SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
(X) Preliminary Proxy Statement
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Heilig Meyers Company
(Name of Registrant as Specified in its Charter)
Heilig Meyers Company
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PRELIMINARY COPY
HEILIG-MEYERS COMPANY
2235 Staples Mill Road
Richmond, Virginia 23230
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 15, 1994
TO THE HOLDERS OF COMMON STOCK:
The Annual Meeting of Shareholders of Heilig-Meyers Company (the
"Company") will be held in the Auditorium, 4th Floor,
Crestar Building--919 East Main Street, Richmond, Virginia, on Wednesday,
June 15, 1994, commencing at 10:30 a.m. E.D.T., for the following purposes:
1. To elect a board of twelve directors.
2. To act upon a proposal, previously approved by the Board of
Directors, to adopt the 1994 Stock Option Plan.
3. To act upon a proposal, previously approved by the Board of
Directors, to amend the Company's Restated Articles of
Incorporation to increase the number of shares of Common Stock
which the Company is authorized to issue to 250,000,000 shares.
4. To ratify or reject the selection of Deloitte & Touche as
accountants and auditors for the Company for the current fiscal
year.
5. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 26,
1994, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting and any adjournments thereof.
Your attention is directed to the attached Proxy Statement.
By Order of the Board of Directors
ROY B. GOODMAN, Secretary
May 3, 1994
PLEASE FILL IN, SIGN, DATE AND RETURN PROMPTLY THE ACCOMPANYING PROXY. IF
YOU ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR
OWN SHARES.
<PAGE>
HEILIG-MEYERS COMPANY
2235 Staples Mill Road
Richmond, Virginia 23230
PROXY STATEMENT
To Be Mailed on or about May 3, 1994
for
Annual Meeting of Shareholders
To Be Held June 15, 1994
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Heilig-Meyers Company (the "Company") for use at the Annual
Meeting of Shareholders of the Company to be held June 15, 1994, or any
adjournments thereof, for the purposes set forth in this Proxy Statement
and the attached Notice of Annual Meeting of Shareholders. Supplementary
solicitations may also be made by mail or by telephone, telegraph or
personal interview by directors, officers and regular employees of the
Company, none of whom will receive additional compensation for these
services. It is also contemplated that, for a fee of $5,500 plus certain
expenses, additional solicitation will be made by personal interview,
telephone, telecopy and telegraph under the direction of the proxy
solicitation firm of D. F. King & Co., Inc., 77 Water Street, New York, New
York 10005. Costs of solicitation of proxies will be borne by the Company,
which will reimburse banks, brokerage firms, other custodians, nominees,
and fiduciaries for reasonable out-of-pocket expenses incurred by them in
forwarding proxy materials to the beneficial owners of shares held by them.
The shares represented by all properly executed proxies received by
the Secretary of the Company and not revoked as herein provided will be
voted as set forth herein unless the
shareholder directs otherwise in the proxy, in which event such shares will
be voted in accordance with such directions. Any proxy may be revoked at
any time before the shares to which it relates are voted either by written
notice (which may be in the form of a substitute proxy delivered to the
secretary of the meeting) or by attending the meeting and voting in person.
Presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the meeting will
constitute a quorum. Shares for which the holder has elected to abstain or
to withhold the proxies' authority to vote (including broker non-votes) on
a matter will count towards a quorum, but will have no effect on the action
taken with respect to such matter except with respect to the proposed
amendment to the Company's Amended and Restated Articles of Incorporation.
See "Amendment to the Restated Articles of Incorporation to Increase the
Number of Authorized Shares."
VOTING SECURITIES AND RECORD DATE
The Board of Directors has fixed the close of business on April 26,
1994 as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting and any adjournments thereof. Each
holder of record of the Company's Common Stock, $2.00 par value (the
"Common Stock") on the record date will be entitled to one vote for each
share then registered in the holder's name with respect to all matters to
be considered at the meeting. As of the close of business on the record
date, 48,422,523 shares of Common Stock were outstanding and entitled to
vote at the meeting.
ELECTION OF DIRECTORS
Nominees
The Company's Board of Directors presently consists of twelve
directors, who are named below as nominees and who were elected at the 1993
Annual Meeting of Shareholders to serve until the next Annual Meeting of
Shareholders or the election and qualification of their successors. The
twelve nominees for director receiving the greatest number of votes cast
for the election of directors will be elected.
Each of the nominees has consented to his being named as a nominee in
this Proxy Statement, has agreed to serve if elected, and has furnished to
the Company the information set forth in the table below with respect to
his age, his principal occupation or employment and his beneficial
ownership of the Common Stock as of April 26, 1994. The table also sets
forth the amount of shares beneficially owned as of April 26, 1994 by all
the executive officers set forth in the summary compensation table who are
not directors, and by all executive officers and directors as a group and
the percentage of outstanding shares represented by the stated beneficial
ownership. To the best of the Company's information, the persons named in
the table, and all executive officers and directors as a group, have sole
voting and investment power with respect to shares shown as owned by them,
except as set forth in the notes thereto.
It is expected that each of these nominees will be able to serve, but
in the event that any such nominee is unable to serve for any reason (which
event is not now anticipated), the proxies reserve discretion to vote or
refrain from voting for a substitute nominee or nominees. Shareholders may
withhold authority to vote for any of the nominees on the accompanying
proxy.
Name, Age, Positions Amount of Shares
of Directors with Beneficially Owned
the Company or Principal and Percent of Class
Occupation for the Past Five Director Outstanding
Years and Other Information Since(1) as of April 26, 1994(2)
WILLIAM C. DERUSHA, 44. . . . . 1983 453,053 (4)(5)
Chairman of the Board since
April 1986.(3) Chief Executive
Officer since April 1984.(3)
Director, Signet Banking Corporation.
TROY A. PEERY, JR., 48. . . . . 1984 415,943 (4)
President since April
1986.(3) Chief Operating
Officer since December 1987.(3)
ALEXANDER ALEXANDER, 65 . . . . 1975 13,896 (4)
President, Colony Management
Corporation (real estate
management).
ROBERT L. BURRUS, JR., 59 . . . 1973 22,175 (4)
Chairman (since 1990) and partner
of McGuire, Woods, Battle &
Boothe (law firm). Director, CSX
Corporation, S&K Famous Brands,
Inc. and Concepts Direct, Inc.
ARTHUR D. CHARPENTIER, 47 . . . 1987 52,902 (4)(6)
President, Merritt Research
Corporation (investment
advisory services) since
1987. General partner,
Prescott Group (investment
partnerships) 1988 to 1991.
Director, Russ Berrie and
Co., Inc.
BENJAMIN F. EDWARDS III, 62. . 1983 20,000 (7)
Chairman of the Board,
Chief Executive Officer,
President and Director, A.G.
Edwards, Inc., the parent of
A.G. Edwards & Sons, Inc.
(securities brokerage and
investment banking). Director,
National Life Insurance Company
of Vermont.
ALAN G. FLEISCHER, 77 . . . . . 1976 2,530
Of Counsel, law firm of
Hirschler, Fleischer, Weinberg,
Cox & Allen. Rector, Norfolk State
University. Member, Board of
Associates, University of Richmond.
NATHANIEL KRUMBEIN, 79. . . . . 1946 96,055 (4)(8)
Retired Vice Chairman of
the Company.
HYMAN MEYERS, 82. . . . . . . . 1940 348,764 (4)(9)(10)
Retired Chairman of the
Board of the Company.
S. SIDNEY MEYERS, 80. . . . . . 1940 65,411 (4)(9)(11)
Retired Vice Chairman of
the Company.
LAWRENCE N. SMITH, 56 . . . . . 1975 19,431 (4)
President and Chief Executive
Officer, Resource Bank since
December 1992. Chairman and
Chief Executive Officer, Essex
Financial Group, Inc. (invest-
ment and mortgage banking firm)
until December 1992.
GEORGE A. THORNTON, III, 53 . . 1980 195,561 (12)
Chairman, TimBuck II,
Ltd. (Ships Watch, Buck
Island, resort real estate
development). Independent
consultant to furniture
manufacturers.
Certain Executive Officers
JOSEPH R. JENKINS 163,275 (4)
Executive Vice President and
Chief Financial Officer (3)
JAMES F. CERZA, JR. 198,683 (4)
Executive Vice President,
Operations (3)
JAMES R. RIDDLE 175,472 (4)
Executive Vice President,
Marketing (3)
All executive officers and directors 2,693,680 5.6%(4)(13)
as a group (22 persons)
____________________
(1) Year in which the nominee was first elected a director of the Company
or any of its predecessors. The Company's predecessors are numerous
Virginia and North Carolina corporations, the first of which was
incorporated in 1940, and all of which were merged into Heilig-Meyers
Company, a North Carolina corporation, in March 1970, which in turn
was merged into the Company in June 1972.
(2) Unless otherwise indicated, less than one percent of the outstanding
Common Stock.
(3) Nominee or officer holds the same offices in the Company's wholly-
owned subsidiary Heilig-Meyers Furniture Company.
(4) Includes shares which could be acquired through the exercise
of stock options within 60 days after April 26, 1994.
(5) Excludes 150 shares owned of record by Mr. DeRusha's wife.
(6) Includes 12,402 shares held jointly with Mr. Charpentier's wife.
(7) Excludes 1,687 shares owned of record by Mr. Edwards' wife.
(8) Includes 46 shares held by Mr. Krumbein as trustee or custodian.
Excludes 80,710 shares owned of record by Mr. Krumbein's wife. Includes
1,600 shares held of record by the Krumbein Foundation of which Mr.
Krumbein is an officer, as to which shares he may be deemed to share
voting and investment powers.
(9) Includes 5,023 shares owned of record by the Meyers-Krumbein
Foundation of which Messrs. Hyman and S. Sidney Meyers are officers,
as to which shares they may be deemed to share voting and investment
powers.
(10) Includes 218,471 shares held in trusts of which Mr. Meyers is co-
trustee, as to which shares Mr. Meyers may be deemed to share voting
and investment powers.
(11) Excludes 25,949 shares owned of record by Mr. Meyers' wife.
(12) Includes 37,479 shares held by Mr. Thornton as trustee for his
children. Excludes 22,072 shares owned of record by the George and
Eleanor D. Thornton Foundation of which Mr. Thornton is a director.
(13) Excludes a total of 8,209 shares owned of record by the wives of
executive officers not named above. See notes 5 through 12 above.
The securities brokerage and investment banking firm of A.G. Edwards &
Sons, Inc., served as an underwriter for a public offering of the Common
Stock in May 1993 and may perform other services for the Company during the
current fiscal year. Mr. Edwards is Chairman of the Board, President,
Chief Executive Officer and Director of the parent company of A.G. Edwards
& Sons, Inc.
As of April 26, 1994, there were no beneficial owners of more than 5%
of the Common Stock known to the Company.
Nominations for Director
The By-laws of the Company provide that the only persons who may be
nominated for Directors are (i) those persons nominated by the Company's
Board of Directors; (ii) those persons nominated by the Nominating
Committee of the Company's Board of Directors and (iii) those persons whose
names were personally delivered to the Secretary of the Company not later
than the close of business on the tenth day following the mailing date of
the Company's Proxy Statement for an annual meeting or delivered to the
Secretary of the Company by United States mail, postage prepaid, postmarked
no later than ten days after the mailing date of the Proxy Statement for an
annual meeting. Any shareholder wishing to nominate a person other than
those listed in this Proxy Statement must submit the following information
in writing to the Office of the Secretary, Heilig-Meyers Company, 2235
Staples Mill Road, Richmond, Virginia 23230: (i) the name and address of
the shareholder who intends to make the nomination; (ii) the name, address,
and principal occupation of each proposed nominee; (iii) a representation
that the shareholder is entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; and (iv) the written consent of each
proposed nominee to serve as a director of the Company if so elected. The
Chairman of the meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
By requiring advance notice of shareholder nominations, this By-law
affords the Board of Directors the opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary
or desirable by the Board, to inform shareholders about such
qualifications. The By-law does not give the Board of Directors any power
to approve or disapprove of shareholder nominations for election of
directors. However, it may have the effect of precluding a contest for the
election of directors if its procedures are not followed, and therefore may
discourage or deter a shareholder from conducting a solicitation of proxies
to elect his own slate of directors.
Family Relationships
Hyman Meyers, Director of the Company, and S. Sidney Meyers, Director
of the Company, are brothers. Nathaniel Krumbein, Director of the Company,
is their brother-in-law.
Attendance
The Board of Directors held eight meetings during the fiscal year
ended February 28, 1994. Each director attended 75 percent or more of
these meetings, including regularly scheduled and special meetings, and the
meetings of all committees of the Board on which they served that were held
in the past fiscal year during the periods in which they were directors or
served on such committees.
Compliance with Exchange Act Filing Requirements
The Securities Exchange Act of 1934 requires the Company's executive
officers and directors, and any persons owning more than 10% of the Common
Stock, to file certain reports of ownership and changes in ownership with
the Securities and Exchange Commission. Based solely on its review of the
copies of the Forms 3, 4 and 5 received by it, and written representations
from certain reporting persons that no Forms 5 were required to be filed by
those persons, the Company believes that all executive officers and
directors complied with such filing requirements, except that Nathaniel
Krumbein, a Company director, reported late gifts of 12,014 shares by
himself and his wife in January 1994, George A. Thornton, III, a Company
director, reported late the sale of 10,000 shares in July 1993 and the sale
of 933 shares held as trustee for an adult son in August 1993, Benjamin F.
Edwards III a Company director, reported late the purchase of 500 shares in
February 1994 and James F. Cerza, Jr. reported late donations of 875 shares in
November 1993.
Committees of the Board of Directors
The standing committees of the Board of Directors of the Company
include an Audit Committee, a Compensation Committee and a Nominating
Committee.
Messrs. Smith, Alexander, Charpentier and Edwards are the members of
the Audit Committee, which met two times during the fiscal year ended
February 28, 1994. The primary functions of the Committee are to make
recommendations to the Board concerning engaging and discharging the
independent auditors; to review the overall scope and the results of the
annual audit; to review the independence of the independent auditors; and
to review the functions and performance of the internal audit department
and the Company's internal accounting controls.
The Compensation Committee, comprised of Messrs. Burrus, Fleischer,
Smith and Thornton, met three times during the fiscal year ended
February 28, 1994. The primary functions of the Committee are to review
and make recommendations concerning the direct and indirect compensation of
officers elected by the Board; to administer and make awards under the
Company's stock option programs; to review and report to the Board
concerning annual salaries and year-end bonuses recommended by management
for all officers and certain other executives; to recommend special
benefits and perquisites for management and to generally consult with
management regarding employee benefits and personnel policies.
Messrs. Fleischer, Burrus and Thornton are the members of the
Nominating Committee, which met one time during the fiscal year ended
February 28, 1994. The primary functions of the Committee are to recommend
persons to fill vacancies on the Board and for membership on committees
established by the Board and to consider nominees recommended by
shareholders.
Executive Compensation
Summary Compensation Table. The table below sets forth for the years
ended February 28, 1994, February 28, 1993, and February 29, 1992, the
annual and long-term compensation for services in all capacities to the
Company and its subsidiaries of those persons who at February 28, 1994 were
the Company's Chief Executive Officer and the next four highest compensated
executive officers of the Company whose salary and bonus exceeded $100,000
for the year ended February 28, 1994.
<TABLE>
Long-Term
Name and Principal Position Annual Compensation Compensation
Awards
Securities
Underlying
Fiscal Other Annual Options/ All Other
Year Salary Bonus Compensation(1) SARs(#) Compensation(1)(2)
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha
Chairman of the 1994 $432,000 $367,000 (3) 135,000(5) $13,429
Board and Chief 1993 400,000 340,000 (3) 0 9,652
Executive Officer 1992 331,000 198,000 --- 303,750(4) ---
Troy A. Peery, Jr. 1994 388,800 330,000 (3) 135,000(5) 33,857
President and Chief 1993 360,000 306,000 (3) 0 22,920
Operating Officer 1992 296,000 177,000 --- 273,375(4) ---
Joseph R. Jenkins 1994 240,000 204,000 (3) 75,000(5) 20,983
Executive Vice 1993 210,000 178,500 (3) 0 17,170
President and Chief 1992 175,000 103,000 --- 168,750(4) ---
Financial Officer
James F. Cerza, Jr. 1994 240,000 204,000 (3) 75,000(5) 8,871
Executive Vice 1993 210,000 178,500 (3) 0 9,963
President, Operations 1992 170,000 100,000 --- 168,750(4) ---
James R. Riddle 1994 217,000 184,000 (3) 75,000(5) 19,537
Executive Vice 1993 190,000 161,500 (3) 0 13,912
President, Marketing 1992 170,000 86,000 --- 168,750(4) ---
</TABLE>
(1) In accordance with the transitional provisions applicable to the
revised rules on executive officer and director compensation
disclosure adopted by the Securities and Exchange Commission, amounts
of Other Annual Compensation and All Other Compensation are excluded
for the Company's 1992 fiscal year.
(2) Consists of Company contributions to the Employees' Profit Sharing and
Retirement Savings Plan, the Employees' Supplemental Profit Sharing
and Retirement Savings Plan and the dollar value of split dollar life
insurance premiums paid on behalf of the named executive officers.
(3) None of the named executive officers received Other Annual
Compensation in excess of the lesser of $50,000 or 10% of combined
salary and bonus for 1993 or 1994.
(4) Amounts have been adjusted to reflect three-for-two stock splits
distributed in the form of a stock dividend in January 1992, November
1992 and July 1993.
(5) Amounts have been adjusted to reflect a three-for-two stock split
distributed in the form of stock dividend in July 1993.
<PAGE>
Option Grant Table. The following table sets forth information
concerning individual grants of stock options made during the year ended
February 28, 1994 to the Company's executive officers named in the Summary
Compensation Table.
<TABLE>
Option/SAR Grants in Last Fiscal Year
Individual Grants
Potential
Realizable
Value at
Assumed
Annual Rates
of Stock
Price
% of Total Appreciation
Options/ Options/SARs Exercise for Option
SARs Granted to or Base Term(1)
Granted Employees in Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha 135,000 12.28% $20.83 April 6, 2003 $1,771,200 $4,479,300
Troy A. Peery, Jr. 135,000 12.28% $20.83 April 6, 2003 $1,771,200 $4,479,300
Joseph R. Jenkins 75,000 6.82% $20.83 April 6, 2003 $ 984,000 $2,488,500
James F. Cerza, Jr. 75,000 6.82% $20.83 April 6, 2003 $ 984,000 $2,488,500
James R. Riddle 75,000 6.82% $20.83 April 6, 2003 $ 984,000 $2,488,500
</TABLE>
(1) Stock appreciation values calculated by annually compounding the
exercise price until expiration at the growth rate noted.
Aggregate Option Exercises and Year-end Option Values. The following
table sets forth the number of shares acquired on exercise of stock options
and the aggregate gains realized on exercise in fiscal 1994 by the
Company's executive officers named in the Summary Compensation Table. The
table also sets forth the number of shares covered by exercisable and
unexercisable options held by such executives on February 28, 1994 and the
aggregate gains that would have been realized had these options been
exercised on February 28, 1994, even though these options were not
exercised, and the unexercisable options could not have been exercised, on
February 28, 1994.
<PAGE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of Unexercised Value of Unexercised
Options/SARs at In-The-Money Options
2-28-94 at 2-28-94(2)
--------------------------------------------------------
Shares
Acquired on Value
Name Exercise (#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha 54,967 $1,560,441 336,853 101,250 $7,676,116 $1,232,213
Troy A. Peery, Jr. 41,500 1,150,449 298,750 101,250 6,762,788 1,232,213
Joseph R. Jenkins 46,875 1,174,706 134,500 56,250 3,002,715 684,563
James F. Cerza, Jr. 36,875 987,078 165,000 56,250 3,733,800 684,563
James R. Riddle 37,000 928,621 139,375 56,250 3,119,569 684,563
</TABLE>
____________________
(1) This amount represents the gross value after commissions and before
adjustment for applicable federal or state taxes.
(2) Based on the closing sales price of the Common Stock of $33.00 on
February 28, 1994.
Compensation Committee Report on Executive Compensation
The Compensation Committee (the "Committee") of the Board of Directors
(comprised of directors who are not employees of the Company) has provided
the following report on Executive Compensation:
Compensation Philosophy
The Committee believes that corporate performance and, in turn,
shareholder value will be enhanced by a compensation system which supports
and reinforces the Company's key operating and strategic goals while
aligning the financial interests of the Company's executive officers with
those of the shareholders. The Company utilizes both short-term and long-
term incentive compensation programs to achieve this objective. These
programs are tied to store, regional, departmental and Company-wide
business goals as well as individual goals. For executive officers, the
Company relies on an annual incentive program and stock option program to
align the executives' financial interests with those of its shareholders.
Components of the Compensation Program
The Company's compensation program for executive officers consists of
a base salary, an annual incentive bonus program and a stock option
program, all of which are tied to the Company's success in achieving
financial and strategic performance goals. The Company's performance goals
are proposed by management and are approved by the Board of Directors of
the Company as part of the Company's budgeting process.
Each year, the Committee reviews proposals submitted by the Company's
Chief Executive Officer ("CEO") for annual salary for the executive
officers other than the CEO. In evaluating the CEO's proposals, the
Committee considers (1) the individual executive officer's performance,
including evaluations thereof provided by the CEO and (2) the Company's
performance in relation to its performance goals, which include pre-tax
earnings, earnings per share and return on equity. Under employment
agreements covering the five named executive officers, the Committee may
increase, but not decrease executive salaries on an annual basis.
The Committee also considered the effect of Internal Revenue Code
Section 162(m), which imposes a $1 million limit per year on the corporate
tax deduction for compensation paid or accrued with respect to the top five
executives of a publicly held corporation. Performance-based compensation
that meets certain requirements will not be subject to this deduction
limit. The limit is generally effective for any payment made by the
Company that would be deductible for the fiscal year beginning March 1,
1994. It was the Committee's recommendation that no changes be made to the
Company's existing compensation programs to avoid the limit since the
current compensation level of the top five executives is unlikely to exceed
the $1 million limit during the fiscal year ending February 28, 1995.
However, the Company has proposed the adoption of a new 1994 Stock Option
Plan with the intention of making the plan meet the requirements for
performance-based compensation. The Committee will continue to monitor the
impact of the Section 162(m) limit and to assess various alternatives to
minimize or eliminate any loss of tax deductions in future years, provided
the alternatives are consistent with the objectives of the Company's
executive compensation program.
The annual incentive bonus program for executive officers is the
principal short-term incentive compensation program of the Company. Cash
bonuses are paid following the conclusion of the Company's fiscal year.
These cash bonus awards are based upon the achievement of Company
performance goals designated at the beginning of the Company's fiscal year
and upon a series of component factors, each determined separately. The
component factors, some of which are evaluated by the CEO, for executives
other than the CEO, include: (1) personal performance, (2) departmental
business goals, (3) the extent to which the Company's (a) pre-tax profits,
and (b) earnings per share increase over those of the previous fiscal year,
and (4) the extent to which the Company meets or exceeds its budgeted pre-
tax profits and earnings per share targets. The Committee first
establishes a threshold target and maximum bonus payable for levels of
Company performance based on pre-tax profits, net after-tax earnings and
earnings per share. The Committee then determines the individual bonus
amount by assigning a percentage of salary to each of the component factors
described above. The total of an officer's percentages earned for each
component is then multiplied by the individual officer's salary to
determine his or her annual incentive cash bonus. The maximum percentage
of salary the five named executive officers may receive as bonus for each
of the component factors is as follows: personal performance (ten
percent); departmental business goals (ten percent); pre-tax profits
(twenty percent); and earnings per share (twenty percent). Consequently,
bonus payments vary depending upon the extent to which the Company achieves
its target financial performance for the year. If the targets are not
achieved, no bonus is payable. However, in the event of a change of
control, a minimum annual bonus may still be paid under employment
agreements with the five named executive officers. See "Employment
Agreements."
In addition, the Committee authorized a special incentive cash bonus
payment to be made to the five named executive officers for the fiscal year
ending February 28, 1994, in view of management's performance and pre-tax
earnings and earnings per share substantially greater than the amount
established as the maximum targets for the annual 1994 incentive bonus.
The Company's long-term incentive program is a stock option program
under which the Committee reviews and recommends proposed grants of long-
term incentive compensation in the form of stock options. The Committee
considers stock options to be an important means of insuring that senior
executives maintain their incentive to increase the profitability of the
Company and the value of the Company's stock. Whether a grant will be made
to an executive officer, and in what amount, are determined by the
Committee based on the Company's overall performance and the individual's
performance. Because the value of stock options is entirely a function of
the value of the Company's stock, the Committee believes that this
component of the Company's compensation arrangement aligns the interests of
the senior executives with those of the Company's shareholders. Options
have always been granted with an exercise price equal to the fair market
value of the Company's stock on the date of grant.
The options granted to the five named executive officers in April
1993, were intended to preserve for the executives the same opportunity for
future appreciation in the Company's stock that such executives possessed
before December 1992, when each of the five named executive officers
exercised a block of nonstatutory stock options and four of the five named
executive officers sold the underlying shares acquired upon the December
1992 exercise. The Committee also considered that as a result of the
December 1992 option exercises, the Company's ability to receive the full
tax benefit associated with such exercises (i.e., the Company's deduction)
was preserved.
Chief Executive Officer's Compensation
The Committee determined the compensation of William C. DeRusha, Chief
Executive Officer, for the fiscal year ended February 28, 1994, in a manner
consistent with the guidelines described above. The Committee evaluated
the Company's performance with respect to its stated budget and financial
goals that were established and agreed to by Mr. DeRusha before the start
of this fiscal year. The Committee also evaluated Mr. DeRusha's personal
performance, in view of (a) the personal goals he established for himself,
in consultation with the Committee, as Chairman and Chief Executive Officer
and (b) the extent to which the Company exceeded its financial goals. The
Committee evaluated Mr. DeRusha's personal performance, and it was
determined that his performance exceeded expectations.
Administration of Compensation Program
The Committee oversees all compensation programs for senior management
and reviews and approves many plans and programs for other employees. The
Committee reviews management recommendations and ultimately determines
levels of base salary, annual incentive bonus program payments and stock
option grants. The Committee also reviews and determines the salary level
of the CEO, whose compensation is reported in this proxy statement.
COMPENSATION COMMITTEE
Robert L. Burrus, Jr., Chairman
Alan G. Fleischer
Lawrence N. Smith
George A. Thornton, III
<PAGE>
Performance Graph
The following graph compares the cumulative total return on the
Company's Common Stock ("HMY") with the cumulative total return of the
companies included in the S&P 500 and the S&P Retail Stores Composite for
the last five fiscal years.
(Performance Graph)
1989 1990 1991 1992 1993 1994
Heilig Meyers 100 139.3 169.5 310.9 444.8 742.0
S&P 500 100 118.8 136.3 158.1 174.9 189.4
S&P Retail Composite 100 119.5 147.2 198.5 227.9 228.5
<PAGE>
Employment Agreements
The Company has entered into employment contracts with William C.
DeRusha and Troy A. Peery, Jr. Both contracts provided for an initial
three-year term that ended February 28, 1991 with an automatic annual one-
year extension, unless either party notifies the other at least two years
in advance that it does not wish to extend the term. The contracts also
provide that Messrs. DeRusha and Peery will receive annual salaries
established by the Compensation Committee of the Board of Directors of the
Company (or the Board of Directors of the Company), which may be increased,
but not decreased, on an annual basis. In 1993, the contracts were amended
to limit the circumstances under which an executive may earn a minimum
bonus payment. The contracts now provide that each employee is entitled to
an annual bonus in accordance with the terms of the Company's annual
performance bonus plan, provided that in the event of a change of control,
such payment shall be not less than the average bonus paid to him during
the three fiscal years immediately preceding the year for which the bonus
is currently payable. The contracts provide further that the Company may
terminate either employee's employment immediately for cause as defined in
the contracts. In the event of such a termination before the expiration of
the employment term, each employee will forfeit the right to receive any
further salary or benefits to which he is entitled under the employment
contract. Should either employee voluntarily terminate employment and
become employed with another employer before the expiration of the
employment term, he will also forfeit the right to receive any further
salary or benefits to which he is entitled under the employment contract.
These agreements also provide that if (a) the executive's employment
is terminated by the Company for any reason other than cause or (b) the
executive voluntarily terminates employment within 60 days after there has
been a material reduction in his compensation, benefits or other material
change in his employment status, he will be entitled to a lump sum payment
equal to the aggregate compensation he would have received during the
remainder of the employment term. If a change of control event occurs, the
bonus to which the executive is entitled during the change of control year
will be computed on the assumption that the financial results achieved
before the change of control will continue at levels not less favorable
than those before the change of control.
Effective March 1, 1991, the Company also entered into employment
contracts with Joseph R. Jenkins, James F. Cerza, Jr. and James R. Riddle
The terms of these contracts are identical to the terms of the agreements
with Messrs. DeRusha and Peery, except that the contracts with Messrs.
Jenkins, Cerza and Riddle provide for initial two-year terms with an
automatic one-year renewal, unless either party notifies the other at least
one year in advance that it does not wish to extend the term.
Executive Supplemental Retirement Plan
The Company has executive supplemental retirement agreements with its
twelve executive officers that entitle them to receive death benefits or
supplemental retirement income. If the executive officer dies prior to age
65 in the employment of the Company, the executive's beneficiary will
receive annual benefits of 100% of the executive officer's salary for a
period of one to two years and/or 50% of the executive officer's salary for
a period of eight years. If the executive officer retires at age 65, he
will receive an annual retirement benefit equal to a designated percentage
of his salary at the time of retirement increased four percent annually for
a period of 15 years. In the event an executive officer dies after
retirement, but before he has received all of his retirement income, the
executive officer's beneficiary will receive annual benefits equal to a
percentage of such executive officer's salary for the balance of the 15-
year period.
The executive supplemental retirement agreements with Messrs. DeRusha
and Peery provide for an actuarially reduced benefit payable in the form of
a lump sum in the event such executive's employment terminates for any
reason (other than cause) before age 65. The remaining agreements provide
that, if the executive's employment is terminated under circumstances
entitling the executive to a payment under the Executive Severance Plan
(described below), a lump sum cash out of the executive's benefit will be
made to him. The Company owns and is the beneficiary under life insurance
contracts intended to provide the Company with funds to meet its
obligations under all executive supplemental retirement agreements.
Executive Severance Plan
The Company has an executive severance plan under which executives
(other than Messrs. DeRusha, Peery, Jenkins, Cerza and Riddle) designated
by the Committee are covered. The executive severance plan is triggered by
a change of control and, once triggered, provides certain employment and
compensation guarantees for a two-year period. During the two-year period,
eligible executives are guaranteed salary and bonuses at levels not less
than those paid during the one-month period before the change of control.
If an executive is terminated or voluntarily terminates within 60 days
because the executive's working conditions have materially changed, the
executive will be entitled to receive 200% of salary and bonuses received
for the preceding twelve-month period. If a change of control does not
occur the plan has no effect. The severance plan covers, in general, all
officers of the Company (other than Messrs. DeRusha, Peery, Jenkins, Cerza
and Riddle), certain categories of key administrative people designated by
the Chairman and all full-time employees with ten or more years of service.
Directors' Compensation
For the fiscal year ended February 28, 1994, directors who were not
employees of the Company were each paid fees of
$20,000. The Company maintains deferred compensation agreements pursuant
to which an outside director may defer all or a portion of the fees he
receives for services performed for the Company (in his capacity as a
director). The agreements provide deferred income to the participating
director and/or his family at the director's attainment of age 70, or upon
his death. The Compensation Committee may, in its sole discretion, provide
for deferred income benefits in the event of a director's permanent
disability. The benefit payable under these agreements is fixed for each
outside director. Benefits are payable in monthly payments over a 15-year
period. These agreements provide for immediate payment of an actuarially
reduced benefit to each outside director upon the termination of his
relationship with the Company before age 70 unless the relationship
terminated for "due cause" as determined by the Compensation Committee or
Board of Directors of the Company. Generally, if a director terminates his
relationship with the Company following a change of control, he will be
entitled to receive a reduced lump sum payment equal to the actuarial
equivalent of the benefit he would have received at age 70 (taking into
account deferrals made to the date of the director's death). However, in
the case of one outside director, the agreement provides that in the event of
termination following a change of control, an amount sufficient to satisfy
the Company's future obligations to the director (and his beneficiaries)
under the agreement will be deposited in a trust with a national bank. The
deposited amount would be subject to the claims of creditors, but would not
be otherwise available to the Company.
In addition, directors who serve on the Executive Committee of the
Company's Board of Directors and who are not full-time employees of the
Company receive annual fees of $6,000. These directors are Robert L.
Burrus, Jr., Hyman Meyers, Lawrence N. Smith and George A. Thornton, III.
Messrs. DeRusha and Peery also serve on the Executive Committee.
Compensation Committee Interlocks and Insider Participation
Mr. Burrus, Chairman of the Compensation Committee, is Chairman and
partner of the law firm of McGuire, Woods, Battle & Boothe, which was
retained as general counsel by the Company during the fiscal year ended
February 28, 1994, and has been so retained during the current fiscal year.
Certain Transactions
Agreements with Retired Executives. The Company entered into
Executive Employment and Deferred Compensation Agreements with Hyman
Meyers, S. Sidney Meyers and Nathaniel Krumbein while these individuals
were executive officers of the Company. The agreements provide for
retirement compensation until an individual's death in an annual amount
equal to 58% of the average of the highest three years of total cash
compensation paid to the individual during any fiscal year in which he was
employed by the Company. This amount will be reduced by the individual's
primary social security benefit and by the amount determined to be payable
under the employer portion of the Company's profit sharing plan. The
payment to Hyman Meyers will end upon his death. S. Sidney Meyers and
Nathaniel Krumbein elected to receive the actuarial equivalent of this
amount as a joint and survivor annuity with their spouses, providing
payments to them or their wives as long as either shall live. The Company
owns and is beneficiary under life insurance contracts, purchased in full
before the retirement of these individuals, which are intended to provide
the Company with funds to meet its obligations under these agreements.
During the year ended February 28, 1994, the Company made the
following payments as retirement compensation: $93,008 to Hyman Meyers,
$39,644 to S. Sidney Meyers, and $45,960 to Nathaniel Krumbein.
The amount of retirement compensation is automatically increased
annually by the lesser of 5% or one-half of the percentage increase in the
consumer price index over the previous year.
These agreements also provide that if a change of control occurs,
amounts sufficient to satisfy the Company's future contractual obligations
to each of these individuals (and his beneficiaries) under the agreements
will be deposited in a trust with a national bank. The deposited amounts
would be subject to the claims of creditors, but would not be otherwise
available to the Company.
During retirement, the individual is also entitled to discounted
purchases, coverage under the Company's group health insurance plans, an
office at a location selected by the Company, and customary office services
to the same extent that he received at the time of retirement. The Company
paid approximately $3,448 in health and life insurance premiums for Hyman
Meyers and $3,904 for each of S. Sidney Meyers and Nathaniel Krumbein
during the fiscal year ended February 28, 1994. The Company provided S.
Sidney Meyers and Nathaniel Krumbein with office space and services, which
they shared at a total cost of $56,285 during the fiscal year ended
February 28, 1994.
The Company may retain any of these individuals (with his consent) on
a year-to-year basis during retirement to render consulting services as
directed by the Board of Directors, at a minimum annual fee of $10,000,
plus out-of-pocket expenses. The Company did not retain any of these
individuals to render consulting services during the fiscal year ended
February 28, 1994.
Leases. During the past fiscal year, the Company rented five of its
stores and one of its local warehouses from Hyman Meyers, S. Sidney Meyers
and Nathaniel Krumbein together with members of their families.1 The
leases generally provide for fixed rentals ranging from $12,500 to $91,770
per year; however, four of the leases provide for rent to be adjusted every
three years with the new rent equal to four percent of net sales at the
leased premises during the fiscal year immediately preceding the rental
adjustment. As of April 26, 1994, the unexpired terms of all leases with
members of the Meyers and Krumbein families, excluding renewal options,
ranged from 2 3/4 years to 15 3/4 years.
During the fiscal year ended February 28, 1994, the Company paid rent
aggregating $285,048 to certain directors and members of their families.
The table below sets forth certain information concerning the rent received
during the fiscal year ended February 28, 1994 and rent to be received by
these directors and members of their families on account of properties
leased to the Company.
Rent Received During Minimum Annual
Fiscal Year Ended Rent (at current
February 28, 1994 Annual Rental Rates)
Hyman Meyers $ 61,322 $ 61,290
S. Sidney Meyers 61,322 61,290
Nathaniel Krumbein 1,400 1,368
Amy M. Krumbein
(Wife of Nathaniel
Krumbein) 59,921 59,921
Other family members $101,083* $ 98,779
- -------------
1 Under four of these leases the Company must pay real estate taxes
and insurance premiums and must provide maintenance and make certain repairs.
Under four of these leases, the Company as tenant bears the expense of real
estate tax increases and certain interior repairs and pays utility charges
and insurance rate increases attributable to it. One of these leases
provides for rental escalations for any exercised renewal options based on
increases in the Consumer Price Index.
* Consists of the following amounts payable to adult children of the
following individuals: Hyman Meyers, $33,701; S. Sidney Meyers, $33,691;
and Nathaniel Krumbein, $33,691.
With respect to principal leases with the Company's directors and
members of their families that were entered into from 1977 until 1986, the
Company obtained advice from independent fee appraisers who hold M.A.I.
designation that the terms and conditions of such leases would be fair and
reasonable to the Company as tenant. The leases and the advice of the
independent fee appraisers were reviewed by the Real Estate Committee of
the Board of Directors of the Company, made up of directors who are not
employees of the Company, and approved. The Company believes that the rent
and terms provided in these leases, as well as others negotiated without
this procedure, are fair and reasonable to the Company as tenant and will
be generally comparable to the rent and terms of leases of similar
properties in the same general location.
Franchises. During the fiscal year ended February 28, 1994, the
Company had one franchise agreement for use of its service mark in
connection with retail furniture operations, under which the Company
supplies a merchandising and advertising program at approximate cost and
the franchisee pays a franchise fee based upon sales. The agreement
relates to stores in Norfolk, Virginia Beach and Keller, Virginia.
Florence T. Meyers, wife of Hyman Meyers, owned a one-third interest in
these franchise operations until her death in September 1993. The estate
of Mrs. Meyers, of which Mr. Hyman Meyers is executor, has disposed of most
of the interest in these franchise operations. The terms of the franchise
agreement with respect to this franchise are substantially identical to the
terms of previous franchise agreements with persons unrelated to directors
of the Company. This franchise buys a significant portion of its
merchandise from the Company. During the past fiscal year, this
franchise's merchandise purchases from the Company totaled $1,182,420.
During the fiscal year ended February 28, 1994, the largest amount of
indebtedness to the Company at the end of any month from this franchise was
$443,822, principally in respect of merchandise purchases, and on February
28, 1994, the outstanding indebtedness was $322,255. The franchisee pays
interest to the Company on all amounts outstanding more than 30 days at
115% of the prevailing prime rate, which is greater than the effective rate
the Company pays its major lenders.
1994 STOCK OPTION PLAN
Introduction
On February 9, 1994, the Board of Directors of the Company approved
and adopted the 1994 Stock Option Plan (the "1994 Plan") and directed that
it be submitted to shareholders for approval.
The 1994 Plan became effective February 8, 1994. Unless sooner
terminated by the Board of Directors, the Plan will terminate on February
7, 2004. No awards may be made under the 1994 Plan after its termination.
The 1994 Plan is intended to provide a means for selected key
management employees of the Company to increase their personal financial
interest in the Company, thereby stimulating the efforts of these employees
and strengthening their desire to remain with
the Company (references to the "Company" in this section will include any
parent and subsidiary corporations).
The principal features of the 1994 Plan are summarized below. The
summary is qualified by reference to the complete text of the plan, which
is attached as Exhibit A.
Grants Subject to Shareholder Approval
On February 8, 1994, the Compensation Committee granted options
covering 107,236 shares of Common Stock to officers, subject to shareholder
approval of the 1994 Plan. One-third of the options will become
exercisable upon shareholder approval and the remainder will vest one-third
on each February 8 until 1996. The exercise price of the options is
$35.06, and all of the options will expire on February 8, 2004, if not
exercised sooner. Of the options granted subject to shareholder approval
of the 1994 Plan, none were granted to Messrs. DeRusha, Peery, Jenkins,
Cerza or Riddle.
General
The 1994 Plan authorizes the reservation of 1,000,000 shares of Common
Stock for issuance pursuant to awards. Such awards may be in the form of
either incentive stock options or nonstatutory stock options (as described
below).
If an award under this Plan, the Company's 1983 Stock Option Plan or
the Company's 1990 Stock Option Plan is cancelled, terminates or lapses
unexercised, any unissued shares allocable to such award may be subjected
again to an incentive award.
Adjustments will be made in the number of shares which may be issued
under the 1994 Plan in the event of a future stock dividend, stock split or
similar pro rata change in the number of outstanding shares of Common Stock
or the future creation or issuance to shareholders generally of rights,
options or warrants for the purchase of Common Stock or Preferred Stock.
The Common Stock is traded on the New York Stock Exchange, and on
March 29, 1994, the closing price was $32 3/8.
Eligibility
All present and future employees of the Company who hold positions
with management responsibilities are eligible to receive awards under the
1994 Plan. The Company estimates that it has approximately 85 such
employees (56 of whom are officers).
Administration
The 1994 Plan will be administered by a committee comprised of at
least three directors of the Company who are not eligible to participate in
the Plan and who shall be considered "disinterested" for purposes of
Securities and Exchange Commission Rule 16b-3 ("Rule 16b-3"). The 1994
Plan is intended to conform to the provisions of Securities and Exchange
Commission Rule 16b-3 and to meet the requirements for performance-based
compensation under Code Section 162(m). Unless otherwise determined by the
Board of Directors, the Committee will be the Compensation Committee. The
Compensation Committee has the power and complete discretion to determine
when to grant awards, which eligible employees will receive awards, whether
the award will be an incentive or nonstatutory stock option, whether stock
appreciation rights will be attached to options, and the number of shares
to be allocated to each award. The Compensation Committee may impose
conditions on the exercise of options and stock appreciation rights, and
may impose such other restrictions and requirements as it may deem
appropriate.
Stock Options
Options to purchase shares of Common Stock granted under the 1994 Plan
may be incentive stock options or nonstatutory stock options. Incentive
stock options qualify for favorable income tax treatment under Section 422
of the Internal Revenue Code, while nonstatutory stock options do not. The
purchase price of Common Stock covered by an option may not be less than
100% (or, in the case of an incentive stock option granted to a 10%
shareholder, 110%) of the fair market value of the Common Stock on the date
of the option grant. Fair market value means the average of the highest
and the lowest registered sales prices of the Common Stock on the exchange
on which it generally has the highest trading volume. The exchange on
which the Common Stock currently has the greatest trading volume is the New
York Stock Exchange.
The value of incentive stock options, based on the exercise price,
that can be exercisable for the first time in any calendar year under the
1994 Plan or any other similar plan maintained by the Company is limited to
$100,000.
An employee may not receive an award of options under the 1994 Plan
with respect to more than 150,000 shares of Common Stock during any one
fiscal year.
Options may only be exercised at such times as may be specified by the
Compensation Committee; provided, however, that incentive stock options may
not be exercised after the first to occur of (i) ten years (or, in the case
of an incentive stock option granted to a 10% shareholder, five years) from
the date on which the incentive stock option was granted, (ii) three months
from the optionee's termination of employment with the Company for reasons
other than death or disability, or (iii) one year from the optionee's
termination of employment on account of death or disability. The
Compensation Committee may grant options with a provision that an option
not otherwise exercisable will become exercisable upon a change of control
(as defined in the 1994 Plan). The Compensation Committee may also
accelerate the expiration date of outstanding options in the event of a
change of control or a change in the corporate structure of the Company.
An optionee exercising an option may pay the purchase price in cash;
and if the option so provides, by delivering or causing to be withheld from
the option shares, shares of Common Stock; by delivering a promissory note;
or by delivering an exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Company the amount of sale or loan
proceeds from the option shares to pay the exercise price. The
Compensation Committee may also provide in the option that an employee who
exercises an option by delivering already owned shares of Common Stock will
be automatically granted a "reload option," which is a new option equal in
amount to the number of shares delivered to exercise the option with an
exercise price equal to the fair market value of the Common Stock on the
date of delivery.
Stock Appreciation Rights
The Compensation Committee may award stock appreciation rights with an
option, or the Compensation Committee may subsequently award and attach
stock appreciation rights to a previously awarded nonstatutory option, and
impose such conditions upon their exercise as it deems appropriate. When
the stock appreciation right is exercisable, the holder may surrender to
the Company all or a portion of his unexercised stock appreciation right
and receive in exchange an amount equal to the excess of (i) the fair
market value on the date of exercise of the Common Stock covered by the
surrendered portion of the stock appreciation right over (ii) the exercise
price of the Common Stock under the related option. The Compensation
Committee may limit the amount which can be received when a stock
appreciation right is exercised. When a stock appreciation right is
exercised, the underlying option, to the extent surrendered, will no longer
be exercisable. Similarly, when an option is exercised, any stock
appreciation rights attached to the option will no longer be exercisable.
The Company's obligation arising upon the exercise of a stock appreciation
right may be paid in Common Stock or in cash, or in any combination of the
two, as the Compensation Committee may determine.
Stock appreciation rights may only be exercised when the underlying
option is exercisable or, if there is no underlying option, at such times
as may be specified by the Compensation Committee, which may include a
change of control. There are further limitations on when an officer,
director or 10% shareholder of the Company (an "Insider"), may exercise a
stock appreciation right. In particular, Insiders may not exercise stock
appreciation rights for cash within the first six months after they are
granted.
Transferability of Awards
An option awarded under the Plan may not be sold, transferred,
pledged, or otherwise disposed of, other than by will or by the laws of
descent and distribution. All rights granted to a participant under the
Plan shall be exercisable during his lifetime only by such participant, or
his guardians or legal representatives. Upon the death of a participant,
his personal representative or beneficiary may exercise his rights under
the Plan.
Amendment of the 1994 Plan and Awards
The Board of Directors may amend the 1994 Plan in such respects as it
deems advisable; provided that, if and to the extent required by Rule 16b-3
or the Code, the shareholders of the Company must approve any amendment
that would (i) materially increase the benefits accruing to participants
under the 1994 Plan, (ii) materially increase the number of shares of
Common Stock that may be reserved for issuance under the 1994 Plan, or
(iii) materially modify the requirements of eligibility for participation
in the 1994 Plan. Awards granted under the 1994 Plan may be amended with
the consent of the recipient so long as the amended award is consistent
with the terms of the Plan.
Federal Income Tax Consequences
An employee will not incur federal income tax when he is granted a
nonstatutory stock option or an incentive stock option.
Upon exercise of a nonstatutory stock option or a stock appreciation
right, an employee generally will recognize compensation income, which is
subject to income tax withholding by the Company, equal to the difference
between the fair market value of the Common Stock on the date of the
exercise and the option price. The Committee has authority under the 1994
Plan to include provisions allowing the employee to elect to have a portion
of the shares he would otherwise acquire upon exercise of an option or
stock appreciation right withheld to cover his tax liabilities if
permissible under Rule 16b-3. The election will be effective only if
approved by the Compensation Committee and made in compliance with other
requirements set forth in the Plan. When an employee exercises an
incentive stock option, he generally will not recognize income subject to
tax, unless he is subject to the alternative minimum tax.
The Company usually will be entitled to a business expense deduction
at the time and in the amount that the recipient of an incentive award
recognizes ordinary compensation income in connection therewith. As stated
above, this usually occurs upon exercise of nonstatutory options and stock
appreciation rights. In some cases, such as the exercise of a nonstatutory
option, the Company's deduction is contingent upon the Company's meeting
withholding tax requirements. No deduction is allowed in connection with
an incentive stock option, unless the employee disposes of Common Stock
received upon exercise in violation of the holding period requirements.
This summary of Federal income tax consequences of nonstatutory stock
options, incentive stock options and stock appreciation rights does not
purport to be complete. There may also be state and local income taxes
applicable to these transactions. Holders of awards should consult their
own advisors with respect to the application of the laws to them and to
understand other tax consequences of the awards including possible income
deferral for Insiders, alternative minimum tax rules, taxes on parachute
payments and the tax consequences of the sale of shares acquired under the
Plan.
Vote Required
Approval of the 1994 Stock Option Plan requires the affirmative vote
of the holders of a majority of the shares of Common Stock voting at the
annual meeting.
The Board of Directors believes that approval of the 1994 Stock Option
Plan is in the best interest of all shareholders and, accordingly,
recommends a vote "FOR" approval of the proposed 1994 Stock Option Plan.
AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board has unanimously approved, and recommends to the shareholders
that they adopt, an amendment to the first paragraph of Article III of the
Restated Articles that would increase the authorized Common Stock from
75,000,000 to 250,000,000 shares.
Of the 75,000,000 currently authorized shares of Common Stock, as of
April 26, 1994, 48,422,523 shares have been issued and 5,193,355 shares are
reserved and unissued under the Company's stock option and employee stock
purchase plans (including 1,000,000 shares reserved for issuance under the
1994 Plan, subject to shareholder approval). This leaves a balance of
approximately 21 million authorized but unissued shares of Common Stock
available and unreserved for future use. The Company has historically
declared three-for-two stock splits distributed in the form of 50% stock
dividends when considered appropriate by the Board of Directors and has
done so in each of the last three fiscal years. Under Virginia law, the
Company must have sufficient authorized and unissued shares of Common Stock
to effectuate such a stock dividend. Consequently, in order to effectuate
such dividends in the future, the number of authorized shares of Common
Stock must be increased. Under Virginia law, the Board of Directors could
increase the authorized number of shares of Common Stock without
shareholder approval in connection with a stock split or dividend which
results in no fractional shares or cash paid in lieu of fractional shares,
e.g. a two-for-one stock split or 100% stock dividend.
The additional shares of Common Stock for which authorization is
sought would be a part of the existing class of Common Stock and, if and
when issued, would have the same rights and privileges as the shares of
Common Stock presently outstanding. No holder of Common Stock has any
preemptive rights to acquire additional shares of the Common Stock.
The full text of the first paragraph of Article III of the Restated
Articles, including the amendment, is attached to this Proxy Statement as
Exhibit B which shareholders are urged to read carefully.
Purpose and Effect of Amendment
The Board believes that an increase in the number of shares of Common
Stock as contemplated by this Amendment would benefit the Company and its
shareholders by (i) giving the Company the flexibility to effectuate future
stock splits or dividends consistent with prior practice, and (ii) giving
the Company needed flexibility in its corporate planning and in responding
to developments in the Company's business, including financing in
acquisition transactions and other general corporate purposes. Having such
authorized shares available for issuance in the future would give the
Company greater flexibility to respond to future developments and allow
Common Stock to be issued by the Company without the expense and delay of a
special shareholders' meeting.
Unless otherwise required by applicable law or regulation, the
additional shares of Common Stock will be issuable without further
authorization by a vote or consent of the shareholders and on such terms
and for such consideration as may be determined by the Board. However, the
New York Stock Exchange, on which the Common Stock is listed, currently
requires shareholder approval as a prerequisite to listing shares in
several instances, including acquisition transactions where the present or
potential issuance of shares could result in an increase of 20% or more in
the number of shares of Common Stock outstanding.
The Board could use the additional shares of Common Stock to
discourage an attempted change of control of the Company. However, the
Board has no present intention of issuing any shares of Common Stock for
such purposes and this amendment is not being recommended in response to
any specific effort of which the Company is aware to obtain control of the
Company.
Vote Required
Adoption of this amendment requires the affirmative vote of the
holders of more than a majority of the outstanding shares of Common Stock.
Abstention from voting on this amendment (including broker non-vote) has
the same legal effect as a vote "against" this amendment, even though the
shareholder may interpret such action differently.
RATIFICATION OF SELECTION OF AUDITORS
Deloitte & Touche, independent certified public accountants, has been
selected by the Board of Directors as accountants and auditors for the
Company for the current fiscal year, subject to ratification or rejection
by the shareholders. The firm has no relationship with the Company except
that it has served as its independent accountants and auditors since
November 1, 1973. Representatives of Deloitte & Touche are expected to be
present at the Annual Meeting of Shareholders and will have an opportunity
to make a statement if they so desire and are expected to be available to
respond to appropriate questions from shareholders. In the event the
shareholders do not ratify the selection of Deloitte & Touche, the
selection of other accountants and auditors will be considered by the Board
of Directors.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the meeting. However, if any other matters are properly presented,
or if any question arises as to whether any matter has been properly
presented and is a proper subject for shareholder action, the persons named
as proxies in the accompanying proxy intend to vote the shares represented
by such proxy in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 1994 MEETING
Proposals of shareholders intended to be presented at the 1995 Annual
Meeting must be received by the Company at its principal executive offices
no later than January 3, 1995 for inclusion in the Company's 1995 proxy
materials. Such proposals should meet the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
FURTHER INFORMATION
The Company will provide without charge to each person from whom a
proxy is solicited by the Board of Directors, upon the written request of
any such person, a copy of the Company's annual report on Form 10-K,
including the financial statements thereto, required to be filed with the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, for the Company's fiscal year ended February 28, 1994.
Such written requests should be sent to the Office of the Treasurer,
Heilig-Meyers Company, 2235 Staples Mill Road, Richmond, Virginia 23230.
By Order of the Board of Directors
ROY B. GOODMAN
Secretary
May 3, 1994
PLEASE FILL IN, SIGN, DATE AND RETURN PROMPTLY THE ACCOMPANYING PROXY. IF
YOU ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR
OWN SHARES.
<PAGE>
EXHIBIT A
HEILIG-MEYERS COMPANY
1994 STOCK OPTION PLAN
1. Purpose. The purpose of this Heilig-Meyers Company 1994 Stock
Option Plan (the "Plan") is to further the long term stability and financial
success of Heilig-Meyers Company (the "Company") by attracting and retaining
key employees of the Company through the use of stock incentives. It is
believed that ownership of Company Stock will stimulate the efforts of those
employees of the Company upon whose judgment and interest the Company is and
will be largely dependent for the successful conduct of its business. It is
also believed that Awards granted to such employees under this Plan will
strengthen their desire to remain with the Company and will further the
identification of those employees' interests with those of the Company's
shareholders.
2. Definitions. As used in the Plan, the following terms have the
meanings indicated:
(a) "Award" means, collectively, the award of an Option or Stock
Appreciation Right under the Plan.
(b) "Board" means the board of directors of the Company.
(c) "Change of Control" means:
(i) The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended, of beneficial ownership (within the meaning of Rule 13d-
3 promulgated under the Securities Exchange Act of 1934) of 20%
or more of either the then outstanding shares of common stock of
the Company or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors, but excluding for this purpose, any
such acquisition by the Company or any of its subsidiaries, or
any employee benefit plan (or related trust) of the Company or
its subsidiaries, or any corporation with respect to which,
following such acquisition, more than 50% of, respectively, the
then outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by the individuals and entities who were the
beneficial owners, respectively, of the common stock and voting
securities of the Company immediately prior to such acquisition
in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the then outstanding
shares of common stock of the Company or the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors, as the
case may be; or
(ii) Individuals who, as of the date hereof, constitute the
Board (as of the date hereof the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided
that any individual becoming a director subsequent to the date
hereof whose election or nomination for election by the Company's
shareholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
Directors of the Company [(within the scope of Rule 14a-11 of
Regulation 14A promulgated under the Securities Exchange Act of
1934)]; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with
respect to which the individuals and entities who were the
respective beneficial owners of the common stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such reorganization, merger or
consolidation, or a complete liquidation or dissolution of the
Company or of its sale or other disposition of all or
substantially all of the assets of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Company" means Heilig-Meyers Company, a Virginia
corporation.
(f) "Company Stock" means Common Stock of the Company. If the
par value of the Company Stock is changed, or in the event of a change
in the capital structure of the Company (as provided in Section 12),
the shares resulting from such a change shall be deemed to be Company
Stock within the meaning of the Plan.
(g) "Compensation Committee" or "Committee" means the committee
(or subcommittee) appointed by the Board as described under Section
13.
(h) "Date of Grant" means the effective date of an Award granted
by the Compensation Committee.
(i) "Disability" or "Disabled" means, as to an Incentive Stock
Option, a Disability within the meaning of Section 22(e)(3) of the
Code. As to all other Awards, the Committee shall determine whether a
Disability exists and such determination shall be conclusive.
(j) "Fair Market Value" means as of the Date of Grant (or, if
there were no trades on the Date of Grant, the last preceding day on
which Company Stock was traded) (i) if the Company Stock is traded on
an exchange, the average of the highest and lowest registered sales
prices of the Company Stock at which it is traded on such date on the
exchange on which it generally has the greatest trading volume or (ii)
if the Company Stock is traded in the over-the-counter market, the
average between the closing bid and asked prices on such date as
reported by NASDAQ.
(k) "Incentive Stock Option" means an Option intended to meet
the requirements of, and qualify for favorable Federal income tax
treatment under, Section 422 of the Code.
(l) "Insider" means a person subject to Section 16(b) of the
Securities Exchange Act of 1934.
(m) "Nonstatutory Stock Option" means an Option, which does not
meet the requirements of Section 422 of the Code, or even if meeting
the requirements of Section 422 of the Code, is not intended to be an
Incentive Stock Option and is so designated.
(n) "Option" means a right to purchase Company Stock granted
under the Plan, at a price determined in accordance with the Plan.
(o) "Parent" means, with respect to any corporation, a "parent
corporation" of that corporation within the meaning of Section 425(e)
of the Code.
(p) "Participant" means any employee who receives an Award under
the Plan.
(q) "Reload Feature" means a feature of an Option described in
an employee's stock option agreement that provides for the automatic
grant of a Reload Option in accordance with the provisions described
in Section 8(d).
(r) "Reload Option" means an Option granted to an employee equal
to the number of shares of already owned Company Stock delivered by
the employee to exercise an Option described in Section 8(d).
(s) "Rule 16b-3" means Rule 16b-3 of the Securities Exchange Act
of 1934. A reference in the Plan to Rule 16b-3 shall include a
reference to any corresponding rule (or number redesignation) of any
amendments to Rule 16b-3 enacted after the effective date of the
Plan's adoption.
(t) "Stock Appreciation Right" means a right granted under the
Plan to receive amounts in cash from the Company upon the surrender of
an Option.
(u) "Subsidiary" means, with respect to any corporation, a
"subsidiary corporation" of that corporation within the meaning of
Section 425(f) of the Code.
(v) "10% Shareholder" means a person who owns, directly or
indirectly, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Parent or
Subsidiary of the Company. Indirect ownership of stock shall be
determined in accordance with Section 425(d) of the Code.
(w) "Window Period" means the period beginning on the third
business day and ending on the twelfth business day following the
release for publication of quarterly or annual summary statements of
the Company's sales and earnings. The release for publication shall
be deemed to have occurred if the specified financial data (i) appears
on a wire service, (ii) appears in a financial news service, (iii)
appears in a newspaper of general circulation or (iv) is otherwise
made publicly available.
3. General. Awards of Options and Stock Appreciation Rights may be
granted under the Plan. Options granted under the Plan may be Incentive
Stock Options or Nonstatutory Stock Options.
4. Stock. Subject to Section 12 of the Plan, there shall be
reserved for issuance under the Plan an aggregate of 1,000,000 shares of
Company Stock, which shall be authorized, but unissued shares. Shares that
have not been issued under the Heilig-Meyers Company 1990 Stock Option Plan
(the "1990 Plan"), or shares allocable to options or portions thereof that
expire or otherwise terminate unexercised under the Company's 1983 Stock
Option Plan (the "1983 Plan"), the 1990 Plan or this Plan may be subjected
to an Award under the Plan. Shares allocable to Options or portions
thereof granted under the Plan that expire or otherwise terminate
unexercised may again be subjected to an Award under the Plan. The
Committee is expressly authorized to make an Award to a Participant
conditioned upon the surrender for cancellation of an existing Award or
Option granted under this Plan, the 1983 Plan or the 1990 Plan. For
purposes of determining the number of shares that are available for Awards
under the Plan, such number shall, if permissible under Rule 16b-3, include
the number of shares surrendered by an optionee or retained by the Company
in payment of federal and state income tax withholding liabilities upon
exercise of a Nonstatutory Stock Option or a Stock Appreciation Right.
5. Eligibility.
(a) Any employee of the Company (or Parent or Subsidiary of the
Company) who, in the judgment of the Committee has contributed or can be
expected to contribute to the profits or growth of the Company (or Parent
or Subsidiary) shall be eligible to receive Awards under the Plan.
Directors of the Company who are employees of the Company and are not
members of the Committee are eligible to participate in the Plan. The
Committee shall have the power and complete discretion, as provided in
Section 13, to select eligible employees to receive Awards and to determine
for each employee the terms and conditions, the nature of the award and the
number of shares to be allocated to each employee as part of each Award.
(b) The grant of an Award shall not obligate the Company or any
Parent or Subsidiary of the Company to pay an employee any particular
amount of remuneration, to continue the employment of the employee after
the grant or to make further grants to the employee at any time thereafter.
6. Stock Options.
(a) Whenever the Committee deems it appropriate to grant
Options, notice shall be given to the eligible employee stating the number
of shares for which Options are granted, the Option price per share,
whether the Options are Incentive Stock Options or Nonstatutory Stock
Options, the extent to which Stock Appreciation Rights are granted (as
provided in Section 7), and the conditions to which the grant and exercise
of the Options are subject. This notice, when duly accepted in writing by
the eligible employee, shall become a stock option agreement between the
Company and the eligible employee.
(b) The exercise price of shares of Company Stock covered by an
Option shall be not less than 100% of the Fair Market Value of such shares
on the Date of Grant; provided, that if an Incentive Stock Option is
granted to a Participant who, at the time of the grant, is a 10%
Shareholder, then the exercise price of the Shares of the Company Stock
covered by the Incentive Stock Option shall be not less than 110% of the
Fair Market Value of such shares on the Date of Grant.
(c) An employee may not receive Awards of Options under the Plan
with respect to more than 150,000 shares of Company Stock during any "one-
year period," which for purposes of this Plan, shall mean the Company's
fiscal year beginning on March 1 of each year and ending on the last day of
February of each year.
(d) Options may be exercised in whole or in part at such times
as may be specified by the Committee in the employee's stock option
agreement; provided that the exercise provisions for Incentive Stock
Options shall in all events not be more liberal than the following
provisions:
(i) No Incentive Stock Option may be exercised after the
first to occur of (x) ten years (or, in the case of an Incentive
Stock Option granted to a 10% Shareholder, five years) from the
Date of Grant, (y) three months from the employee's retirement or
termination of employment with the Company and its parent and
Subsidiary corporations for reasons other than Disability or
death, or (z) one year from the employee's termination of
employment on account of Disability or death.
(ii) Except as otherwise provided in this paragraph, no
Incentive Stock Option may be exercised unless the employee is
employed by the Company or a Parent or Subsidiary of the Company
at the time of the exercise (or was so employed not more than
three months before the time of the exercise) and has been
employed by the Company or a Parent or Subsidiary of the Company
at all times since the Date of Grant. If an employee's
employment is terminated other than by reason of his Disability
or death at a time when the employee holds an Incentive Stock
Option that is exercisable (in whole or in part), the employee
may exercise any or all of the exercisable portion of the
Incentive Stock Option (to the extent exercisable on the date of
termination) within three months after the employee's termination
of employment. If an employee's employment is terminated by
reason of his Disability at a time when the employee holds an
Incentive Stock Option that is exercisable (in whole or in part),
the employee may exercise any or all of the exercisable portion
of the Incentive Stock Option (to the extent exercisable on the
date of Disability) within one year after the employee's
termination of employment. If an employee's employment is
terminated by reason of his death at a time when the employee
holds an Incentive Stock Option that is exercisable (in whole or
in part), the Incentive Stock Option may be exercised (to the
extent exercisable on the date of death) within one year after
the employee's death by the person to whom the employee's rights
under the Incentive Stock Option shall have passed by will or by
the laws of descent and distribution.
(iii) An Incentive Stock Option by its terms, shall be
exercisable in any calendar year only to the extent that the
aggregate Fair Market Value (determined at the Date of Grant) of
the Company Stock with respect to which incentive stock options
are exercisable for the first time during the calendar year does
not exceed $100,000 (the "Limitation Amount"). Incentive Stock
Options granted under the Plan and similar incentive options
granted after 1986 under all other plans of the Company and any
Parent or Subsidiary of the Company shall be aggregated for
purposes of determining whether the Limitation Amount has been
exceeded. The Committee may impose such conditions as it deems
appropriate on an Incentive Stock Option to ensure that the
foregoing requirement is met. If Incentive Stock Options that
first become exercisable in a calendar year exceed the Limitation
Amount, the excess Options will be treated as Nonstatutory Stock
Options to the extent permitted by law.
(e) The Committee may, in its discretion, grant Options which by
their terms become fully exercisable upon a Change of Control,
notwithstanding other conditions on exercisability in the stock option
agreement.
(f) The Committee may, in its discretion, grant Options
containing or amend a Nonstatutory Option previously granted to provide for
a Reload Feature subject to the limitations of Section 8(d).
7. Stock Appreciation Rights.
(a) Whenever the Committee deems it appropriate, Stock
Appreciation Rights may be granted in connection with all or any part of an
Incentive Stock Option. At the discretion of the Committee, Stock
Appreciation Rights may also be granted in connection with all or any part
of a Nonstatutory Stock Option, either concurrently with the grant of the
Nonstatutory Stock Option or at any time thereafter during the term of the
Nonstatutory Stock Option. The following provisions apply to all Stock
Appreciation Rights that are granted in connection with Options:
(i) Stock Appreciation Rights shall entitle the employee,
upon exercise of all or any part of the Stock Appreciation
Rights, to surrender to the Company unexercised that portion of
the underlying Option relating to the same number of shares of
Company Stock as is covered by the Stock Appreciation Rights (or
the portion of the Stock Appreciation Rights so exercised) and to
receive in exchange from the Company an amount in cash or shares
of Company Stock (as provided in the Stock Appreciation Right)
equal to the excess of (x) the Fair Market Value on the date of
exercise of the Company Stock covered by the surrendered portion
of the underlying Option over (y) the exercise price of the
Company Stock covered by the surrendered portion of the
underlying Option. The Committee may limit the amount that the
employee will be entitled to receive upon exercise of the Stock
Appreciation Right.
(ii) Upon the exercise of a Stock Appreciation Right and
surrender of the related portion of the underlying Option, the
Option, to the extent surrendered, shall not thereafter be
exercisable.
(iii) Subject to any further conditions upon exercise
imposed by the Committee, a Stock Appreciation Right shall be
exercisable only to the extent that the related Option is
exercisable, except that in no event shall a Stock Appreciation
Right held by an Insider be exercisable for cash within the first
six months after it is awarded even though the related Option is
or becomes exercisable, and shall expire no later than the date
on which the related Option expires.
(iv) A Stock Appreciation Right may only be exercised at a
time when the Fair Market Value of the Company Stock covered by
the Stock Appreciation Right exceeds the exercise price of the
Company Stock covered by the underlying Option.
(b) The manner in which the Company's obligation arising upon
the exercise of a Stock Appreciation Right shall be paid shall be
determined by the Committee and shall be set forth in the employee's Option
or the related Stock Appreciation Rights agreement. The Committee may
provide for payment in Company Stock or cash, or a fixed combination of
Company Stock or cash, or the Committee may reserve the right to determine
the manner of payment at the time the Stock Appreciation Right is
exercised. Shares of Company Stock issued upon the exercise of a Stock
Appreciation Right shall be valued at their Fair Market Value on the date
of exercise.
(c) No Stock Appreciation Right held by an Insider shall be
exercisable for cash by its terms within the first six months after it is
granted.
8. Method of Exercise of Options and Stock Appreciation Rights.
(a) Options and Stock Appreciation Rights may be exercised by
the employee giving written notice of the exercise to the Company, stating
the number of shares the employee has elected to purchase under the Option
or the number of Stock Appreciation Rights he has elected to exercise. In
the case of the purchase of shares under an Option, such notice shall be
effective only if accompanied by the exercise price in full in cash;
provided that if the terms of an Option so permit, the employee may (i)
deliver, or cause to be withheld from the Option Shares, shares of Company
Stock (valued at their Fair Market Value on the date of exercise) in
satisfaction of all or any part of the exercise price, (ii) deliver a
properly executed exercise notice together with irrevocable instructions to
a broker to promptly deliver to the Company the amount of the sale or loan
proceeds to pay the exercise price, or (iii) deliver an interest bearing
promissory note, payable to the Company, in payment of all or part of the
exercise price together with such collateral as may be required by the
Committee at the time of exercise. The interest rate under any such
promissory note shall be equal to the minimum interest rate required at the
time to avoid imputed interest to the Participant under the Code. For
purposes of the method of payment described in (a)(ii) above, the exercise
shall be deemed to have occurred on the date the Company receives the
exercise notice (accompanied by the broker instructions).
(b) The Company may place on any certificate representing
Company Stock issued upon the exercise of an Option or Stock Appreciation
Right any legend deemed desirable by the Company's counsel to comply with
Federal or state securities laws, and the Company may require of the
employee a customary written indication of his investment intent. Until
the employee has made any required payment, including any applicable
withholding taxes, and has had issued to him a certificate for the shares
of Company Stock acquired, he shall possess no shareholder rights with
respect to the shares.
(c) As an alternative to making a cash payment to the Company to
satisfy tax withholding obligations, the Committee may establish procedures
permitting the Participant to elect to (i) deliver shares of already owned
Company Stock or (ii) have the Company retain the number of shares of
Company Stock that would satisfy all or a specified portion of the Federal,
state and local tax liabilities of the Participant in the year the Award
becomes subject to tax. Any such election shall be made only in accordance
with procedures established by the Committee.
(d) If an employee exercises an Option that has a Reload Feature
by delivering already owned shares of Company Stock, the employee shall
automatically be granted a Reload Option. The Reload Option shall be
subject to the following provisions:
(i) The Reload Option shall cover the number of shares of
Company Stock delivered by the employee to the Company to
exercise the Option with the Reload Feature;
(ii) The Reload Option will not have a Reload Feature;
(iii) The exercise price of shares of Company Stock covered
by a Reload Option shall be 100% of the Fair Market Value of such
shares on the date the employee delivers shares of Company Stock
to the Company to exercise the Option that has a Reload Feature;
(iv) The Reload Option shall be subject to the same
restrictions on exercisability as those imposed on the underlying
Option (possessing the Reload Feature);
(v) The shares acquired upon the exercise of the Reload
Option shall not be disposed of until the expiration of any
retention holding period imposed on the disposition of any shares
of Company Stock covered by the underlying Option (possessing the
Reload Feature).
The Committee may, in its discretion, cause the Company to place on any
certificate representing Company Stock issued to a Participant upon the
exercise of an underlying Option (possessing a Reload Feature as evidenced
by the stock option agreement for such Option) delivered pursuant to this
subsection (d), a legend restricting the sale or other disposition of such
Company Stock.
9. Nontransferability of Awards and Options. Options and Stock
Appreciation Rights by their terms, shall not be transferable by the
Participant except by will or by the laws of descent and distribution and
shall be exercisable, during the Participant's lifetime, only by the
Participant or by his guardian or legal representative.
10. Effective Date of the Plan. This Plan shall be effective on
February 8, 1994 and shall be submitted to the shareholders of the Company
for approval. Until (i) the Plan has been approved by the Company's
shareholders, and (ii) the requirements of any applicable federal or state
securities laws have been met, no Award Option or Stock Appreciation Right
shall be exercisable and no Company Stock shall be issued under the Plan.
11. Termination, Modification, Change. If not sooner terminated by
the Board, this Plan shall terminate at the close of business on February
7, 2004. No Awards shall be made under the Plan after its termination.
The Board may terminate the Plan or may amend the Plan in such respects as
it shall deem advisable; provided, that (i) if and to the extent required
by the Code or Rule 16b-3, no change shall be made that materially
increases the total number of shares of Company Stock reserved for issuance
pursuant to Awards granted under the Plan (except pursuant to Section 12),
materially modifies the requirements as to eligibility for participation in
the Plan, or materially increases the benefits accruing to Participants
under the Plan unless such change is authorized by the shareholders of the
Company. Notwithstanding the foregoing, the Board may unilaterally amend
the Plan and Awards as it deems appropriate to ensure compliance with Rule
16b-3 and to cause Options to meet the requirements of the Code and
regulations thereunder. Except as provided in the preceding sentence, a
termination or amendment of the Plan shall not, without the consent of the
Participant, adversely affect a Participant's rights under an Award
previously granted to the Participant.
12. Change in Capital Structure.
(a) In the event of a stock dividend, stock split or combination
of shares, recapitalization or merger in which the Company is the surviving
corporation or other change in the Company's capital stock (including, but
not limited to, the creation or issuance to shareholders generally of
rights, options or warrants for the purchase of common stock or preferred
stock of the Company), the number and kind of shares of stock or securities
of the Company to be subject to the Plan and to Options then outstanding or
to be granted thereunder, the maximum number of shares or securities which
may be delivered under the Plan, the exercise price and other relevant
provisions shall be appropriately adjusted by the Committee, whose
determination shall be binding on all persons. If the adjustment would
produce fractional shares with respect to any unexercised Option, the
Committee may adjust appropriately the number of shares covered by the
Option so as to eliminate the fractional shares.
(b) If the Company is a party to a consolidation or a merger in
which the Company is not the surviving corporation, a transaction that
results in the acquisition of substantially all of the Company's
outstanding stock by a single person or entity, or a sale or transfer of
substantially all of the Company's assets, the Committee may take such
actions with respect to outstanding Awards as the Committee deems
appropriate.
(c) Notwithstanding anything in the Plan to the contrary, the
Committee may take the foregoing actions without the consent of any
Participant, and the Committee's determination shall be conclusive and
binding on all persons for all purposes.
(d) If a Change of Control occurs, the Committee may take such
actions with respect to outstanding Options or Awards as the Committee
deems appropriate. These actions may include, but shall not be limited to,
accelerating the expiration date of any or all outstanding Options and
Awards and the dates on which any part of the Options and Awards may be
exercised, in which case they shall be exercisable in full on dates
designated by the Committee. The effectiveness of such acceleration, and
any exercise of Options and Awards pursuant thereto with respect to shares
in excess of the number of shares which could have been exercised in the
absence of such acceleration, shall be conditioned upon the consummation of
the applicable Change of Control.
13. Administration of the Plan. The Plan shall be administered by a
committee (the "Committee"), consisting of not less than three Directors of
the Company, who shall be appointed by the Board of Directors. The
Committee shall be the Compensation Committee of the Board, unless the
Board shall appoint another committee (or subcommittee) to administer the
Plan. If and to the extent required by Rule 16b-3, all members of the
Committee shall be "disinterested persons," as that term is defined in Rule
16b-3. If any member fails to qualify as a "disinterested person" (to the
extent required by Rule 16b-3), such person shall immediately cease to be a
member of the Committee (or subcommittee) and shall not take part in future
Committee (or subcommittee) deliberations. The Committee shall have
general authority to impose any limitation or condition upon an Award the
Committee deems appropriate to achieve the objectives of the Award and the
Plan and, in addition, and without limitation and in addition to powers set
forth elsewhere in the Plan, shall have the following specific authority:
(a) The Committee shall have the power and complete discretion
to determine (i) which eligible employees shall receive an Award and
the nature of the Award, (ii) the number of shares of Company Stock to
be covered by each Award, (iii) whether Options shall be Incentive
Stock Options or Nonstatutory Stock Options, (iv) when, whether and to
what extent Stock Appreciation Rights shall be granted in connection
with Options, (v) whether to include a Reload Feature in an option and
to impose limitations on the use of shares acquired through the
exercise of a Reload Option to exercise Options, (vi) the time or
times when an Award shall be granted, (vii) whether an Award shall
become vested over a period of time and when it shall be fully vested,
(viii) when Options and Stock Appreciation Rights may be exercised,
(ix) whether a Disability exists, (x) the manner in which payment will
be made upon the exercise of Options or Stock Appreciation Rights,
(xi) conditions relating to the length of time before disposition of
Company Stock received upon the exercise of Options or Stock
Appreciation Rights is permitted, (xii) whether to approve a
Participant's election (X) to deliver shares of already owned Company
Stock to satisfy tax liabilities arising upon the exercise of a
Nonstatutory Stock Option or Stock Appreciation Right or (Y) to have
the Company withhold from the shares to be issued upon the exercise of
a Nonstatutory Stock Option or Stock Appreciation Right that number of
shares necessary to satisfy tax liabilities arising from such
exercise, (xiii) notice provisions relating to the sale of Company
Stock acquired under the Plan, and (xiv) any additional requirements
relating to Awards that the Committee deems appropriate.
Notwithstanding the foregoing, no "tandem stock options" (where two
stock options are issued together and the exercise of one option
affects the right to exercise the other option) may be issued in
connection with Incentive Stock Options. The Committee shall also
have the power to amend the terms of previously granted Awards so long
as the terms as amended are consistent with the terms of the Plan and,
where applicable, consistent with the qualification of the Option as
an Incentive Stock Option. The consent of the Participant must be
obtained with respect to any amendment that would adversely affect a
Participant's rights under the Award, except that such consent will
not be required if the amendment is for the purpose of complying with
Rule 16b-3 or any requirement of the Code applicable to the Award.
(b) The Committee may adopt rules and regulations for carrying
out the Plan. The interpretation and construction of any provision of
the Plan by the Committee shall be final and conclusive. The
Committee may consult with counsel, who may be counsel to the Company,
and shall not incur any liability for any action taken in good faith
in reliance upon the advice of counsel.
(c) A majority of the members of the Committee shall constitute
a quorum, and all actions of the Committee shall be taken by a
majority of the members present. Any action may be taken by a written
instrument signed by all of the members, and any action so taken shall
be fully effective as if it had been taken at a meeting.
14. Notice. All notices and other communications required or
permitted to be given under this Plan shall be in writing and shall be
deemed to have been duly given if delivered personally or mailed first
class, postage prepaid, as follows (a) if to the Company - at its principal
business address to the attention of the Treasurer; (b) if to any
Participant - at the last address of the Participant known to the sender at
the time the notice or other communication is sent.
15. Interpretation. The terms of this Plan are subject to all
present and future regulations and rulings of the Secretary of the Treasury
or his delegate relating to the qualification of Incentive Stock Options
under the Code and are subject to all present and future rulings of the
Securities Exchange Commission with respect to Rule 16b-3. The terms of
this Plan shall be governed by the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed
this _____ day of March, 1994.
HEILIG-MEYERS COMPANY
By____________________________________
<PAGE>
EXHIBIT B
ARTICLE III
The aggregate number of shares of capital stock which the Corporation
shall have authority to issue is 3,000,000 shares of Preferred Stock, par
value $10.00 per share, and 250,000,000 shares of Common Stock, par value
$2.00 per share.
<PAGE>
HEILIG-MEYERS COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby appoints David W.
Robertson and Troy A. Peery, Jr., or either of them, each with full power of
substitution, as proxies for the undersigned, and hereby authorizes them to
represent and to vote, as designated below, all of the shares of common stock
of Heilig-Meyers Company (the "Company") which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of the Company to be held on June
15, 1994, at 10:30 a.m. E.D.T., or at any adjournment thereof, as fully as
could the undersigned if personally present.
1. ELECTION OF DIRECTORS
( ) FOR all nominees listed below ( ) WITHHOLD AUTHORITY
(except as indicated below) to vote for all
nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.)
William C. DeRusha, Troy A. Peery, Jr., Alexander Alexander,
Robert L. Burrus, Jr., Arthur D. Charpentier, Benjamin F. Edwards, III,
Alan G. Fleischer, Nathaniel Krumbein, Hyman Meyers,
S. Sidney Meyers, Lawrence N. Smith, George A. Thornton, III
_____________________________________________________________________________
2. ADOPTION OF 1994 STOCK OPTION PLAN.
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. AMENDMENT OF THE RESTATED ARTICLES OF INCORPORATION to increase the number
of shares of Common Stock which the Company is authorized to issue to
250,000,000 shares.
( ) FOR ( ) AGAINST ( ) ABSTAIN
4. RATIFICATION OF THE SELECTION of Deloitte & Touche as accountants and
auditors for the Company for the current fiscal year.
( ) FOR ( ) AGAINST ( ) ABSTAIN
5. IN THEIR DISCRETION upon any other matters which may properly come before
the meeting or any adjournment thereof.
If this proxy is properly executed and returned, the shares to which it
relates will be voted as specified, but if no specification is made, the
shares to which it relates will be voted FOR the election of the directors
listed on the reverse side, and FOR Items 2, 3, and 4.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
Receipt of the Board of Directors' Notice of and Proxy Statement for the
Annual Meeting of Shareholders to be held on June 15, 1994 is hereby
acknowledged.
Dated____________________________, 1994
_______________________________________
Signature
_______________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE, AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE.
