SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) 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)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
HEILIG-MEYERS COMPANY
2235 STAPLES MILL ROAD
RICHMOND, VIRGINIA 23230
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 21, 1995
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 21, 1995, commencing at 10:00
a.m. E.D.T., for the following purposes:
1. To elect a board of twelve directors.
2. To ratify or reject the selection of Deloitte & Touche LLP as
accountants and auditors for the Company for the current fiscal year.
3. 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, 1995,
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, 1995
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, 1995
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 21, 1995
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 21, 1995, 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.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has fixed the close of business on April 26, 1995 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, 48,548,746 shares of Common Stock were
outstanding and entitled to vote at the meeting.
1
<PAGE>
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 1994 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, 1995. The table also sets forth the amount of
shares beneficially owned as of April 26, 1995, 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.
<TABLE>
<CAPTION>
AMOUNT OF SHARES
NAME, AGE, POSITIONS OF DIRECTORS BENEFICIALLY OWNED
WITH 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, 1995(2)
<S> <C> <C>
WILLIAM C. DERUSHA, 45................................ 1983 509,303(4)(5)
Chairman of the Board since April 1986.(3)
Chief Executive Officer since April 1984.(3)
Director, Signet Banking Corporation and Best Products
Co., Inc.
TROY A. PEERY, JR., 49................................ 1984 472,193(4)
President since April 1986.(3)
Chief Operating Officer since December 1987.(3)
ALEXANDER ALEXANDER, 66............................... 1975 34,146(4)
President, Colony Management Corporation (real estate
management).
ROBERT L. BURRUS, JR., 60............................. 1973 42,024(4)
Chairman (since 1990) and partner of McGuire, Woods,
Battle & Boothe, L.L.P. (law firm). Director, CSX
Corporation, S&K Famous Brands, Inc. and Concepts
Direct, Inc.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF SHARES
NAME, AGE, POSITIONS OF DIRECTORS BENEFICIALLY OWNED
WITH 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, 1995(2)
<S> <C> <C>
ARTHUR D. CHARPENTIER, 48............................. 1987 73,152(4)(6)
President, Merritt Research Corporation (investment
advisory services) since 1987. General partner,
Prescott Group (investment partnerships) 1988 to 1991.
BENJAMIN F. EDWARDS III, 63........................... 1983 43,250(4)(7)
Chairman of the Board, President, Chief Executive
Officer, 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, 78................................. 1976 22,780(4)
Of Counsel, law firm of Hirschler, Fleischer,
Weinberg, Cox & Allen. Member, Board of Associates,
University of Richmond.
NATHANIEL KRUMBEIN, 80................................ 1946 138,530(4)(8)
Retired Vice Chairman of the Company.
HYMAN MEYERS, 83...................................... 1940 309,722(4)(9)(10)
Retired Chairman of the Board of the Company.
S. SIDNEY MEYERS, 81.................................. 1940 65,481(4)(9)(11)
Retired Vice Chairman of the Company.
LAWRENCE N. SMITH, 57................................. 1975 39,681(4)(12)
President and Chief Executive Officer, Resource Bank
since December 1992. Chairman and Chief Executive
Officer, Essex Financial Group, Inc. (investment and
mortgage banking firm) until December 1992.
GEORGE A. THORNTON III, 54............................ 1980 215,811(4)(13)
Chairman, TimBuck II, Ltd. (Ships Watch, Buck Island,
resort real estate development). Independent
consultant to furniture manufacturers.
Certain Executive Officers
JOSEPH R. JENKINS..................................... 192,745(4)
Executive Vice President and Chief Financial
Officer(3)
JAMES F. CERZA, JR.................................... 231,070(4)
Executive Vice President(3)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF SHARES
NAME, AGE, POSITIONS OF DIRECTORS BENEFICIALLY OWNED
WITH 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, 1995(2)
<S> <C> <C>
JAMES R. RIDDLE....................................... 206,722(4)
Executive Vice President(3)
All current executive officers and directors as a 3,137,692(4)(14)
group (24 persons).................................. 6.5%
</TABLE>
(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, 1995.
(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 2,000 shares owned of record by Mr. Edwards' wife.
(8) Includes 46 shares held by Mr. Krumbein and his wife as co-trustees or
custodians. Excludes 73,085 shares owned of record by Mr. Krumbein's wife.
Includes 22,950 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 156,952 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) Excludes 2,225 shares owned of record by Mr. Smith's wife.
(13) 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.
(14) Excludes a total of 8,609 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.
4
<PAGE>
NOMINATIONS FOR DIRECTOR
The By-laws of the Company provide that the only persons who may be
nominated as 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 six meetings during the fiscal year ended
February 28, 1995. 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 Mr. Sidney Meyers, a Company director,
reported late gifts of 19,200 shares in December 1994 and Hyman Meyers, a
Company director, reported late gifts of 15,442 shares in October 1994, 3,500
shares in November 1994 and 40,350 shares in December 1994.
5
<PAGE>
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,
1995. 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, 1995.
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, 1995.
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.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The table below sets forth for the years ended
February 28, 1995, February 28, 1994 and February 28, 1993, the annual and
long-term compensation for services in all capacities to the Company and its
subsidiaries of those persons who at February 28, 1995 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, 1995.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
SECURITIES
ANNUAL COMPENSATION UNDERLYING
FISCAL OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION SARS(#)(3) COMPENSATION(1)
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha 1995 $500,000 $260,000 (2) 90,000 $45,293
Chairman of the 1994 432,000 367,000 (2) 135,000 12,937
Board and Chief 1993 400,000 340,000 (2) 0 9,652
Executive Officer
Troy A. Peery, Jr. 1995 450,000 234,000 (2) 90,000 53,822
President and Chief 1994 388,800 330,000 (2) 135,000 33,252
Operating Officer 1993 360,000 306,000 (2) 0 22,920
Joseph R. Jenkins 1995 275,000 143,000 (2) 50,000 33,145
Executive Vice 1994 240,000 204,000 (2) 75,000 20,339
President and Chief 1993 210,000 178,500 (2) 0 17,170
Financial Officer
James F. Cerza, Jr. 1995 275,000 143,000 (2) 50,000 20,996
Executive Vice 1994 240,000 204,000 (2) 75,000 8,310
President 1993 210,000 178,500 (2) 0 9,963
James R. Riddle 1995 243,000 78,000 (2) 50,000 29,516
Executive Vice 1994 217,000 184,000 (2) 75,000 18,353
President 1993 190,000 161,500 (2) 0 13,912
</TABLE>
(1) Consists of Company contributions to the Employees' Profit Sharing and
Retirement Savings Plan ("Savings Plan"), the Employees' Supplemental Profit
Sharing and Retirement Savings Plan ("Supplemental Plan") and the dollar value
of split dollar life insurance premiums paid on behalf of the named executive
officers. Company contributions to the Savings Plan, company contributions to
the Supplemental Plan and dollar value of split dollar life insurance premiums
paid, respectively, during fiscal 1995, for the named executive officers were:
Mr. DeRusha, $7,893, $37,043, $357; Mr. Peery, $7,893, $45,612, $316; Mr.
Jenkins, $7,893, $24,859, $393; Mr. Cerza, $6,545, $14,079, $372; and Mr.
Riddle, $7,893 $21,421, $202.
(2) None of the named executive officers received Other Annual Compensation
in excess of the lesser of $50,000 or 10% of combined salary and bonus for
fiscal 1993, 1994 or 1995.
(3) Amounts have been adjusted to reflect three-for-two stock splits
distributed in the form of a stock dividend in July 1993.
7
<PAGE>
OPTION GRANT TABLE. The following table sets forth information concerning
individual grants of stock options made during the year ended February 28, 1995,
to the Company's executive officers named in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
SECURITIES % OF TOTAL VALUE AT ASSUMED ANNUAL
UNDERLYING OPTIONS/SARS EXERCISE RATES OF STOCK PRICE
OPTIONS/ GRANTED TO OR BASE APPRECIATION FOR OPTION
SARS EMPLOYEES IN PRICE TERM(1)
NAME GRANTED (#) FISCAL YEAR ($/SH) EXPIRATION DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha 90,000 14.99% $26.13 August 14, 2004 $1,479,600 $3,747,600
Troy A. Peery, Jr. 90,000 14.99 26.13 August 14, 2004 1,479,600 3,747,600
Joseph R. Jenkins 50,000 8.33 26.13 August 14, 2004 822,000 2,082,000
James F. Cerza, Jr. 50,000 8.33 26.13 August 14, 2004 822,000 2,082,000
James R. Riddle 50,000 8.33 26.13 August 14, 2004 822,000 2,082,000
</TABLE>
(1) Stock appreciation values calculated by annually compounding the
exercise price until expiration at the growth rate noted.
AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES. The following table
sets forth the number of shares acquired on exercise of stock options and the
aggregate gains realized on exercise in fiscal 1995 by the Company's executive
officers named in the Summary Compensation Table. The table also sets forth the
number of shares covered by exercisable and unexercisable options held by such
executives on February 28, 1995 and the aggregate gains that would have been
realized had these options been exercised on February 28, 1995, even though
these options were not exercised, and the unexercisable options could not have
been exercised, on February 28, 1995.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
EXERCISE VALUE OPTIONS/SARS AT FY-END AT FY-END(2)
NAME (#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha 0 $ 0 393,103 135,000 $ 4,612,451 $ 188,663
Troy A. Peery, Jr. 11,074 181,898 343,926 135,000 3,694,712 188,663
Joseph R. Jenkins 5,000 81,725 160,750 75,000 1,721,209 104,813
James F. Cerza, Jr. 0 0 196,250 75,000 2,239,331 104,813
James R. Riddle 0 0 170,625 75,000 1,865,334 104,813
</TABLE>
(1) Calculated by deducting option exercise price from the average of the
high and low sales price of Common Stock on the date of exercise.
(2) Based on the closing sales price of the Common Stock of $23 5/8 on
February 28, 1995.
8
<PAGE>
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 annual and long-term incentive
compensation programs to achieve these objectives. The incentive 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 Company's 1994
Stock Option Plan meets the requirements for performance-based compensation. 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, 1996. 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
annual 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 for individual executives. 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 pre-tax profits and 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
9
<PAGE>
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".
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.
Options were granted to the five most senior executive officers under the
Company's 1994 Stock Option Plan. The option grants qualified as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended.
These option grants were in recognition of the performance of the five officers
during the fiscal year ending February 28, 1994. The options vest over a four
year period and expire ten years following the date of the grant.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. The Committee determined the
compensation of William C. DeRusha, Chief Executive Officer, for the fiscal year
ended February 28, 1995, 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. The Committee has retained the services of an
independent compensation consultant to review the Company's executive
compensation practices. The Committee will consider the consultant's report in
its evaluation of executive compensation for the fiscal year ending February 29,
1996.
COMPENSATION COMMITTEE
Robert L. Burrus, Jr., Chairman
Alan G. Fleischer
Lawrence N. Smith
George A. Thornton III
10
<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.
(graph)
S&P RETAIL
DATE HMY S&P 500 COMPOSITE
1990 100.0% 100.0% 100.0%
1991 121.7% 114.7% 123.2%
1992 223.2% 133.0% 166.1%
1993 319.4% 147.2% 190.7%
1994 532.8% 159.4% 191.3%
1995 384.9% 171.3% 175.1%
11
<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 automatic annual one-year extensions, 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 automatic one-year renewals,
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
fourteen 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
12
<PAGE>
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, 1995, directors who were not
employees of the Company were each paid fees of $20,000. For the fiscal year
ending February 29, 1996, directors who are not employees of the Company will
each be paid fees of $25,000, plus a fee of $1,500 for each board meeting
attended in person and a fee of $750 for each board meeting attended by
telephone. 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 (age 59, in the case of one
outside director), 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 (age 59, in the case of one outside
director), 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 (age 59, in
the case of one outside director), 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
received annual fees of $6,000 for the fiscal year ended January 28, 1995, and
will receive a fee of $1,500 for each executive committee meeting attended in
the fiscal year ending February 29, 1996. 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. For the fiscal year ending
13
<PAGE>
February 29, 1996, directors who serve on all other committees and who are not
full-time employees of the Company will receive a fee of $1,000 for each
committee meeting attended.
Under the Company's 1990 Stock Option Plan, each director who was not a
full time employee of the Company received an automatic grant on August 14,
1994, of an option to purchase 20,250 shares of Common Stock (which reflects
adjustments for stock splits distributed in the form of stock dividends since
the adoption of the 1990 Stock Option Plan) at an exercise price equal to the
fair market value of the Common Stock on August 14, 1994.
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, L.L.P., which was retained
as general counsel by the Company during the fiscal year ended February 28,
1995, 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, 1995, the Company made the following
payments as retirement compensation: $94,244 to Hyman Meyers, $40,176 to S.
Sidney Meyers, and $46,572 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 $2,248 in health and life insurance premiums for Hyman Meyers and
$4,240 for each of S. Sidney Meyers and Nathaniel Krumbein during the fiscal
year ended February 28, 1995. The Company provided S. Sidney Meyers and
Nathaniel Krumbein with office space and services, which they shared at a total
cost of $62,366 during the fiscal year ended February 28, 1995.
14
<PAGE>
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, 1995.
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, 1995, the unexpired terms of all leases with members of the Meyers and
Krumbein families, excluding renewal options, ranged from 1 3/4 years to 14 3/4
years.
During the fiscal year ended February 28, 1995, 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, 1995, and rent to be received by these
directors and members of their families on account of properties leased to the
Company.
<TABLE>
<CAPTION>
RENT RECEIVED DURING MINIMUM ANNUAL RENT
FISCAL YEAR ENDED (AT CURRENT ANNUAL
FEBRUARY 28, 1995 RENTAL RATES)
<S> <C> <C>
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
</TABLE>
* 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 certain leases with the Company's directors and members of
their families, 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 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.
1Under four of these leases, the Company pays real estate taxes and
insurance premiums while the remaining two leases require the Company to pay 50%
of real estate taxes and insurance premiums. In addition, under all leases, the
Company as tenant bears the expense of real estate tax increases, provides
maintenance, makes certain repairs and pays utility charges and insurance rate
increases attributable to it. The leases also provide for rental escalations for
any exercised renewal option based on increases in the Consumer Price Index.
15
<PAGE>
PRINCIPAL SHAREHOLDER
The following table lists the only persons known by the Company to be the
beneficial owner of more than five percent of the Common Stock of the Company as
of April 26, 1995.
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL
BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
<S> <C> <C>
The Prudential Insurance Company of America.......................... 4,269,495(1) 8.80%
Prudential Plaza
Newark, NJ 07102-3777
</TABLE>
(1) The Prudential Insurance Company of America reported sole voting and
dispositive power with respect to 546,750 of such shares, and shared voting and
dispositive power with respect to 3,722,745 of such shares. The ownership
information is based upon the Schedule 13G filed April 4, 1995, which indicates
the ownership information as of December 31, 1994.
RATIFICATION OF SELECTION OF AUDITORS
Deloitte & Touche LLP, 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 LLP 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 LLP, 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 1996 MEETING
Proposals of shareholders intended to be presented at the 1996 Annual
Meeting must be received by the Company at its principal executive offices no
later than January 4, 1996, for inclusion in the Company's 1996 proxy materials.
Such proposals should meet the applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
16
<PAGE>
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, 1995. 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, 1995
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.
17
HEILIG-MEYERS COMPANY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby appoints Troy
A. Peery. Jr. and David W. Robertson, and each of them, proxies with
full power of substitution to represent the undersigned at the Annual
Meeting of Shareholders of Heilig-Meyers Company (the "Company") to be
held on June 21, 1995, and to vote, as directed below, all the shares of
Common Stock of the Company which the undersigned would be entitled to
vote if personally present.
1. ELECTION OF DIRECTORS ( ) FOR all nominees ( ) WITHHOLD AUTHORITY to
listed below (except as vote for all nominees
marked to the listed below
contrary below)
William C. DeRusha, Troy A. Peery, Jr., Alexander Alexander, Robert L. Burrus,
Jr., Arthur D. Charpender, Benjamin F. Edwards III, Alan G. Fleischer,
Nathaniel Krumbein, Hyman Meyers, S. Sidney Meyers, Lawrence N. Smith,
George A. Thornton III
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
-----------------------------------------------------------------------------
2. RATIFICATION OF THE SELECTION of Deloitte & Touche LLP as accountants and
auditors for the current fiscal year.
FOR ( ) AGAINST ( ) ABSTAIN ( )
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy when properly
executed will be voted in the manner directed herein by the undersigned
stockholder. If no direction is made, this proxy will be voted "FOR" the
election of each of the nominees named in Proposal 1 and "FOR" Proposal 2.
(Continued and to be signed on the other side)
The undersigned acknowledges receipt of the Notice of Annual Meeting and of
the Proxy Statement attached thereto.
Please sign exactly as name
appears at left. If shares are held by
two or more persons as joint tenants,
any of such persons may sign. When
signing as attorney, executor,
administrator, trustees, guardian,
etc., give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Dated:-------------------------,1995
------------------------------------
------------------------------------
PLEASE MARK, SIGN, DATE, AND RETURN THE
PROXY CARD USING THE ENCLOSED ENVELOPE.
