<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240-14a-11(c) or
Section 240.14a-12
General Host Corporation
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Geneal Host Corporation
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(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 transactions 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
- --------------------------------------------------------------------------------
[LOGO]
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
MAY 19, 1994
9:00 A.M. LOCAL TIME
AT
THE BROWN HOTEL
335 WEST BROADWAY
LOUISVILLE, KENTUCKY 40202
- --------------------------------------------------------------------------------
<PAGE> 3
[LOGO]
METRO CENTER, ONE STATION PLACE, STAMFORD, CONNECTICUT
------------------------
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
MAY 19, 1994
TO THE SHAREHOLDERS OF GENERAL HOST CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of GENERAL HOST
CORPORATION will be held at the Brown Hotel, 335 West Broadway, Louisville,
Kentucky 40202, on Thursday, May 19, 1994, at 9:00 A.M., local time, for the
following purposes:
(1) To elect three directors to hold office until the 1997 Annual
Meeting of Shareholders;
(2) To ratify the appointment of Price Waterhouse as independent
accountants for the year; and
(3) To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on April 4, 1994 will be
entitled to vote at the meeting or any adjournment thereof.
By order of the Board of Directors
JOHN R. FICARRO,
Secretary
Stamford, Connecticut
April 14, 1994
EACH SHAREHOLDER IS URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY. IF
A SHAREHOLDER DECIDES TO ATTEND THE MEETING, HE MAY, IF HE DESIRES, REVOKE HIS
PROXY AND VOTE HIS SHARES IN PERSON.
<PAGE> 4
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1994
This Proxy Statement is furnished to the shareholders of General Host
Corporation (hereinafter referred to as the "Company" or "General Host") in
connection with the solicitation of proxies by or on behalf of the Board of
Directors to be voted at the Annual Meeting of Shareholders of the Company to be
held on Thursday, May 19, 1994.
The mailing address of the principal executive office of the Company is
Metro Center, One Station Place, P.O. Box 10045, Stamford, Connecticut 06904.
The approximate date on which the Proxy Statement and form of proxy are first
being sent or given to shareholders is April 14, 1994.
Proxies delivered pursuant to this solicitation are revocable at the option
of the persons who have executed them at any time prior to the exercise thereof.
All properly executed proxies delivered pursuant to this solicitation, unless
previously revoked, will be voted in accordance with directions given, if
delivered in time to be voted at the meeting.
INFORMATION CONCERNING GENERAL HOST SECURITIES
VOTING RIGHTS
Only shareholders of record at the close of business on April 4, 1994, will
be entitled to vote at the Annual Meeting or any adjournment thereof.
On March 15, 1994, there were outstanding 20,015,758 shares of Common Stock
of the Company, which are the only voting securities outstanding. Except with
respect to the election of directors discussed below, each of these shares will
be entitled to one vote at the Annual Meeting as are any additional shares which
were issued prior to the close of business on April 4, 1994.
The Company's directors are divided into three classes. Shareholders have
cumulative voting rights in electing directors, and each shareholder has the
number of votes equal to the number of shares owned by him multiplied by the
number of directors to be elected in each class. Shareholders may cast all of
their votes for a single nominee within a class or distribute them among
nominees in such class in any manner they desire. Proxies solicited may be
cumulatively voted to the extent that discretionary authority granted to proxy
holders permits them to do so.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, to the best knowledge of the Company,
information as to the beneficial ownership of (i) owners of more than 5% of the
Common Stock of the Company; (ii) each director; (iii) the executive officers
(other than directors) named in the Summary Compensation Table beginning on page
8; and (iv) all directors and executive officers, as a group, of the Company's
Common Stock. Unless otherwise noted, all information is shown as of March 15,
1994 and includes the number of shares beneficially owned by each director or
executive officer determined under the rules of the Securities and Exchange
Commission (the "Commission"), and the information is not necessarily indicative
of beneficial ownership for any other purpose.
2
<PAGE> 5
<TABLE>
<CAPTION>
SHARES OF
GENERAL HOST
COMMON STOCK
----------------------
AMOUNT PERCENT
BENEFICIALLY OF
BENEFICIAL OWNERS OWNED(1)(2) CLASS
------------------------------------------------- ----------- -------
<S> <C> <C> <C>
(i) Holders Other Than Directors
Gabelli Funds, Inc.
One Corporate Center
Rye, NY 10580-1434............................. 2,765,979(3) 13.1
Pier 1 Imports, Inc.
301 Commerce Street, Ste 600
Fort Worth, Texas 76102.......................... 1,940,000(4) 9.7
(ii) Directors
Harris J. Ashton................................. 1,857,918(5) 9.0
C. Whitcomb Alden, Jr. .......................... 381,732(6) 1.9
Christopher A. Forster........................... 9,818 *
S. Joseph Fortunato.............................. 4,000 *
Weston E. Hamilton............................... 21,477(7) *
Philip B. Harley................................. 80,000 *
Richard W. Haskel................................ 5,413 *
Edward H. Hoornstra.............................. 300,471(8) 1.5
Charles B. Johnson............................... 31,746 *
(iii) Executive Officers Other Than Directors
Robert M. Lovejoy, Jr. .......................... 47,100 *
James R. Simpson................................. 28,667 *
John R. Ficarro.................................. 34,548 *
William C. Boyd.................................. 46,141 *
(iv) All Directors And Executive Officers As a Group
(13 persons)..................................... 2,849,031 13.7
</TABLE>
- -------------------------
* Represents holdings of less than one percent.
(1) Includes the following numbers of shares of Common Stock held as of December
31, 1993 by the trustee of the General Host Corporation Profit Sharing and
Savings Plan for the benefit of the following persons: Mr. Ashton, 37,602;
Mr. Lovejoy, 3,100; Mr. Simpson, 1,465; Mr. Ficarro, 2,096; Mr. Boyd, 3,092;
and all directors and officers as a group, 47,355.
(2) Includes the following shares of Common Stock subject to options outstanding
and exercisable on or within 60 days after March 15, 1994: Mr. Ashton,
540,000; Mr. Lovejoy, 31,500; Mr. Simpson, 19,500; Mr. Ficarro, 22,500; Mr.
Boyd, 34,000; and all directors and officers as a group, 647,500.
(3) Number of shares based on Amendment No. 7 to the Schedule 13D dated January
13, 1994, filed with the Commission by Gabelli Funds, Inc. and GAMCO
Investors, Inc. Of these shares, 1,131,979 would be receivable by the
holders upon conversion of General Host's convertible debentures held by
them.
(4) Number of shares based on Amendment No. 1 to the Schedule 13D dated May 5,
1993, filed with the Commission by Pier 1 Imports, Inc.
(5) Includes 20,405 shares of Common Stock directly owned and 9,639 shares
beneficially owned by Mr. Ashton's wife and 6,500 shares of Common Stock
owned by a foundation of which Mr. Ashton is an officer. With respect to the
foregoing, Mr. Ashton disclaims any beneficial ownership.
(6) Includes 351,562 shares of Common Stock, as of January 31, 1994, owned by
one pension trust of which Mr. Alden is trustee, which is maintained by a
subsidiary of the Company.
(7) Includes 702 shares of Common Stock as to which Mr. Hamilton shares voting
and investment power with his wife.
(8) Includes 27,577 shares of Common Stock as to which Mr. Hoornstra shares
voting and investment power with his wife.
3
<PAGE> 6
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. The Company believes
that its directors and officers have complied with all Section 16(a) filing
requirements during 1993. However, in February 1994 it was discovered that Mr.
Hamilton inadvertently did not file a Form 4 disclosing two purchases of 200
shares each in 1979 and one sale of 1,412 shares in 1992 of the Company's Common
Stock by the trustee of his Keogh Plan. Mr. Hamilton did promptly file a Form 5
disclosing this inadvertent omission when it was brought to his attention. In
making these statements, the Company has relied upon the written representations
of its directors and officers.
ELECTION OF DIRECTORS
Under the Company's Certificate of Incorporation and By-Laws, its directors
are divided into three classes, each class to be elected at successive annual
meetings of shareholders for terms of three years. The three directors whose
terms will expire at the 1994 Annual Meeting of Shareholders are Weston E.
Hamilton, Edward H. Hoornstra and Charles B. Johnson. These individuals have
been nominated by the Board of Directors to stand for re-election as directors
at the 1994 Annual Meeting to hold office until the 1997 Annual Meeting and
until their successors are duly elected and qualified.
Should any one or more of these nominees become unable to accept nomination
or election, which the Board has no reason to believe will be the case, the
persons named in the accompanying form of proxy will vote for the election of
such person or persons as the Board may nominate.
Section 13 of the Company's By-Laws requires that advance notification of
nominations of directors by shareholders be given to the Secretary of the
Company not less than thirty (30) nor more than sixty (60) days prior to the
date of any meeting of shareholders held for the purpose of electing directors,
unless shareholders are given less than thirty-five (35) days notice of such
meeting in which case shareholder nominations would be permissible up to seven
(7) days after notice of the meeting is mailed by the Company. In addition, the
notice of nomination must set forth certain information regarding any nominee
who is not an incumbent director, including his or her name, address and
principal occupation, the number of shares of stock of the Company beneficially
owned by such nominee and the nominating shareholder and any other information
required to be disclosed about nominees in proxy solicitations pursuant to Rule
14(a) of the Exchange Act or any successor rule, and the notice must be
accompanied by the written consent of the proposed nominee to serve as director.
Nominations which are determined by the chairman of the meeting of shareholders
not to have been made in accordance with the procedure established by Section 13
will be disregarded. The foregoing summary of Section 13 is qualified in its
entirety by reference to the complete text of Section 13.
Based on this provision and the dates of mailing of this Notice and the
Annual Meeting, any nominations by shareholders for directors, together with the
other required information and consents, should be delivered to the Secretary of
the Company by April 19, 1994.
4
<PAGE> 7
INFORMATION ON NOMINEES AND INCUMBENT DIRECTORS
<TABLE>
<CAPTION>
SERVED AS
NAME DIRECTOR SINCE AGE
- --------------------------------------------------------------------- -------------- ---
<S> <C> <C>
Nominees for Term Expiring 1997
Weston E. Hamilton................................................... April 1967 82
Edward H. Hoornstra.................................................. June 1970 72
Charles B. Johnson................................................... September 1969 61
Incumbent Directors -- Term Expiring 1995
C. Whitcomb Alden, Jr. .............................................. May 1965 78
Philip B. Harley..................................................... March 1973 75
Richard W. Haskel.................................................... February 1981 60
Incumbent Directors -- Term Expiring 1996
Harris J. Ashton..................................................... May 1965 61
Christopher A. Forster............................................... March 1974 61
S. Joseph Fortunato.................................................. April 1993 61
</TABLE>
Mr. Ashton has been principally employed for more than the past five years
as Chairman of the Board of Directors, President and Chief Executive Officer of
the Company. Mr. Ashton is Chairman of the Board of Directors of Sunbelt Nursery
Group, Inc. and is a director or trustee of numerous Franklin/Templeton mutual
funds. He is also a director of RBC Holdings (USA) Inc., a wholly-owned
subsidiary of The Royal Bank of Canada.
Mr. Alden has been principally engaged during the past five years as a
financial consultant and private investor.
Mr. Forster retired on July 1, 1993 as a Managing Director of Marsh &
McLennan, Incorporated, insurance brokers, a position he held for more than the
past five years.
Mr. Fortunato has been a partner of the law firm of Pitney, Hardin, Kipp &
Szuch for more than the past five years. He is also a director or trustee of
numerous Franklin/Templeton mutual funds.
Mr. Hamilton has been Senior Vice President, Zions First National Bank, for
more than the past five years and is a director of Beneficial Life Insurance
Company of Utah.
Mr. Harley has been a private investor and is a member of the Advisory
Boards of several Keystone Mutual Funds.
Mr. Haskel has been President of Haskel Enterprises, Inc., a consulting
company involved in management consulting and acquisitions, and affiliated with
the business brokerage firm of Country Business, Inc., for more than the past
five years.
Mr. Hoornstra has been President of Del-Tem Investment Corporation, a
closely held investment and real estate management company, for more than the
past five years. Mr. Hoornstra was Vice Chairman of the Board of Directors of
the Company and President of its Specialty Retailing Group for more than five
years prior to his retirement in December 1986.
Mr. Johnson has been President and a director of Franklin Resources, Inc.,
a financial holding company, and President of Franklin Distributors, Inc., a
mutual fund management company, for more than the past five
5
<PAGE> 8
years. He is also President and a trustee of Franklin Tax-Free Trust, and a
director or trustee of numerous Franklin/Templeton mutual funds.
INFORMATION ON COMMITTEES OF THE BOARD OF DIRECTORS
Executive Committee -- This Committee, which exercises, to the extent
permitted by New York law, all of the powers of the Board of Directors during
the intervals between Board meetings, consists of Harris J. Ashton (Chairman),
Richard W. Haskel and Charles B. Johnson. During fiscal 1993 the Executive
Committee held four meetings.
Audit Committee -- This Committee, which monitors the activities of the
Company's auditors and reports on such activities to the full Board of
Directors, consists of Charles B. Johnson (Chairman), Weston E. Hamilton and
Richard W. Haskel. During fiscal 1993, the Audit Committee held two meetings.
Compensation Committee -- This Committee, which approves the compensation
of officers of the Company and has overall responsibility for the Company's
compensation policies, consists of Philip B. Harley (Chairman), C. Whitcomb
Alden, Jr. and Christopher A. Forster. During fiscal 1993, the Compensation
Committee held three meetings.
The Board of Directors has no nominating committee.
COMPENSATION OF DIRECTORS
The non-management directors of the Company received fees of $30,000 per
annum, and $750 for each Board of Directors or Committee meeting attended.
During fiscal 1993, there were six meetings of the Board and a total of nine
meetings of its Committees. The directors also participate in benefit programs
generally available to Company employees.
Upon reaching age seventy-five or after ten years of service as a director,
whichever occurs earlier, each non-management director becomes eligible to
retire from the Board of Directors and, at the discretion of the Board of
Directors, receive an annual retainer fee equal to the then annual director's
fee being paid on his retirement date for a number of years equal to the number
of years served as a director. In order to be eligible for this retainer, each
director must agree to be available to provide services to the Company on a
basis to be mutually determined by the director and the Executive Committee.
The Company's Directors' Stock Option Plan authorizes the granting of stock
options to non-employee directors of the Company, covering a maximum of 100,000
shares of the Company's Common Stock. Options are granted by the Compensation
Committee of the Board of Directors and, with respect to options for members of
the Compensation Committee, by a majority of the Board of Directors not on the
Compensation Committee. Options are granted at current market prices (the mean
between the high and low sales prices on the New York Stock Exchange on the date
an option is granted) and expire within five years after the date of grant or,
if earlier, within three months after the optionee ceases to be a director. On
May 20, 1993, Mr. Fortunato was granted an option under this Plan for 15,000
shares of the Company's Common Stock at a purchase price of $8.94 per share,
exercisable one year after the date of grant. During the 1992 fiscal year,
Messrs. Alden and Harley each exercised options for 15,000 shares and elected to
defer the purchase price of the options, as provided by this Plan. Each of them
executed a promissory note in the amount of $109,650 due five years from the
date of execution with interest at the rate of six percent per annum. Mr. Harley
prepaid the entire amount of his note on March 31, 1993. In addition, Mr. Alden
also elected to borrow from the Company, on the same terms as noted herein, an
amount equal to his tax liability as a result of the exercise, as
6
<PAGE> 9
provided by this Plan. The largest aggregate amount outstanding with regard to
Mr. Alden's indebtedness to the Company during fiscal year 1993 was $123,650. As
of March 15, 1994 the amount of indebtedness outstanding under Mr. Alden's notes
was $123,650.
During the last fiscal year C. Whitcomb Alden, Jr. served as Trustee of a
pension trust maintained by the Company and one of its subsidiaries. Mr. Alden
received a total of $15,000 in 1993 in compensation from this trust for serving
in this capacity. Mr. Alden also acts as a consultant to the Company for which
he received a fee of $12,000 in 1993.
CERTAIN TRANSACTIONS AND OTHER RELATIONSHIPS
The Company and its operating subsidiary, Frank's Nursery & Crafts, Inc.
("Frank's") during the 1993 fiscal year had transactions in the normal course of
business with unaffiliated companies with which one of the Company's directors,
Mr. Forster, was associated in his principal occupation. Marsh & McLennan,
Incorporated received $127,000 in brokerage commissions on insurance which it
placed for the Company. In addition, Seabury & Smith, Inc., an affiliate of
Marsh & McLennan, Incorporated, received $7,232 in brokerage commissions and
fees on insurance placed for the Company.
The Company maintains $17.5 million of insurance providing payment either
to the Company for indemnification given its directors or officers, or directly
to its directors and officers, for certain liabilities which the Company's
directors and officers may incur in their respective capacities. This insurance
is provided by National Union Fire Insurance Company. The premium paid in fiscal
1993 was $280,000.
7
<PAGE> 10
EXECUTIVE COMPENSATION
Shown below is information concerning the compensation for services
rendered in all capacities to the Company for the fiscal years ended January 26,
1992 (fiscal year 1991), January 31, 1993 (fiscal year 1992) and January 30,
1994 (fiscal year 1993) for those persons who were, at January 30, 1994, (i) the
chief executive officer and (ii) the other four most highly compensated
executive officers of the Company (the CEO and the four most highly compensated
officers will be referred to collectively as the "Named Officers"). Mr. Ashton
served as CEO for the entire year and no other individuals served as executive
officers during fiscal year 1993 for whom disclosure must be provided.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------------
ANNUAL AWARDS
COMPENSATION ----------
NAME ---------------------------------------- SECURITIES PAYOUTS
AND OTHER UNDERLYING -------- ALL
PRINCIPAL ANNUAL OPTIONS/ LTIP OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION(2)(3) SARS PAYOUTS COMPENSATION(2)
- ------------------------------- ---- -------- -------- ------------------ ---------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Harris J. Ashton, 1993 $757,122 -0- -- -0- -0- -0-
Chairman of the Board, 1992 721,707 $103,000 $ 28,725 300,000 $446,869 $53,269
President and CEO 1991 687,340 350,000 -0-
Robert M. Lovejoy, 1993 182,774 -0- -- 7,500 -0- -0-
Vice President and Treasurer 1992 182,774 35,000 -- 2,000 -0- -0-
1991 178,913 66,000 -- 2,000 -- --
James R. Simpson, 1993 164,370 -0- -- 7,500 -0- -0-
Vice President and Controller 1992 159,250 30,400 -- 2,000 -0- -0-
1991 153,528 56,000 -- -0- -- --
John R. Ficarro, 1993 118,524 -0- -- 7,500 -0- -0-
Vice President, General 1992 113,524 20,000 -- 2,000 -0- -0-
Counsel and Secretary 1991 107,836 40,000 -- 5,000 -- --
William C. Boyd, 1993 161,096 -0- -- 10,000 -0- -0-
Executive Vice President -- 1992 154,904 30,000 -- 2,000 -0- -0-
Frank's 1991 146,889 15,000 -- 5,000 -- --
</TABLE>
- -------------------------
(1) Amounts included under the Company's or Frank's Executive Compensation Plan
for services rendered in the respective fiscal years.
(2) In accordance with the rules adopted by the Securities and Exchange
Commission, amounts of Other Annual Compensation and All Other Compensation
are not required to be included for the Company's 1991 fiscal year.
(3) Certain perquisites and other personal benefits otherwise included in Other
Annual Compensation have not been disclosed for the Named Officers as such
compensation was the lesser of either $50,000 or 10% of the total of annual
salary and bonus reported for the Named Officer.
8
<PAGE> 11
The table below reflects information regarding grants of stock options
pursuant to the Amended and Restated 1986 Stock Incentive Plan during the fiscal
year ended January 30, 1994 to the Named Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
- ------------------------------------------------------------------------------------------ AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ------------------
NAME GRANTED(1) FISCAL 1993 (PER SHARE) DATE 5% 10%
- ----------------------------- ------------ ------------ ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Harris J. Ashton............. 0 0 -- -- -- --
Robert M. Lovejoy............ 7,500(2) 4.5% $10.06 3/2/98 $20,851 $46,076
James R. Simpson............. 7,500(2) 4.5 10.06 3/2/98 20,851 46,076
John R. Ficarro.............. 7,500(2) 4.5 10.06 3/2/98 20,851 46,076
William C. Boyd.............. 10,000(2) 6.0 10.06 3/2/98 27,801 61,434
</TABLE>
- -------------------------
(1) Shares may be paid for by delivery of a five year, interest-only promissory
note at an interest rate determined by the Administrator of this Plan.
Principal is paid in a balloon payment at the end of five years from the
date of exercise. The Administrator may make an appreciation distribution in
cash equal to the difference between the option price and the fair market
value of the stock times the number of shares for which the option is
exercised on the date notice of exercise is received. The Administrator may
authorize a tax loan in an amount equal to the Federal, state and local
taxes that may be due as a result of the option or SAR exercise. If a change
of control (as defined in this Plan) occurs prior to the date the options
become exercisable, the options become exercisable within thirty days unless
otherwise directed by a majority of the Board of Directors.
(2) Granted March 3, 1993; exercisable after the closing price of the Company's
Common Stock reaches $14.00 per share and such closing price remains at or
above $14.00 per share for ten consecutive business days.
9
<PAGE> 12
Shown below is information with respect to the unexercised options and/or
SARs to purchase the Company's Common Stock granted in fiscal 1993 and prior
years under the Amended and Restated 1986 Stock Incentive Plan, the 1986 Stock
Incentive Plan and the 1981 Stock Option Award Plan to the Named Officers and
held by them at January 30, 1994.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS/SARS AT OPTIONS/SARS AT
NAME ON EXERCISE REALIZED JANUARY 30, 1994(1) JANUARY 30, 1994(2)
- ------------------------------------ --------------- -------- ------------------- -------------------
<S> <C> <C> <C> <C>
Harris J. Ashton.................... -- -- 540,000 -0-
Robert M. Lovejoy................... -- -- 31,500 -0-
James R. Simpson.................... -- -- 19,500 -0-
John R. Ficarro..................... -- -- 22,500 -0-
William C. Boyd..................... -- -- 34,000 -0-
</TABLE>
- -------------------------
(1) All options held by these individuals are deemed exercisable; however,
Messrs. Lovejoy, Simpson and Ficarro hold options for 7,500 shares and Mr.
Boyd holds options for 10,000 shares, which options may be exercised only
after the closing price of the Company's Common Stock reaches $14.00 per
share and such closing price remains at or above $14.00 per share for ten
consecutive business days.
(2) Based on the closing price on the New York Stock Exchange -- Composite
Transactions, of the Company's Common Stock on January 28, 1994 ($6.625).
RETIREMENT BENEFIT
Mr. Ashton is entitled to a retirement benefit under the terms of his
employment contract to commence on January 1, 1998, when he will have become 65,
or upon his earlier termination of employment. The retirement benefit is
determined on a life annuity basis, using the 1971 Group Annuity Table, in the
form of a monthly benefit (payable for life) equal to 3% of his average monthly
cash salary during the last thirty-six months of his employment multiplied by
the number of years of his service to the Company. Mr. Ashton has been employed
by the Company for twenty-eight years and ten months and his average monthly
cash salary during the last three fiscal years was $60,063. Under his contract,
Mr. Ashton is entitled to receive a lump sum payment at the time his retirement
benefit is due to commence. Such lump sum payment is to be equal to (i) the then
discounted present value, determined by using a discount rate of six percent per
year, of the retirement benefit less (ii) $3,442,302, plus an interest factor,
representing amounts previously paid on account of such retirement benefit.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for guiding the Company and
Frank's Nursery & Crafts, Inc., the Company's wholly owned operating subsidiary
("Frank's"), in the development and implementation of various policies, plans
and programs. The Committee approves the salary levels of Mr. Ashton (the
10
<PAGE> 13
"CEO") and Messrs. Lovejoy, Simpson, Ficarro and Boyd (for purposes of this
Compensation Committee Report, Messrs. Lovejoy, Simpson, Ficarro and Boyd shall
be referred to as the "named executives"). The Committee approves, on an annual
basis, the terms of the General Host Executive Compensation Program (the
"Program"), the option awards under the Amended and Restated General Host
Corporation 1986 Stock Incentive Plan (the "Plan") and the terms of the Frank's
Executive Compensation Program (the "Frank's Program").
The intended purposes of the Program, the Plan and the Frank's Program are
to: (a) promote the interests of the Company and its shareholders by attracting
and retaining officers and other key employees of exceptional ability; (b)
maximize the Company's long-term success and investment return to shareholders;
(c) provide officers and key employees important to the Company's sustained
growth with a proprietary interest and greater incentive to contribute to the
success of the Company through ownership of Company shares; and (d) provide
long-term incentive opportunities for officers and other key employees which are
competitive with those offered by other corporations in the business and
geographic areas the Company operates.
The Committee has the power to waive performance or profitability criteria
when awarding salary increases or when granting bonuses under the Program and
the Frank's Program, but did not do so in 1993 and accordingly, no bonuses were
awarded.
The Committee has enacted a policy whereby officers of the Company and
Frank's who serve in the capacity of Vice President or above are required to
achieve a minimum ownership target of Company stock within five (5) years from
initial participation, which is January 20, 1994 for current officers. The
target for the CEO is three (3) times salary. The target for the named
executives except Mr. Boyd is one (1) times salary. The target for Mr. Boyd is
two (2) times salary.
SALARIES
Salaries are established at levels necessary to attract and retain talented
corporate officers and other key employees. Salary increases for corporate
officers depend on the Company's performance in the prior fiscal year as well as
achievement of individual non-financial objectives and overall personal
performance.
The named executives, as a group, received increases which averaged two and
one-half percent (2.5%) in 1993. The non-financial objectives reviewed by the
Committee in the evaluation of these salary increases were typically the same
non-financial objectives that were considered for bonus awards, which are
discussed below. There is no pre-determined weight that is given to the
achievement of non-financial objectives when consideration is given to a salary
increase. The increases for the named executives in 1993 might have been larger
had the Company achieved a higher level of profitability in fiscal 1992. The
Company announced in December 1993 that salaries for all salaried employees,
including the named executives, have been frozen until such time as the Company
returns to an acceptable level of profitability.
BONUSES
The Program provides that certain executive officers of the Company are
eligible to receive bonus payments based on the achievement of corporate profit
objectives and specific individual objectives. The profit objectives contained
in the Program are based on net income per share of the Company for the fiscal
year, as established by the Committee at the beginning of each fiscal year. The
individual, or non-financial objectives, typically consist of four or five major
goals that are individually tailored to each function performed by the named
executives and incorporate the contribution of that individual's department into
the overall objectives
11
<PAGE> 14
of the Company. With respect to bonus awards, these individual objectives can
account for as much as 50% of total objective achievement, when combined with
Company financial objectives.
The total bonus payments for each of the named executives may not exceed
48% of base salary. Certain restrictions on payments exist if the Company does
not pay dividends on its Common Stock or if the Company would report a loss for
the fiscal year in question due to the payment of a bonus. If profit targets are
not attained, a reasonable and appropriate bonus may be awarded to an individual
whose performance was otherwise outstanding.
Pursuant to the terms of the Frank's Program, certain executive officers of
Frank's and other selected management of Frank's are eligible to receive bonuses
ranging from 3% to 48% of their base salary based on achieving predetermined
levels of operating income and on specific individual objectives as
predetermined by the individual's immediate superior. The Committee approves the
Frank's Program and the operating income levels at the beginning of each fiscal
year. The Frank's Program contains the same restrictions and features as the
Program. Furthermore, at the discretion of the Company, bonuses paid under the
Frank's Program may be paid in Common Stock of the Company.
None of the named executives received a bonus for services performed in
1993 because the corporate profit objectives under the Program and the Frank's
Program were not met.
OPTIONS AND RESTRICTED STOCK
Options were granted in 1993 under the Plan to officers and key employees
based on the following considerations by the Committee: (a) the position and
responsibilities of the person being considered; (b) the nature of the services
and the accomplishments of each individual; (c) the value to the Company of the
services; (d) the individual's present and potential contributions to the
success of the Company; and (e) such other factors as the Committee deemed
relevant to accomplishing the purposes of the Plan including the value of
options currently held by the individual. The purchase price of Common Stock
covered by an option shall not be less than the fair market value of the Common
Stock on the day the option is granted. Payment for option shares may be made in
(a) cash, (b) Common Stock, (c) a combination of both, or (d) at the discretion
of the Committee, on a case by case basis, by promissory notes.
In January 1994, the Committee adopted a proposal to award Restricted Stock
to all employees affected by the December 1993 wage freeze. The named executives
may each be awarded 1,000 shares of Restricted Stock in 1995 if the Company
achieves the budgeted profitability objective set by the Committee as described
in the 1994 Program.
CEO COMPENSATION
The Committee approved a new employment contract with the CEO, effective
January 1, 1992, that expires on December 31, 1997. The terms of the employment
contract are set forth beginning on page 14 of the Proxy Statement.
In 1993, the CEO received a five percent (5%) salary increase, in
accordance with the terms of his employment contract.
The Committee develops and measures the CEO's objectives under the Program
in January of each year for the following fiscal year. The Committee believes
that the salary and other compensation contained in the employment contract are
competitive with other similarly situated specialty retailers and take into
account the length of service provided by the CEO to the Company.
Notwithstanding the fact that his employment
12
<PAGE> 15
agreement provided for a salary increase effective January 1, 1994, the CEO has
agreed to a freeze of his salary until such time as the Company returns to an
acceptable level of profitability.
The CEO is eligible to receive a bonus payment not to exceed 60% of salary
based on the same objectives mentioned previously relative to the Program. The
CEO did not receive a bonus for services rendered in 1993.
The stock gain award, which is discussed on page 15 of this Proxy
Statement, provides incentive to the CEO to concentrate on taking all necessary
measures to enhance shareholder value. The Committee is willing to reward the
CEO if the shareholders have been rewarded by virtue of a higher stock price.
The CEO did not receive a stock gain award in 1993.
The retirement benefit, which is discussed on page 10 of this Proxy
Statement, was granted to the CEO in recognition of what will be, at the
expiration of the current employment contract, 32 years in senior management,
including 28 years as Chief Executive Officer of the Company.
INTERNAL REVENUE CODE SECTION 162(M)
Recently enacted Internal Revenue Code Section 162(m) generally limits the
corporate tax deduction for compensation paid to certain officers named in this
Proxy Statement to $1 million. Based on past history, it is probable that the
restrictions contained in Section 162(m) will only affect the deductibility of
the CEO's pay. According to Section 162(m), compensation payable pursuant to a
written contract in effect prior to February 17, 1993, which has not been
materially modified after that date, is exempt from the $1 million deduction
limit. The CEO's contract was entered into prior to that date and, therefore,
compensation payable pursuant to the employment contract will be exempt from
Section 162(m) until termination of the contract in 1997 or until the contract
is materially modified.
Philip B. Harley (Chairman)
C. Whitcomb Alden, Jr.
Christopher A. Forster
13
<PAGE> 16
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the S&P 500 Stock Index and the S&P Retail Store
Composite Index for the period of five fiscal years commencing January 27, 1989
and ending January 30, 1994.
COMPARISON OF FIVE YEAR TOTAL RETURNS
GENERAL HOST, S&P 500, S&P RETAIL COMPOSITE
<TABLE>
<CAPTION>
RETAIL
MEASUREMENT PERIOD GENERAL HOST S&P 500 IN- STORES-
(FISCAL YEAR COVERED) CORP DEX* COMPOSITE**
<S> <C> <C> <C>
1988 100.00 100.00 100.00
1989 60.76 114.46 114.84
1990 81.42 124.07 134.75
1991 107.57 152.22 188.28
1992 118.24 168.33 224.74
1993 81.53 190.00 216.61
</TABLE>
* Source: Standard & Poor's Corporation. Years ended January.
** Source: Standard & Poor's Compustat Services, Inc. 1/27/89=100
EMPLOYMENT CONTRACT AND OTHER ARRANGEMENTS
The Company has an employment contract, effective January 1, 1992, with Mr.
Ashton, pursuant to which he will be employed as Chief Executive Officer of the
Company until December 31, 1997.
The employment contract entitles Mr. Ashton to a minimum base salary of
$718,942, with increases of five percent per year thereafter during the term of
the contract. If Mr. Ashton becomes permanently disabled, dies or his employment
is terminated by the Company during the term of the contract, the Company shall
pay him or his estate his base salary through the date of termination or, in the
event of death or disability, through the end of the month in which the death or
disability occurs, in addition to a lump sum amount equal to the discounted
present value of 50% (100% in the event of termination without cause) of the
base salary he would have received through the end of the contract, or if
greater, for the twenty-four months following his termination, death or
disability (Mr. Ashton's final base salary under the contract to be continued
for any part of the twenty-four month period occurring after December 31, 1997).
Under the contract, Mr. Ashton may elect to regard his employment to be
terminated without cause in the event of a change in control (as defined in the
contract) of the Company, or a change in any of the material terms and
conditions of his employment.
14
<PAGE> 17
In the event of voluntary termination by Mr. Ashton, he will be entitled to
receive his base salary through the date of termination plus a lump sum payment
in cash equal to the base salary he would have received under the contract for a
period of 12 months following the date of his termination but not beyond the
expiration date of the contract.
Upon expiration of the contract or cessation of Mr. Ashton's employment for
any reason, he will be entitled to receive a retirement benefit as described on
page 10 of this Proxy Statement.
Mr. Ashton is also entitled to receive a stock gain award determined at the
end of each calendar year based on the excess of the average of the weekly
closing prices for the Company's Common Stock for the year over the greater of
(i) $7.50 (representing the average of the weekly closing price for 1991)
increased by 4% each year or (ii) the average of the weekly closing prices for
the last year for which a stock gain award was paid. The excess, if any, is then
multiplied by the product of 2% and the average number of shares outstanding for
the year in question.
On the date the contract was executed, Mr. Ashton was granted options to
purchase 300,000 shares of the Company's Common Stock, pursuant to the terms of
the contract.
During the term of the contract, Mr. Ashton shall be reimbursed for any
medical or dental expenses incurred by him or any members of his immediate
family under age 26 or living at home, to the extent not otherwise paid under
Company programs. Mr. Ashton and his wife are also entitled to fully paid
medical benefits, consistent with those now paid, for the rest of their lives.
Mr. Ashton is entitled under the contract to indemnity consistent with
Section 26 of the By-Laws as such Section presently exists, notwithstanding
subsequent amendments, if any, to such Section.
If any payments to be made to Mr. Ashton under this contract are subject to
an excise tax, the Company shall pay Mr. Ashton an additional amount which,
after income taxes, equals such excise tax.
Under the terms of an agreement made in March 1990 between the Company and
a Trust established for the benefit of Mr. and Mrs. Ashton's beneficiaries, the
Company will pay the premiums for two survivorship life insurance policies on
the lives of Mr. Ashton and Mrs. Ashton. Benefits become payable when both have
died, and the Company will have an interest in the death benefits equal to the
amount it has paid for these policy premiums. The Company will continue to make
annual premium payments until the earliest of: (1) the deaths of both Mr. and
Mrs. Ashton; (2) the Company shall have made 12 payments of the full annual cash
premiums; (3) the Company shall have paid an aggregate of $1,500,000 for
premiums; or (4) the premium payment next due after the year in which premiums
may be paid in full from the sum available from dividends or other sums
generated by the policies. The premium payment for these policies for fiscal
1993 was $113,413.
PROFIT SHARING PLAN AND LOANS TO OFFICERS AND OTHER KEY EMPLOYEES
The Company currently maintains a Profit Sharing and Savings Plan which
covers salaried and hourly employees of the Company who are 21 years of age,
have one year of service, have worked 1,000 hours in a year and are not covered
by a collective bargaining agreement. Profit sharing contributions are
determined by the Board of Directors who utilize, as a guideline, a formula
based on the return on equity of the Company. There was no profit sharing
contribution for 1993. The same employees are eligible to contribute, on a
pre-tax basis, up to 10% of their income to a 401(k) plan. The Company does not
match employee contributions.
The Company or Frank's has loaned money to certain key employees for the
purpose of enabling them to purchase shares of the Company's stock. These loans
are payable in a lump sum five years from the date made
15
<PAGE> 18
and bear interest at the rate of 6% per annum. The Named Officers, other than
Mr. Ashton, have loans outstanding as of the last day of fiscal 1993 in the
amounts indicated: Robert M. Lovejoy, Jr., $128,864; James R. Simpson, $40,483;
John R. Ficarro, $57,414, and William C. Boyd, $44,744.
Optionees are permitted, by the terms of their options, to defer payment of
the full amount of the option price for up to five years after the date of
exercise. The interest rate on such loans is currently 6% per annum. Interest is
payable quarterly on the unpaid balance of the deferred purchase price. On
August 22, 1990, Mr. Ashton had outstanding deferred payments on options
totalling $831,250, which were then due the Company. On that date, Frank's made
a loan to Mr. Ashton in the amount of $831,250, the proceeds of which were used
to pay the outstanding deferred payments due the Company. The loan from Frank's
bears interest at the rate of 6% and is payable in full on August 22, 1995. Mr.
Ashton elected to prepay $177,294 of this loan in March 1991 and $25,000 in
February 1992. On March 7, 1991, Mr. Ashton elected to defer the payment of the
purchase price from the exercise of options for 225,000 shares of Common Stock
in the amount of $1,381,253 which is due March 6, 1996. Mr. Ashton elected to
prepay $25,000 of this loan in March 1993. On December 30, 1992, Mr. Ashton
elected to defer the payment of the purchase price from the exercise of options
for 60,000 shares of Common Stock in the amount of $495,000 which is due
December 29, 1997.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of Price
Waterhouse as its independent accountants for the fiscal year ending January 29,
1995, subject to ratification of its appointment by the Company's shareholders.
Price Waterhouse has been serving the Company and its subsidiaries for 79 years,
and the Company has been advised by that firm that neither it nor any member
thereof has any financial interest, direct or indirect, in the Company or any of
its subsidiaries in any capacity. A representative of Price Waterhouse is
expected to be present at this year's Annual Meeting of Shareholders, at which
time he will be given an opportunity to make a statement and is expected to be
available to respond to appropriate questions.
Ratification of the appointment of the independent accountants requires the
affirmative vote of a majority of the shares present in person or by proxy and
voting at the meeting. If the shareholders should not ratify the appointment of
Price Waterhouse, the Board of Directors will reconsider the appointment.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION
OF APPOINTMENT OF THE INDEPENDENT ACCOUNTANTS.
SHAREHOLDERS' PROPOSALS FOR 1995 ANNUAL MEETING
Shareholders' proposals intended to be presented at the 1995 Annual Meeting
of Shareholders must be received by the Company for inclusion in its proxy
statement and form of proxy relating to that meeting by December 15, 1994.
Reference is also made to Section 13 of the Company's By-Laws regarding
nomination of directors as discussed on page 4 of this Proxy Statement.
GENERAL
All expenses in connection with the solicitation of proxies will be borne
by the Company. The Company has retained Kissel-Blake Inc. to assist in the
solicitation of proxies, for which such firm will receive aggregate fees of
approximately $10,500, plus reasonable out-of-pocket expenses. In addition, the
Company intends to request brokerage houses, custodians, nominees and others who
hold stock in their names to solicit proxies
16
<PAGE> 19
from the beneficial owners of such stock, pursuant to the rules of the New York
Stock Exchange and the Pacific Stock Exchange, upon which the Company's Common
Stock is listed. The Company will reimburse such brokerage houses, custodians,
nominees and others for their out-of-pocket expenses, including reasonable
clerical expenses, if any. Proxies may also be solicited by mail, personal
solicitation, telephone or telegraph by employees of the Company.
While Management knows of no other business to be presented at the Annual
Meeting, it is intended that proxies solicited will be voted on any other
matters that may properly come before the meeting, or any adjournment thereof,
in accordance with the discretion of the proxy holders.
By order of the Board of Directors
JOHN R. FICARRO,
Secretary
Stamford, Connecticut
April 14, 1994
-------------------------
The Annual Report to Shareholders for the fiscal year ended January 30,
1994, which includes financial statements, has been mailed to shareholders
together with this Proxy Statement. The Annual Report does not form any part of
the material for the solicitation of proxies.
17
<PAGE> 20
<TABLE>
<CAPTION>
/ X / Please mark
your vote
as this
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------
COMMON
The Board of Directors recommends a vote FOR all the following proposals:
1. Election of the following FOR WITHHELD 2. Ratification of appointment FOR AGAINST ABSTAIN
three Directors to hold / / / / of Price Waterhouse as / / / / / /
office until 1997: Weston independent accountants for
E. Hamilton, Edward H. 1994.
Hoornstra and Charles B.
Johnson
(To withhold authority to vote for any individual nominee
write that nominee's name on the space below.)
- -------------------------------------------------------------------
This proxy will be voted "FOR" Proposals 1 and 2, unless instructions to the contrary are indicated. In addition, this proxy will
be voted in accordance with the judgement of the proxy holders upon such other matters as may properly come before, or incident to,
the conduct of the meeting.
Should any management nominee become unable to accept nomination or election, this proxy will be voted for a substitute nominated by
the Board of Directors.
Dated __________________________________, 1994
______________________________________________
(Signature)
_______________________________________________
(Signature)
The signature on this proxy should correspond exactly with
the name stenciled hereon. For joint accounts, each joint
owner should sign. Persons signing as attorney, executor,
administrator, trustees or guardian and corporate officers
should give their full titles.
</TABLE>
<PAGE> 21
PROXY
GENERAL HOST CORPORATION -- 1994 ANNUAL MEETING
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints HARRIS J. ASHTON, JOHN R. FICARRO and JAMES R.
SIMPSON and each of them, jointly and severally, proxies, with full power of
substitution, to vote with the same force and effect as the undersigned,
including the right to cumulate votes in the election of directors for such of
the nominees as the proxies in their discretion may deem appropriate (subject
to any limitations on such authority as may be indicated on the reverse side
hereof), at the Annual Meeting of Shareholders of General Host Corporation, to
be held at The Brown Hotel, 335 West Broadway, Louisville, Kentucky 40202 on
May 19, 1994, at 9:00 A.M., and any adjournment thereof, upon the matters set
forth on the reverse side hereof and upon such other matters as may properly
come before, or incident to the conduct of, the meeting, all in accordance with
the accompanying notice and proxy statement for said meeting, receipt of which
is hereby acknowledged.
(CONTINUED, AND TO BE SIGNED, ON THE OTHER SIDE)
<PAGE> 22
<TABLE>
<CAPTION>
/ X / Please mark
your vote
as this
<S> <C> <C> <C> <C> <C> <C> <C>
___________________
COMMON
The Board of Directors recommends a vote FOR all the following proposals:
1. Election of the following FOR WITHHELD 2. Ratification of appointment FOR AGAINST ABSTAIN
three Directors to hold / / / / of Price Waterhouse as / / / / / /
office until 1997: Weston independent accountants for
E. Hamilton, Edward H. 1994.
Hoornstra and Charles B.
Johnson
(To withhold authority to vote for any individual nominee
write that nominee's name on the space below.)
_________________________________________________________ I hereby instruct the Trustee to vote by proxy upon such
other matters as may properly come before, or incident to,
the conduct of the meeting, or any adjournment thereof.
Should any management nominee become unable to accept
nomination or election, the Trustee is instructed to vote
by proxy for a substitute nominated by the Board of
Directors.
Signature(s)_____________________________________________________________ Dated __________________________________
The signature on this card should correspond exactly with the
name stenciled hereon. Persons signing as attorney, director,
administrator, trustee or guardian and corporate officers should
give their full titles.
</TABLE>
<PAGE> 23
CG TRUST COMPANY -- TRUSTEE
GENERAL HOST CORPORATION PROFIT SHARING AND SAVINGS PLAN
GENERAL HOST CORPORATION -- 1994 ANNUAL MEETING
THIS VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby instructs CG Trust Company to vote all the shares of
General Host Cororation Common Stock held on my behalf in the General Host
Corporation Profit Sharing and Savings Plan, at the Annual Meeting of
Shareholders of General Host Corporation, to be held at The Brown Hotel, 335
West Broadway, Louisville, Kentucky 40202, May 19, 1994 at 9:00 A.M., and any
adjournment thereof, upon the matters set forth on the reverse side hereof and
upon such other matters as may properly come before, or incident to the conduct
of, the meeting, all in accordance with the accompanying notice and proxy
statement for said meeting, receipt of which is hereby acknowledged.
(CONTINUED, AND TO BE SIGNED, ON THE REVERSE SIDE)
