one year term
to coincide with the terms of the other Class C directors. 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 for Class B is
currently a member of the Board of Directors. The Company has no reason to
believe that any of the listed nominees will become unavailable for election,
but if for any reason that should be the case, the proxies may be voted for a
substitute nominee. 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 1998 (CLASS B DIRECTORS)
WILLIAM F. CONNELL*, age 56, 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 65, Director since 1986
Senior Lecturer, Massachusetts Institute of Technology, since September
1989; Director of AMR Corporation and Shawmut National Corporation.
ROBERT A. SMITH, age 35, 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
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Directors of the Company, and the brother-in-law of Brian J. Knez, Vice
President of the Company and a nominee as a Class C director.
HUGO UYTERHOEVEN*, age 63, 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.
NOMINEE FOR TERM EXPIRING IN 1996 (CLASS C DIRECTOR)
BRIAN J. KNEZ, age 37, Nominee for the First Time
Vice President of the Company since November 1991 and President of the
Scientific, Technical, Medical and Professional Group of Harcourt Brace &
Company, a subsidiary of the Company, since 1993; Group Vice President of the
Scientific, Technical and Medical Group of Harcourt Brace & Company from 1991 to
1993; Assistant to the President of the Company from 1989 to November 1991. Mr.
Knez is the son-in-law of Richard A. Smith, Chairman of the Board of Directors
of the Company, and the brother-in-law of Robert A. Smith, Group Vice President
and a director of the Company.
DIRECTORS WHOSE TERMS EXPIRE IN 1996 (CLASS C DIRECTORS)
LYNN MORLEY MARTIN*, age 55, Director since 1993
Davee Chair, F. L. Kellogg School of Management, Northwestern University,
since September 1993; Advisor, Deloitte & Touche LLP, since June 1993; former
Fellow at the Kennedy School of Government, Harvard University; 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.,
Procter & Gamble Co. and various Dreyfus mutual funds.
PAULA STERN*, age 49, 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, Dynatech Corporation and Duracell
International Inc.
SIDNEY STONEMAN, age 83, 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.
CLIFTON R. WHARTON, JR.*, age 68, Director since June 1994
Retired Chairman and Chief Executive Officer of Teachers Insurance and
Annuity Association-College Retirement Equities Fund (TIAA-CREF); Deputy
Secretary of State, U.S. Department of State, from January 1993 to November
1993; former Chancellor, State University of New York System; Director of Ford
Motor Company, Tenneco, Inc., the New York Stock Exchange, Inc. and TIAA-CREF
Board of Overseers.
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DIRECTORS WHOSE TERMS EXPIRE IN 1997 (CLASS A DIRECTORS)
JACK M. GREENBERG*, age 52, 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; Director of
McDonald's Corporation and Arthur J. Gallagher & Company.
HERBERT W. JARVIS*, age 69, 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 and various other
corporations and organizations.
RICHARD A. SMITH, age 70, 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 December 1991; Chairman of the Board, President and Chief Executive
Officer of GC Companies, Inc. since December 1993; Director of The Neiman Marcus
Group, Inc., GC Companies, Inc., Liberty Mutual Insurance Company, Liberty
Mutual Fire Insurance Company, Bank of Boston Corporation and its principal
subsidiary, The First National Bank of Boston. 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 Vice President of the Company and a
nominee as a Class C director.
ROBERT J. TARR, JR., age 51, Director since 1982
President, Chief Executive Officer (since December 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.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended October 31, 1994, the Board of Directors held
seven meetings and each director of the Company attended at least 75% of the
aggregate number of Board meetings and meetings held by committees of which he
or she is a member. 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 1994, are Messrs. Jarvis (Chairman), Connell, Greenberg and
Uyterhoeven and Dr. 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 three times during fiscal 1994, 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.
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Nominating Committee. The members of the Nominating Committee, which met
twice during fiscal 1994, 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 1996 Stockholder Proposals
and Nominations").
Executive Committee. The members of the Executive Committee, which did not
act during fiscal 1994, 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.
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 $18,929 in fiscal 1994) 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.
All directors of the Company are invited to attend meetings of the Board of
Directors of The Neiman Marcus Group, Inc. ("NMG"), a publicly-held company in
which the Company has a controlling interest. Directors of the Company who are
not employees of the Company and who participate in NMG Board meetings receive
$1,500 for each meeting attended in person and $750 for participating by
telephone.
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 Dr. Stern have elected to receive their fees on a
deferred basis.
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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 filing requirements
applicable to its insiders were complied with during fiscal 1994.
<TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information on the compensation provided by
the Company during fiscal 1994, 1993 and 1992 to the Company's Chief Executive
Officer and the four most highly paid executive officers of the Company during
fiscal 1994.
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION(1)
----------------------------------- -----------------------
AWARDS
OTHER ----------------------- ALL
ANNUAL RESTRICTED SECURITIES OTHER
COMPEN- STOCK UNDERLYING COMPEN-
NAME AND FISCAL SATION AWARDS OPTIONS SATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) ($)(3)(4) ($)(5) (#)(6) ($)(7)
------------------ ------ --------- ----------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Tarr, Jr...................... 1994 $1,400,000 $1,050,000 $ 84,583 -- -- $ 95,042
President and Chief Executive Officer 1993 1,250,000 937,500 147,100 -- -- 89,521
1992 1,100,000 825,000 -- $1,750,000 220,200(8) 66,560
Richard A. Smith........................ 1994 $ 750,000 $ 525,000 -- -- -- $273,404(9)
Chairman of the Board 1993 750,000 525,000 -- -- -- 253,483(9)
1992 750,000 525,000 -- -- -- 154,546(9)
Richard T. Morgan(10)................... 1994 $ 575,000 $ 287,500 -- -- 25,000 $ 30,313
President and Chief Executive Officer of 1993 525,000 350,000 -- -- -- 22,330
Harcourt Brace & Company 1992 211,538 105,769 -- -- 27,525 --
John R. Cook(11)........................ 1994 $ 330,000 $ 165,000 -- -- 15,000 $ 17,800
Senior Vice President and 1993 315,000 157,500 -- -- 16,515 15,331
Chief Financial Officer 1992 47,250 -- -- -- -- --
Eric P. Geller(12)...................... 1994 $ 280,000 $ 140,000 -- -- 10,000 $ 15,118
Senior Vice President, 1993 262,500 165,000 $118,380 -- -- 15,251
General Counsel and Secretary 1992 209,375 87,812 -- -- 15,414 9,180
</TABLE>
- ---------------
(1) The Company does not have a long-term compensation program that includes
long-term incentive payouts.
(2) Bonus payments are reported with respect to the year in which the related
services were performed.
(3) No disclosure regarding items included in this column 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.
9
<PAGE> 12
(4) Includes the cost to the Company of medical, dental and financial
counseling reimbursements, personal legal fees reimbursed, auto expenses
with respect to Messrs. Smith and Tarr, tax offset bonuses to Messrs. Tarr
and Geller in fiscal 1993 (in connection with the exercise of non-qualified
stock options) in the amounts of $77,331 and $109,148, respectively, and
bargain interest on Company loans, including bargain interest of $60,333
and $40,340 for Mr. Tarr in fiscal 1994 and 1993, respectively.
(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 are 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. Dividends are paid to the
holders of restricted stock, who are also entitled to vote their restricted
shares. 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 1994, the only named
executive officer who held restricted shares of Common Stock was Mr.
Geller, who had 500 shares of restricted Common Stock with a fair market
value (based on the New York Stock Exchange closing price of the Company's
Common Stock of $37.00 at fiscal year end) of $18,500. In December 1992,
all of Mr. Tarr's restricted shares of Common Stock vested, as explained in
the description of his Employment Agreement in paragraph A under
"Transactions Involving Management."
(6) In connection with the spinoff of the Company's motion picture exhibition
business to the Company's stockholders in December 1993, the number and
exercise price of all options shown in the table for fiscal 1993 and 1992
were adjusted in accordance with the 1988 Stock Incentive Plan.
(7) 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 1994, such amounts for each of the named executive officers were,
respectively, as follows: Mr. Tarr -- $500, $73,413 and $21,129; Mr. Smith
-- $500, $0 and $6,503; Mr. Morgan -- $500, $25,875 and $3,938; Mr. Cook --
$500, $14,841 and $2,459 and Mr. Geller -- $500, $12,590 and $2,028. Also
included in this column for fiscal 1994 is $266,851 for Mr. Smith, which
represents a calculation of the benefit to Mr. Smith of the premium
advanced by the Company in fiscal 1994 on the life insurance policy
referred to in paragraph B under "Transactions Involving Management." The
benefit is determined for the period, projected on an actuarial basis,
between the date the premium is paid by the Company and the date the
Company will be entitled to reimbursement of the premium.
(8) These options were granted with tandem stock appreciation rights. The stock
appreciation rights cannot be exercised without surrendering a like number
of options.
(9) For information regarding advances made to Mr. Smith of a portion of the
premiums payable on a split dollar life insurance policy, see paragraph B
under "Transactions Involving Management."
(10) Mr. Morgan's employment with the Company commenced on June 1, 1992. Mr.
Morgan resigned from the Company, for health reasons, effective January 15,
1995. See paragraph C under "Transactions Involving Management" for
information regarding the vesting of all stock options held by Mr. Morgan.
(11) Mr. Cook's employment with the Company commenced on September 8, 1992.
(12) Mr. Geller first became an executive officer of the Company on May 1, 1992,
when he was named Senior Vice President and General Counsel.
10
<PAGE> 13
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding options granted under
the Company's 1988 Stock Incentive Plan during the fiscal year ended October 31,
1994 to the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF ANNUAL RATES OF
SECURITIES TOTAL STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ------------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Mr. Tarr(3)......... -- -- -- -- -- --
Mr. Smith(4)........ -- -- -- -- -- --
Mr. Morgan(5)....... 25,000 23.25% $32.75 --(5) --(5) --(5)
Mr. Cook............ 15,000 13.95% $32.75 12/17/03 $308,945 $782,926
Mr. Geller.......... 10,000 9.30% $32.75 12/17/03 $205,963 $521,951
</TABLE>
- ---------------
(1) No stock appreciation rights were granted to any named executive officer
during fiscal 1994. All option grants are non-qualified stock options having
a term of 10 years and one day. They become exercisable at the rate of 20%
on each of the first five anniversary dates of the grant. All options were
granted at fair market value measured by the closing price of the Common
Stock on the New York Stock Exchange on the date of grant.
(2) These potential realizable values are based on assumed rates of appreciation
required by applicable regulations of the Securities and Exchange
Commission.
(3) Pursuant to Mr. Tarr's Employment Agreement, following the grants of options
and restricted stock to Mr. Tarr in fiscal 1992, he is not eligible to
receive any additional restricted stock or stock options during the initial
term of his Employment Agreement. For a description of Mr. Tarr's Employment
Agreement, see paragraph A under "Transactions Involving Management."
(4) Mr. Smith does not participate in the Company's stock incentive plans.
(5) Mr. Morgan resigned from the Company, for health reasons, effective January
15, 1995. In connection with Mr. Morgan's resignation, the Compensation
Committee of the Board of Directors authorized the vesting of all stock
options held by Mr. Morgan. For further information, see paragraph C under
"Transactions Involving Management."
11
<PAGE> 14
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table provides information regarding the number and value of
stock options held at October 31, 1994 by the executive officers named in the
Summary Compensation Table. None of the named executive officers exercised any
stock options during fiscal 1994.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
OCT. 31, OPTIONS AT
1994(#) OCT. 31, 1994($)
--------------- --------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE(1)(2) UNEXERCISABLE(2)(3)
---- ------------------- -------------------
<S> <C> <C>
Mr. Tarr(4)....................................... 273,042/103,055 $5,279,756/2,131,811
Mr. Smith(5)...................................... -- --
Mr. Morgan(6)..................................... 11,010/ 41,515 $ 149,870/ 331,055
Mr. Cook.......................................... 3,303/ 28,212 $ 27,336/ 173,094
Mr. Geller........................................ 36,662/ 21,232 $ 666,953/ 223,803
</TABLE>
- ---------------
(1) 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 1994.
(2) In connection with the spinoff of the Company's motion picture exhibition
business to the Company's stockholders in December 1993, the number and
exercise price of all options granted to all employees of the Company,
including the named executive officers, prior to the spinoff were adjusted
in accordance with the 1988 Stock Incentive Plan and the 1981 Stock Option
Plan.
(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 ($37.00) and the option exercise price for those shares. These values
have not been realized. The closing price of the Company's Common Stock on
January 20, 1995 was $34.50.
(4) On November 25, 1991, Mr. Tarr was granted stock appreciation rights in
tandem with 220,200 (as adjusted, see Note 2 above) 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 plans.
(6) Mr. Morgan resigned from the Company, for health reasons, effective January
15, 1995. In connection with Mr. Morgan's resignation, the Compensation
Committee of the Board of Directors authorized the vesting of all stock
options held by Mr. Morgan. For further information, see paragraph C under
"Transactions Involving Management."
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 ($99,000 for
fiscal 1994) 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.
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 1994 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)
<TABLE>
<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
</TABLE>
- ---------------
(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 retirement benefits will thus be
reduced accordingly.
13
<PAGE> 16
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, 1994 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.
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------
PENSIONABLE EARNINGS AT
FOR YEAR ENDED OCTOBER 31, AT
NAME OCTOBER 31, 1994 1994 AGE 65
---- -------------------- ----------- ------
<S> <C> <C> <C>
Mr. Tarr(1).................................... $1,400,000 18 25
Mr. Smith...................................... 750,000 25(2) 25
Mr. Morgan..................................... 575,000 2 --(3)
Mr. Cook....................................... 330,000 2 14
Mr. Geller..................................... 280,000 15 25
</TABLE>
- ---------------
(1) See paragraph A under "Transactions Involving Management" for a description
of Mr. Tarr's retirement benefits under his Employment Agreement.
(2) Mr. Smith had 47 years of actual service at October 31, 1994. 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.
(3) Mr. Morgan resigned from the Company, for health reasons, effective January
15, 1995.
TRANSACTIONS INVOLVING MANAGEMENT
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 was $1,400,000 for fiscal 1994
and will be $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 1994 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 1994 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. Pursuant to his Employment Agreement, in June
1992 Mr. Tarr received a loan from the Company in the amount of $1,000,000,
which carried interest at an annual rate of 5%. Mr. Tarr paid the remaining
balance of this loan in December 1994. 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 of Control of the Company occurs, as defined below, and, within
two years following such Change of 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. A Change of Control
exists if (a) more than 20% of the voting power of the Company is beneficially
owned by a person or group and the Smith Family Group has at such time less than
50.1% of the voting power of all classes of stock of the Company entitled to
vote in an election of directors; (b) the Smith Family Group does not have
sufficient voting power to prevent the Company from consummating a merger,
consolidation, sale of its assets or dissolution; or (c) the members of the
Board of Directors at the time the Employment Agreement was executed (the
"Incumbent Directors") cease to constitute a majority of the Board; provided
that any person who became a director subsequent to the execution of the
Employment Agreement and whose nomination was approved by at least a majority of
the Board is considered an Incumbent Director for purposes of the 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.
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
15
<PAGE> 18
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.
Pursuant to the Employment Agreement, 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 non-qualified stock option (together
with stock appreciation rights) under that Plan to purchase 220,200 shares of
the Company's Common Stock at a price of $15.90 per share (as adjusted in
connection with the spinoff of the Company's motion picture exhibition business
in December 1993 as described in Note 6 to the Summary Compensation Table). Mr.
Tarr is not entitled to receive any additional restricted stock or stock option
grants during the initial term of the Employment Agreement. As of January 20,
1995, 60% of the stock options (and related stock appreciation rights) had
become 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, 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 (as such terms are defined in the Employment Agreement).
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 vesting of all of the shares of restricted Common
Stock previously granted to Mr. Tarr. 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 tax laws were enacted 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, 1995, $573,177 remained outstanding under this loan. In addition,
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 a 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, agreed to make advances of the portion
of the premiums not related to term insurance 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 1994, 1993 and 1992, the Company
advanced $422,898, $426,216 and $429,221, respectively, toward the payment of
such premiums.
16
<PAGE> 19
C. Mr. Morgan resigned as President and Chief Executive Officer of
Harcourt Brace & Company, for health reasons, effective January 15, 1995. In
December 1994, the Compensation Committee approved the immediate vesting of
options to purchase 36,515 shares of the Company's Common Stock previously
granted to Mr. Morgan, which as of the date of his resignation were not
exercisable. Mr. Morgan has until April 2, 1995 to either exercise his stock
options or, in lieu of exercising his options, elect to receive a cash payment
in an amount equal to the difference between the closing price of the Company's
Common Stock on the New York Stock Exchange on the date Mr. Morgan elects to
receive this payment and the option exercise prices.
D. 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 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.
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
Compensation 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 Compensation 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
Compensation 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 aggregate amount of outstanding
indebtedness to the Company on January 20, 1995 under the Loan Plans was
$1,809,852.
The following table describes (a) the largest amount of indebtedness
outstanding under the Loan Plans during fiscal 1994, (b) the amount of
indebtedness outstanding on January 20, 1995, and (c) the weighted average rate
of interest on indebtedness outstanding on January 20, 1995 for the executive
officers of the Company who had loans in excess of $60,000 during fiscal 1994 or
subsequent thereto.
<TABLE>
<CAPTION>
LARGEST WEIGHTED
INDEBTEDNESS INDEBTEDNESS AVERAGE
OUTSTANDING OUTSTANDING AT INTEREST RATE
IN FISCAL 1994 JANUARY 20, 1995 PER ANNUM
-------------- ---------------- -------------
<S> <C> <C> <C>
Mr. Tarr(1)................................ $985,928 $885,936 2.25%
Mr. Cook................................... 334,752 334,752 5.00
Mr. Geller................................. 244,856 318,294 5.54
Mr. Sawin(2)............................... 72,416 72,416 5.00
</TABLE>
- ---------------
(1) The Company has also made loans to Mr. Tarr pursuant to his Employment
Agreement and Supplemental Agreement. Mr. Tarr has repaid the loan made to
him under the Employment Agreement. At January 20, 1995, the principal
amount outstanding under the loan made under the Supplemental
17
<PAGE> 20
Agreement was $573,177. For further information, see paragraph A under
"Transactions Involving Management."
(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. 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 goal 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 for the
Company's executive officers. The Committee reviews those recommendations and
then approves them or makes such modifications as it deems appropriate.
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 included in such salary surveys or, depending
on an executive's level of responsibility, to groups of profit centers or
divisions within such companies, with the principal selection criteria for
comparisons being similar revenues to the Company 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 Company's size (in terms of
revenues) and complexity (in terms of diversity of operating businesses)
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 groups in the Stock
Performance Graph.
18
<PAGE> 21
The Committee reviews in detail the base salary levels for each of the
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, guidelines determined
by the Chief Executive Officer with respect to salary increases for the
entire Company and the subjective judgment of the Committee.
Executive Incentive Bonus Plan:
Bonuses are awarded under this plan based on the achievement of
performance objectives by the Company and individual executive officers.
The bonus program puts significant amounts of total cash compensation at
risk for 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 executive
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 executive officers is the Company's earnings goal established
by the Committee shortly after the beginning of the fiscal year. The
earnings goal established for fiscal 1994, as adjusted for certain events
which occurred during the year, including the sale of the Company's
insurance business and the restructuring of Contempo Casuals, was an amount
of net income that was exceeded by the Company's actual net income for
fiscal 1994 as it appears on the line "Net earnings" in the Company's
Consolidated Statements of Earnings. 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 executive officers prepares and
agrees 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 executive officer,
factors such as the performance of a business unit or units for which the
executive officer is responsible and achievement of individual performance
goals are considered in the decision to award a bonus. If corporate and/or
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 1994
were determined by an assessment of all of the factors described above.
While the Company exceeded its earnings goal in fiscal 1994, the bonuses
awarded to the named executive officers in each case equalled their maximum
bonus values.
19
<PAGE> 22
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 executive officers and the
long term interest of the stockholders. The Company's 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 stock options in
fiscal 1994, 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 officer.
Compensation of the Chief Executive Officer
Mr. Tarr's compensation for fiscal 1994 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. The individual
positions used for comparison purposes in this review were chosen to most
closely approximate the scope and nature of Mr. Tarr's position as Chief
Executive Officer of Harcourt General. Only one of the companies considered is
included in the peer groups used in the Stock Performance Graph. 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.
Mr. Tarr's Employment Agreement became effective 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 target bonus of 75% of base salary for 1994
because the Company exceeded the earnings goal established by the Committee for
fiscal 1994, adjusted as explained above under "Executive Incentive Bonus Plan."
In November 1991, Mr. Tarr received 100,000 shares of restricted stock and
an option grant for 220,200 (as adjusted to reflect the spinoff of the Company's
motion picture exhibition business) 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
Compliance with Internal Revenue Code Section 162(m)
Amendments to Section 162(m) of the Internal Revenue Code which were
enacted in 1993 generally disallow a tax deduction to public companies for
compensation in excess of $1 million per year paid to each of the executive
officers named in the Summary Compensation Table. This will apply to the Company
for the first time in fiscal 1995. Because Mr. Tarr's compensation is paid
pursuant to his Employment Agreement, which became effective prior to February
17, 1993, his compensation is not subject to the $1 million limit on
deductibility. Mr. Smith, whose compensation may also exceed $1 million in
fiscal 1995, has agreed to defer all of his fiscal 1995 compensation that would
not be deductible as a result of this provision. Under transition provisions in
the regulations under Section 162(m), compensation resulting from awards under
the Company's 1981 Stock Option Plan and 1988 Stock Incentive Plan is not
subject to the deductibility limit at this time. The Committee will continue to
monitor the requirements of Section 162(m) and to determine what actions should
be taken by the Company in order to preserve the tax deduction for executive
compensation to the maximum extent, consistent with the Company's continuing
goals of providing the executive officers of the Company with appropriate
incentives and rewards for their performance.
COMPENSATION COMMITTEE
Maurice Segall, Chairman
Jack M. Greenberg
Lynn Morley Martin
Hugo Uyterhoeven
21
<PAGE> 24
STOCK PERFORMANCE GRAPH
The following graph compares the total cumulative return over five years on
the Company's Common Stock to the total cumulative return over the same period
of the common stocks of companies in the Standard & Poor's 500 Stock Index and
two Peer Indexes. The graph assumes that the value of the investment in the
Company's Common Stock and each index was $100 at October 31, 1989 and that all
dividends were reinvested.
<TABLE>
<CAPTION>
Measurement Period Harcourt S&P 500 Peer Peer
(Fiscal Year Covered) General, Inc. Index Index (NEW) Index (OLD)
<S> <C> <C> <C> <C>
31-Oct-89 $100.00 $100.00 $100.00 $100.00
31-Oct-90 $ 71.57 $ 92.53 $ 68.29 $ 66.33
31-Oct-91 $ 79.07 $123.53 $103.09 $101.85
31-Oct-92 $117.76 $135.83 $115.11 $112.48
31-Oct-93 $178.25 $156.12 $129.05 $127.58
31-Oct-94 $167.17 $162.16 $128.11 $126.65
</TABLE>
The two Peer Indexes include companies in the publishing and specialty
retailing industries, as well as the companies in the Standard & Poor's Life
Insurance Index. As a result of the spinoff of the Company's theatre operations
in December 1993, the New Peer Index excludes the motion picture exhibition
companies which are included in the Old Peer Index. Both Peer Indexes also
exclude Paramount Communications, which was included in the publishing group
last year, since Paramount Communications is no longer a public reporting
company. Paramount has been replaced this year in both Peer Indexes with Times
Mirror Co. and John Wiley & Sons.
22
<PAGE> 25
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 New Peer Index have been weighted 55%
publishing, 30% specialty retailing and 15% insurance based on the approximate
contribution to the Company's fiscal 1994 operating earnings of each of those
sectors. The companies which comprise the New Peer Index are:
<TABLE>
<CAPTION>
PUBLISHING SPECIALTY RETAILING INSURANCE
---------- ------------------- ---------
<S> <C> <C>
Houghton Mifflin Company The Limited, Inc. Jefferson-Pilot Corp.
John Wiley & Sons Nordstrom, Inc. Lincoln National Corp.
McGraw-Hill, Inc. Tiffany & Co. Torchmark Corp.
Times Mirror Co. Unum Corp.
USLIFE Corp.
</TABLE>
The groups in the Old Peer Index have been weighted 50% publishing, 30%
specialty retailing, 15% insurance and 5% motion picture exhibition. The
companies which comprise the Old Peer Index are the companies listed above as
well as AMC Entertainment, Inc., Carmike Cinemas, Inc. and Cineplex Odeon Corp.
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
sold its insurance business on October 31, 1994.
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 LLP as independent auditors to audit the
financial statements of the Company for the fiscal year ending October 31, 1995.
Representatives of Deloitte & Touche LLP 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 $2.9 million on account of audit, tax and
consulting services rendered by Deloitte & Touche LLP for the fiscal year ended
October 31, 1994. Deloitte & Touche LLP also serves as the independent auditors
for The Neiman Marcus Group, Inc.
Approval of the proposal to ratify the selection of Deloitte & Touche LLP
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 LLP AS INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING OCTOBER 31, 1995.
23
<PAGE> 26
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
1996 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 1996, they must be received by the Company at its principal executive
offices by November 1, 1995. Any nominations for the Board of Directors must
also be received no later than November 1, 1995. 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.
24
<PAGE> 27
HARCOURT GENERAL, INC.
COMMON STOCK AND COMMON STOCK AND
CLASS B STOCK CLASS B STOCK
PROXY PROXY
ANNUAL MEETING OF STOCKHOLDERS -- MARCH 10, 1995
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 Harcournt General, Inc. to be held at The
First National Bank of Boston, 100 Federal Street, Boston, Massachusetts, on
Friday, March 10, 1995 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, 1995 and
a copy of the Annual Report for the year ended October 31, 1994.
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 ELECTION OF CLASS C DIRECTOR
NOMINEES: William F. Connell NOMINEE: Brian J. Knez
Maurice Segall
Robert A. Smith
Hugo Uyterhoeven
(SEE REVERSE SIDE TO CAST VOTE)
CONTINUED, AND TO SIGNED, ON REVERSE SIDE
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of / / / /
Directors (See
reverse).
/ /
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Approval of the appointment of / / / / / /
Deloitte & Touche LLP as inde-
pendent auditors of the Company
for the current fiscal year.
- --------------------------------------------------------------------------------
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, Administrators, Trustees, etc.,
should give full title.
Signature:______________________ Date___________
Signature:______________________ Date___________
<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 10, 1995
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 10, 1995 at 10:00 a.m.
and at any adjournments thereof. The undersigned hereby revokes any voting
instruction previously given and acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement dated February 3, 1995 and a copy of the Annual
Report for the year ended October 31, 1994.
The shares represented by this Instruction Card 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 INSTRUCTION CARD IS SIGNED AND RETURNED AND DOES NOT
SPECIFY A VOTE ON ANY PROPOSAL, THIS INSTRUCITON CARD WILL BE SO VOTED.
ELECTION OF CLASS A DIRECTORS ELECTION OF CLASS C DIRECTOR
NOMINEES: William F. Connell NOMINEE: Brian J. Knez
Maurice Segall
Robert A. Smith
Hugo Uyterhoeven
(SEE REVERSE SIDE TO CAST VOTE.)
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE
THIS INSTRUCTION CARD IS SOLICITED BY THE PLAN TRUSTEE
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of / / / /
Directors (See
reverse).
/ /
For all nominees except as noted above.
FOR AGAINST ABSTAIN
2. Approval of the appointment of / / / / / /
Deloitte & Touche LLP as inde-
pendent auditors of the Company
for the current fiscal year.
- --------------------------------------------------------------------------------
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, Administrators, Trustees, etc.,
should give full title.
Signature:______________________ Date___________
Signature:______________________ Date___________
<PAGE> 29
ATTACHMENT
WACHOVIA
________________________________________________________________________________
Employee Benefit Trust Services
301 North Main Street
Winston-Salem, NC 27150-3099
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
DATE: February 2, 1995
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 10, 1995.
A proxy statement, confidential voting instruction card and return envelope are
enclosed. Please complete, date and sign the voting instruction card and mail
it promptly in the return envelope to exercise your right to direct the Trustee
with respect to shares of Harcourt General, Inc. allocated to your account.
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.
Enclosures
