HEILIG MEYERS CO, DEF 14A, 1996-05-06

HEILIG MEYERS CO
DEF 14A, 1996-05-06
FURNITURE STORES

Previous: INVESTORS INSURANCE GROUP INC, 8-K, 1996-05-06

Next: HUDSON GENERAL CORP, 10-Q, 1996-05-06

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:

HEILIG-MEYERS COMPANY
2235 STAPLES MILL ROAD
RICHMOND, VIRGINIA 23230

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 19, 1996

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 19, 1996, commencing at 10:00
a.m. E.D.T., for the following purposes:

1. To elect a board of eleven directors.

2. To consider and vote upon a proposal to amend the Company's 1990 Stock
Option Plan.

3. To consider and vote upon a proposal to amend the Company's 1994 Stock
Option Plan.

4. To consider and vote upon a proposal to approve the Company's Annual
Performance-Based Bonus Plan.

5. To ratify or reject the selection of Deloitte & Touche LLP as
accountants and auditors for the Company for the current fiscal year.

6. 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, 1996,
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, 1996

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.

HEILIG-MEYERS COMPANY
2235 STAPLES MILL ROAD
RICHMOND, VIRGINIA 23230

PROXY STATEMENT
TO BE MAILED ON OR ABOUT MAY 3, 1996
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 19, 1996

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 19, 1996, 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 on a matter will count towards a quorum,
but will have no effect on the action taken with respect to such matter. Shares
held of record by a broker or its nominee (broker non-votes) that are not voted
on any matter at the meeting will not be included in determining whether a
quorum is present at the meeting.

VOTING SECURITIES AND RECORD DATE

The Board of Directors has fixed the close of business on April 26, 1996 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, 48,590,221 shares of Common Stock were
outstanding and entitled to vote at the meeting.

<PAGE>

ELECTION OF DIRECTORS

NOMINEES

The Company's Board of Directors presently consists of twelve directors,
and will consist of eleven directors as of the 1996 Annual Meeting of
Shareholders. The eleven nominees named below were elected at the 1995 Annual
Meeting of Shareholders to serve until the next Annual Meeting of Shareholders
or the election and qualification of their successors. The eleven 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, 1996. The table also sets forth the amount of
shares beneficially owned as of April 26, 1996, 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
BENEFICIALLY
OWNED
AND PERCENT
OF
NAME, AGE, POSITIONS OF DIRECTORS CLASS
WITH THE COMPANY OR PRINCIPAL OUTSTANDING
OCCUPATION FOR THE PAST FIVE DIRECTOR AS OF APRIL
YEARS AND OTHER INFORMATION SINCE(1) 26, 1996(2)
<S> <C> <C>
WILLIAM C. DERUSHA, 46................................ 1983 597,353 (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., 50................................ 1984 560,243 (4)
President since April 1986.(3)
Chief Operating Officer since December 1987.(3)

ALEXANDER ALEXANDER, 67............................... 1975 34,500 (4)
President, Colony Management Corporation
(real estate management).

ROBERT L. BURRUS, JR., 61............................. 1973 41,824 (4)
Chairman (since 1990) and partner of McGuire, Woods,
Battle & Boothe, L.L.P. (law firm). Director, CSX
Corporation, S&K Famous Brands, Inc., Concepts Direct,
Inc. and
O'Sullivan Corporation.
</TABLE>

<PAGE>

<S> <C> <C>
BENJAMIN F. EDWARDS III, 64........................... 1983 45,250 (4)(6)
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, 79................................. 1976 23,750 (4)
Of Counsel, law firm of Hirschler, Fleischer,
Weinberg, Cox & Allen. Member, Board of Associates,
University of Richmond.

NATHANIEL KRUMBEIN, 81................................ 1946 132,368 (4)(7)
Retired Vice Chairman of the Company.

HYMAN MEYERS, 84...................................... 1940 305,622 (4)(8)(9)
Retired Chairman of the Board of the Company.

S. SIDNEY MEYERS, 82.................................. 1940 64,751 (4)(8)(10)
Retired Vice Chairman of the Company.

LAWRENCE N. SMITH, 58................................. 1975 39,681 (4)(11)
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, 55............................ 1980 223,442 (4)(12)
Chairman, TimBuck II, Ltd. (Ships Watch, Buck Island,
resort real estate development). Independent
consultant to furniture manufacturers.

Certain Executive Officers

JOSEPH R. JENKINS..................................... 243,795 (4)
Executive Vice President and Chief Financial
Officer(3)

JAMES F. CERZA, JR.................................... 268,704 (4)(13)
Executive Vice President(3)

JAMES R. RIDDLE....................................... 247,972 (4)
Executive Vice President(3)

All current executive officers and directors as a
group (23 persons).................................... 3,455,377 (4)(14)
7.1%
</TABLE>

<PAGE>
(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.

(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, 1996.

(5) Excludes 150 shares owned of record by Mr. DeRusha's wife.

(6) Excludes 2,000 shares owned of record by Mr. Edwards' wife.

(7) Includes 5,046 shares held by Mr. Krumbein and his wife as co-trustees
or custodians. Excludes 65,585 shares owned of record by Mr. Krumbein's wife.
Includes 29,288 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.

(8) 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.

(9) Includes 145,000 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.

(10) Excludes 27,149 shares owned of record by Mr. Meyers' wife.

(11) Excludes 5,000 shares owned of record by Mr. Smith's wife.

(12) Includes 45,110 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 13,605 shares owned of record by Mr. Cerza's wife.

(14) Excludes a total of 1,369 shares owned of record by the wives of
executive officers not named above. Includes 78,152 shares held by Arthur D.
Charpentier, a director whose term expires at the 1996 Annual Meeting of
Shareholders, either individually or jointly with his wife. See notes 5 through
13 above.

The securities brokerage and investment banking firm of A.G. Edwards &
Sons, Inc., may perform 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.

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

<PAGE>
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 five meetings during the fiscal year ended
February 29, 1996. 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 he served that were held in the past fiscal
year during the periods in which he was a director 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 one report of a gift to his children was
filed late by Hyman Meyers, a Company director.

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 29,
1996. The primary functions of the Committee are to make

<PAGE>
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 29, 1996.
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 determine the salary level for the Company's Chief Executive
Officer; to review and report to the Board concerning annual salaries and
year-end bonuses recommended by management for other 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 29, 1996.
The primary functions of the Committee are to recommend persons for membership
on the Board and for membership on committees established by the Board and to
consider nominees recommended by shareholders.

<PAGE>

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The table below sets forth for the years ended
February 29, 1996, February 28, 1995 and February 28, 1994, the annual and
long-term compensation for services in all capacities to the Company and its
subsidiaries of those persons who at February 29, 1996 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
29, 1996.

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
SECURITIES
ANNUAL COMPENSATION UNDERLYING ALL
FISCAL OTHER ANNUAL OPTIONS/ OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION SARS(#)(2) COMPENSATION(3)
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha 1996 $ 530,000 $ 0 (1) 63,600 $17,067
Chairman of the 1995 500,000 260,000 (1) 90,000 45,293
Board and Chief 1994 432,000 367,000 (1) 135,000 12,937
Executive Officer

Troy A. Peery, Jr. 1996 477,000 0 (1) 63,600 16,261
President and Chief 1995 450,800 234,000 (1) 90,000 53,822
Operating Officer 1994 388,000 330,000 (1) 135,000 33,252

Joseph R. Jenkins 1996 325,000 0 (1) 39,600 10,363
Executive Vice 1995 275,000 143,000 (1) 50,000 33,145
President and Chief 1994 240,000 204,000 (1) 75,000 20,339
Financial Officer

James F. Cerza, Jr. 1996 325,000 0 (1) 39,600 10,266
Executive Vice 1995 275,000 143,000 (1) 50,000 20,996
President 1994 240,000 204,000 (1) 75,000 8,310

James R. Riddle 1996 243,000 0 (1) 10,000 7,224
Executive Vice 1995 243,000 78,000 (1) 50,000 29,516
President 1994 217,000 184,000 (1) 75,000 18,353

</TABLE>

(1) 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 1994, 1995 or 1996.

(2) Amounts have been adjusted to reflect three-for-two stock splits
distributed in the form of a stock dividend in July 1993.

(3) 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 1996 for the named executive officers were:
Mr. DeRusha, $3,133, $13,580, $354; Mr. Peery, $3,133, $12,816, $312; Mr.
Jenkins, $3,137, $6,836, $390; Mr. Cerza, $3,133, $6,764 , $369; and Mr. Riddle,
$3,129, $3,893, $202.

<PAGE>
OPTION GRANT TABLE. The following table sets forth information concerning
individual grants of stock options made during the year ended February 29, 1996,
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
VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
SECURITIES APPRECIATION
UNDERLYING % OF TOTAL FOR OPTION TERM(1)
OPTIONS/ OPTIONS/SARS
SARS GRANTED TO EXERCISE ON
GRANTED EMPLOYEES IN BASE PRICE
NAME (#) FISCAL YEAR ($/SH) EXPIRATION DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha 63,600 15.43% $17.25 January 8, 2006 $ 690,060 $1,750,272
Troy A. Peery, Jr. 63,600 15.43 17.25 January 8, 2006 690,060 1,750,272
Joseph R. Jenkins 39,600 9.61 17.25 January 8, 2006 429,660 1,089,792
James F. Cerza, Jr. 39,600 9.61 17.25 January 8, 2006 429,660 1,089,792
James R. Riddle 10,000 2.43 17.25 January 8, 2006 108,500 275,200
</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 1996 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 29, 1996 and the aggregate gains that would have been
realized had these options been exercised on February 29, 1996, even though
these options were not exercised, and the unexercisable options could not have
been exercised, on February 29, 1996.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

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(1)
NAME REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha 0 $0 514,903 76,800 $1,506,422 $0
Troy A. Peery, Jr. 0 0 465,726 76,800 1,262,012 0
Joseph R. Jenkins 0 0 230,550 44,800 550,428 0
James F. Cerza, Jr. 0 0 266,050 44,800 726,863 0
James R. Riddle 0 0 230,625 25,000 599,506 0
</TABLE>

(1) Based on the closing sales price of the Common Stock of $14.00 on
February 29, 1996.

<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 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, which are tied to the Company's success in
achieving financial and strategic performance goals. The Board of Directors
approves the Company's performance goals, which are proposed by management, 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 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 most highly compensated executive
officers, the Committee may increase, but not decrease executive salaries on an
annual basis.

The Committee has periodically retained the services of a compensation
consultant to review in a comprehensive manner the Company's compensation
practices and programs. The Committee has considered the consultant's report in
its evaluation of the executive compensation program for the fiscal year ended
February 29, 1996 and will continue to do so for the fiscal year beginning March
1, 1996, in view of the growth and changing conditions of the Company.

The Committee considered again 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 five most highly
compensated 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 these requirements
for performance-based compensation, while the Company's annual incentive bonus
program for the 1996 fiscal year does not. After considering the report prepared
by the Company's consultant, the Committee recommended that the bonus program be
revised to meet these requirements for the 1997 fiscal year. The revised bonus
program provides for cash bonus awards based upon the achievement of Company
performance goals designated at the beginning of each fiscal year. Consequently,
if the performance goals are not met, no bonus is payable. The revised bonus
program includes only objective performance goals that preclude individual
discretion, and does not include personal performance as one of the
performance-based criteria for the five most highly compensated officers.

<PAGE>
The revised bonus program has been submitted to Shareholders for approval
at the 1996 Annual Meeting. See "Approval of the Heilig-Meyers Company Annual
Performance-Based Bonus Plan". The Committee recommended adoption of a revised
bonus program since the current compensation level of the five most highly
compensated executives may exceed the $1 million limit during the 1997 fiscal
year. The Committee believes that it is in the best interests of the Company to
minimize or eliminate any loss of tax deductions this year and in future years
since this approach is consistent with the objectives of the Company's overall
executive compensation program.

No bonuses were paid for the fiscal year ended February 29, 1996 under the
Company's annual incentive bonus program in effect because the earnings and
pre-tax profits goals set for the year were not met. Cash bonus awards were
contingent 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
included: (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 goals.

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. 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.

Historically, whether a grant was made to an executive officer, and in what
amount, was determined by the Committee based on the Company's overall
performance and the individual's performance. This year, after consultation with
its compensation consultant, the Committee considered and adopted an objective
formula award procedure for granting options. Under this formula, the option
grant size is based on the individual executive's salary level so that each
executive will receive a fixed number of options based on his or her executive
classification. With respect to all officers including the five most highly
compensated officers, the Committee retains the latitude to adjust
recommendations up or down based on business conditions and individual
responsibilities and contributions. Options have always been granted (and will
continue to be granted under the new formula) with an exercise price equal to
the fair market value of the Company's stock on the date of grant.

This year, the Committee considered amending the terms of certain options
previously granted to certain officers to reduce the option exercise price.
However, after careful consideration, the Committee recommended that no
amendments be made to options previously granted to the five most highly
compensated executive officers. Although the Committee considered it
inappropriate to amend the terms of these five officers' options, the Committee
did reduce the exercise price for certain outstanding option grants made to
lower management officers. The Committee also recommended that the Company's
1990 and 1994 Stock Option Plans be amended by the Board, subject to approval by
the Company's shareholders, to prohibit entirely the Committee from (i) amending
the terms of previously granted options to reduce the option exercise price of
such grants and (ii) granting stock options to any employee conditioned upon the
surrender or cancellation of previously granted options. See "Amendments of 1990
Stock Option Plan and 1994 Stock Option Plan".

<PAGE>
Options were granted to the five most highly compensated executive officers
under the Company's 1994 Stock Option Plan in accordance with the formula
described above. Because of the difficult retail environment experienced by the
Company, the Committee used its discretionary authority to increase the size of
the grants made to four of the five most highly compensated officers in order to
provide additional motivation. These option grants were in recognition of the
performance of these five officers during the fiscal year ended February 29,
1996 and in recognition of the difficult retail environment experienced by the
Company. One-half of these options vest immediately and one-half of these
options vest after three years.

CHIEF EXECUTIVE OFFICER'S COMPENSATION. The Committee determined the
compensation of William C. DeRusha, Chief Executive Officer, for the fiscal year
ended February 29, 1996, 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 the goals established for him in
consultation with the Committee. The Committee evaluated Mr. DeRusha's
performance, and it was determined that, while the Company did not meet the
goals established by the Board of Directors for the 1996 fiscal year, Mr.
DeRusha met his personal performance goals.

ADMINISTRATION OF COMPENSATION PROGRAM. The Committee oversees all
compensation programs for senior management and reviews and approves certain
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 for all executives. 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.

HEILIG-MEYERS COMPANY
FISCAL YEARS ENDED FEBRUARY 1991 TO FEBRUARY 1996

[GRAPH GOES HERE]

1991 1992 1993 1994 1995 1996

HMY 100 183.5 262.7 438.3 316.5 190.3
S&P 500 100 115.9 128.3 139 149.2 202.3
S&P RETAIL 100 135.4 158.7 159.6 146.2 162

<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 Messrs.
DeRusha, Peery, Jenkins, Cerza and Riddle that entitle them to receive death
benefits or supplemental retirement income. If the executive officer dies before
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 two years in the case of Messrs. DeRusha and Peery and one year in the case
of Messrs. Jenkins, Cerza and Riddle. Thereafter, the executive's beneficiary
will receive annual benefits of 50% of the executive officer's salary for a
period of eight years. The agreements define salary as the executive's highest
final compensation payable over the three year fiscal period preceding
retirement or termination. Final compensation means the executive's base salary
established by the Compensation Committee for each of the three fiscal year
periods, including any bonus paid or payable to the executive on account of each
of the fiscal years. If the executive officer retires at age 65, he will receive
an annual retirement

<PAGE>
benefit equal to a designated percentage of his salary (25% in the case of
Messrs. DeRusha and Peery and 22.5% in the case of Messrs. Jenkins, Cerza and
Riddle) 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 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
Compensation 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 29, 1996, all directors who were not
employees of the Company were 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.

<PAGE>
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 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. Directors who serve on all other
committees and who are not full-time employees of the Company received a fee of
$1,000 for each committee meeting attended in the fiscal year ending February
29, 1996.

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 29,
1996, 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 29, 1996, the Company made the following
payments as retirement compensation: $95,340 to Hyman Meyers, $40,644 to S.
Sidney Meyers, and $47,112 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 29, 1996. The Company provided S. Sidney Meyers and
Nathaniel Krumbein with office space and services, which they shared at a total
cost of $70,421 during the fiscal year ended February 29, 1996.

<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 29, 1996.

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, 1996, the unexpired terms of all leases with members of the Meyers and
Krumbein families, excluding renewal options, ranged from nine months to 13 3/4
years.

During the fiscal year ended February 29, 1996, the Company paid rent
aggregating $292,615 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 29, 1996, 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
FISCAL YEAR ENDED RENT (AT CURRENT
FEBRUARY 29, 1996 ANNUAL RENTAL RATES)
<S> <C> <C>
Hyman Meyers................................. $ 61,422 $ 61,390
S. Sidney Meyers............................. 61,422 61,390
Nathaniel Krumbein........................... 1,501 1,469
Amy M. Krumbein (Wife of Nathaniel Krumbein). 59,921 59,921
Other family members......................... 108,348* 106,044
</TABLE>

*Consists of the following amounts payable to adult children of the
following individuals: Hyman Meyers, $36,124, S. Sidney Meyers, $36,112, and
Nathaniel Krumbein, $36,112.

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.

(1)Under 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.

<PAGE>
PRINCIPAL SHAREHOLDERS

The following table lists the only persons known by the Company to be the
beneficial owners of more than five percent of the Common Stock of the Company
as of April 26, 1996.

AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL
BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS

FMR Corp............................ 4,835,773(1) 9.96%
82 Devonshire Street
Boston, MA 02109

Nicholas Company, Inc............... 3,452,347(2) 7.11%
700 North Water Street
Milwaukee, WI 53202

State Farm Mutual................... 2,770,793(3) 5.70%
Automobile Insurance Company
One State Farm Plaza
Bloomington, IL 61710

(1) FMR Corp. reported sole voting power with respect to 425,100 of such
shares, shared voting power with respect to none of such shares and sole
dispositive power with respect to 4,835,773 of such shares. The ownership
information is based on the Schedule 13G filed on February 14, 1996.

(2) Nicholas Company, Inc. reported sole voting power with respect to none
of such shares, shared voting power with respect to none of such shares and sole
dispositive power with respect to 3,452,347 of such shares. The ownership
information is based on the Schedule 13G filed on January 26, 1996.

(3) State Farm Mutual Automobile Insurance Company reported sole voting and
dispositive power with respect to such shares. The ownership information is
based on the Schedule 13G filed on January 27, 1996.

AMENDMENTS OF 1990 STOCK OPTION PLAN AND 1994 STOCK OPTION PLAN

AMENDMENT OF 1990 STOCK OPTION PLAN

The Board of Directors of the Company has adopted, and recommends that the
shareholders approve an amendment to the Company's 1990 Stock Option Plan (the
"1990 Plan") (i) to extend the exercise period of options granted to directors
upon termination of the director relationship with the Company from three months
to two years, and (ii) to prohibit expressly the Compensation Committee (or
Board) from reducing the exercise price of options held by management and
directors.

EXTENSION OF DIRECTOR'S EXERCISE PERIOD. Options granted to directors under
the 1990 Plan are nonstatutory options (described below) and have a term of ten
years. Under the current terms of the 1990 Plan, if a director optionee ceases
to serve as a director of the Company, the option will terminate three months
after the date of termination, or on expiration of the option, whichever is
earlier. If a director's relationship with the Company ceases by reason of death
or disability, the option may be exercised within one year after such death or
disability.

<PAGE>
If the amendment is approved, a director's option will terminate two years after
the date of the director's termination, or on expiration of the option,
whichever is earlier. If a director's relationship with the Company ceases by
reason of death or disability, the option may also be exercised within two years
after such death or disability. The amendment will extend the exercise date of
currently outstanding, unexercised options held by the following nominees for
director and covering the stated number of shares (after adjustment for stock
splits distributed in the form of stock dividends): Mr. Alexander: 30,500
shares; Mr. Burrus: 40,250 shares; Mr. Edwards: 20,250 shares; Mr. Fleischer:
20,250 shares; Mr. Krumbein: 39,000 shares; Mr. H. Meyers: 54,000 shares; Mr. S.
Meyers: 33,750 shares; Mr. Smith: 30,500 shares; and Mr. Thornton: 20,250
shares. The amendment will extend the exercise date of 342,750 (after adjustment
for stock splits distributed in the form of stock dividends) currently
outstanding, unexercised options held by the non-employee directors of the
Company. This amendment applies to any Director who holds outstanding options on
or after February 7, 1996. The amendment will increase benefits under the 1990
Plan for directors by causing the period in which an option can be exercised to
be extended to two years after termination of the director relationship with the
Company.

PROHIBITION AGAINST REPRICING OF STOCK OPTIONS. The amendment provides an
express prohibition on the Compensation Committee's (or Board's) ability to
reprice stock options awarded to management and directors under the 1990 Plan
either (a) by amending any existing option to reduce the exercise price of such
option or (b) by granting new options conditioned upon the surrender for
cancellation of existing options for the purpose of reducing the exercise price
of such options.

AMENDMENT OF THE 1994 STOCK OPTION PLAN.

The Board of Directors of the Company has adopted, and recommends that the
shareholders approve an amendment to the Company's 1994 Stock Option Plan (the
"1994 Plan"), (i) to increase the number of authorized shares of Common Stock
reserved for issuance under the 1994 Plan by 1,000,000, and (ii) to prohibit
expressly the Compensation Committee from reducing the exercise price of
currently outstanding options held by management.

INCREASE IN NUMBER OF SHARES. A total of 1,000,000 shares was originally
approved by the shareholders on June 15, 1994 for issuance under the 1994 Plan.
Such awards may be in the form of either incentive stock options or nonstatutory
stock options (as described below). In addition, the 1994 Plan as approved by
the shareholders, provides that shares subject to options granted under the
Company's 1983 Stock Option Plan (the "1983 Plan"), the 1990 Plan or the 1994
Plan which are cancelled, expire or otherwise terminate unexercised may be
subjected to a grant and issued under the 1994 Plan. Of the shares previously
approved by the shareholders for issuance, 115,070 shares were available for
future awards as of February 29, 1996. The amendment will increase by 1,000,000
the number of shares of Common Stock authorized for issuance under the 1994
Plan.

PROHIBITION AGAINST REPRICING OF STOCK OPTIONS. The amendment provides an
express prohibition on the Compensation Committee's ability to reprice stock
options awarded to management under the 1994 Plan (a) by amending any existing
option to reduce the exercise price of such option or (b) by granting new
options conditioned upon the surrender for cancellation of existing options for
the purpose of reducing the exercise price of such options.

<PAGE>
VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares of Common
Stock voting at the Annual Meeting of Shareholders is required to approve the
amendment to the 1990 Plan and the amendment to the 1994 Plan.

The Board of Directors believes that approval of the amendments to the 1990
Plan and 1994 Plan is in the best interest of all shareholders, and accordingly,
recommends a vote "FOR" the approval of the proposed amendments to the 1990 Plan
and 1994 Plan.

GENERAL

The 1990 Plan and 1994 Plan (collectively, the "Plans") are intended to
further the long-term stability and financial success of the Company by
recruiting, attracting and retaining key employees and, in the case of the 1990
Plan, non-employee members of the Company's Board of Directors through the use
of stock incentives (references to the "Company" in this section include any
parent and subsidiary corporations). Awards to eligible employees under the
Plans may be in the form of stock options or stock appreciation rights. Awards
have been granted for all shares authorized for issuance under the 1990 Plan.
Consequently, no additional grants under the 1990 Plan are expected.

Adjustments will be made in the number of shares which may be issued under
the Plans 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 April 26,
1996, the closing price was $20.00.

ELIGIBILITY

All present and future employees of the Company who hold positions with
management responsibilities are eligible to receive awards under the Plans. The
Company estimates that it has approximately 114 such employees (62 of whom are
officers). In addition, each member of the Board of Directors of the Company who
is not a full-time employee of the Company is eligible to participate in the
1990 Plan. Currently, there are 10 directors who are not full-time employees who
are eligible to participate in the 1990 Plan. See "Stock Options for Directors."

ADMINISTRATION

The Plans are administered by a committee comprised of at least three
directors of the Company who are not eligible to participate in the Plans (other
than automatic grants to non-employee directors under the 1990 Plan) and who are
"disinterested" for purposes of Securities and Exchange Commission Rule 16b-3
("Rule 16b-3"). The Plans are intended to conform to the provisions of Rule
16b-3 and to meet the requirements for performance-based compensation under
Section 162(m) of the Internal Revenue Code. 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

<PAGE>
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 FOR EMPLOYEES

Options to purchase shares of Common Stock granted to eligible employees
under the Plans 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 is defined under the Plans as 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 Plans 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 in order for a stock option to
be treated as an incentive stock option, it 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.

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. Under the 1994 Plan, 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.

CHANGE OF CONTROL

The Compensation Committee may, in its discretion, provide that stock
options granted under the Plans become fully exercisable upon a Change of
Control, or upon the occurrence of one or more events subsequent to a Change of
Control, notwithstanding other conditions on exercisability in the option. The
Plans also permit the Compensation Committee to accelerate the exercisability of
currently outstanding options, if the Compensation Committee believes it is in
the best interest of the Company to do so.

<PAGE>
STOCK APPRECIATION RIGHTS FOR EMPLOYEES

The Compensation Committee may award stock appreciation rights with an
option granted to an eligible employee, 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 rights 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.

STOCK OPTIONS FOR DIRECTORS

The 1990 Plan authorized a grant of options to purchase 4,000 shares
(13,500 after adjustment for stock splits distributed in the form of stock
dividends) of Common Stock to all of the Company's directors who were not
full-time employees of the Company on February 14, 1990. In addition, the 1990
Plan provides that as of August 14, 1991, and as of August 14 of every third
year thereafter, each director who is not a full-time employee of the Company
will be granted stock options to purchase 6,000 shares (20,250 after adjustment
for stock splits distributed in the form of stock dividends) of Common Stock to
the extent shares are available under the 1990 Plan. Directors received an award
on August 14, 1994; however, no further awards will be received by Directors
under the 1990 Plan as no additional shares are available for award under the
1990 Plan. All options granted to directors under the 1990 Plan are nonstatutory
stock options. The exercise price of these nonstatutory stock options is 100% of
the fair market value of the Common Stock on the date of grant. Fair market
value is defined as the average of the highest and lowest registered sales
prices of the Common Stock on the exchange on which it generally has the
greatest trading volume.

TRANSFERABILITY OF AWARDS

An option awarded under the Plans 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 Plans are
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 Plans.

<PAGE>
AMENDMENT OF THE PLANS AND AWARDS

Each of the Plans may be amended by the Board of Directors in such respects
as it deems advisable; provided that, if and to the extent required by Rule
16b-3 or the Internal Revenue Code, the shareholders of the Company must approve
any amendment that would (i) materially increase the benefits accruing to
participants under such Plan, (ii) materially increase the number of shares of
Common Stock that may be reserved for issuance under such Plan, or (iii)
materially modify the requirements of eligibility for participation in such
Plan. Awards granted under the Plans may be amended with the consent of the
recipient so long as the amended award is consistent with the terms of the
applicable Plan.

FEDERAL INCOME TAXES

A participant generally will not incur federal income tax when he is
granted a nonstatutory stock option, an incentive stock option or a stock
appreciation right.

Upon exercise of a nonstatutory option or a stock appreciation right, a
participant generally will recognize ordinary income equal to the difference
between the fair market value of the Common Stock on the date of the exercise
and the option price. The Compensation Committee has authority under the Plans
to include provisions allowing an 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. The election will be
effective only if approved by the Compensation Committee and made in compliance
with other requirements set forth in the Plans. When a participant exercises an
incentive stock option, he generally will not recognize income, 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 income in connection therewith. This usually occurs upon the 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 with respect to options
granted to eligible employees. Generally, no deduction is allowed in connection
with an incentive stock option, unless the employee disposes of Common Stock
received upon exercise in violation of certain holding period requirements.
Moreover, there can be circumstances when the Company may not be entitled to a
deduction for certain transfers of Common Stock or payments to a participant
upon the exercise of an incentive award that has been accelerated as a result of
a Change of Control.

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.

APPROVAL OF THE HEILIG-MEYERS COMPANY
ANNUAL PERFORMANCE-BASED BONUS PLAN

The Compensation Committee of the Board of Directors adopted the
Heilig-Meyers Company Annual Performance-Based Bonus Plan (the "Bonus Plan") on
March 25, 1996. The Compensation Committee and the Board of Directors
recommended that the Bonus Plan be submitted for approval by the shareholders of
the Company to meet the requirements of Section 162(m) of the Internal Revenue
Code ("Section 162(m)") so that the

<PAGE>
Company's ability to deduct payments under the Bonus Plan for Federal income tax
purposes would not be limited by the provisions of Section 162(m). This
recommendation is consistent with the Company's policy concerning Section 162(m)
as explained under "Compensation Committee Report on Executive Compensation"
above. The Bonus Plan is intended to operate substantially the same as the
Company's bonus program applied generally to all executive officers. However,
the Bonus Plan includes only objective performance goals that preclude
individual discretion and does not include personal performance as one of the
performance-based criteria. The principal features of the Bonus Plan are
summarized below. The summary is qualified by reference to the complete text of
the Bonus Plan, which is attached as Exhibit A.

The purpose of the Bonus Plan is to provide an annual performance-based
cash incentive for executive officers who are in a position to contribute
materially to the success of the Company and its subsidiaries. The Bonus Plan
will be administered by the Compensation Committee (the "Compensation
Committee") (or a subcommittee thereof). The Bonus Plan will apply to each
fiscal year of the Company (the "Plan Year") beginning with the fiscal year
ending on February 28, 1997.

As of March 1, 1996, only the five most highly compensated executive
officers of the Company are eligible under the Bonus Plan. However, the
Compensation Committee has the discretion to select which executive officers
will be participants each Plan Year and the terms and conditions of annual
awards to participants. Five employees are currently eligible to participate in
the Bonus Plan.

For each Plan Year, the Compensation Committee will select the Performance
Component Factors to be used for that Plan Year. The permissible Performance
Component Factors under the Bonus Plan are the Company's pre-tax earnings, the
Company's earnings per share and whether pre-tax earnings or earnings per share
exceed the specified Performance Goals by more than a designated percentage
established by the Compensation Committee. One or more of the Performance
Component Factors may be used for a Plan Year. The Compensation Committee will
assign a percentage of a participant's salary to each of the Performance
Component Factors for a Plan Year. For each Performance Component Factor, the
Compensation Committee will establish one or more Performance Goals. During a
Plan Year, the Compensation Committee may increase, but not decrease, a
Performance Goal. If the Performance Goals established by the Compensation
Committee are not met for the fiscal year, no bonus awards will be paid.

The Compensation Committee will also establish a Maximum Bonus for each
participant for each Plan Year. After the end of a Plan Year, the Compensation
Committee will certify in writing the level of Performance Goal that was
attained for the prior Plan Year. The total of a participant's percentage earned
for each Performance Component Factor will be multiplied by the participant's
salary to determine the bonus award. A participant's salary means the base
salary established by the Compensation Committee at the commencement of each
Plan Year which may not be changed during the Plan Year. The maximum bonus award
for a participant for a Plan Year may not be greater than 85% of the
participant's base salary for the Plan Year. The maximum dollar amounts payable
to each of the five participants for fiscal 1997 are set forth on the table
below.

Bonuses for participants are payable in cash after the Compensation
Committee certifies the achievement of the Performance Goal. A participant must
be employed on the last day of the Plan Year to receive a bonus, unless the
Compensation Committee provides otherwise.

The Plan will terminate on February 29, 2004 unless it is terminated
earlier by the Board of Directors. The Board may amend the Plan, provided that
any amendment to change the Performance Component Factors or

<PAGE>
materially increase the maximum potential benefits for participants must be
approved by the shareholders of the Company (except for amendments necessary to
meet the requirements of Section 162(m) of the Internal Revenue Code). In the
event of a Change of Control of the Company, the Compensation Committee may take
such action with respect to outstanding awards as it deems appropriate to
protect participants' interests.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares of Common
Stock voting at the Annual Meeting of Shareholders is required to approve the
adoption of the Bonus Plan.

The Board of Directors believes that adoption of the Bonus Plan is in the
best interest of all shareholders, and accordingly, recommends a vote "FOR" the
adoption of the Bonus Plan by the shareholders.

NEW PLAN BENEFITS

Subject to shareholder approval of the Bonus Plan, the Compensation
Committee has approved the granting of initial awards for the fiscal year ending
February 28, 1997 to the four most highly compensated executive officers of the
Company. These awards will not be made under the Bonus Plan if shareholder
approval is not received. The table below sets forth information concerning the
proposed awards.

The amounts to be received under the Bonus Plan cannot be determined at
this time because the amounts payable are based on the Company's future
performance and depends on the Performance Compensation Factors and Performance
Goals designated for a Plan Year. If the Bonus Plan had been in effect for
fiscal 1996 and if the Compensation Committee had set Performance Goals
comparable to those established under the Company's existing bonus plan, no
awards would have been paid under the Bonus Plan because the Performance Goals
were not met. The table below sets forth the Maximum Bonus payable for fiscal
1997.

ANNUAL PERFORMANCE-BASED BONUS PLAN

<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($)(1)
<S> <C>
William C. DeRusha, Chairman of the Board $ 486,540
and Chief Executive Officer................................................

Troy A. Peery, Jr., President and Chief Operating Officer.................... $ 437,886

Joseph R. Jenkins, Executive Vice President and Chief Financial Officer...... $ 289,000

James F. Cerza, Jr., Executive Vice President................................ $ 289,000

Executive Officers as a Group(2)............................................. $ 1,502,426
</TABLE>

(1) Payment of any amount under the Bonus Plan is dependent on the
Company's performance for the Plan Year ending February 28, 1997 (the "1997 Plan
Year") and will be uncertain until the end of the 1997 Plan Year.

(2) Includes only executive officers listed above as other executive
officers do not currently participate in the Bonus Plan. Directors who are not
executive officers and employees who are not executive officers are not eligible
to participate in the Bonus Plan. Executive officers not eligible to participate
in the Bonus Plan and employees who are not executive officers are eligible
under the Company's regular bonus program.

<PAGE>
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 1997 MEETING

Proposals of shareholders intended to be presented at the 1997 Annual
Meeting must be received by the Company at its principal executive offices no
later than January 4, 1997, for inclusion in the Company's 1997 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 29, 1996. 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, 1996

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
ANNUAL PERFORMANCE-BASED BONUS PLAN

1. PURPOSE. The purpose of the Heilig-Meyers Company Annual
Performance-Based Bonus Plan (the "Plan") is to provide an annual
performance-based incentive for executive officers who are in a position to
contribute materially to the success of the Company and its Subsidiaries.

2. DEFINITIONS. As used in the Plan, the following terms will have the
meaning indicated:

(a) "Award" or "Bonus Award" means a cash bonus award made pursuant to
the terms of this Plan.

(b) "Award Agreement" means the agreement entered into between the
Company and a Participant, setting forth the terms and conditions
applicable to an Award granted to the Participant.

(d) "Change of Control" means the occurrence of either of the
following events: (i) a third person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Act"), becomes, or obtains the right to become, the beneficial owner of
Company securities having 20% or more of the combined voting power of the
then outstanding securities of the Company that may be cast for the
election of directors to the Board of the Company (other than as a result
of an issuance of securities initiated by the Company in the ordinary
course of business); or (ii) as the result of, or in connection with, any
cash tender or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions, the persons who were directors of the Company before such
transactions shall cease to constitute a majority of the Board or of the
board of directors of any successor to the Company.

(e) "Code" means the Internal Revenue Code of 1986, as amended.

(f) "Code Section 162(m) Award" means an Award intended to satisfy the
requirements of Code Section 162(m) and designated as such in an Award
Agreement.

(g) "Committee" means the committee appointed by the Board as
described under Section 4.

(h) "Company" means Heilig-Meyers Company, a Virginia corporation.

(i) "Covered Employee" means a covered employee within the meaning of
Code Section 162(m)(3).

(j) "Executive Employee" means all executive officers (as defined in
Rule 3b-7 under the Act) of the Company (or any Parent or Subsidiary of the
Company, whether now existing or hereafter created or acquired).

(k) "Parent" means, with respect to any corporation, a parent of that
corporation within the meaning of Code Section 424(e).

(l) "Participant" means an Executive Employee selected from time to
time by the Committee to participate in the Plan.

A-1

<PAGE>
(m) "Performance Percentage" means the percentage of Salary assigned
to each of the Performance Component Factors.

(n) "Performance Component Factor" means the criteria selected by the
Committee to measure performance for a Plan Year from among one or more of
the following categories:

(i) Pre-tax profits, as shown in the Company's annual report to
shareholders, calculated in accordance with generally accepted
accounting principles consistently applied by the Company; and

(ii) Earnings per share, as shown in the Company's annual report to
shareholders, calculated in accordance with generally accepted
accounting principles consistently applied by the Company.

(iii) Outstanding Performance, as evidenced by the Company's
overall performance in Pre-tax profit and Earnings per share, which
generally applies in the event the Company's actual performance exceeds
the Performance Goals by more than a designated percentage established
by the Committee.

(o) "Performance Goal" means the establishment of one or more levels
of performance (i.e., a threshold, a target, a maximum or an excess
percentage level) designated for each Performance Component Factor
established by the Committee that will be used to determine the Performance
Percentages.

(p) "Plan Year" means the fiscal year of the Company from March 1 to
the last day of February of each year.

(q) "Salary" means the Participant's base salary, established by the
Committee for each Plan Year.

(r) "Subsidiary" means, with respect to any corporation, a subsidiary
of that corporation within the meaning of Code Section 424(f).

(s) "Maximum Bonus" means the bonus payable to a Participant if there
is a 100-percent achievement of the Performance Percentages for each of the
Performance Component Factors.

(t) "Total Award Percentage" means the sum of an individual
Participant's Performance Percentages earned for each Performance Component
Factor, which when multiplied by the individual Participant's Salary
determines the amount of his/her Award.

3. ELIGIBILITY. All present and future Executive Employees who are Level A
Officers (which includes the Chairman, Chief Executive Officer, President, Chief
Operating Officer and all Executive Vice Presidents of the Company) shall be
eligible to receive Awards under the Plan.

The Committee shall have the power and complete discretion to select
eligible Executive Employees to receive Awards and to determine for each
Participant the terms and conditions and the amount of each Award.

4. AWARDS.

(a) Each Award shall be evidenced by an Award Agreement setting forth
the Performance Goals and the Performance Percentages for each Performance
Component Factor, the Total Award Percentage, the Maximum Bonus payable and
such other terms and conditions applicable to the Award, as determined by
the Committee, not inconsistent with the terms of the Plan. Notwithstanding
any other Plan provisions to the contrary, the aggregate maximum amount
payable under the Plan to any Participant in any Plan Year shall

A-2

<PAGE>
be 85 percent of a Participant's Salary. In the event of any conflict
between an Award Agreement and the Plan, the terms of the Plan shall
govern.

(b) The Committee shall establish the Performance Goals for the
Company each Plan Year. The Committee shall also determine the extent to
which each Performance Component Factor shall be weighted in determining
Awards by establishing Performance Percentages for each Performance
Component Factor. The Committee may vary the Performance Component Factors,
the Performance Percentages assigned to each of the factors and the
Performance Goals from Plan Year to Plan Year. The Committee may increase,
but not decrease, any Performance Goal during a Plan Year.

(c) The Committee shall establish for each Award the maximum
percentage of Salary payable to each Participant for specified levels of
performance by designating Performance Percentages based on the Performance
Goal for each Performance Component Factor and the weighting established
for such factors. The Award payable to any Participant may range from zero
(0) to 85 percent of the Participant's Salary, depending upon whether, or
the extent to which, the Performance Goals have been achieved. All such
determinations regarding the achievement of any Performance Goals will be
made by the Committee; provided, however, that the Committee may not
increase during a Plan Year the amount of the Award that would otherwise be
payable upon achievement of the Performance Goal or Goals.

(d) The actual Award for a Participant will be calculated by
multiplying the Participant's Total Award Percentage by the individual
Participant's Salary. All calculations of actual Awards shall be made by
the Committee.

(e) Awards will be paid, in a lump sum cash payment, as soon as
practicable after the close of the Plan Year for which they are earned;
provided, however, that no Awards shall be paid except to the extent that
the Committee has certified in writing that the Performance Goals have been
met.

(f) Whenever payments under the Plan are to be made, the Company
and/or the Subsidiary will withhold therefrom an amount sufficient to
satisfy any applicable governmental withholding tax requirements related
thereto.

(g) Nothing contained in the Plan will be deemed in any way to limit
or restrict the Company, its Subsidiaries, or the Committee from making any
award or payment to any person under any other plan, arrangement or
understanding, whether now existing or hereafter in effect.

5. ADMINISTRATION. The Plan shall be administered by a Committee, which
shall be appointed by the Board, consisting of not less than three members of
the Board. Subject to paragraph (d) below, the Committee shall be a subcommittee
of the Compensation Committee unless the Board shall appoint another Committee
to administer the Plan. 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 Executive Employees shall receive an Award and the
nature of the Award, (ii) the amount of each Award, (iii) the time or times
when an Award shall be granted, (iv) whether a disability exists, (v) the
terms and conditions applicable to Awards, and (vi) any additional
requirements relating to Awards that the Committee deems appropriate.

A-3

<PAGE>
(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.

(d) All members of the Committee must be "outside directors" as
described in Code Section 162(m).

(e) The Board from time to time may appoint members previously
appointed and may fill vacancies, however caused, in the Committee.

(f) As to any Code Section 162(m) Awards, it is the intent of the
Company that this Plan and any Code Section 162(m) Awards hereunder
satisfy, and be interpreted in a manner that satisfy, the applicable
requirements of Code Section 162(m). If any provision of this Plan or if
any Code Section 162(m) Award would otherwise conflict with the intent
expressed in this Section 4(f), that provision to the extent possible shall
be interpreted so as to avoid such conflict. To the extent of any remaining
irreconcilable conflict with such intent, such provision shall be deemed
void as applicable to Covered Employees. Nothing herein shall be
interpreted to preclude a Participant who is or may be a Covered Employee
from receiving an Award that is not a Code Section 162(m) Award.

(g) The Committee's determinations under the Plan need not be uniform
and may be made by it selectively among persons who receive, or are
eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated. Without limiting the generality of the foregoing, the
Committee will be entitled, among other things, to make non-uniform and
selective determinations and to establish non-uniform and selective
Performance Component Factors, Performance Goals, the weightings thereof,
and Maximum Bonuses.

6. CHANGE OF CONTROL. In the event of a Change of Control of the Company,
in addition to any action required or authorized by the terms of an Award
Agreement, the Committee may, in its sole discretion, take any of the following
actions as a result, or in anticipation, of any such event to assure fair and
equitable treatment of Participants:

(a) accelerate time periods for purposes of vesting in, or receiving
any payment with regard to, any outstanding Award, or

(b) make adjustments or modifications to outstanding Awards as the
Committee deems appropriate to maintain and protect the rights and
interests of Participants following such Change of Control.

Any such action approved by the Committee shall be conclusive and binding
on the Company and all Participants.

7. NONTRANSFERABILITY OF AWARDS. An Award shall not be assignable or
transferable by the Participant except by will or by the laws of descent and
distribution.

A-4

<PAGE>
8. TERMINATION, MODIFICATION, CHANGE. If not sooner terminated by the
Board, this Plan shall terminate at the close of business on February 29, 2004.
No Awards shall be granted 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, if and to the extent required by the Code, no change
shall be made that changes the Performance Component Factors, or materially
increases the maximum potential benefits for 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 cause Awards to meet the requirements of Code Section 162(m), 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 him.

9. UNFUNDED PLAN. The Plan shall be unfunded. No provision of the Plan or
any Award Agreement will require the Company or its Subsidiaries, for the
purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor will the Company or its Subsidiaries
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for such
purposes. Participants will have no rights under the Plan other than as
unsecured general creditors of the Company and its Subsidiaries, except that
insofar as they may have become entitled to payment of additional compensation
by performance of services, they will have the same rights as other employees
under generally applicable law.

10. LIABILITY OF COMPANY. Any liability of the Company or a Subsidiary to
any Participant with respect to an Award shall be based solely upon contractual
obligations created by the Plan and the Award Agreement. Neither the Company nor
a Subsidiary, nor any member of the Board or of the Committee, nor any other
person participating in any determination of any question under the Plan, or in
the interpretation, administration or application of the Plan, shall have any
liability to any party for any action taken or not taken in good faith under the
Plan. Status as an eligible Executive Employee shall not be construed as a
commitment that any Award will be made under this Plan to such eligible
Executive Employee or to eligible Executive Employees generally. Nothing
contained in this Plan or in any Award Agreement (or in any other documents
related to this Plan or to any Award or Award Agreement) shall confer upon any
Executive Employee or Participant any right to continue in the employ or other
service of the Company or a Subsidiary or constitute any contract or limit in
any way the right of the Company or a Subsidiary to change such person's
compensation or other benefits.

11. INTERPRETATION. If any term or provision contained herein will to any
extent be invalid or unenforceable, such term or provision will be reformed so
that it is valid, and such invalidity or unenforceability will not affect any
other provision or part hereof. The Plan, the Award Agreements and all actions
taken hereunder or thereunder shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Virginia without regard to the conflict of
law principles thereof.

12. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of March 1,
1996 and shall be submitted to the shareholders of the Company for approval. No
Award shall be payable to a Covered Employee until the Plan has been approved by
the Company's shareholders.

A-5

<PAGE>

HEILIG-MEYERS COMPANY

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 19, 1996, 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 listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all
nominees listed below

William C. DeRusha, Troy A. Peery, Jr., Alexander Alexander,
Robert L. Burrus, Jr., 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. APPROVAL OF THE AMENDMENT OF THE 1990 STOCK OPTION PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. APPROVAL OF THE AMENDMENT OF THE 1994 STOCK OPTION PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]

4. APPROVAL OF THE ANNUAL PERFORMANCE-BASED BONUS PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]

5. RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS
ACCOUNTANTS AND AUDITORS FOR THE CURRENT FISCAL YEAR.
FOR [ ] AGAINST [ ] ABSTAIN [ ]

6. 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" Proposals 2,3,4 and 5.

(Continued and to be signed on the other side)

The undersigned acknowledges receipt of the Notice of the 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,
trustee, 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 auhorized person.

Dated:____________________________________________________,1996

_______________________________________________________________

[PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
USING THE ENCLOSED ENVELOPE.]