<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Genovese Drug Stores, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / 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]
GENOVESE DRUG STORES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 12, 1995
---------------------------
The Annual Meeting of Shareholders of Genovese Drug Stores, Inc. (the
"Company") will be held at the executive offices of the Company, 80 Marcus
Drive, Melville, New York, on Monday, June 12, 1995 at 11:00 A.M., local time.
The items to be considered and acted upon at the meeting will be:
1. The election of three (3) Class III directors to serve until the
1998 Annual Meeting of Shareholders.
2. To consider a proposal to amend the Company's Certificate of
Incorporation to increase the number of authorized shares of Class A Common
Stock from 12,000,000 shares to 20,000,000 shares.
3. To consider a proposal to amend the Company's Certificate of
Incorporation to permit the Company to engage in all activities permitted
under Delaware law.
4. To consider a proposal to amend the Company's Certificate of
Incorporation to authorize the Board of Directors to adopt, amend, or
repeal the By-Laws of the Company without action by the shareholders of the
Company.
5. To consider a proposal to amend the Company's Certificate of
Incorporation to clarify that dividends payable in respect of shares of
Class B Common Stock may be paid in shares of Class A Common Stock, shares
of Class B Common Stock or any other cash, property or securities of the
Company.
6. To consider a proposal to amend the Company's Certificate of
Incorporation to limit the liability of directors of the Company as
permitted by Delaware law.
7. To consider a proposal to amend the Company's Certificate of
Incorporation to provide for the full indemnification of directors,
officers, employees and agents of the Company permitted by Delaware law.
8. To consider a proposal to make certain technical amendments to the
Company's Certificate of Incorporation, including the change of registered
address, the elimination of the reference to pre-1986 option grants, the
deletion of the provision denying shareholders preemptive rights, which is
unnecessary under Delaware law, and the deletion of the reference to
perpetual duration, which is unnecessary under Delaware law.
9. To consider a proposal to amend the 1987 Executive Bonus & Stock
Plan (the "1987 Plan") to increase the number of authorized shares of Class
A Common Stock that may be issued under the 1987 Plan by 250,000 shares and
extending the termination date of the 1987 Plan from 1997 to 2007.
10. Such other business as may properly come before the Annual
Meeting, or any adjournments thereof.
Only shareholders of record at the close of business on April 24, 1995 are
entitled to notice of, and to vote at, the Annual Meeting.
Shareholders are invited to attend the Meeting, where they can vote in
person or by proxy. Those Shareholders who cannot attend the Meeting are
requested to vote and sign the enclosed proxy card and return it in the enclosed
self-addressed postage paid envelope. Please return the proxy card as soon as
possible to ensure that your vote is counted and to save the Company additional
expenses in soliciting proxies.
A proxy statement and proxy card are furnished herewith, along with the
Company's Fiscal 1995 Annual Report.
By Order of the Board of Directors
DONALD W. GROSS
Vice President and Secretary
May 3, 1995
Melville, New York
<PAGE> 3
GENOVESE DRUG STORES, INC.
80 MARCUS DRIVE
MELVILLE, NEW YORK 11747
---------------------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 12, 1995
PROXY STATEMENT
---------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of Genovese Drug Stores, Inc. (the
"Company") of proxies for use at the Company's Annual Meeting of Shareholders
(the "1995 Annual Meeting") to be held at 11:00 A.M., local time, on Monday,
June 12, 1995, at the executive offices of the Company, 80 Marcus Drive,
Melville, New York and at any adjournments thereof. The Proxy Statement and
accompanying form of proxy are being mailed on or about May 3, 1995 to
shareholders of record on April 24, 1995.
SOLICITATION AND REVOCATION OF PROXIES
The proxy is solicited on behalf of the Board of Directors of the Company.
It may be revoked at any time before its exercise by filing with the Secretary
of the Company a written revocation or a duly executed proxy bearing a later
date. It may also be revoked by attendance at the meeting and election to vote
in person.
The entire cost of soliciting proxies will be borne by the Company. Proxies
may be solicited by directors, officers and regular employees of the Company
personally or by telephone, at minimal cost to the Company, for which they will
receive no additional compensation. The Company may reimburse brokers and others
for reasonable costs incurred by them in obtaining voting instructions from
beneficial owners of common stock held by their principals.
If proxy cards in the accompanying form are properly executed and returned,
the shares of common stock represented thereby will be voted as instructed on
the proxy. If no instructions are given, such shares will be voted (i) for the
election as directors of the nominees of the Board of Directors named below,
(ii) for the proposed amendments and (iii) in the discretion of the proxies
named in the proxy card on any other proposals to properly come before the
meeting or any adjournments thereof.
VOTING SECURITIES OF THE COMPANY; REQUIRED VOTE
Only holders of record as of the close of business on April 24, 1995 are
entitled to vote at the 1995 Annual Meeting. On that date, there were
outstanding shares of the Class A Common Stock of the Company, each
entitling the holder thereof to one vote per share, and shares of the
Class B Common Stock of the Company, each entitling the holder thereof to ten
votes per share.
The election of each nominee for director requires a plurality of the total
votes cast. Proxies cannot be voted for a greater number of persons than the
number of nominees named. The amendment to the Certificate of Incorporation
increasing the number of authorized shares of Class A Common Stock requires the
approval of a majority of the outstanding Class A and Class B stock voting
together as a single class as well as a majority of the outstanding Class A
stock voting as a separate class. The other proposed amendments to the
Certificate of Incorporation require the approval of a majority of the
outstanding Class A and Class B stock voting together as a single class. The
amendment to the 1987 Executive Bonus & Stock Plan, as amended (the "1987
Plan"), requires the approval of a majority of the total votes cast. Abstentions
and broker non-votes will not be considered votes cast for the foregoing
purposes. Proxy ballots are received and tabulated by the Company's transfer
agent and certified by the inspectors of election.
<PAGE> 4
ELECTION OF DIRECTORS
In accordance with the Certificate of Incorporation and the By-Laws of the
Company, the number of directors constituting the whole Board of Directors for
the ensuing year is nine. The Company's Board of Directors is divided into three
classes with a minimum of three directors in each class, and directors in each
class are elected for three-year terms or until their successors are duly
elected and qualified. Under the Certificate of Incorporation and the By-Laws of
the Company, only the Class III directors (a total of three) are nominees for
election at the 1995 Annual Meeting and are scheduled to serve for terms lasting
for three years until the Company's 1998 Annual Meeting of Shareholders. The
Board of Directors has no reason to believe that any of the nominees for
director will not serve as a director, but if any nominee should subsequently
become unavailable to serve as a director, the persons named as proxies may, in
their discretion, vote for a substitute nominee designated by the Board of
Directors.
The following table sets forth information for each of the three Class III
director nominees for election at the 1995 Annual Meeting and for each director
continuing in office, including their age, present principal occupation and
positions held during the past five years, directorships held in any other
publicly held corporations, and the year in which each first became a director
of the Company. The information provided in connection with this table has been
obtained from the Company's records, information furnished by the directors as
of March 15, 1995, and a review of statements filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and received by the Company through March
15, 1995.
CLASS III DIRECTORS TO BE ELECTED FOR A TERM WHICH EXPIRES AT THE
1998 ANNUAL MEETING
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY,
BUSINESS EXPERIENCE AND OTHER DIRECTOR
NAME AGE DIRECTORSHIPS SINCE
- -------------------------- ---- ------------------------------------------ --------
<S> <C> <C> <C>
ABRAHAM ALLEN 69 Self-employed health care consultant 1986
(a)(b)(c)(d)
THOMAS M. COONEY 69 President of Gibson Foundation since 1988; 1988
(a)(b)(c)(d) Director of Gibson Greetings, Inc.
LEONARD GENOVESE 60 Chairman of the Board, Chief Executive 1961
(d)(e) Officer and President of the Company;
Director of TR Financial Corp.; Director
of Aid Auto Stores, Inc.
CLASS I DIRECTORS WHOSE PRESENT TERMS EXPIRE AT THE 1996 ANNUAL MEETING
WILLIAM J. MCKENNA 68 Chairman of the Board, President and Chief 1979
(a)(b)(c)(d) Executive Officer of Kellwood Co.;
Director of United Missouri Bankshares,
Inc.
FRANCES GENOVESE WANGBERG 64 Director of the Company 1975
(d)(e)
HERBERT J. KETT 62 Vice Chairman of the Company; former 1970
Senior Vice President of the Company
</TABLE>
2
<PAGE> 5
CLASS II DIRECTORS WHOSE PRESENT TERMS EXPIRE AT THE 1997 ANNUAL MEETING
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY,
BUSINESS EXPERIENCE, AND OTHER DIRECTOR
NAME AGE DIRECTORSHIPS SINCE
- -------------------------- ---- ------------------------------------------ --------
<S> <C> <C> <C>
CHARLES HAYWARD 63 Consultant 1981
(a)(b)(c)(d)
ALLAN PATRICK 48 Executive Vice President of the Company; 1987
former Senior Vice President of the
Company
THOMAS J. MORAN 42 President and Chief Executive Officer of 1995
(a)(b)(c)(d) Mutual of America Life Insurance Company
</TABLE>
- ---------------
(a) Member of the Audit Committee.
(b) Member of the Compensation Committee.
(c) Member of the Finance Committee.
(d) Member of the Nominating Committee.
(e) Leonard Genovese is the brother-in-law of Frances Genovese Wangberg.
OTHER INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The Board, which met four times during fiscal year 1995 (ended February 3,
1995), has standing Audit, Compensation, Finance and Nominating Committees to
assist it in the discharge of its responsibilities. The Committees and their
principal functions are described below.
The Audit Committee consists of Messrs. Allen, Cooney, Hayward (Chairman),
McKenna and Moran. The Audit Committee met twice in fiscal year 1995. This
Committee recommends to the Board the engagement of independent auditors for the
ensuing year, reviews the scope and budget for the annual audit and reviews with
the auditors the results of their engagement, the financial statements and
management report. In addition, the Audit Committee reviews the scope of and
compliance with the Company's internal controls and reviews recommendations made
by the independent auditors with respect to changes in accounting principles and
internal controls.
The Compensation Committee consists of Messrs. Allen, Cooney, Hayward,
McKenna (Chairman) and Moran. The Compensation Committee met once in fiscal year
1995 and approves or recommends to the Board compensation and special
compensation for senior management in the form of bonuses and incentives, and
recommends to the Board the adoption and implementation of incentive
compensation plans, stock option plans and employee benefit plans, as well as
any modifications to existing plans.
The Finance Committee consists of Messrs. Allen (Chairman), Cooney,
Hayward, McKenna and Moran. The Finance Committee met once in fiscal year 1995.
It reviews the financial condition and capital structure of the Company and
advises the Board with respect to acquisitions, divestitures and other financial
matters affecting the Company.
The Nominating Committee consists of Messrs. Allen, Cooney, Genovese
(Chairman), Hayward, McKenna and Moran and Frances Genovese Wangberg. The
Committee will consider nominees recommended by Shareholders for election to the
Board. Recommendations should be sent to the Secretary of the Company at the
Company's executive offices. The Nominating Committee met one time in fiscal
year 1995 and reviews and recommends criteria for Board membership.
3
<PAGE> 6
COMPENSATION OF DIRECTORS
The Company's present policy is to pay each director, exclusive of employee
directors, an annual fee of $16,000 for serving as a director. Members of the
Committees of the Board of Directors are not paid additional amounts for
attending Committee meetings. During fiscal year 1995, each director attended at
least 75% of the meetings held by the Board and the Committees of which he or
she is a member, except for Frances Genovese Wangberg, who attended two of the
four regular board meetings and the one meeting of the Nominating Committee.
Thomas J. Moran was elected as a director on March 7, 1995. Certain directors
may receive additional forms of compensation, as described elsewhere in this
Proxy Statement.
OWNERSHIP OF SECURITIES BY PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
Class A Common Stock and Class B Common Stock owned beneficially as of March 15,
1995, or as otherwise noted, by any person or entity known to the Company to be
the beneficial owner of more than 5% of the outstanding shares of either class
of Common Stock. The persons identified in this table have sole voting and
investment power with respect to the shares set forth opposite their names,
except as otherwise disclosed in the footnotes to the table, according to
information furnished to the Company by each of them.
CLASS A SHAREHOLDERS
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME & ADDRESS(a) OF BENEFICIAL OWNERSHIP(b) OF CLASS
- --------------------------------------------------------- -------------------------- --------
<S> <C> <C>
Genovese Drug Stores, Inc. Employee 329,142 6.7
Stock Ownership Plan & Trust("ESOP")
T. Rowe Price Associates, Inc.(c) 257,488 5.2
100 E. Pratt Street
Baltimore, MD 21202
(as of December 31, 1994)
CLASS B SHAREHOLDERS(g)
Leonard Genovese(d) 1,677,477 32.5
Frances Genovese Wangberg(e) 1,695,562 32.9
Trust under the Will of the late 1,431,686 27.8
Joseph W. Genovese, Jr.
Trust under the Will of the late 517,606 10.0
Joseph Genovese, Sr.
Donald W. Gross Revocable Living Trust and 292,706 5.7
Marie A. Gross Revocable Living Trust(f)
</TABLE>
- ---------------
(a) Except as otherwise noted, the address for all beneficial owners is 80
Marcus Drive, Melville, New York 11747.
(b) Certain shares in the table have been counted twice because of certain rules
and regulations of the Securities and Exchange Commission. See notes (d),
(e) and (g).
(c) These securities are owned by various individual and institutional investors
which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment adviser with power to direct investment and/or shared power to
vote the securities. For purposes of the reporting requirements of the
Exchange Act, Price Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities.
(d) Includes 27,990 shares of Class B Common Stock held in trust for his
daughter and 517,606 shares of Class B Common Stock listed as beneficially
owned by the Trust under the Will of the late Joseph Genovese, Sr., of which
Mr. Genovese is Trustee. Mr. Genovese disclaims any beneficial ownership in
any such shares. Additionally, Mr. Genovese owns 52,222 shares of Class A
Common Stock and also has options to purchase 47,620 more shares of Class A
Common Stock.
4
<PAGE> 7
(e) Includes 1,431,686 shares of Class B Common Stock listed as beneficially
owned by the Trust under the Will of the late Joseph W. Genovese, Jr., of
which Frances Genovese Wangberg is Trustee. Additionally, Mrs. Wangberg owns
2,657 shares of Class A Common Stock and also has options to purchase 13,784
more shares of Class A Common Stock.
(f) Of the shares of Class B Common Stock stated, 194,856 shares are owned by
the Donald W. Gross Revocable Living Trust, of which Marie A. Gross is
contingent beneficiary. The balance, 97,850 shares, are owned by the Marie
A. Gross Revocable Living Trust, of which Donald W. Gross is a Trustee and
contingent beneficiary. Mr. Gross is deemed to be an associate of the Donald
W. Gross Revocable Living Trust, Marie Gross and the Marie A. Gross
Revocable Living Trust. Mrs. Gross is deemed to be an associate of the Marie
A. Gross Revocable Living Trust, Donald Gross and the Donald W. Gross
Revocable Living Trust. None of these shares have been counted more than
once as set forth in Note (b). Mr. Gross is a Vice President and Secretary
of the Company. Additionally, Mr. Gross owns 17,625 shares of Class A Common
Stock and also has options to purchase 23,810 more shares of Class A Common
Stock.
(g) Because shares of Class B Common Stock may be converted at any time to
shares of Class A Common Stock on a one-for-one basis, under Securities and
Exchange Commission rules each beneficial owner of outstanding shares of
Class B Common Stock is deemed to be the beneficial owner of shares of Class
A Common Stock. As of March 15, 1995, the following persons were deemed to
be beneficial owners of more than 5% of the outstanding Class A Common Stock
and each were deemed to own the following number of shares of Class A Common
Stock (and percent of outstanding Class A Common Stock) assuming conversion
of shares of Class B Common Stock and exercise of stock options to purchase
shares of Class A Common Stock: Leonard Genovese, 1,777,319 Class A shares
(26.7%), consisting of 1,677,477 shares of Class B Common Stock, 52,222
shares of Class A Common Stock and options covering 47,620 shares of Class A
Common Stock; Frances Genovese Wangberg, 1,712,003 Class A shares (25.8%),
consisting of 1,695,562 shares of Class B Common Stock, 2,657 shares of
Class A Common Stock and options covering 13,784 shares of Class A Common
Stock; Trust under the Will of the late Joseph W. Genovese, Jr., 1,431,686
Class A shares (22.5%), consisting of 1,431,686 shares of Class B Common
Stock; Trust under the Will of the late Joseph Genovese, Sr., 517,606 Class
A shares (9.5%) consisting of 517,606 shares of Class B Common Stock; and
Donald W. Gross Revocable Living Trust and Marie A. Gross Revocable Living
Trust, 334,141 Class A shares (6.4%), consisting of 292,706 shares of Class
B Common Stock, 17,625 shares of Class A Common Stock and options covering
23,810 shares of Class A Common Stock.
Leonard Genovese is the brother of Marie Gross and the brother-in-law of
Frances Genovese Wangberg. Donald W. Gross is the husband of Marie Gross, and
also the brother-in-law of Leonard Genovese. These persons are deemed
"associates" of each other as that term is defined in the regulations
promulgated under the Exchange Act.
The Trust under the Will of the late Joseph W. Genovese, Jr. may be deemed
to be an "associate" of Frances Genovese Wangberg and the Trust under the Will
of the late Joseph Genovese, Sr. may be deemed to be an "associate" of Leonard
Genovese as that term is so defined. The term "associate" is used to indicate a
relationship with any person, including, in this situation, any trust or estate
as to which such person has a substantial beneficial interest, or as to which
such person serves as trustee or in any other fiduciary capacity, and any
relative or spouse of such person who has the same home as such person or who is
a director or officer of the Company.
5
<PAGE> 8
SECURITY OWNERSHIP BY MANAGEMENT
The following table presents the number of shares of the Company's Class A
Common Stock and Class B Common Stock owned beneficially as of March 15, 1995,
by (i) all directors and nominees, (ii) the executive officers listed in the
Summary Compensation Table, and (iii) all executive officers and directors as a
group:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED
AS OF 3/15/95(a)(b) % OF CLASS
----------------------- --------------
NAME CLASS A CLASS B A B
- --------------------------------------------------- ------- --------- --- ----
<S> <C> <C> <C> <C>
Abraham Allen...................................... 16,355 2,414 * *
Thomas M. Cooney................................... 19,710 0 * 0
Leonard Genovese(c)................................ 99,842 1,677,477 2.0 32.5
Charles Hayward.................................... 19,711 0 * 0
Herbert J. Kett.................................... 38,526 66,700 * 1.3
Irwin Livon........................................ 28,087 0 * 0
William J. McKenna................................. 15,215 2,414 * *
Thomas J. Moran.................................... 2,000 0 * 0
Allan Patrick...................................... 84,881 0 1.7 0
Jerome Stengel..................................... 38,147 45,476 * *
Frances Genovese Wangberg(d)....................... 16,441 1,695,562 * 32.9
All Executive Officers and Directors
as a Group (18 persons)(e)....................... 555,188 3,799,513 10.5 73.7
</TABLE>
- ---------------
* Indicates less than 1% of Class
(a) The persons identified in this table have sole voting and investment power
with respect to the shares set forth opposite their names, except as
otherwise disclosed in the footnotes to the table, according to information
furnished to the Company by each of them.
(b) The number of shares of Class A Common Stock shown in the table includes the
right to acquire such shares through the exercise of stock options pursuant
to the Company's 1984 Employee Stock Option and Stock Appreciation Rights
Plan, as amended (the "1984 Plan"), as follows: 47,620 shares held by Mr.
Genovese; 24,763 shares held by Mr. Kett; 23,810 shares held by Mr. Livon;
35,715 shares held by Mr. Patrick; 23,810 shares held by Mr. Stengel; 13,784
shares held by Mrs. Genovese Wangberg; 10,855 shares held by each of Messrs.
Allen, Cooney, Hayward and McKenna; and 2,000 shares held by Mr. Moran.
(c) Includes 27,990 shares of Class B Common Stock held in trust for his
daughter and 517,606 shares of Class B Common Stock held by the Trust under
the Will of the late Joseph Genovese, Sr., of which Mr. Genovese is Trustee.
Mr. Genovese disclaims any beneficial interest in any such shares.
(d) Includes 1,431,686 shares of Class B Common Stock held by the Trust under
the Will of the late Joseph W. Genovese, Jr. for the benefit of Frances
Genovese Wangberg, of which she is Trustee.
(e) Includes 280,613 shares of Class A Common Stock which the group currently
has rights to acquire through the exercise of stock options pursuant to the
1984 Plan.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission (the "SEC") and the American Stock Exchange initial reports
of ownership and reports of changes in ownership of Common Stock of the Company.
Reporting persons are required by SEC regulation to furnish the Company with
copies of all such filed reports. To the Company's knowledge, based solely on a
review of copies of such filed reports furnished to the Company, all of the
Company's directors, officers, and greater than ten percent beneficial owners
made all required filings during
6
<PAGE> 9
fiscal year 1995 in a timely manner, except that one transaction by each of
Messrs. Kett, Patrick, Stengel, Gross and Dominick Lettieri with respect to
stock options exercised in January 1995 was inadvertently omitted on each such
person's 1995 Form 5. An amended Form 5 was filed three weeks late for each such
reporting person. No stock was sold in connection with such option exercises.
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid by the Company
during the fiscal years ending February 3, 1995, January 28, 1994 and January
29, 1993 to the Chief Executive Officer and the four most highly compensated
executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- ------------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(A) ($)(B) (#)(C) ($)(D)
- ------------------------------- ----- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
LEONARD GENOVESE............... 1995 420,000 210,000 -0- 11,000 11,061(e)
Chairman of the Board, Chief 1994 400,000 190,000 -0- -0- 13,672
Executive Officer and
President 1993 375,000 187,500 -0- 22,000 14,287
ALLAN PATRICK.................. 1995 215,000 107,500 48,152 8,250 4,848
Executive Vice President and 1994 200,000 95,000 -0- -0- 6,916
Director 1993 178,800 89,400 -0- 16,500 5,215
HERBERT J. KETT................ 1995 160,000 60,800 33,383 5,720 8,688
Vice Chairman and Director 1994 153,000 55,233 -0- -0- 8,275
1993 146,600 55,708 -0- 11,440 6,842
IRWIN LIVON.................... 1995 142,000 53,960 -0- 5,500 5,411
Vice President 1994 136,000 49,096 -0- -0- 5,831
1993 131,000 49,780 -0- 11,000 4,241
JEROME STENGEL................. 1995 140,000 50,400 32,103 5,500 6,356
Vice President and Treasurer 1994 133,000 45,486 -0- -0- 6,973
1993 127,900 46,044 -0- 11,000 5,674
</TABLE>
- ---------------
(a) Bonus -- 50% cash, 50% stock; stock is distributed in five (5) equal
installments over a four (4) year period.
(b) Non-Qualified Stock Options -- Amounts reported represent the dollar value
of the difference of price at date of grant and market price on date of
exercise.
(c) Options to purchase shares of Class A Common Stock granted pursuant to the
1984 Plan. The number of options granted in March 1994 have been restated to
reflect the 10% stock dividend issued in January 1995.
(d) The amounts shown in the table reflect, for fiscal year 1995, personal use
of a Company-leased automobile on a pro-rated basis in the amounts of
$2,500, $2,403, $2,403, $2,550 and $1,830, respectively; premiums paid by
the Company for life insurance over $50,000 in the amounts of $2,808, $574,
$2,317, $1,485 and $1,485, respectively; and the Company's contributions to
the Executive Retirement Plan added to salary in the amounts of $2,415,
$892, $2,660, $0 and $1,757, respectively. The amount shown for Mr. Genovese
also includes premiums added to salary for two additional insurance policies
in the amount of $1,732. In fiscal year 1995, the Company contributed
$1,277, $650, $979, $1,065 and $978, respectively, under The Genovese
Retirement and Savings Plan, a Section 401(k) plan. The Company has
contributed $329, $329, $329, $311 and $306, respectively, under the ESOP.
(e) Includes the amount of annual premiums on the term portion of split-dollar
life insurance on the lives of Leonard Genovese and his spouse in the
amounts of $1,732, $1,732 and $213 for fiscal years 1995, 1994 and 1993,
respectively. The annual premiums paid by the Company for the non-term
portion of such insurance were $90,286, 88,540 and $76,060 for fiscal years
1995, 1994 and 1993, respectively. Pursuant to a collateral assignment of
the split-dollar life insurance policy, upon the death of Leonard Genovese
and his spouse, the Company is repaid the amount of premiums paid by the
Company.
7
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE
The Company's current executive compensation program reflects the overall
compensation philosophies of the Company. The program is designed with a goal of
fairly compensating executives for their performance and contribution to the
Company's financial results, as well as providing incentives which attract and
retain key executives, instill a long-term commitment to the Company, and
develop a pride and sense of Company ownership, all in a manner consistent with
shareholder interests. Given these objectives, the executive compensation
package includes three elements: (1) base salary; (2) bonuses awarded under the
1987 Executive Bonus & Stock Plan (the "1987 Plan"), consisting of one-half cash
and one-half grants of Class A Common Stock (which grants vest in five equal
annual installments, generally commencing shortly after each grant); and (3)
options to purchase shares of Class A Common Stock granted under the 1984
Employee Stock Option and Stock Appreciation Rights Plan (the "1984 Plan"),
which options are non-qualified options with an exercise price of 100% of the
price per share of Class A Common Stock on the date of grant and a term of five
years from the date of grant. Each of the foregoing three elements is reviewed
annually and adjusted in light of the Company's performance for the year,
including the attainment of a pre-determined financial plan, and the individual
executive's contribution to that performance.
The Compensation Committee administers the 1987 Plan and the 1984 Plan. In
evaluating an executive's performance at the Company, in addition to financial
results of the Company (such as attaining the pre-determined financial plan), a
broad range of performance criteria is considered. These criteria include
standards of business conduct which reflect the social values and expectations
of the Company's associates and shareholders and the communities in which it
operates. In considering salary increases, bonus awards and stock option grants
(for persons other than the Chief Executive Officer), the Compensation Committee
considers recommendations submitted by the Chief Executive Officer (the "CEO").
In approving the salary increase, bonus award and stock option grant to the
CEO, the Committee takes into account his level and scope of responsibilities
and contributions to the Company. The Committee decides on the compensation of
the CEO privately, without the CEO being present.
The Committee consists of all five independent directors, none of whom is
an employee of the Company.
This report is submitted by the following persons who constitute the
Compensation Committee:
William McKenna, Chairman
Abraham Allen
Thomas Cooney
Charles Hayward
Thomas J. Moran
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee for the 1995 fiscal year consisted of the
following four non-employee directors: William McKenna, Abraham Allen, Thomas
Cooney and Charles Hayward. In the ordinary course of business, the Company
purchased merchandise from Gibson Greetings, Inc. which during fiscal year 1995
aggregated approximately $600,000. Thomas Cooney, a director of the Company, is
also a director of Gibson Greetings, Inc. The Company believes that the
purchases were made on a basis no less favorable than could have been obtained
from unaffiliated suppliers in similar transactions.
EMPLOYEE BENEFIT PLANS AND OTHER REMUNERATION
1987 EXECUTIVE BONUS & STOCK PLAN
The 1987 Plan was adopted during fiscal year 1988. Under the 1987 Plan, the
Compensation Committee can award eligible executives, upon meeting targeted
performance levels, incentive compensation which is paid 50% in cash and 50% in
shares of Class A Common Stock. The stock is payable in equal installments of
20% over a four year period, provided the recipient remains employed by the
Company. The Company had available, as of February 3, 1995, approximately 5,000
shares of Class A Common Stock for awards under the 1987 Plan. For fiscal year
1995, the Company awarded $378,490 in cash and 36,997 shares of Class A
8
<PAGE> 11
Common Stock. The Company also distributed during fiscal 1995 shares of Class A
Common Stock for amounts awarded in previous years.
1984 EMPLOYEE STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
The 1984 Plan authorizes the grant of discretionary options to purchase
shares of Class A Common Stock from the Company to officers and other key
employees of the Company and automatic, non-discretionary options to
non-employee directors of the Company. The 1984 Plan authorizes the grant of
such options at an exercise price which is no less than 100% of the fair market
value of the Class A Common Stock at the time the option is granted. All
outstanding options have a five-year term.
Payment for shares of Class A Common Stock purchased upon exercise of an
option must be made in full at the time of exercise, either in cash, by delivery
of shares of Common Stock then owned by the optionee or a combination of cash
and shares of Common Stock having an aggregate fair market value equal to the
option price, or by participation in a cashless exercise program. As of February
3, 1995, 306,730 options were outstanding at exercise prices ranging from $6.49
to $11.93 per share.
OPTION GRANTS IN FISCAL 1995
The following table sets forth certain information concerning individual
grants of stock options made to each of the executive officers of the Company
named in the above Summary Compensation Table during fiscal 1995 pursuant to the
1984 Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS OPTIONS PRICE APPRECIATION
GRANTED GRANTED TO EXERCISE FOR OPTION TERM($)
(# OF EMPLOYEES IN PRICE(2) EXPIRATION ---------------------
NAME SHARES)(1) FISCAL 1995 ($/SH) DATE 5%(3) 10%(3)
- ------------------------------ --------- ------------ -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Leonard Genovese.............. 11,000 8.7% $11.82 3/7/99 $35,970 $79,420
Allan Patrick................. 8,250 6.5% $11.82 3/7/99 $26,978 $59,565
Herbert J. Kett............... 5,720 4.5% $11.82 3/7/99 $18,704 $41,298
Irwin Livon................... 5,500 4.3% $11.82 3/7/99 $17,985 $39,710
Jerome Stengel................ 5,500 4.3% $11.82 3/7/99 $17,985 $39,710
</TABLE>
- ---------------
(1) The indicated stock options are fully vested immediately upon grant. All
rights to exercise such options terminate 14 business days after termination
of employment, provided, however, that the optionee or his estate shall have
three months after termination of employment to exercise the options if the
cessation of employment is due to retirement on or after attaining the age
of sixty-five (65) years, disability, or death. The Company paid on January
5, 1995 a 10% stock dividend to shareholders of record on December 22, 1994.
Since the 1984 Plan contains antidilution provisions, the number of options
granted and the option prices were adjusted to reflect the stock dividend.
(2) Exercise price of $11.82, after adjustment for 10% stock dividend paid in
January 1995.
(3) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise of stock options immediately prior to the
expiration of their five-year term using 5% and 10% appreciation rates (as
specified by the SEC), compounded annually, and therefore are not intended
to forecast possible future appreciation, if any, of the price of Class A
Common Stock. Additionally, these values do not take into consideration the
provisions of the options providing for non-transferability or termination
of the options following termination of employment.
9
<PAGE> 12
In order to achieve the potential realizable values set forth in the 5% and
10% columns, the price per share of Class A Common Stock for the stock options
granted on March 8, 1994 would need to appreciate to approximately $15.09 and
$19.04, respectively, from the date of grant through the five-year option term.
On February 3, 1995, the last day of trading in fiscal 1995, the closing price
of the Class A Common Stock on the American Stock Exchange was $9.875 per share.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during fiscal year 1995
and unexercised options held at fiscal year-end.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT YEAR-END(#) FISCAL YEAR-END($)(A)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leonard Genovese......... -0- -0- 37,620 -0- 13,377 -0-
Allan Patrick............ 10,981 48,152 28,216 -0- 20,266 -0-
Herbert J. Kett.......... 7,613 33,383 19,562 -0- 14,050 -0-
Irwin Livon.............. -0- -0- 18,810 -0- 13,510 -0-
Jerome Stengel........... 7,321 32,103 18,810 -0- 13,510 -0-
</TABLE>
- ---------------
(a) Calculated based on the excess of the fair market value of Class A Common
Stock on February 3, 1995 ($9.875) over the option exercise price. All
awards made to Leonard Genovese from 1990 through 1992 were at an option
exercise price equal to 110% of the market price on the date of the grant.
THE GENOVESE RETIREMENT AND SAVINGS PLAN
The Company maintains a profit sharing and deferred retirement plan
pursuant to Section 401(k) of the Internal Revenue Code of 1986. All employees
participate after one year of service and attainment of age 21.
The Company may make discretionary contributions in an amount determined
annually by the Board of Directors. Company contributions are allocated to
eligible participants in proportion to their compensation. Participants may make
contributions to the Plan on a salary reduction basis, and the Company may make
matching contributions on behalf of each participant. A separate salary
reduction account and matching employer contribution account are maintained for
each participant. All contributions are paid to The Dreyfus Trust Company, as
Trustee, to hold, invest and reinvest the funds. All accounts are vested at
retirement, death or disability. Upon any other termination of employment,
matching and discretionary contributions vest 20% a year for the first five
years of service. Subject to certain restrictions and tax penalties,
participants may borrow from or make early withdrawals from their salary
reduction accounts.
RETIREMENT INCOME PLAN
The Company's Retirement Income Plan (the "Pension Plan") covers
approximately 830 participants. The Company, during fiscal year 1990, elected to
freeze the Pension Plan as of December 31, 1988. The adoption of this amendment
to the Pension Plan resulted in the freezing of maximum benefits available to
employees covered by the Pension Plan as of December 31, 1988. Employees covered
by the Pension Plan will continue to vest with the passage of time.
The Pension Plan provides 100% vesting after five years of service. Normal
retirement age is 65 and early retirement can be taken after age 55. A
participant's benefits under the Pension Plan are based upon a maximum of 50% of
his average earnings during the final five years of employment up to a maximum
of $30,000, less 75% of his primary Social Security benefits, for 30 years or
more of service. Benefits are reduced proportionately if the participant's
actual years of service are less than 30. As a result of the freeze of benefits
described above, these benefits were determined for each affected employee as if
he terminated employment on December 31, 1988.
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<PAGE> 13
The following named executive officers shall be entitled to receive the
following annual benefits upon retirement at age 65: Leonard Genovese, $4,991;
Herbert Kett, $5,172; Allan Patrick, $2,398; Jerome Stengel, $3,364; and Irwin
Livon, $0.00.
NON-QUALIFIED PENSION PLAN
In addition, five key officers of the Company (Leonard Genovese, Herbert J.
Kett, Allan Patrick, Jerome Stengel and Dominick Lettieri) participate in a
non-qualified pension plan. The plan provides benefits at retirement equal to
50% of a participant's base salary with a maximum benefit of $50,000 per year
for 10 years. This plan also provides life insurance on the individual officers,
payable to the officers in an amount equal to five years base salary up to a
maximum of $500,000.
EMPLOYEE STOCK OWNERSHIP PLAN
On April 6, 1976, the Board of Directors of the Company approved the
adoption of the ESOP for the benefit of all of its employees, including
officers, who meet certain eligibility requirements, based primarily on age,
length of service and number of hours worked. Under the ESOP, the Company may
make contributions to a trust fund in cash or property, including shares of
Class A Common Stock, in an amount to be determined annually by the Board of
Directors. The Trustees of the trust fund will be directed to invest any funds
received primarily in Class A Common Stock and to make distributions in the form
of Class A Common Stock to participants upon death, disability or retirement. In
the event employment of a participant is terminated prior to death, disability
or retirement, the number of shares of the ESOP he or she will be entitled to
receive as a distribution will depend, in general, upon his or her length of
service with the Company. A participant's share in the contribution for each
year is determined by the ratio of his or her compensation (exclusive of any
bonuses) to the aggregate compensation of all participants (exclusive of
bonuses).
For fiscal year 1995, the Board of Directors authorized a contribution of
10,000 shares of Class A Common Stock to the ESOP. On March 15, 1995, the ESOP
held 329,142 shares of Class A Common Stock.
OTHER REMUNERATION
During fiscal year 1995, the Company paid to Leonard Genovese and another
member of the Genovese family, as Trustees under deeds of trust for the benefit
of certain family members, an aggregate of $274,020 for facilities located in
Long Island City, New York, under the terms of a lease which expires on July 31,
2010, and provided during fiscal 1995 for the payment to the Trustees of an
annual base rental of $210,000, plus a percentage of annual gross sales
generated from the premises in excess of a specified amount, and for the payment
of certain real estate taxes and maintenance charges. The Company believes that
the lease, when entered into, was made on terms no less favorable to the Company
than could have been obtained from an unaffiliated person in a similar
transaction.
In the ordinary course of business, the Company purchased merchandise from
Gibson Greetings, Inc. which during fiscal year 1995 aggregated approximately
$600,000. Thomas M. Cooney, a director of the Company, is also a director of
Gibson Greetings, Inc. The Company believes that the purchases were made on a
basis no less favorable than could have been obtained from unaffiliated
suppliers in similar transactions.
CERTAIN TRANSACTIONS
Leonard Genovese, Chairman, Chief Executive Officer and President of the
Company, was indebted to the Company as of March 15, 1995 in the amount of
$73,000 for a personal loan. The loan is interest-free and payable on demand.
The largest aggregate amount of indebtedness owed by Mr. Genovese to the Company
since January 30, 1994 was $97,000.
11
<PAGE> 14
PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the cumulative
total shareholder return on the Company's Class A Common Stock against the
cumulative total return of the American Stock Exchange Market Value Index and a
composite peer group for the period of five years commencing February 1, 1990
and ending January 31, 1995.
COMPARISON OF CUMULATIVE TOTAL RETURN FOR THE
FIVE YEARS COMMENCING 2/1/90 AND ENDING 1/31/95
<TABLE>
<CAPTION>
AMERICAN
STOCK EXCHANGE
MEASUREMENT PERIOD GENOVESE DRUG MARKET VALUE COMPOSITE
(FISCAL YEAR COVERED) STORES, INC. INDEX PEER GROUP
<S> <C> <C> <C>
2/1/90 100 100 100
1/91 85 91 123
1/92 146 118 155
1/93 134 117 163
1/94 190 139 162
1/95 170 124 202
</TABLE>
The graph assumes that the value of the investment in the Class A Common
Stock and each index was $100 on February 1, 1990 and that all dividends were
reinvested.
12
<PAGE> 15
The peer group consists of the Company and the following drugstore chains:
Arbor Drugs, Inc., Big B, Inc., Drug Emporium, Inc., F&M Distributors, Inc.,
Fay's Incorporated, Longs Drug Stores Corp., Perry Drug Stores, Inc., Revco
D.S., Inc., Rite Aid Corp., and Walgreen Co.
CERTIFIED PUBLIC ACCOUNTANTS
The certified public accounting firm of Deloitte & Touche LLP was engaged
as independent auditors by the Board for fiscal year 1995. The Board, on the
recommendation of its Audit Committee, has retained Deloitte & Touche LLP to
provide accounting services for fiscal year 1996. Deloitte & Touche LLP is
expected to have representatives present at the 1995 Annual Meeting who will be
available to respond to shareholders' questions and, if they desire, will have
an opportunity to make any statement they consider appropriate.
PROPOSED AMENDMENTS
The Company's Board of Directors has unanimously approved, and proposes for
adoption by the stockholders, the following seven amendments to the Company's
Certificate of Incorporation and an amendment to the Company's 1987 Executive
Bonus & Stock Plan. A description of the specific amendments and a discussion of
the reasons why they are being proposed are set forth below.
Each proposed amendment will be voted on separately by the stockholders.
The amendment to the Certificate of Incorporation increasing the number of
authorized shares of Class A Common Stock requires the approval of a majority of
the outstanding Class A and Class B stock voting together as a single class as
well as a majority of the outstanding Class A stock voting as a separate class.
The other amendments to the Certificate of Incorporation require the approval of
a majority of the outstanding Class A and Class B stock voting together as a
single class. The amendment to the 1987 Plan requires the approval of a majority
of the total votes cast. Each proposed amendment to the Certificate of
Incorporation that is adopted by the stockholders will become effective upon the
filing and recordation of a Certificate of Amendment to the Certificate of
Incorporation as required by Delaware law. THE BOARD OF DIRECTORS BELIEVES THAT
THE PROPOSED AMENDMENTS ARE IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF EACH OF THE EIGHT PROPOSALS.
PROPOSAL 1
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF CLASS A COMMON STOCK
The Board of Directors has unanimously approved, and proposes that the
stockholders adopt, an amendment to Article Fourth of the Certificate of
Incorporation to increase the number of authorized shares of the Company's Class
A Common Stock from 12,000,000 shares to 20,000,000 shares. The additional
shares of Class A Common Stock for which authorization is sought would be
identical to the shares of Class A Common Stock now authorized, and the rights
and limitations of the Class A Common Stock would remain unchanged under the
proposed amendment. No change is being proposed to the number of authorized
shares of the Company's Class B Common Stock. The text of the proposed amendment
appears in Exhibit A.
At the close of business on April 24, 1995, shares of Class A
Common Stock were issued and outstanding and shares of Class A
Common Stock were reserved for issuance pursuant to the Company's incentive and
stock option plans, leaving shares of Class A Common Stock unissued
and unreserved.
The Board of Directors believes that it is desirable that the Company have
the flexibility to issue additional shares of Class A Common Stock in connection
with possible future actions, such as stock dividends, stock splits, financings,
employee benefit programs, corporate mergers, acquisitions of property or for
other corporate purposes. The Board of Directors will have sole discretion to
determine whether, when and on what terms to issue the additional shares of
Class A Common Stock without further action by the stockholders unless required
by the Certificate of Incorporation or By-Laws, by applicable law, or by the
rules
13
<PAGE> 16
of any national securities exchange on which shares of Class A Common Stock are
then listed. The Board of Directors has no present plan to issue any of the
additional shares of Class A Common Stock proposed to be authorized.
The availability of additional shares of Class A Common Stock for issuance
could potentially have an anti-takeover effect by making it more difficult or
discouraging an attempt to obtain control of the Company. For example, the
issuance of shares of Class A Common Stock in a public or private sale, merger
or similar transaction would increase the number of outstanding shares, thereby
possibly diluting the interest of a party attempting to obtain control of the
Company. The additional shares also could be used to make it more difficult to
obtain the consent of stockholders to a merger or similar transaction even if it
appears to be desirable to the holders of a majority of the voting power of the
outstanding common stock. The additional shares of Class A Common Stock have not
been proposed for any anti-takeover purpose and the Board of Directors is not
aware of any pending or threatened efforts to obtain control of the Company.
Because the Company's stockholders do not have preemptive rights, all or
any of the authorized but unissued shares of Class A Common Stock may be issued
without first offering such shares to the holders of the Class A Common Stock or
to any other stockholders of the Company. The issuance of Class A Common Stock
otherwise than on a pro-rata basis to all current stockholders would have a
dilutive effect on earnings per share and on the equity and voting power of
current stockholders.
PROPOSAL 2
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO PERMIT THE COMPANY TO ENGAGE IN ALL ACTIVITIES
PERMITTED UNDER DELAWARE LAW
The Board of Directors has unanimously approved, and proposes that the
stockholders adopt, an amended and restated Article Third of the Certificate of
Incorporation to allow the Company to engage in any lawful act or activity for
which corporations may be organized under the Delaware General Corporation Law.
The text of the proposed amendment appears in Exhibit A.
Section 102(a)(3) of the Delaware General Corporation Law provides that the
certificate of incorporation of a Delaware corporation must set forth the
"nature of the business or purposes to be conducted or promoted" by the
corporation and shall be sufficient if it states, "either alone or with other
businesses or purposes, that the purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware."
The current Article Third of the Certificate of Incorporation has a lengthy
and detailed description of the Company's nature and purpose that has remained
essentially unchanged since the Company's original incorporation in New York in
1938, when such a detailed description was customary. The proposed amendment
will simplify Article Third in accordance with modern corporate practice to make
clear that the Company can engage in any lawful act or activity for which
corporations may be formed under the Delaware General Corporation Law. The
modern approach removes any doubt or technical concern as to the permitted scope
of the Company present or possible future activities. The Board of Directors has
no present plan to change the nature of the Company's business or purposes which
would not be permitted by the current Article Third.
PROPOSAL 3
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO AUTHORIZE THE DIRECTORS TO
ADOPT, AMEND OR REPEAL BY-LAWS
The Board of Directors has unanimously approved, and proposes that the
stockholders adopt, a new Article Eleventh to the Certificate of Incorporation
that would confer on the Board of Directors the power to adopt, amend or repeal
the By-Laws without stockholder action. The text of the proposed amendment
appears in Exhibit A.
14
<PAGE> 17
Section 109 of the Delaware General Corporation Law permits any Delaware
corporation, in its certificate of incorporation, to confer the power on its
board of directors to adopt, amend or repeal its by-laws. Absent such a
provision, only the stockholders of a Delaware corporation have the power to
adopt, amend or repeal its by-laws.
The Certificate of Incorporation currently does not confer such power on
the Board of Directors and therefore currently only the stockholders of the
Company have the power to adopt, amend or repeal the By-Laws. Granting such
power to the Board of Directors does not divest or limit the stockholders' power
to adopt, amend or repeal the By-Laws.
The Board of Directors of the Company believes that it should be in a
position to adopt, amend or repeal the By-Laws whenever such action becomes
desirable for the benefit of the Company and its stockholders, without the
necessity and expense of obtaining stockholder approval at an annual or special
meeting. The Board has therefore deemed it advisable and in the best interests
of the Company and its stockholders that the proposed amendment be approved by
the stockholders.
The proposed amendment could potentially have an anti-takeover effect by
allowing the Board of Directors to make a change in control of the Company more
difficult through the amendment of certain provisions of the By-Laws. The
amendment has not been proposed for any anti-takeover purpose and the Board of
Directors is not aware of any pending or threatened efforts to obtain control of
the Company. Having such power would also allow the Board to alter, amend or
repeal By-Laws adopted by the stockholders of the Company.
The Board of Directors has no present plan to amend the By-Laws if the
proposed amendment is approved.
PROPOSAL 4
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
REGARDING DIVIDENDS PAYABLE IN RESPECT
OF CLASS B COMMON STOCK
The Board of Directors has unanimously approved, and proposes that the
stockholders adopt, a new paragraph to Article Fourth of the Certificate of
Incorporation providing that dividends in respect of the Company's Class B
Common Stock may be paid in shares of Class A Common Stock, shares of Class B
Common Stock or any other cash, property or securities of the Company in
accordance with applicable law. The text of the proposed amendment appears in
Exhibit A.
The purpose of the proposed amendment is to clarify a possible ambiguity in
the current text of Article Fourth, subparagraph (c)(i) of the Certificate of
Incorporation which, if read narrowly and in conjunction with the Company's past
practice, might imply that stock dividends payable in respect of shares of Class
B Common Stock may be paid only in shares of Class B Common Stock. The Board of
Directors believes that the intent of the current provision is that dividends
payable in respect of shares of Class B Common Stock may be paid in shares of
Class B Common Stock, but also may be payable in shares of Class A Common Stock
or any other cash, property or securities of the Company in accordance with
applicable law.
Historically, the Company has paid stock dividends in respect of shares of
Class B Common Stock only in shares of Class B Common Stock and stock dividends
in respect of shares of Class A Common Stock only in shares of Class A Common
Stock. The Board of Directors does not believe that this is or should be the
only permissible method of paying stock dividends. The Board of Directors would
like to confirm that it has the flexibility to pay any future stock dividends in
respect of shares of Class B Common Stock in shares of Class A Common Stock.
Shares of Class B Common Stock are entitled to ten votes per share on each
matter submitted to a vote of stockholders; shares of Class A Common Stock are
entitled to one vote per share. Under the Company's current stock dividend
policy, dividends payable in respect of shares of Class A Common Stock and Class
B Common Stock are paid in like kind. As a result of the current stock dividend
policy, the declaration and payment of stock dividends does not dilute the pro
rata voting power of the holders of the Class A Common Stock or the holders of
the Class B Common Stock.
15
<PAGE> 18
If stock dividends were paid solely in shares of Class A Common Stock to
holders of both Class A Common Stock and Class B Common Stock, the pro rata
voting power of the holders of Class B Common Stock as a class would be diluted
and the pro rata voting power of the holders of Class A Common Stock as a class
would increase. The degree of the change would depend upon the size of each
stock dividend and the cumulative effect thereof. The Board does not currently
plan to pay future stock dividends, if any, in shares of Class A Common Stock to
holders of Class B Common Stock.
In order to eliminate any potential ambiguity and in order to expressly
authorize the Board of Directors to pay future dividends in respect of Class B
Common Stock in shares of Class A Common Stock, shares of Class B Common Stock
or any other cash, property or securities of the Company, the Board of Directors
has deemed it advisable and in the best interests of the Company and its
stockholders that the proposed amendment be adopted and that Article Fourth of
the Certificate of Incorporation be amended as described above.
PROPOSAL 5
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO LIMIT THE LIABILITY OF DIRECTORS
IN ACCORDANCE WITH DELAWARE LAW
The Board of Directors has unanimously approved, and proposes that the
stockholders adopt, a new Article Twelfth to the Certificate of Incorporation
that would limit the personal liability of the Company's directors to the
Company or its stockholders for monetary damages for breach of their fiduciary
duty to the extent permitted by Delaware law. The text of the proposed amendment
appears in Exhibit A.
Section 102(b)(7) of the Delaware General Corporation Law provides that a
Delaware corporation may include in its certificate of incorporation a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision cannot eliminate or limit a director's
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law concerning an unlawful
payment of a dividend or unlawful stock purchase or redemption or (iv) for any
transaction from which the director derived an improper personal benefit.
The proposed amendment is consistent with Section 102(b)(7) of the Delaware
General Corporation Law, which is designed, among other things, to reduce the
personal risks inherent in serving as a director of a corporation. The proposed
amendment would not eliminate the directors' duty of care, but it would
eliminate the financial exposure of directors of the Company for breaches of
such duty. Directors would remain liable to the Company and its stockholders for
the acts that are specifically excluded from the scope of the provision as
listed above. The proposed amendment would not be retroactive and therefore
would not limit the liability of directors for any act or omission occurring
prior to the adoption of the proposed amendment.
Although the Company has had no difficulty in attracting and retaining
directors, the Board of Directors believes that the Company should take all
reasonable steps to ensure that it will continue to be able to attract and
retain qualified persons for such positions and that directors will not be
inhibited in their decision-making because of undue concerns about personal
liability.
If the proposed amendment is adopted, a stockholder will be able to
prosecute an action against a director for monetary damages only if the
stockholder alleges a breach of the duty of loyalty, a failure to act in good
faith, a knowing violation of law or a breach of duty resulting in receipt of an
improper personal benefit. A stockholder will not be able to prosecute such an
action (including an action relating to an attempted takeover of the Company)
based on "negligence" or "gross negligence" of a director or in the performance
of the director's duties. However, the proposed amendment will not limit or
eliminate the right of the Company or any stockholder to seek an injunction,
rescission or other form of non-monetary relief in the event of a breach of the
duty of care by a director (although such relief may not be an effective remedy
in certain circumstances). In addition, the proposed amendment applies only to
claims against a director arising out of service in such capacity and, depending
upon judicial interpretation, it may not be effective to relieve a
16
<PAGE> 19
director from liability under the laws of jurisdictions other than Delaware,
such as liabilities imposed under the federal securities laws. The amendment
will have no effect on tort or other claims by third parties against directors.
The proposed amendment will not preclude indemnification of a director by the
Company for any liability which has not been eliminated by the amendment as
permitted by law. Proposal 6 below describes existing and proposed
indemnification provisions in the Certificate of Incorporation.
The Company has not received notice of any pending or threatened litigation
to which any current director is a party or threatened to be made a party in
such capacity to which the protections and benefits under the proposed amendment
might apply. The proposed amendment is not being proposed in response to any
specific resignation, threat of resignation or refusal to serve by any director
or potential director of the Company.
The Board of Directors believes that the diligence exercised by directors
stems primarily from their fiduciary duty and desire to act in the best
interests of the Company and its stockholders and not from fear of monetary
damages. Consequently, they believe that the level of care exercised by them in
the performance of their duties would not be lessened by the adoption of the
proposed amendment. The Board of Directors recognizes that it and future members
of the Board of Directors could personally benefit from approval of the proposed
amendment, but for the reasons stated above, the Board of Directors believes
that the proposed amendment is in the best interests of the Company and its
stockholders.
PROPOSAL 6
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO INDEMNIFY DIRECTORS, OFFICERS AND CERTAIN OTHERS
TO THE FULL EXTENT PROVIDED BY DELAWARE LAW
The Board of Directors has unanimously approved, and proposes that the
stockholders adopt, an amended and restated Article Ninth of the Certificate of
Incorporation to provide that the directors, officers, employees and agents of
the Company shall be indemnified to the full extent provided by Delaware law,
including the mandatory advancement of expenses to the indemnified party. The
text of the proposed amendment appears in Exhibit A.
In performing their duties, directors of a Delaware corporation are
obligated as fiduciaries to exercise their business judgment and act in what
they reasonably determine in good faith, after appropriate consideration, to be
in the best interests of the corporation and its stockholders. Decisions made on
that basis are protected by the "business judgment rule," which is designed to
protect directors from personal liability if their business decisions are
subsequently challenged. However, the expense of defending lawsuits, including
unwarranted litigation, and the inevitable uncertainty with respect to the
outcome of applying the business judgment rule to particular facts and
circumstances means that, as a practical matter, directors and officers of
corporations rely on indemnification from corporations as a means of providing
financial resources in the event of such expenses or unforeseen liability. The
Delaware legislature has recognized that adequate indemnification provisions are
often a condition of an individual's willingness to serve as a director or an
officer of a corporation and therefore enacted Section 145 of the Delaware
General Corporation Law to allow Delaware corporations to provide
indemnification for their directors, officers, employees and agents.
Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may include in its certificate of incorporation a provision
providing for indemnification of any of its directors, officers, employees or
agents who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (a "Proceeding"),
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director, officer, employee or agent of the
corporation. For a Proceeding other than an action by or in the right of the
corporation, Section 145 currently provides for indemnification of expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
Proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation and its stockholders and, with respect to a criminal Proceeding, had
no reasonable cause to believe their conduct was unlawful. For a Proceeding by
or in the right of the corporation, Section 145 currently
17
<PAGE> 20
provides for indemnification of expenses (including attorneys' fees) incurred by
such person in connection with such Proceeding even if not successful on the
merits if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation and
its stockholders, provided that no such indemnification may be made on behalf of
a person adjudged liable to the corporation unless a court determines that,
despite such adjudication but in view of all the circumstances, such person is
entitled to indemnification. Notwithstanding whether a Delaware corporation
chooses to adopt these voluntary indemnification provisions, all Delaware
corporations are required to indemnify such persons for expenses (including
attorneys' fees) incurred by such persons in the successful defense, on the
merits or otherwise, of any such Proceeding. Section 145 provides that a
corporation may include a provision that allows for the payment by the
corporation of expenses of the indemnified party in advance of the final
disposition of such Proceeding, and also that a corporation may enter into one
or more agreements with any person which provide for indemnification greater or
different than that provided by Delaware law.
The proposed amendment provides that directors and officers of the Company
would be indemnified to the full extent permitted by Delaware General
Corporation Law as the same currently exists or may hereafter be amended or by
any other applicable laws as then in effect. The proposed amendment also
provides that the Company must pay expenses of the indemnified party in advance
of the final disposition of any such Proceeding, and that the Company may enter
into one or more agreements with any person which provide for indemnification
greater or different than that provided by Delaware General Corporation Law.
The proposed amendment is an updating and clarification of the current
Article Ninth of the Certificate of Incorporation, which provides for
indemnification "to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law." The proposed amendment would replace the reference to
Section 145 of the Delaware General Corporation Law with a general reference to
Delaware General Corporation Law and any other applicable laws. The general
reference in the proposed amendment would potentially avoid the necessity of a
stockholder vote to amend the Certificate of Incorporation each time
indemnification provisions of Section 145 or any other section of the Delaware
General Corporation Law or any other applicable laws may subsequently be enacted
or amended.
The principal difference between the proposed amendment and the current
Article Ninth is that the proposed amendment provides for mandatory payment of
expenses in advance of the final disposition of a Proceeding rather than making
such payments permissive as is currently the case with Article Ninth. The
advancement of expenses would be conditioned upon the Company's receipt of an
undertaking to repay such an advance if it is ultimately determined that such
party is not entitled to indemnity. The language in the proposed amendment
clarifying that the Company may enter into agreements with any person which
provide for indemnification greater or different than that provided by Delaware
General Corporation Law is not included in the current Article Ninth but is
specifically provided for in Section 145 of the Delaware General Corporation
Law. The ability to enter into agreements which provide for indemnification
greater or different than that provided by Delaware law gives the Board
additional flexibility in attracting and retaining qualified individuals to
serve as directors and officers for the Company.
The Board of Directors believes that the proposed amendment is desirable so
that the Company can continue to attract and retain qualified individuals to
serve as its directors and officers in light of the present difficult
environment in which such persons must serve and, in conjunction with the
proposed Article Twelfth regarding the limitation of liability of directors,
will serve such purpose. In recent years, Proceedings seeking to impose
liability on, or involving as witnesses, directors and officers of publicly held
corporations have become the subject of much public discussion. Such Proceedings
are typically very expensive whatever their eventual outcome. Even in
Proceedings in which a director or officer is not named as a defendant, such
individual may incur substantial expenses or attorneys' fees if he or she is
called as a witness or becomes involved in the Proceeding in any other way. As a
result, an individual may conclude that potential exposure to the costs and
risks of Proceedings in which he or she may become involved exceeds any benefit
to him or her from serving as a director or officer of a publicly held
corporation.
The Company has not received notice of any pending, threatened or completed
Proceeding against an officer, director, employee or agent of the Company to
which the protections and benefits under the proposed
18
<PAGE> 21
amendment might apply. The proposed amendment is not being proposed in response
to any specific resignation, threat of resignation or refusal to serve by any
director or potential director.
Article Ninth of the Certificate of Incorporation, as amended and restated
by the proposed amendment, would be retroactive and would apply to acts and
omissions that occurred prior to its adoption.
The Board of Directors has deemed it advisable and in the best interests of
the Company and its stockholders that the Certificate of Incorporation be
amended to provide for the indemnification of directors, officers, employees and
agents of the Company in accordance with the proposed amendment. The Board
recognizes that it and future members of the Board could personally benefit from
approval of the proposed amendment, but for the reasons stated above, the Board
believes that the proposed amendment is in the best interests of the Company and
its stockholders.
PROPOSAL 7
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO MAKE CERTAIN TECHNICAL AMENDMENTS
The Board of Directors has unanimously approved, and proposes that the
stockholders adopt, certain technical amendments to the Certificate of
Incorporation to update it to the current state of Delaware law and to delete
provisions that are unnecessary because they are duplicative of provisions that
automatically apply to the Company under Delaware law. The four proposed
technical amendments relate to (i) a change in the Delaware registered address
of the Company, (ii) the deletion of a provision regarding certain pre-1986
option grants and awards, (iii) the deletion of a provision denying stockholders
preemptive rights, which is unnecessary under the Delaware law, and (iv) the
deletion of a provision regarding the duration of the Company, which is
unnecessary under Delaware law. The text or a description of these proposed
amendments appears in Exhibit A.
The first proposed technical amendment is to update the registered address
of the Company in Article Second of the Certificate of Incorporation, which is
appropriate due to a change in the address of the Company's registered agent for
this purpose.
The second proposed technical amendment is to delete the provision in
Article Fourth, subparagraph (c)(iv) of the Certificate of Incorporation which
refers to shares of Class B Common Stock issuable pursuant to pre-1986 option
grants and plan awards. The provision is not necessary because there were never
any shares of Class B Common Stock so issuable.
The third proposed technical amendment is to delete Article Fifth of the
Certificate of Incorporation, which denies stockholders of the Company
preemptive rights. It is customary that publicly held companies do not provide
preemptive rights. The current provision is not necessary under the Delaware
General Corporation Law, which provides in Section 102(b)(4) that stockholders
of Delaware corporations do not have preemptive rights unless such rights are
expressly granted to stockholders in the certificate of incorporation of the
corporation. The Company's stockholders do not currently have preemptive rights
and therefore this amendment will not increase or decrease stockholder rights.
The fourth proposed technical amendment is to delete Article Seventh of the
Certificate of Incorporation regarding the perpetual duration of the Company.
The current provision is not necessary under the Delaware General Corporation
Law, which provides in Section 102(b)(5) that all Delaware corporations have
perpetual existence unless otherwise provided in their certificate of
incorporation.
PROPOSAL 8
PROPOSAL TO AMEND THE
1987 EXECUTIVE BONUS & STOCK PLAN
The Compensation Committee of the Board of Directors has unanimously
approved, and proposes that the stockholders adopt, an amendment to the 1987
Plan pursuant to which the number of shares of Class A Common Stock that can be
awarded under the 1987 Plan would be increased to 400,000 shares from 150,000
19
<PAGE> 22
shares and the term of the 1987 Plan would be extended from 1997 to 2007. The
text of the proposed amendment appears in Exhibit B.
The proposed amendment would make two changes to the 1987 Plan. The first
change would increase the number of shares of Class A Common Stock that can be
awarded under the 1987 Plan. The 1987 Plan currently provides that 150,000
shares of Class A Common Stock (before adjustment in accordance with the
anti-dilution provisions of the 1987 Plan) are available for awards under the
1987 Plan. At the present time, approximately 5,000 shares of Class A Common
Stock remain available for awards even though the 1987 Plan will continue in
existence until January 20, 1997. Such an amount of shares would be insufficient
to make awards of bonuses to the Company's executive officers with respect to
fiscal year 1996 if the same or a greater number of shares were awarded as were
awarded with respect to fiscal year 1995. The proposed amendment would authorize
an additional 250,000 shares of Class A Common Stock to be available for awards
under the 1987 Plan.
The second change would extend the termination date of the 1987 Plan from
January 20, 1997 to January 20, 2007.
The foregoing changes would be effective as of March 7, 1995.
In all other respects, the current terms and conditions of the 1987 Plan
would remain in effect, as described below:
Purpose. The purpose of the 1987 Plan is to encourage executives to
improve the long-term growth and profitability of the Company and to develop a
long-term commitment to the Company by giving such executives a proprietary
interest in the Company.
Adoption. The 1987 Plan was approved by the stockholders of the Company on
June 1, 1987 to be effective as of January 20, 1987, was amended by vote of the
stockholders on June 14, 1994, and is currently scheduled to terminate on
January 20, 1997.
Persons Eligible. Such officers or other key employees of the Company as
the Compensation Committee in its sole discretion may select are eligible to
receive cash and stock awards under the 1987 Plan. There are 12 executive
officers of the Company ("executives") currently participating in the 1987 Plan.
Administration of the 1987 Plan. The 1987 Plan authorizes the Compensation
Committee, which administers the 1987 Plan and grants awards thereunder, to
construe and interpret the 1987 Plan, to define the terms used therein, to
prescribe, amend and rescind rules and regulations relating to the 1987 Plan,
and to make all other determinations necessary or advisable for the
administration of the 1987 Plan.
Awards. The 1987 Plan currently provides for the award to executives of
cash bonuses and stock bonuses up to an aggregate of 150,000 shares of Class A
Common Stock (before adjustment in accordance with the anti-dilution provisions
of the 1987 Plan). The Compensation Committee or the Board of Directors prior to
the close of each fiscal year must approve for the succeeding fiscal year a
targeted performance level for each executive participating in the 1987 Plan as
presented to it by Company management. The Compensation Committee or the Board
of Directors has, in its sole discretion, the right to accept, reject, modify or
alter any targeted performance level presented to it by Company management. The
Compensation Committee determines the amount of awards granted to each executive
under the 1987 Plan based upon the actual performance of the executive compared
to the executive's targeted performance level.
Within a reasonable time after an award date, the Company pays an executive
in cash 50% of the amount awarded to such executive. The balance of the amount
awarded to such executive is paid in shares of Class A Common Stock, which
number is determined by dividing (i) the value of 50% of the total award by (ii)
the closing market price of one share of Class A Common Stock on the first
business day of the fiscal year with respect to which the award is made. Twenty
percent of the total number of shares awarded to such executive is paid within a
reasonable time after the award date. The balance of the shares awarded is paid
to such executive in the subsequent four fiscal years at a rate of 20% per year.
In the event of the death, permanent disability or retirement of an
executive, the unpaid balance due to such executive under the 1987 Plan
immediately vests and is due to such executive or his beneficiary. In the event
of a change in control of the Company, being defined as a change of 25% or more
of the voting power of
20
<PAGE> 23
the Company's common stock, the Compensation Committee may in its discretion
accelerate the pay-out dates with respect to the shares of Class A Common Stock
under the 1987 Plan, and authorize the immediate payment of all shares of Class
A Common Stock due to an executive under the 1987 Plan.
Forfeitures. Upon termination of employment with the Company due to any
reason other than death, disability or retirement, all shares of Class A Common
Stock granted but not received under the 1987 Plan are forfeited by such
terminated executive. Any stock so forfeited reverts to the 1987 Plan and
becomes available for further awards under the 1987 Plan.
Change in Capitalization. In the event of any stock dividend, stock split,
reclassification or other such change in the common stock of the Company, the
Compensation Committee may make such adjustments as it deems equitable to
accomplish the purpose of the 1987 Plan. The Compensation Committee's
determination as to any such adjustment is final and conclusive.
Tax Withholding. If the Company is required to withhold any amounts under
any federal, state or local tax rules or regulations by reason of payments to an
executive, the Company is entitled to deduct and withhold such amounts from any
payments to be made to such executive. If any amount available to the Company
for withholding in connection with any payment is insufficient, it will be a
condition to the payment that such executive make arrangements satisfactory to
the Company for the payment of the balance of any taxes required to be withheld.
At the discretion of the Compensation Committee, such arrangements may include
relinquishment of a portion of the payment. The Company and an executive may
also make similar arrangements regarding the payment of taxes which are not
required to be withheld.
Amendments by the Board of Directors or the Compensation
Committee. Subject to the provisions of the following paragraph, the Board of
Directors or the Compensation Committee has the right to extend the length of
the 1987 Plan, amend or modify the 1987 Plan from time to time, or terminate the
1987 Plan entirely without stockholder approval. Notwithstanding the provisions
of the 1987 Plan, the Company intends to seek shareholder approval to extend the
termination date of the 1987 Plan.
Amendments Requiring Stockholder Approval. Notwithstanding the provisions
of the preceding paragraph, any amendment to the 1987 Plan which changes the
number of shares of Class A Common Stock available under the 1987 Plan, or
changes the ratio of cash awards to stock awards as set forth in the section
entitled "Awards" above, will not be effective unless approved by a vote of the
majority of stockholders entitled to vote thereon.
Plan Benefits. Set forth in the table below are the amounts of cash and
stock bonuses that were granted under the 1987 Plan for the Company's last
completed fiscal year to (i) each of the named executive officers and (ii) all
current executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT OF STOCK
BONUSES
AMOUNT OF CASH AWARDED FOR
BONUSES AWARDED LAST FISCAL
FOR LAST FISCAL YEAR
NAME AND POSITION YEAR ($) (IN SHARES)
- ------------------------------------------------------------ --------------- ---------------
<S> <C> <C>
Leonard Genovese............................................ $ 105,000 10,264
Chairman, President and Chief Executive Officer
Allan Patrick............................................... $ 53,750 5,254
Executive Vice President
Herbert J. Kett............................................. $ 30,400 2,972
Vice Chairman
Irwin Livon................................................. $ 26,980 2,637
Vice President
Jerome Stengel.............................................. $ 25,200 2,463
Vice President and Treasurer
All executive officers as a group (12 persons).............. $ 378,490 36,997
</TABLE>
21
<PAGE> 24
The amount of cash and stock bonuses that will be granted under the 1987
Plan to the above-named individuals and group in the future is not determinable
at this time.
The Compensation Committee believes that the changes made to the 1987 Plan
by the proposed amendment will further the purpose of the 1987 Plan and are in
the best interests of the Company and its stockholders.
OTHER MATTERS RELATING TO THE ANNUAL MEETING
As of the date of this Proxy Statement, the Board knows of no business
other than that described above to be presented for action at the 1995 Annual
Meeting, but it is intended that all proxies will be exercised in accordance
with the best judgment of their holders upon any other matters and/or proposals
that may properly come before the meeting of the assembled shareholders, or at
any adjournment thereof, in accordance with the direction of the persons named
therein.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any proposal which a holder of Common Stock intends to present at the 1996
Annual Meeting of Shareholders must be received by the Secretary of the Company,
at 80 Marcus Drive, Melville, New York 11747, no later than the close of
business on January 4, 1996. Reference is made to Rule 14a-8 under the Exchange
Act for information concerning the content and form of such proposal and the
manner in which such proposal must be made.
ADDITIONAL INFORMATION
The Company's Annual Report, including certain financial statements, is
being mailed concurrently with the Notice and Proxy Statement to all persons who
were shareholders of record on April 24, 1995, which is the record date for
voting purposes. The Annual Report does not constitute a part of the proxy
soliciting material.
Upon the written request of any shareholder, the Company will provide,
without charge, a copy of the Company's Annual Report on Form 10-K for the
fiscal year ended February 3, 1995. Written requests for such report should be
directed to the Secretary of the Company, 80 Marcus Drive, Melville, New York
11747.
By Order of the Board of Directors,
DONALD W. GROSS
Vice President & Secretary
May 3, 1995.
22
<PAGE> 25
EXHIBIT A
PROPOSAL 1
If Proposal 1 is adopted by the stockholders, the introduction to and
subparagraph (a) of Article Fourth of the Certificate of Incorporation would be
amended and restated to read as follows:
FOURTH: The Capital Stock of the corporation shall consist of 32,000,000
shares, par value $1.00 per share, all of which shall be known as Common Stock.
The Common Stock shall be divided into two classes known as Class A Common Stock
and Class B Common Stock.
(a) Class A Common Stock shall consist of 20,000,000 shares, par value
$1.00 per share. Every stockholder of record of Class A Common Stock shall be
entitled to one vote per share in person or by proxy on each matter submitted to
a vote of the stockholders for each share of the Class A Common Stock held by
such holder as of the record date of such meeting.
PROPOSAL 2
If Proposal 2 is adopted by the stockholders, Article Third of the
Certificate of Incorporation would be amended and restated to read in its
entirety as follows:
THIRD: The purpose for which the corporation is formed is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
PROPOSAL 3
If Proposal 3 is adopted by the stockholders, a new Article Eleventh would
be added to the Certificate of Incorporation, which Article would read in its
entirety as follows:
ELEVENTH: In furtherance and not in limitation of the rights, powers,
privileges, and discretionary authority granted or conferred by the General
Corporation Law of the State of Delaware or other statutes or laws of the State
of Delaware, the Board of Directors is expressly authorized to adopt, amend or
repeal the by-laws of the corporation, without any action on the part of the
stockholders of the corporation, but the stockholders may make additional
by-laws and may alter, amend or repeal any by-law whether adopted by them or
otherwise.
PROPOSAL 4
If Proposal 4 is adopted by the stockholders, the following paragraph would
be added to the end of subparagraph (c) of Article Fourth of the Certificate of
Incorporation:
For the purposes of subsection (i) of this subparagraph (c), dividends in
respect of the Class B Common Stock may be paid in shares of Class A Common
Stock, shares of Class B Common Stock or any other cash, property or other
securities of the corporation in accordance with applicable law.
PROPOSAL 5
If Proposal 5 is adopted by the stockholders, a new Article Twelfth would
be added to the Certificate of Incorporation, which Article would read in its
entirety as follows:
TWELFTH: To the full extent permitted by the General Corporation Law of
the State of Delaware or any other applicable laws presently or hereafter in
effect, no director of the corporation shall be personally liable to the
corporation or its stockholders for or with respect to any acts or omissions in
the performance of his or her duties as a director of the corporation. Any
repeal or modification of this Article shall not adversely affect any right or
protection of a director of the corporation existing immediately prior to such
repeal or modification.
A-1
<PAGE> 26
PROPOSAL 6
If Proposal 6 is adopted by the stockholders, Article Ninth of the
Certificate of Incorporation would be amended and restated to read in its
entirety as follows:
NINTH: Each person who is or was or has agreed to become a director or
officer of the corporation, or each such person who is or was serving or who had
agreed to serve at the request of the Board of Directors or an officer of the
corporation as an employee or agent of the corporation or as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executors, administrators or
estate of such person), shall be indemnified by the corporation to the full
extent permitted by the General Corporation Law of the State of Delaware or any
other applicable laws as presently or hereafter in effect. The corporation will
advance expenses for any director, officer, employee or agent's defense prior to
a final disposition of a claim provided such party executes an undertaking to
repay advances from the corporation if it is ultimately determined that such
party is not entitled to indemnity. Without limiting the generality or the
effect of the foregoing, the Corporation may enter into one or more agreements
with any person which provide for indemnification greater or different than that
provided in this Article. Any repeal or modification of this Article shall not
adversely affect any right or protection existing hereunder immediately prior to
such repeal or modification.
PROPOSAL 7
If Proposal 7 is adopted by the stockholders, the following changes would
be made to the Certificate of Incorporation:
(i) Article Second of the Certificate of Incorporation would be amended and
restated to read in its entirety as follows:
SECOND: The address, including street, number, city and county, of the
registered office of the corporation in the State of Delaware is 32 Loockerman
Square, Suite L-100, Dover, Delaware 19904, and the name of the registered agent
of the corporation in the State of Delaware at such address is P-H Corporation
Systems, Inc.
(ii) Subparagraph (c)(iv) of Article Fourth of the Certificate of
Incorporation, which refers to shares of Class B Common Stock issuable pursuant
to pre-1986 option grants and plan awards, would be deleted in its entirety.
(iii) Article Fifth of the Certificate of Incorporation, which denies
preemptive rights to stockholders of the Company, would be deleted in its
entirety, and the remaining Articles of the Certificate of Incorporation would
be renumbered accordingly.
(iv) Article Seventh of the Certificate of Incorporation of the Company,
regarding the duration of the Company, would be deleted in its entirety, and the
remaining Articles of the Certificate of Incorporation would be renumbered
accordingly.
A-2
<PAGE> 27
EXHIBIT B
GENOVESE DRUG STORES, INC.
1987 EXECUTIVE BONUS & STOCK PLAN
AMENDMENT NO. 2
Pursuant to Section 11 of the Genovese Drug Stores, Inc. 1987 Executive
Bonus & Stock Plan (the "1987 Plan"), the 1987 Plan is hereby amended as
follows:
1. Section 5 of the 1987 Plan is deleted in its entirety and replaced
with the following new section:
"Section 5. SHARES AVAILABLE. The Committee may, but shall not be
required to, grant in accordance with the Plan not more than 400,000
shares, which may be either treasury shares or authorized but unissued
shares of Class A Common Stock."
2. Section 6 of the 1987 Plan is deleted in its entirety and replaced
with the following new section:
"Section 6. TIME FOR GRANTING AWARDS. Awards may be granted by the
Committee under this Plan up to and including January 20, 2007."
3. The foregoing amendments shall be effective on March 7, 1995,
subject to the approval of the amendments by the shareholders of Genovese
Drug Stores, Inc.
B-1
<PAGE> 28
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS OF GENOVESE DRUG STORES, INC.
The undersigned shareholder of Genovese Drug Stores, Inc. does hereby
nominate and appoint Leonard Genovese and Donald W. Gross, or either of
them, as true and lawful attorneys and proxies of the undersigned with
power of substitution, to vote as designated below all shares of Common
Stock of said Company which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of said Company at 80 Marcus Drive,
Melville, New York 11747 on June 12, 1995 at 11:00 A.M., local time, or at
any adjournment or adjournments thereof to the same extent with all powers
the undersigned would possess if personally present and voting at said
meeting or adjournments thereof.
ELECTION OF DIRECTORS
CLASS III Directors elected until the 1998 Annual Meeting:
<TABLE>
<S> <C> <C>
Abraham Allen / / FOR / / WITHHOLD AUTHORITY
Thomas M. Cooney / / FOR / / WITHHOLD AUTHORITY
Leonard Genovese / / FOR / / WITHHOLD AUTHORITY
</TABLE>
PROPOSED AMENDMENTS
1. Amend Certificate of Incorporation to increase number of authorized
shares of Class A Common Stock from 12,000,000 to 20,000,000.
/ / FOR / / AGAINST / / ABSTAIN
2. Amend purposes clause of Certificate of Incorporation to permit the
Company to engage in all activities permitted under Delaware law.
/ / FOR / / AGAINST / / ABSTAIN
3. Amend Certificate of Incorporation to authorize the Board of Directors
to adopt, amend or repeal By-Laws without shareholder action.
/ / FOR / / AGAINST / / ABSTAIN
4. Amend Certificate of Incorporation to clarify that dividends payable in
respect of Class B Common Stock may be payable in shares of Class A
Common Stock, shares of Class B Common Stock or any other cash,
property or securities of the Company.
/ / FOR / / AGAINST / / ABSTAIN
5. Amend Certificate of Incorporation to limit the liability of directors
as permitted by Delaware law.
/ / FOR / / AGAINST / / ABSTAIN
6. Amend Certificate of Incorporation to provide for the full
indemnification of directors, officers, employees and agents of the
Company permitted by Delaware law.
/ / FOR / / AGAINST / / ABSTAIN
(continued on other side)
<PAGE> 29
7. Make certain technical amendments to the Certificate of Incorporation.
/ / FOR / / AGAINST / / ABSTAIN
8. Amend 1987 Plan to increase number of authorized shares by 250,000
shares and extend termination date to 2007.
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED IN THE SPACE PROVIDED OR, IF NO
DIRECTION IS GIVEN, IT WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
EACH OF THE EIGHT PROPOSED AMENDMENTS.
RECEIPT IS HEREBY ACKNOWLEDGED OF THE NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS AND PROXY STATEMENT, EACH DATED MAY 3, 1995, AND THE ANNUAL
REPORT OF GENOVESE DRUG STORES, INC. FOR THE FISCAL YEAR ENDED FEBRUARY 3,
1995.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED SELF-ADDRESSED POSTAGE PAID ENVELOPE.
DATED: -------------------, 1995
SIGNATURE:
--------------------------------
--------------------------------
(SIGNATURE IF HELD JOINTLY)
NOTE: PLEASE SIGN EXACTLY AS
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