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) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
HEILIG-MEYERS COMPANY
12560 WEST CREEK PARKWAY
RICHMOND, VIRGINIA 23238
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 16, 1999
TO THE HOLDERS OF COMMON STOCK:
The Annual Meeting of Shareholders of Heilig-Meyers Company (the
"Company") will be held at The Jefferson -- Franklin and Adams Streets,
Richmond, Virginia, on Wednesday, June 16, 1999, commencing at 10:30 a.m.
E.D.T., for the following purposes:
1. To elect a board of nine directors.
2. To act on a proposal to approve the Company's Director Stock Ownership
Plan.
3. To consider and vote upon a shareholder proposal, if presented.
4. To ratify or reject the selection of Deloitte & Touche LLP as
accountants and auditors for the Company for the current fiscal year.
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on April 26, 1999,
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
PAIGE H. WILSON, Secretary
May 19, 1999
PLEASE FILL IN, SIGN, DATE AND RETURN PROMPTLY THE ACCOMPANYING PROXY. IF YOU
ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR OWN
SHARES.
<PAGE>
HEILIG-MEYERS COMPANY
12560 WEST CREEK PARKWAY
RICHMOND, VIRGINIA 23238
PROXY STATEMENT
TO BE MAILED ON OR ABOUT MAY 19, 1999
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 16, 1999
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 16, 1999, 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 also 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, 1999
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, 59,861,183 shares of Common Stock
were outstanding and entitled to vote at the meeting.
1
<PAGE>
ELECTION OF DIRECTORS
NOMINEES
The nominees named below were elected at the 1998 Annual Meeting of
Shareholders to serve until the next Annual Meeting of Shareholders or the
election and qualification of their successors. The nine 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 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 or her
age, principal occupation or employment and beneficial ownership of Common
Stock as of April 26, 1999. The table also sets forth the amount of shares
beneficially owned as of April 26, 1999, by the four directors becoming
directors emeritus as of the 1999 Annual Meeting of Shareholders, all the
executive officers and certain former 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.
In April 1998, the Board of Directors adopted a mandatory retirement age
of 72 for directors and provided that the four directors over the age of 72 be
grandfathered for one year and nominated for re-election at the 1998 Annual
Meeting of Shareholders. In view of the substantial contributions of the Meyers
family and these directors in the founding and growth of the Company, the Board
has provided that, as of the 1999 Annual Meeting of Shareholders, each of these
four individuals will become director emeritus of the Company.
<TABLE>
<CAPTION>
AMOUNT OF SHARES
NAME, AGE, POSITIONS OF DIRECTORS BENEFICIALLY OWNED
WITH THE COMPANY OR PRINCIPAL AND PERCENT OF
OCCUPATION FOR THE PAST FIVE DIRECTOR CLASS OUTSTANDING
YEARS AND OTHER INFORMATION SINCE(1) AS OF APRIL 26, 1999(2)
- ----------------------------------------------------- ---------- ------------------------
DIRECTORS AND NOMINEES
- ----------------------
<S> <C> <C>
WILLIAM C. DERUSHA, 49 .............................. 1983 778,473(3)(4)
Chairman of the Board since April 1986.
Chief Executive Officer since April 1984.
Director, Peebles Inc., First Union
Regional Board and Simpson Products.
ALEXANDER ALEXANDER, 70 ............................. 1975 37,500(3)
President, Colony Management Corporation (real estate
management).
ROBERT L. BURRUS, JR., 64 ........................... 1973 44,824(3)
Chairman and partner of McGuire, Woods, Battle &
Boothe LLP (law firm). Director, CSX Corporation,
S&K Famous Brands, Inc., Concepts Direct, Inc.,
O'Sullivan Corporation and Smithfield Foods, Inc.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF SHARES
NAME, AGE, POSITIONS OF DIRECTORS BENEFICIALLY OWNED
WITH THE COMPANY OR PRINCIPAL AND PERCENT OF
OCCUPATION FOR THE PAST FIVE DIRECTOR CLASS OUTSTANDING
YEARS AND OTHER INFORMATION SINCE(1) AS OF APRIL 26, 1999(2)
- --------------------------------------------------------- ---------- ------------------------
<S> <C> <C>
BEVERLEY E. DALTON, 50 .................................. 1996 15,000(3)(5)
Owner, W.C. English, Inc. (general construction firm).
CHARLES A. DAVIS, 50 .................................... 1996 8,000(3)
President and Chief Executive Officer, Marsh &
McLennan Capital, Inc. (insurance and reinsurance
brokerage services firm). Director, Lechters, Inc., Media
General, Inc., MerchantsBancshares, Inc. and Progressive
Corporation.
BENJAMIN F. EDWARDS III, 67 ............................. 1983 50,250(3)(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 and Jefferson Bank & Trust.
LAWRENCE N. SMITH, 61 ................................... 1975 47,681(3)(7)
President and Chief Executive Officer, Resource
Bankshares Corp. Director, Empire Machinery & Supply
Corp. and Twenty, Inc.
EUGENE P. TRANI, PH.D., 59 .............................. 1996 9,158(3)
President, Virginia Commonwealth University. Director,
Crestar Financial Corporation and LandAmerica Financial
Group, Inc.
L. DOUGLAS WILDER, 68 ................................... 1997 4,000(3)
Partner, law firm of Wilder & Gregory since January
1994. Governor, Commonwealth of Virginia (January
1990-January 1994).
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
AMOUNT OF SHARES
BENEFICIALLY OWNED
AND PERCENT OF
CLASS OUTSTANDING
DIRECTORS BECOMING DIRECTORS EMERITUS AS OF APRIL 26, 1999(2)
- --------------------------------------------- -----------------------------
<S> <C>
ALAN G. FLEISCHER ........................... 26,750(3)
NATHANIEL KRUMBEIN .......................... 124,431(3)(8)
HYMAN MEYERS ................................ 137,272(3)(9)
S. SIDNEY MEYERS ............................ 57,478(3)(9)(10)
CERTAIN CURRENT AND FORMER EXECUTIVE OFFICERS
- ----------------------------------------------
JAMES F. CERZA, JR.
Executive Vice President ................... 356,750(3)(11)
PATRICK D. STERN
Executive Vice President ................... 38,000(3)
JAMES R. RIDDLE
Executive Vice President ................... 302,552(3)
ROY B. GOODMAN
Executive Vice President and Chief
Financial Officer .......................... 77,765(3)
TROY A. PEERY, JR. (12) ..................... 681,363(3)
GEORGE A. THORNTON III (13) ................. 253,332(3)(14)
All current executive officers and 3,197,120(3)(15)
directors as a group (21 persons) ........... 5.3%
</TABLE>
- ----------
(1) Year in which the nominee was first elected a director of the
Company.
(2) Unless otherwise indicated, less than one percent of the outstanding
Common Stock.
(3) Includes shares that could be acquired through the exercise of stock
options within 60 days after April 26, 1999.
(4) Excludes 150 shares owned of record by Mr. DeRusha's wife.
(5) Includes 4,000 shares held by Ms. Dalton as trustee of trusts for the
benefit of her children.
(6) Excludes 2,070 shares owned of record by Mr. Edwards' wife.
(7) Includes 3,000 shares held in trust of which Mr. Smith is trustee, as
to which shares Mr. Smith may be deemed to have voting and investment powers.
Excludes 5,000 shares owned of record by Mr. Smith's wife.
(8) Includes 5,046 shares held by Mr. Krumbein and his wife as
co-trustees or custodians. Excludes 48,260 shares owned of record by Mr.
Krumbein's wife. Includes 38,924 shares held of record by the Krumbein
Foundation of which Mr. Krumbein is an officer, as to which shares he may be
deemed to share voting and investment powers.
(9) Includes 5,023 shares owned of record by the Meyers-Krumbein
Foundation of which Messrs. Hyman and S. Sidney Meyers are officers, as to
which shares they may be deemed to share voting and investment powers.
4
<PAGE>
(10) Excludes 32,149 shares owned of record by Mr. Meyers' wife.
(11) Excludes 16,310 shares owned of record by Mr. Cerza's wife as to
which shares Mr. Cerza may be deemed to share voting and investment powers.
(12) Mr. Peery retired as President, Chief Operating Officer and Director
of the Company during the fiscal year ended February 28, 1999.
(13) Mr. Thornton retired as Executive Vice President during the fiscal
year ended February 28, 1999.
(14) Excludes 31,462 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.
(15) Excludes a total of 967 shares owned of record by the wives of
executive officers not named above. Also, see notes 4 through 14 above.
The law firm of McGuire, Woods, Battle & Boothe LLP (of which Mr. Burrus
is the Chairman) was retained as general counsel by the Company during the
fiscal year ended February 28, 1999, and has been so retained during the
current fiscal year. The securities brokerage and investment banking firm of
A.G. Edwards & Sons, Inc. has performed investment banking services for the
Company in the past, and may perform such 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 Corporate Organization and
Responsibility Committee of the Company's Board of Directors and (iii) those
persons whose names were personally delivered to the Secretary of the Company
not later than the close of business on the tenth day following the mailing
date of the Company's Proxy Statement for an annual meeting or delivered to the
Secretary of the Company by United States mail, postage prepaid, postmarked no
later than ten days after the mailing date of the Proxy Statement for an annual
meeting. Any shareholder wishing to nominate a person other than those listed
in this Proxy Statement must submit the following information in writing to the
Office of the Secretary, Heilig-Meyers Company, 12560 West Creek Parkway,
Richmond, Virginia 23238: (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.
5
<PAGE>
FAMILY RELATIONSHIPS
Hyman Meyers, Director of the Company, and S. Sidney Meyers, Director of
the Company, are brothers. Nathaniel Krumbein, Director of the Company, is
their brother-in-law.
ATTENDANCE
The Board of Directors held six meetings during the fiscal year ended
February 28, 1999. Each director, with the exception of Messrs. Davis and S.
Sidney Meyers, 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 or she served that were held in the past fiscal year
during the periods in which he or she was a director or served on such
committees.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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. With respect to the fiscal year ended
February 28, 1999, and based solely on its review of the copies of the Forms 3,
4 and 5 received by it, the Company believes that all executive officers and
directors complied with such filing requirements, except the following:
Benjamin F. Edwards III, L. Douglas Wilder and Hyman Meyers, Directors of the
Company, each filed late one Form 4 reporting either a purchase or gift of
Common Stock; S. Sidney Meyers, Director of the Company, filed late two Forms 4
reporting donations of Common Stock; and James F. Cerza, Jr., Executive Vice
President, filed late one Form 4 reporting two purchases of Common Stock.
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 Corporate Organization and
Responsibility Committee.
Messrs. Smith, Alexander, Edwards, Fleischer and Ms. Dalton are the
members of the Audit Committee, which met two times during the fiscal year
ended February 28, 1999. The primary functions of the Committee are to make
recommendations to the Board concerning engaging and discharging the
independent auditors; to review the overall scope and the results of the annual
audit; to review the independence of the independent auditors; and to review
the functions and performance of the internal audit department and the
Company's internal accounting controls.
Messrs. Davis, Edwards, Fleischer and Smith and Dr. Trani are the members
of the Compensation Committee, which met four times during the fiscal year
ended February 28, 1999. 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 evaluate the performance of the
Chief Executive Officer; 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. Burrus, Alexander, Davis and Wilder, Dr. Trani and Ms. Dalton are
the members of the Corporate Organization and Responsibility Committee, which
met four times during the fiscal year ended February 28, 1999. The primary
functions of the Committee are to recommend persons for membership on the Board
and for
6
<PAGE>
membership on committees established by the Board and to consider nominees
recommended by shareholders. The Committee is also responsible for assessing
the Board's performance, succession planning and assisting the Chairman and
Chief Executive Officer on matters of broad corporate significance.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The table below sets forth for the years ended
February 28, 1999, 1998 and 1997, the annual and long-term compensation for
services in all capacities to the Company and its subsidiaries of those persons
who at February 28, 1999, were the Company's Chief Executive Officer and the
next four highest compensated executive officers of the Company whose salary
and bonus exceeded $100,000 for the year ended February 28, 1999 and two former
executive officers (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- -----------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS/SARS(#) COMPENSATION
- ----------------------------- -------- ----------- ---------- -------------- ----------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha 1999 $700,000 $ -- (1) 70,000 $ 14,678(2)
Chairman of the 1998 684,015 -- (1) -- 18,157
Board and Chief 1997 572,400 171,720 (1) 34,320 12,062
Executive Officer
James F. Cerza, Jr. 1999 380,000 30,000 (1) 22,800 8,068(2)
Executive Vice 1998 378,077 -- (1) -- 9,981
President 1997 340,000 102,000 (1) 20,400 7,264
Patrick D. Stern (3) 1999 300,000 30,000 (1) 18,000 491(2)
Executive Vice 1998 215,385 75,000 (1) 20,000 452
President 1997 -- -- -- -- --
James R. Riddle 1999 250,000 15,000 (1) 15,000 5,613(2)
Executive Vice 1998 243,000 -- (1) -- 6,201
President 1997 243,000 36,450 (1) 14,580 5,504
Roy B. Goodman 1999 190,770 30,000 (1) 18,000 3,992(2)
Executive Vice 1998 152,212 -- (1) -- 4,004
President and Chief 1997 120,667 30,250 (1) 4,840 2,865
Financial Officer
Troy A. Peery, Jr. 1999 638,077 -- (1) -- 2,716,481(2)(4)
Former President and 1998 615,614 -- (1) -- 16,469
Chief Operating Officer 1997 515,160 154,548 (1) 34,320 10,908
George A. Thornton III (5) 1999 321,539 -- (1) -- 875,499(2)(4)
Former Executive 1998 314,231 120,000 (1) -- 81,252(6)
Vice President 1997 -- -- (1) 75,000 --
</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 years 1999, 1998 or 1997.
(2) 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 the dollar
7
<PAGE>
value of split dollar life insurance premiums paid, respectively, during fiscal
1999, for the Named Executive Officers were: Mr. DeRusha, $3,200, $11,107,
$371; Mr. Cerza, $3,200, $4,474, $394; Mr. Stern, $0, $0, $491; Mr. Riddle,
$3,200, $1,932, $481; Mr. Goodman, $3,200, $477, $315; Mr. Peery, $3,200,
$9,704, $330; and Mr. Thornton $0, $0, $364.
(3) Mr. Stern became Executive Vice President in 1997. Pursuant to the
terms on which Mr. Stern was employed, he received a bonus of $75,000.
(4) In connection with their retirements, Mr. Peery and Mr. Thornton
received the following amounts: severance under employment agreements, Mr.
Peery, $2,353,643, Mr. Thornton, $784,135; payment in lieu of retirement health
care coverage, Mr. Peery, $190,000, Mr. Thornton, $91,000; payment in lieu of
home office expenses, Mr. Peery, $100,000; accrued vacation, Mr. Peery,
$50,000; long term disability premiums, Mr. Peery, $83; and use of a Company
car, Mr. Peery, $9,250.
(5) Mr. Thornton became Executive Vice President in February 1997.
Pursuant to the terms on which Mr. Thornton was employed, he received a bonus
of $120,000.
(6) Consists of relocation and related expenses of $80,933 and dollar
value of split dollar life insurance premiums paid of $319.
OPTION GRANT TABLE. The following table sets forth information concerning
individual grants of stock options made during the year ended February 28,
1999, to the Company's executive officers named in the Summary Compensation
Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
FOR
INDIVIDUAL GRANTS OPTION TERM(1)
-------------------------- --------------------
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS EXERCISE
SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------ ------------ -------------- --------- ------------------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha 70,000 20.06% $ 6.47 February 26, 2009 284,774 721,672
James F. Cerza, Jr. 22,800 6.53 6.47 February 26, 2009 92,755 235,059
Patrick D. Stern 18,000 5.16 6.47 February 26, 2009 73,227 185,573
James R. Riddle 15,000 4.30 6.47 February 26, 2009 61,023 154,644
Roy B. Goodman 18,000 5.16 6.47 February 26, 2009 73,227 185,573
Troy A. Peery, Jr. -- -- -- -- -- --
George A. Thornton III -- -- -- -- -- --
</TABLE>
- ----------
(1) Stock appreciation values calculated by annually compounding the
exercise price until expiration at the growth rate noted.
AGGREGATED 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 1999 by the Company's
executive officers named in the Summary Compensation Table. The table also sets
forth the number of shares covered by exercisable and unexercisable options
held by such executives on February 28, 1999, and the aggregate gains that
would have been realized had these options been exercised on February 28, 1999,
even though these options were not exercised, and the unexercisable options
could not have been exercised, on February 28, 1999.
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS
AT FY-END AT FY-END(1)
------------------------------- ------------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ -------------- -------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
William C. DeRusha -- $ -- 696,023 -- $ 2,184 $--
James F. Cerza, Jr. -- -- 354,050 -- 711 --
Patrick D. Stern -- -- 38,000 -- 562 --
James R. Riddle -- -- 285,205 -- 468 --
Roy B. Goodman -- -- 77,765 -- 562 --
Troy A. Peery, Jr. -- -- 576,846 -- -- --
George A. Thornton III -- -- 95,250 -- -- --
</TABLE>
- ----------
(1) Based on the closing sales price of the Common Stock of $ 6 1/2 on
February 26, 1999.
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 certain
officers. For executive officers, the Company relies on an annual
performance-based bonus program and a 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 is composed of base salary, an annual incentive bonus
program, and a stock option program, elements of 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 and determined by the Committee, as part of the Company's
budgeting process.
During the fiscal year ended February 28, 1998 (the "1998 fiscal year"),
the Committee retained the services of a compensation consultant to perform a
comprehensive review of the Company's compensation practices and programs. In
connection with the Committee's determinations for the executive compensation
program for the fiscal year ended February 28, 1999 ("1999 fiscal year"), the
Committee generally considered the compensation consultant's prior report but
did not obtain an update of the report.
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 most of the highly
compensated executive officers, the Committee may increase, but not decrease,
executive salaries on an annual basis. For the 1999
9
<PAGE>
fiscal year, the Committee did not approve any salary increases for the named
executive officers, except when those executives received promotions.
The Committee considers annually 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 is not subject to this deduction
limit. The Company's 1998 Stock Incentive Plan and Annual Performance-Based
Bonus Plan meet these requirements for performance-based compensation. The
Committee believes that it is in the best interests of the Company to minimize
any loss of tax deductions from its ongoing compensation programs, to the
extent that action is consistent with the objectives of the Company's overall
executive compensation program.
The Company's Annual Performance-Based Bonus Plan ("Bonus Plan") provides
executives with the potential to receive cash bonus awards based upon the
achievement of Company performance goals. Near the beginning of each fiscal
year, the performance goals are designated by the Committee. If the performance
goals are not met, no bonus is payable under the Bonus Plan. 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 for the five most highly compensated officers. The targeted bonus
opportunities for the 1999 fiscal year were determined in a manner generally
consistent with the bonus opportunities for the 1998 fiscal year. No bonuses
were payable for the 1999 fiscal year under the Bonus Plan because the Company
did not reach the earnings and pre-tax profit thresholds set for the year. No
bonuses were paid under the Bonus Plan to the five most highly compensated
executive officers.
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 strongly aligns the
interests of the senior executives with those of the Company's shareholders.
The Committee has implemented an objective formula award procedure for
granting options. Under this formula, the option grant size is based on the
individual executive's job classification and salary level. A fixed number of
options for certain increments of salary is established for each job
classification. The formula was modified for grants in the 1999 fiscal year
based on recommendations made by the compensation consultant. The changes are
designed to make the grants at levels comparable to competitors and to provide
the appropriate balance of long-term incentives for executives. With respect to
all officers, including the five most highly compensated officers, the
Committee retains the latitude to adjust the formula awards up or down based on
business conditions and individual responsibilities and contributions to the
Company. Options are granted with an exercise price equal to the fair market
value of the Company's stock on the date of grant.
Options were granted to executive officers during the 1999 fiscal year
under the Company's 1998 Stock Incentive Plan. The size of the option grants
was determined under the revised objective award formula. Option grants were
made to the top five most highly compensated executive officers who were
employed at the end of the 1999 fiscal year.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. The Committee determined the
compensation of William C. DeRusha, Chief Executive Officer, for the 1999
fiscal year, 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 and
10
<PAGE>
in comparison to the financial performance of the retail and furniture retail
industries as a whole. The Committee also evaluated Mr. DeRusha's strong
leadership and management motivation during difficult competitive conditions.
The Committee had increased Mr. DeRusha's base salary for the 1998 fiscal
year to the target established by the Committee of the third quartile of the
compensation peer group. Based on its evaluation of the Company's performance
during the 1998 fiscal year, the Committee determined that Mr. DeRusha's base
salary for the 1999 fiscal year should be kept at the same level as for the
1998 fiscal year.
For the 1999 fiscal year, the Committee also maintained Mr. DeRusha's
bonus opportunity under the Bonus Plan at the same level as for the 1998 fiscal
year. Mr. DeRusha did not receive a bonus for the 1999 fiscal year. During the
1999 fiscal year, Mr. DeRusha was granted stock options under the 1998 Stock
Incentive Plan based on the revised objective option grant formula.
ADMINISTRATION OF COMPENSATION PROGRAMS. The Committee oversees all
compensation programs for senior management and reviews and approves certain
plans and programs for other employees. The Committee or subcommittees of the
Committee review management recommendations and ultimately determine levels of
base salary, annual performance-based bonus payments and stock option grants
for all executives. The Committee also reviews and determines the compensation
of the CEO, whose compensation is reported in this proxy statement.
During the 1999 fiscal year, Troy Peery resigned as President after 26
years of service to the Company. Mr. Peery received termination benefits
primarily under the terms of his employment contract and established Company
programs. Mr. Peery received additional benefits for agreeing to an extended
period of noncompetition. The Committee determined that the termination
benefits were consistent with the terms of Mr. Peery's employment and with the
best interests of the Company. Also, George A. Thornton, III resigned as
Executive Vice President and received termination benefits as provided in his
employment contract.
COMPENSATION COMMITTEE
Charles A. Davis, Chairman
Benjamin F. Edwards, III
Alan G. Fleischer
Lawrence N. Smith
Eugene P. Trani, Ph.D.
11
<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 1994 TO FEBRUARY 1999
CUMULATIVE TOTAL RETURN
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
12
<PAGE>
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company entered into an employment contract with William C. DeRusha,
effective November 1, 1996, which provides for a constant rolling three-year
employment period. The contract provides that Mr. DeRusha's position will be at
least commensurate in all material respects with the most significant of those
held by him during the 90 days before November 1, 1996. The contract also
provides that Mr. DeRusha will be nominated for election to the Board of
Directors during the employment period and will serve as Chairman of the Board.
Under the contract, Mr. DeRusha is entitled to receive an annual base salary at
least equal to that in effect on November 1, 1996. The contract provides for
annual review of Mr. DeRusha's base salary and permits the annual base salary
to be increased, but not decreased. The contract also provides that Mr. DeRusha
is entitled to an annual bonus in accordance with the terms of the Company's
annual performance-based bonus plan or, if more favorable, a bonus under other
plans in effect generally with respect to other peer executives of the Company.
The contract provides further that the Company may terminate Mr. DeRusha's
employment for cause as such term is defined in the contract. In the event of
such termination, the contract terminates without further obligation to Mr.
DeRusha except for payment of annual base salary to the date of termination
plus any previously deferred and unpaid compensation.
If the Company terminates Mr. DeRusha's employment other than for cause or
death, or if Mr. DeRusha terminates his employment for any reason, he is
entitled to receive a lump sum cash payment equal to the sum of (i) unpaid
annual base salary through the date of termination, (ii) the greater of the
annual bonus paid or payable for the most recently completed fiscal year or the
average annualized bonus paid or payable in respect of the three fiscal years
immediately preceding the fiscal year in which termination occurs (the "Highest
Annual Bonus") for the portion of the then current fiscal year through Mr.
DeRusha's termination of employment, (iii) previously deferred and unpaid
compensation, (iv) accrued vacation pay, and (v) annual base salary plus the
Highest Annual Bonus payable for the remainder of the three-year employment
period. Mr. DeRusha is also entitled to a continuation of medical and other
benefits for three years following termination of the employment or such longer
period as the applicable benefit program may provide. Mr. DeRusha has also
agreed not to compete with the Company in the United States for a period of 36
months following termination of his employment. This non-competition covenant
may be terminated by Mr. DeRusha if his employment was terminated by the
Company other than for cause and if he desires to accept employment with a
competitor, provided that he agrees to repay the Company the portion of the
amount paid to him for salary and bonus with respect to the year in which
termination took place equal to the amount of salary and pro rata bonus payable
to him by the competitor during the three-year period following termination of
employment with the Company.
The Company has also entered into an employment contract with James F.
Cerza, Jr. effective March 1, 1991. This contract provided for an initial
two-year term that ended February 28, 1993, with automatic annual one-year
extensions, unless either party notifies the other at least one year in advance
that it does not wish to extend the term. The contract also provides that Mr.
Cerza will receive an annual salary 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. The
contract provides that Mr. Cerza 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 contract provides
further that the Company may terminate Mr. Cerza's employment immediately for
cause as defined in the contract. In the event of such a termination before the
expiration of the employment term, Mr. Cerza will forfeit the right to receive
any further salary or benefits to which he is entitled under the employment
contract. Should Mr. Cerza 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
13
<PAGE>
he is entitled under the employment contract. The contract also provides that
if (a) Mr. Cerza's employment is terminated by the Company for any reason other
than cause or (b) Mr. Cerza 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 Mr. Cerza 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.
Prior to Mr. Peery's retirement, the Company had entered into an
employment contract with Mr. Peery, effective November 1, 1996, on the same
terms as the contract with Mr. DeRusha (with the exception of the provision
providing for Mr. DeRusha to serve as Chairman of the Board). In connection
with his retirement as President, the Company entered into an agreement with
Mr. Peery (the "Peery Agreement"). The Peery Agreement provided for the
following payments by the Company to Mr. Peery: a lump sum severance payment as
provided under his employment agreement; an additional cash payment of $290,000
in lieu of retirement health care coverage and home office expenses; use of a
company car for a year with transfer of ownership at that time; life insurance
premiums of $16,166 annually for five years; the release of the Company's
interest of $29,219 in a split-dollar life insurance policy on Mr. Peery's
life; and a lump sum payment of $2,800,000 primarily for a five-year period of
noncompetition with the Company.
In connection with his retirement as Executive Vice-President, the Company
entered into an agreement with George A. Thornton, III (the "Thornton
Agreement"). The Thornton Agreement provided for the following payments by the
Company to Mr. Thornton: a lump sum severance payment as provided under his
employment agreement; an additional cash payment of $91,000 in lieu of
retirement health care coverage; use of a company car for a year with transfer
of ownership at that time; and the release of the Company's interest of $7,712
in a split-dollar life insurance policy on Mr. Thornton's life.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
The Company has executive supplemental retirement agreements with Messrs.
DeRusha and Cerza 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 Mr. DeRusha and one year in the case of Mr. Cerza. 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 benefit equal to a
designated percentage of his salary (25% in the case of Mr. DeRusha and 22.5%
in the case of Mr. Cerza) 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.
Prior to Messrs. Peery and Thornton's retirement, the Company had
executive supplemental retirement agreements with each executive officer that
entitled them to receive death benefits or supplemental retirement
14
<PAGE>
income. If either executive officer died before age 65 in the employment of the
Company, his beneficiary was entitled to receive annual benefits of 100% of the
executive officer's salary for a period of two years in the case of Mr. Peery
and one year in the case of Mr. Thornton. Thereafter, the executive's
beneficiary would receive annual benefits of 50% of the executive officer's
salary for a period of eight years. The agreements defined salary as the
executive's highest final compensation payable over the three year fiscal
period preceding retirement or termination. These agreements defined final
compensation as 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 retired at age 65, he would receive an annual retirement
benefit equal to a designated percentage of his salary (25% in the case of Mr.
Peery and 22.5% in the case of Mr. Thornton) at the time of retirement
increased four percent annually for a period of 15 years. In the event an
executive officer died after retirement, but before he received all of his
retirement income, the executive officer's beneficiary would receive annual
benefits equal to a percentage of such executive officer's salary for the
balance of the 15-year period. The Company owned and was the beneficiary under
life insurance contracts intended to provide the Company with funds to meet its
obligations under these executive supplemental retirement agreements.
EXECUTIVE SEVERANCE PLAN
The Company has an executive severance plan under which executives (other
than Messrs. DeRusha and Cerza) 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 his employment 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 and Cerza), certain categories of key administrative people
designated by the Chairman and all full-time employees with ten or more years
of service.
DIRECTORS' COMPENSATION
For the fiscal year ended February 28, 1999, 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
received for services performed for the Company as a director. The agreements
provide deferred income to the participating director and/or the director's
family at the director's attainment of age 70 or upon 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 the director's relationship with the Company before age 70, unless the
relationship terminated for "due cause" as determined by the Compensation
Committee or Board of Directors of the Company. Generally, if a director
terminates his relationship with the Company following a change of control, the
director will be entitled to receive a reduced lump sum payment equal to the
actuarial equivalent of the benefit the director would have received at age 70
(taking into account deferrals made to the date of the director's death). The
deposited amount would be subject to the claims of creditors, but would not be
otherwise available to the Company.
15
<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 28, 1999. These directors were Robert L. Burrus,
Jr., Charles A. Davis, Hyman Meyers and Lawrence N. Smith. Messrs. DeRusha and
Peery also served 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
28, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Davis, Chairman of the Compensation Committee, is President and Chief
Executive Officer of Marsh & McLennan Capital, Inc., which provided insurance
and reinsurance brokerage services to the Company during the fiscal year ended
February 28, 1999, and may provide such services during the current fiscal
year. Prior to April 1, 1998, Mr. Davis was a Limited Partner and Senior
Director, Investment Banking of Goldman, Sachs & Co., which performed
investment banking services for the Company during the fiscal year ended
February 28, 1999, and may perform such services during the current fiscal
year.
CERTAIN TRANSACTIONS
AGREEMENTS WITH RETIRED EXECUTIVES. The Company entered into Executive
Employment and Deferred Compensation Agreements with Hyman Meyers, S. Sidney
Meyers and Nathaniel Krumbein while these individuals were executive officers
of the Company. The agreements provide for retirement compensation until an
individual's death in an annual amount equal to 58% of the average of the
highest three years of total cash compensation paid to the individual during
any fiscal year in which he was employed by the Company. This amount will be
reduced by the individual's primary social security benefit and by the amount
determined to be payable under the employer portion of the Company's profit
sharing plan. The payment to Hyman Meyers will end upon his death. S. Sidney
Meyers and Nathaniel Krumbein elected to receive the actuarial equivalent of
this amount as a joint and survivor annuity with their spouses, providing
payments to them or their wives as long as either shall live. The Company owns
and is beneficiary under life insurance contracts, purchased in full before the
retirement of these individuals, which are intended to provide the Company with
funds to meet its obligations under these agreements.
During the year ended February 28, 1999, the Company made the following
payments as retirement compensation: $99,060 to Hyman Meyers, $42,232 to S.
Sidney Meyers, and $48,944 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 $2,850 in health and life insurance premiums for Hyman Meyers and
$5,466 for each of S. Sidney Meyers and Nathaniel Krumbein during the fiscal
year ended February 28, 1999. The Company provided S. Sidney Meyers and
Nathaniel Krumbein with office space and services, which they shared at a total
cost of $124,317 during the fiscal year ended February 28, 1999.
16
<PAGE>
The Company may retain any of these individuals (with his consent) on a
year-to-year basis during retirement to render consulting services as directed
by the Board of Directors, at a minimum annual fee of $10,000, plus
out-of-pocket expenses. The Company did not retain any of these individuals to
render consulting services during the fiscal year ended February 28, 1999.
LEASES. During the past fiscal year, the Company rented five of its stores
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 $16,538 to $120,884 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, 1999, the unexpired terms of
all leases with members of the Meyers and Krumbein families, excluding renewal
options, ranged from 1 1/4 to 10 3/4 years. The Company believes that the rent
and terms provided in these leases 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.
During the fiscal year ended February 28, 1999, the Company paid rent
pursuant to such leases aggregating $286,473. The table below sets forth
certain information concerning the rent received during the fiscal year ended
February 28, 1999, and rent to be received during the current fiscal year by
these directors and members of their families on account of such leases.
<TABLE>
<CAPTION>
RENT RECEIVED DURING MINIMUM ANNUAL
FISCAL YEAR ENDED RENT (AT CURRENT
FEBRUARY 28, 1999 ANNUAL RENTAL RATES)
---------------------- ---------------------
<S> <C> <C>
Hyman Meyers ......................................... $ 54,542 $ 47,551
S. Sidney Meyers ..................................... 54,542 47,551
Nathaniel Krumbein ................................... 1,702 1,743
Amy M. Krumbein (Wife of Nathaniel Krumbein) ......... 52,841 45,807
Other family members ................................. 122,843* 125,855
</TABLE>
- ----------
*Consists of the following amounts payable to adult children of the
following individuals: Hyman Meyers, $40,956, S. Sidney Meyers, $40,944 and
Nathaniel Krumbein, $40,944.
1Under four of these leases, the Company pays real estate taxes and
insurance premiums while the remaining lease requires 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.
17
<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, 1999.
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL
BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
- ----------------------------------- ------------------ -----------------
<S> <C> <C>
FMR Corp. ......................... 5,541,711(1) 9.275%
82 Devonshire Street
Boston, MA 02109
Merrill Lynch & Co., Inc. ......... 3,198,264(2) 5.3 %
(on behalf of Merrill Lynch Asset
Management Group)
World Financial Center, North Tower
250 Vesey Street
New York, NY 10381
GeoCapital LLC .................... 3,013,780(3) 5.04%
767 Fifth Avenue
45th Floor
New York, NY 10153
</TABLE>
- ----------
(1) Information concerning the Common Stock beneficially owned by FMR
Corp. ("FMR") is based on the Schedule 13G/A filed on February 12, 1999. FMR is
a parent holding company and Edward C. Johnson 3d, his wife Abigail Johnson and
certain other members of the Johnson family may be deemed members of a group
that controls FMR. The Schedule 13G/A indicates that the 5,541,711 shares
beneficially owned include: (i) 5,019,300 shares, or 8.401% of the Common
Stock, beneficially owned by Fidelity Management & Research Company, a
registered investment adviser and a wholly-owned subsidiary of FMR, as a result
of acting as investment adviser to various registered investment companies;
(ii) 4,763,500 shares, or 7.973% of the Common Stock, beneficially owned by
Fidelity Value Fund ("Fidelity Fund") and (iii) 522,411 shares, or 0.874% of
the Common Stock, beneficially owned by Fidelity Management Trust Company
("Fidelity Trust"), a bank and wholly-owned subsidiary of FMR. According to the
Schedule 13G/A, each of FMR and Mr. Johnson has sole dispositive power with
respect to 5,019,300 shares, but neither FMR nor Mr. Johnson has sole voting
power with respect to such shares because such power resides with the Fidelity
Fund's Board of Trustees. Both FMR, through its control of Fidelity Trust, and
Mr. Johnson have sole dispostive and sole voting power with respect to the
522,411 shares beneficially owned by Fidelity Trust.
(2) Information concerning the Common Stock beneficially owned by Merrill
Lynch & Co., Inc. ("Merrill Lynch") is based on the Schedule 13G filed on
February 4, 1999. Merrill Lynch is a parent holding company. Merrill Lynch
Asset Management Group is an operating division of Merrill Lynch consisting of
Merrill Lynch's indirectly-owned asset management subsidiaries. The following
asset management subsidiaries hold certain shares of Common Stock: Merrill
Lynch Asset Management, L.P. and Fund Asset Management, L.P.
(3) Information concerning the Common Stock beneficially owned by
GeoCapital LLC ("Geocapital") is based on the Schedule 13G filed on February
10, 1999. GeoCapital reported sole dispositive power with respect to 3,013,780
of such shares and sole voting power, shared voting power and shared
dispositive power with respect to none of such shares.
18
<PAGE>
APPROVAL OF DIRECTOR STOCK OWNERSHIP PLAN
INTRODUCTION
The Board of Directors of the Company has approved and adopted the
Heilig-Meyers Company Director Stock Ownership Plan (the "Director Ownership
Plan") and directed that it be submitted to shareholders for approval.
If approved by shareholders, the Director Ownership Plan will become
effective as of the date of such approval. The Director Ownership Plan will
remain in effect until the tenth anniversary of the effective date, if not
earlier terminated by the Board of Directors or requirements of law. No awards
may be made under the Director Ownership Plan after its termination.
The Director Ownership Plan is intended to increase the level of ownership
of the Company's Common Stock by non-employee directors. The Director Ownership
Plan replaces the practice of paying director retainer fees solely in cash by
paying at least 50% of such fees in Company Common Stock and allowing directors
to receive up to 100% of the fees in Company Common Stock.
The principal features of the Director Ownership Plan are summarized
below. The summary is qualified by reference to the complete text of the
Director Ownership Plan, which is attached as Exhibit A.
GENERAL
The Director Ownership Plan authorizes the reservation of an aggregate of
600,000 shares of Common Stock for issuance pursuant to the Director Ownership
Plan. The aggregate number is subject to adjustment in the event of a stock
dividend or other change in capital structure of the Company. The aggregate
number of shares of Common Stock reserved will be reduced by the issuance of
shares under the Director Ownership Plan.
ELIGIBILITY
All directors automatically participate in the Director Ownership Plan,
provided they are not currently, and were not for at least one year before the
date of an award, employees of the Company or a subsidiary of the Company.
ADMINISTRATION
The Director Ownership Plan will be administered by the Compensation
Committee of the Board of Directors. The Compensation Committee is not
authorized to exercise any discretion with respect to the Director Ownership
Plan. The Director Ownership Plan is intended to conform to the provisions of
Rule 16b-3 of the Securities Exchange Act of 1934, as amended.
AWARDS OF COMPANY COMMON STOCK
Each non-employee director in the Director Ownership Plan will receive an
award each year. The award will be the number of shares of Common Stock
determined by dividing 50% of the non-employee director's retainer fees for the
year by the fair market value of a share of Common Stock determined as of the
date of the award. The date of the award will be the first business day of the
month following the annual meeting of shareholders where directors are elected.
A non-employee director may elect to receive an additional percentage of
his or her retainer up to a total of 100% in the form of Company Common Stock
based on the same method of calculation. The election must be made before the
date of the award each year.
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If at any time there are not sufficient shares available under the
Director Ownership Plan to permit the awards under the Plan, the awards will be
reduced pro rata (to zero, if necessary) so as not to exceed the number of
shares then available under the Director Ownership Plan.
AMENDMENT OF THE DIRECTOR OWNERSHIP PLAN
The Board of Directors may amend the Director Ownership Plan in such
respects as it deems advisable. Shareholder approval must be obtained for any
amendment that increases the total number of shares reserved for issuance under
the Director Ownership Plan, except in the case of an increase due to a stock
dividend or other change in capital structure of the Company. The Board of
Directors may unilaterally amend the Director Ownership Plan as it deems
necessary to ensure compliance with Rule 16b-3.
FEDERAL INCOME TAX CONSEQUENCES
Awards under the Director Ownership Plan are includible in the gross
income of non-employee directors. There may also be state and local income
taxes applicable to these transactions.
VOTE REQUIRED
Approval of the Director Stock Ownership Plan requires an affirmative vote
of the holders of a majority of the shares of Common Stock voting at the Annual
Meeting of Shareholders.
The Board of Directors believes that approval of the Heilig-Meyers Company
Director Stock Ownership Plan is in the best interest of all shareholders and,
accordingly, recommends a vote "FOR" approval of the proposed Director Stock
Ownership Plan.
SHAREHOLDER PROPOSAL
Management has been advised that Ms. Ruthellen Miller, 23 Park Circle,
Great Neck, NY 11024, owner of 400 shares of the Company's Common Stock,
intends to present the following proposal at the Annual Meeting of
Shareholders. Approval of the shareholder proposal requires the affirmative
vote of the holders of a majority of the shares of Common Stock voting at the
Annual Meeting of Shareholders.
MAXIMIZE VALUE RESOLUTION
Resolved that the shareholders of Heilig-Meyers Company urge the
Heilig-Meyers Company Board of Directors to arrange for the prompt sale of
Heilig-Meyers Company to the highest bidder.
The purpose of the Maximize Value Resolution is to give all Heilig-Meyers
Company shareholders the opportunity to send a message to the Heilig-Meyers
Company Board that they support the prompt sale of Heilig-Meyers Company to the
highest bidder. A strong and or majority vote by the shareholders would
indicate to the Board the displeasure felt by the shareholders of the
shareholder returns over many years and the drastic action that should be
taken. Even if it is approved by the majority of the Heilig-Meyers Company
shares represented and entitled to vote at the annual meeting, the Maximize
Value Resolution will not be binding on the Heilig-Meyers Company Board. The
proponent however believes that if this resolution receives substantial support
from the shareholders, the board may choose to carry out the request set forth
in the resolution.
The prompt auction of Heilig-Meyers Company should be accomplished by any
appropriate process the board chooses to adopt including a sale to the highest
bidder whether in cash, stock, or a combination of both. It is expected that
the board will uphold its fiduciary duties to the utmost during the process.
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The proponent further believes that if the resolution is adopted, the
management and the board will interpret such adoption as a message from the
Company's stockholders that it is no longer for the board to continue with its
current management plan and strategies.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION
RESPONSE OF THE BOARD OF DIRECTORS IN OPPOSITION TO SHAREHOLDER PROPOSAL
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
AGAINST THIS RESOLUTION FOR THE FOLLOWING REASONS:
The Board of Directors strongly believes that the implementation of the
shareholder proposal described above would not be in the best interests of the
Company's shareholders, and would not maximize value to the shareholders. The
Board is aware of its duty to act in the best interests of all shareholders in
managing and supervising the affairs of the Company. Maximizing shareholder
value is considered by the Board to be the central component of that duty.
The Board is aware that the Company's recent financial performance has
been disappointing and believes it has already taken substantial and important
steps to enhance shareholder value. In December 1997, the Company implemented a
profit improvement plan for its core Heilig-Meyers stores and results at these
stores have improved in recent periods. On April 1, 1999, Donald S. Shaffer
joined the Company as President and Chief Operating Officer. His previous
position was as Chairman and CEO, Western Auto Supply Company, where he
successfully implemented a major turnaround of this retail concept. In March
1999, the Company announced a review of strategic divestiture options of its
non-core operating assets, including the possible divestiture of Rhodes, Inc.
and Mattress Discounters Corporation. The net proceeds of these two potential
divestitures would be used to pay down debt, resulting in significant interest
savings, and also would likely result in a net one-time gain upon completion of
both divestitures. The Board believes that these divestitures will allow the
Company to focus on its core business and on increased operating profitability.
The Board believes additional time is needed for the Company to implement and
realize the potential benefits of these steps before other strategies are
pursued.
The resolution urges the directors to "arrange for the prompt sale of
Heilig-Meyers Company to the highest bidder". Even though it does not obligate
the Board to take certain action, its adoption could, in effect, place the
Company for auction in a bidding process in a distress sale posture, that might
not enhance, and may, in fact, depress the market value of the Company. The
decision to sell a company involves a complex set of factors including the
subjective evaluation of the future of the company and the impact of market and
economic conditions on the timing of any such sale. The resolution urges the
prompt sale of the Company at the highest bid and not necessarily a bid that
would represent the true value of the Company. The Board believes that, given
current trading ranges for the Common Stock, acting hastily to force a sale at
this time to the highest bidder is likely to result in a valuation which does
not reflect the true value of the Company.
Adoption of the proposal would also, in effect, restrict or eliminate the
ability to pursue planned strategic initiatives, including the possible
divestiture of Rhodes, Inc. and Mattress Discounters Corporation, or prudently
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consider other strategic alternatives. It could also damage shareholder value
by creating uncertainty about the future of the Company among its vendors,
customers, employees, communities and other constituencies.
The Board should retain the discretion to consider all possible future
strategies for the Company that are in the best interests of shareholders and
not be urged to pursue only one course of action at a particular point in time.
For the reasons discussed above, the Board believes that the shareholder
proposal is not in the best interest of all the Company's shareholders, and the
Board vigorously opposes this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
SHAREHOLDER PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED
AGAINST THE PROPOSAL UNLESS OTHERWISE SPECIFIED BY THE SHAREHOLDER IN THE
PROXY.
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. 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 2000 MEETING
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting must be received by the Company at its principal executive offices no
later than January 19, 2000, for inclusion in the Company's 2000 proxy
materials. Such proposals should meet the applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
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FURTHER INFORMATION
The Company will provide without charge to each person from whom a proxy
is solicited by the Board of Directors, upon the written request of any such
person, a copy of the Company's annual report on Form 10-K, including the
financial statements thereto, required to be filed with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, for
the Company's fiscal year ended February 28, 1999. Such written requests should
be sent to the Office of the Treasurer, Heilig-Meyers Company, 12560 West Creek
Parkway, Richmond, Virginia 23238.
By Order of the Board of Directors
PAIGE H. WILSON
Secretary
May 19, 1999
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.
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EXHIBIT A
HEILIG-MEYERS COMPANY
DIRECTOR STOCK OWNERSHIP PLAN
HEILIG-MEYERS COMPANY (the "Company") hereby adopts the Heilig-Meyers
Company Director Stock Ownership Plan.
1. PURPOSE. The purpose of the Director Stock Ownership Plan is to
increase the level of ownership of the Company's common stock by non-employee
directors. The Plan replaces the practice of paying director retainer fees
solely in cash by paying at least 50% of such fees in Company common stock and
allowing directors to receive up to 100% of the fees in Company common stock
all as set forth in the Plan. The Plan has been adopted by the Board of
Directors of the Company subject to approval by the Company's shareholders. The
Plan is intended to conform to the provisions of Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, or any replacement rule in effect from time
to time.
2. DEFINITIONS. As used in the Plan, the following terms have the meanings
indicated:
(a) "Annual Meeting Date" means the date of the annual meeting of the
Company's shareholders at which directors are elected.
(b) "Award" means the award of Company Stock under the Plan.
(c) "Award Date" means the first day on which the New York Stock
Exchange is open in the month immediately following the Annual Meeting
Date.
(d) "Board" means the Board of Directors of the Company.
(e) "Committee" means the Compensation Committee of the Board that shall
administer the Plan.
(f) "Company" means Heilig-Meyers Company, a Virginia corporation, or
any successor corporation.
(g) "Company Stock" means common stock of the Company. In the event of a
change in the capital structure of the Company (as provided in Section 9),
the shares resulting from such a change shall be deemed to be Company Stock
within the meaning of the Plan.
(h) "Compensation" means the amount of retainer fees payable to each
Eligible Director with respect to services rendered to the Company as a
director during a Service Period. Compensation does not include fees for
attending meetings of the Board or committees of the Board.
(i) "Effective Date" means the date the Plan is approved by the
Company's shareholders.
(j) "Election Period" means the 120-day period immediately preceding the
first day of a Service Period, or such other period as determined by the
Committee. For the first Service Period beginning with the Effective Date,
the Election Period shall be the period beginning on the Effective Date and
ending on the first Award Date. For the first Service Period following a
director's first election to the Board, the Election Period shall be the
period beginning on the date of the director's election to the Board and
ending on the first Award Date after the director's election.
(k) "Eligible Director" means a director who is not an employee of the
Company or a Subsidiary.
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(l) "Fair Market Value" means, on the Award Date, the average of the
highest and lowest registered sales prices of the Company Stock on the
exchange on which the Company Stock generally has the greatest trading
volume.
(m) "Participant" means any Eligible Director entitled to receive an
Award under the Plan.
(n) "Plan" means this Heilig-Meyers Company Director Stock Ownership
Plan.
(o) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended. A reference in the Plan to Rule 16b-3
shall include a reference to any corresponding subsequent rule or any
amendments to Rule 16b-3 enacted after the Effective Date.
(p) "Service Period" means the period beginning with the Annual Meeting
Date and ending on the day preceding the next Annual Meeting Date.
(q) "Subsidiary" means an entity of which the Company owns 50% or more
of the total combined voting power of all classes of stock.
3. PARTICIPATION. All Eligible Directors shall automatically participate in
the Plan.
4. STOCK. The Company has reserved an aggregate of 600,000 shares of
Company Stock for issuance pursuant to the Plan. The aggregate number is
subject to adjustment as provided in Section 9. In the event of a change in the
capital structure of the Company (as provided in Section 9), the shares
resulting from such change shall be deemed to be Company Stock within the
meaning of the Plan. The aggregate number of shares of Company Stock reserved
shall be reduced by the issuance of shares under the Plan.
5. AUTOMATIC SHARE AWARDS. As of each Award Date, each Participant will
receive the number of shares of Company Stock (rounded down to the nearest
whole share) determined by dividing (i) an amount equal to 50% of the
Participant's Compensation, by (ii) the Fair Market Value of the Company Stock.
6. ELECTION OF ADDITIONAL COMPANY STOCK.
(a) During the Election Period related to each Service Period, a
Participant may elect to receive an additional percentage of the
Participant's Compensation in the form of Company Stock. The election may
be for any percentage of the Compensation above 50% up to 100%. The
election shall be irrevocable as to the Award for the Service Period and
shall be made by filing a written election with the Company during the
Election Period.
(b) If a Participant makes an election pursuant to Section 6(a), as of
the next Award Date, the Participant will receive the number of shares of
Company Stock (rounded down to the nearest whole share) determined by
dividing (i) the elected percentage of the Participant's Compensation, by
(ii) the Fair Market Value of the Company Stock.
7. PROVISIONS RELATING TO COMPANY STOCK. All Company Stock granted under
the Plan shall be subject to the provisions of this Section.
(a) Company Stock shall automatically be awarded under the Plan as
provided under Sections 5 and 6. If at any time there may not be sufficient
shares available under the Plan to permit automatic Awards, the automatic
Awards shall be reduced pro rata (to zero, if necessary) so as not to
exceed the number of shares then available under the Plan.
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(b) When Company Stock is issued, a certificate representing the shares
of Company Stock awarded shall be registered in each Participant's name or
other evidence of ownership shall be provided to the Participant by the
Company's transfer agent.
8. ISSUANCE OF COMPANY STOCK. The Company shall not be required to issue
or deliver any certificate for shares of Company Stock before (i) approval of
the Plan by the Company's shareholders, (ii) the admission of such shares to
listing on any stock exchange on which the Company Stock may then be listed,
(iii) receipt of any required registration or other qualification of such
shares under any state or federal law or regulation that the Company's counsel
shall determine is necessary or advisable, and (iv) the Company is satisfied
that all applicable legal requirements have been complied with. The Company may
place on a certificate representing Company Stock any legend deemed necessary
by the Company's counsel to comply with federal or state securities laws. Until
a certificate has been issued in the Participant's name for the shares of
Company Stock acquired, the Participant shall possess no shareholder rights
with respect to the shares.
9. EFFECT OF STOCK DIVIDENDS AND OTHER CHANGES IN CAPITAL STRUCTURE.
Appropriate adjustments shall be made automatically to the number and kind of
shares to be issued under the Plan, and any other relevant provisions of the
Plan if there are any changes in the Company Stock by reason of a stock
dividend, stock split, combination of shares, spin-off, reclassification,
recapitalization, merger, consolidation or other change in the Company's
capital stock (including, but not limited to, the creation or issuance to
shareholders generally of rights, options or warrants for the purchase of
common stock or preferred stock of the Company). If the adjustment would
produce fractional shares, the fractional shares shall be eliminated by
rounding to the nearest whole share. Any such adjustments shall neither enhance
nor diminish the rights of a Participant.
10. ADMINISTRATION OF THE PLAN. The Committee shall be responsible for the
proper implementation of the Plan. The Committee shall not exercise any
discretion with respect to the administration of the Plan. The Committee shall
have all powers vested in it by the terms of the Plan. Any decision of the
Committee with respect to the Plan shall be final and conclusive. The Committee
may act only by a majority of its members in office, except that the members
may authorize any one or more of their number or any officer of the Company to
execute and deliver documents on behalf of the Committee. The Committee may
consult with counsel, who may be counsel to the Company, and shall not incur
any liability for action taken in good faith in reliance upon the advice of
counsel.
11. EXPIRATION AND TERMINATION OF THE PLAN. Company Stock shall be awarded
under the Plan until the Plan is terminated by the Board or until such earlier
date when termination of the Plan shall be required by law. If not sooner
terminated, the Plan shall terminate automatically on the tenth anniversary of
the Effective Date.
12. AMENDMENTS. The Board may from time to time make such changes in and
additions to the Plan as it may deem appropriate; provided that no change shall
be made that increases the total number of shares reserved for issuance under
the Plan (except pursuant to Section 9), unless such change is authorized by
the shareholders of the Company. The Board may unilaterally amend the Plan as
it deems appropriate to ensure compliance with Rule 16b-3. Except as provided
in the preceding sentence, the termination of the Plan or any change or
addition to the Plan shall not, without the consent of any Participant who is
adversely affected thereby, alter any Awards previously made to the Participant
pursuant to the Plan.
13. RIGHTS UNDER THE PLAN. Participation in the Plan and the right to
receive Company Stock under the Plan shall not give a Participant any
proprietary interest in the Company, or any Subsidiary or any of their assets,
nor ensure that the Participant will be nominated for election to the Board in
the future.
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14. NOTICE. All notices and other communications required or permitted to
be given under the Plan shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed first class, postage prepaid, as
follows: (a) if to the Company, at its principal business address, to the
attention of the Secretary; (b) if to any Participant, at the last address of
the Participant known to the sender at the time the notice or other
communication is sent.
15. GOVERNING LAW/INTERPRETATION. Generally, the Plan shall be governed by
the laws of the Commonwealth of Virginia. The terms of this Plan are also
subject to all present and future rulings of the Securities Exchange Commission
with respect to Rule 16b-3. If any provision of the Plan would cause the Plan
to fail to meet the requirements of Rule 16b-3, then that provision of the Plan
shall be void and of no effect.
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[ X ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
---------------------
HEILIG-MEYERS COMPANY
---------------------
COMMON STOCK
Mark box at right if an address change or commitment has been noted on the
reverse side of this card. [ ]
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date_____________________
- ----------------------------------------- ------------------------------
Shareholder sign here Co-owner sign here
1. ELECTION OF DIRECTORS
William C. DeRusha Benjamin F. Edwards III
Alexander Alexander Lawrence N. Smith
Robert L. Burrus, Jr. Eugene P. Trani
Beverley E. Dalton L. Douglas Wilder
Charles A. Davis
For Withhold For All Except
[ ] [ ] [ ]
If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
2. Approval of the Director Stock Ownership Plan.
For Against Abstain
[ ] [ ] [ ]
3. Shareholder proposal (described in proxy statement).
For Against Abstain
[ ] [ ] [ ]
4. Ratification of the selection of Deloitte & Touche LLP as accountants and
auditors for the current fiscal year.
For Against Abstain
[ ] [ ] [ ]
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
DETACH CARD DETACH CARD
<PAGE>
COMMON COMMON
HEILIG-MEYERS COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, hereby revoking all previous proxies, hereby appoints Roy B.
Goodman 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 16, 1999, and to
vote, as directed on the reverse, all the shares of Common Stock of the Company
which the undersigned would be entitled to vote if personally present.
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, FOR Proposal
2, AGAINST Proposal 3 and FOR Proposal 4.
The undersigned acknowledges receipt of the Notice of Annual Meeting and of the
Proxy Statement attached thereto.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
Please sign exactly as name(s) appear(s) on the reverse. 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
authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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