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 ss.240.14a-11(c) or ss.240.14a-12
JACOBSON STORES INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the 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>
Jacobson Stores Inc.
----------------------------------------------------------------------------
NOTICE
OF
ANNUAL MEETING
AND
PROXY STATEMENT
----------------------------------------------------------------------------
<PAGE>
Jacobson Stores Inc.
3333 Sargent Road, Jackson, Michigan 49201-8847
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
May 23, 1996
TO THE SHAREHOLDERS OF
JACOBSON STORES INC.:
The 1996 Annual Meeting of Shareholders of Jacobson Stores Inc. will
be held at the corporate offices, 3333 Sargent Road, Jackson, Michigan
49201-8847, on Thursday, May 23, 1996, at 11:30 a.m., local time, for the
following purposes:
(1) To elect Herbert S. Amster, James B. Fowler, Herman S.
Kohlmeyer, Jr., and Mark K. Rosenfeld as Class I Directors, to serve
until the 1999 Annual Meeting of Shareholders or until their
successors are elected and qualified;
(2) To consider and act on a proposal to appoint Arthur Andersen
LLP, independent public accountants, as auditors for the fiscal year
ending January 25, 1997; and
(3) To transact any other business that may properly come before the
meeting or any adjournments thereof.
Common shareholders of record at the close of business on March 25,
1996 will be entitled to notice of and to vote at the meeting.
Your attention is directed to the proxy statement submitted with
this notice.
By order of the Board of Directors,
RICHARD Z. ROSENFELD, Secretary
Jackson, Michigan, April 9, 1996.
Shareholders are requested to specify their choice, date, sign and return the
enclosed proxy in the enclosed envelope.
<PAGE>
JACOBSON STORES INC.
PROXY STATEMENT
FOR
1996 ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Jacobson Stores Inc. (the "Company")
for use at its 1996 Annual Meeting of Shareholders, to be held Thursday, May
23, 1996, at 11:30 a.m., local time, at the corporate offices, 3333 Sargent
Road, Jackson, Michigan 49201-8847, and at any adjournments thereof, for the
purposes set forth in the accompanying notice. This proxy statement and the
enclosed form of proxy are first sent or given to security holders on or about
April 9, 1996.
If the enclosed proxy is properly executed and returned to Norwest
Bank Minnesota, N.A., 161 North Concord Exchange, P.O. Box 738, South St.
Paul, Minnesota 55075-0738, the Company's Registrar and Transfer Agent, all
shares represented will be voted in the manner specified. A proxy may be
revoked at any time before it is exercised.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of March 1, 1996, 5,779,021-2/3 shares of the Company's Common
Stock, par value $1 per share, were outstanding and entitled to vote. Common
shareholders of record at the close of business on March 25, 1996 will be
entitled to notice of and to vote at the meeting. Each shareholder is entitled
to one vote for each Common share held on the record date. Shares may not be
voted cumulatively.
The following table and the explanations on pages 2-3 provide
information as of March 1, 1996 (or, in three cases as explained on page 3,
December 31, 1995) about each person known to the Company to be the beneficial
owner of more than 5% of the Company's Common Stock, which is its only class
of voting securities:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
------------------------------------
Sole Voting Shared Voting Percent
Name and Address of Beneficial Owner and/or Investment and/or Investment of Class
- ------------------------------------ ----------------- ----------------- --------
<S> <C> <C> <C>
Mark K. Rosenfeld 1,501 1,099,286-1/3 19.0
3333 Sargent Road
Jackson, Michigan 49201-8847
Robert L. Rosenfeld, Ph.D 21,600 1,099,286-1/3 19.4
4535 Fourth Road North
Arlington, Virginia 22203-2342
David A. Rosenfeld 325 1,099,286-1/3 19.0
875 Battery
San Francisco, California 94111
David L. Babson & Co., Inc. 372,900 148,200 9.0
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Comerica Bank 66,393(1) 270,991(2) 5.8
One Detroit Center
Detroit, Michigan 48275
Dimensional Fund Advisors Inc. 344,750 -- 6.0
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Franklin Resources, Inc. 297,200 297,200 5.1
77 Mariners Island Blvd
San Mateo, California 94404
<FN>
(1) Includes 66,393 shares over which it has sole voting power and
35,803 shares over which it has sole investment power.
(2) Includes 270,766 shares over which it has shared voting power and 270,991
shares over which it has shared investment power.
</TABLE>
1
<PAGE>
The following table and explanation provide information as of March
1, 1996 about shares of the Company's Common Stock beneficially owned by each
director, each of the five most highly compensated executive officers
identified on page 8, and all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
---------------------------------------
Sole Voting Shared Voting Percent
Name and/or Investment and/or Investment(1) of Class
---- ----------------- -------------------- --------
<S> <C> <C> <C>
Herbert S. Amster 4,750 (2) 5,809 *
James B. Fowler 15,579 (3) 1,187 *
Paul W. Gilbert 6,750 (3) 17,836 (4) *
George P. Kelly 1,750 (5) 500 *
Herman S. Kohlmeyer, Jr 7,000 (2) 206,000-2/3 3.7
Kathleen McCree Lewis 3,000 (6) -- *
Patricia Shontz Longe, Ph.D 5,000 (2) -- *
Robert L. Moles 6,612 (7) -- *
Michael T. Monahan 3,500 (2) -- *
Philip H. Power 3,800 (2) -- *
Mark K. Rosenfeld 1,501 1,099,286-1/3 (8) 19.0
Richard Z. Rosenfeld 86,854 (9) 40,710 2.2
Robert L. Rosenfeld, Ph.D 21,600 1,099,286-1/3 (8) 19.4
James L. Wolohan 3,000 (6) -- *
All directors and executive 178,8451/3 (10) 1,373,972 (11) 26.6
officers (17 persons including
those named above)
<FN>
* Less than 1% of the class
(1) Includes shares the spouse and/or children of the named individual
owns or has the right to acquire individually or jointly with the named
individual.
(2) Includes 2,500 shares that may be acquired on exercise of options.
(3) Includes 6,750 shares that may be acquired on exercise of options
which are exercisable within 60 days after March 1, 1996.
(4) Includes 1,836 shares that may be acquired on conversion of debentures.
(5) Includes 1,750 shares that may be acquired on exercise of
options which are exercisable within 60 days after March 1,
1996. Mr. Kelly resigned effective March 25, 1996, and his
options expired upon his resignation.
(6) Includes 2,000 shares that may be acquired on exercise of options.
(7) Includes 3,250 shares that may be acquired on exercise of options which
are exercisable within 60 days after March 1, 1996.
(8) Includes 8,500 shares that may be acquired by Mark K. Rosenfeld on
exercise of options which are exercisable within 60 days after March 1,
1996, 2,500 shares that may be acquired by Robert L. Rosenfeld on
exercise of options, and 459 shares that may be acquired by Mark K.
Rosenfeld or his wife as custodian and by his adult son on the conversion
of debentures.
(9) Includes 1,500 shares that may be acquired on exercise of options.
(10) Includes 43,125 shares that may be acquired on exercise of options which
are exercisable within 60 days after March 1, 1996.
(11) Includes 11,000 shares that may be acquired on exercise of options which
are exercisable within 60 days after March 1, 1996, and 2,295 shares that
may be acquired on the conversion of debentures.
</TABLE>
Information about beneficial ownership, set forth in the stock
ownership tables, is based on information furnished by the shareholder,
director, or executive officer.
The following additional information is furnished in explanation of
the stock ownership tables:
261,265-1/3 shares of Common Stock registered in the names of Robert
L. Rosenfeld individually and as trustee, and his wife, 256,329 shares in the
names of David A. Rosenfeld and his wife, 299,467 shares in the names of Mark
K. Rosenfeld and his wife individually and as trustee or custodian, and an
adult son of Mark K. Rosenfeld, and 270,766 shares in the Marjorie L.
Rosenfeld Trust, are subject to a Voting and Transfer Restriction Agreement.
Comerica Bank is Co-Trustee (with Robert L. Rosenfeld) of the Marjorie L.
Rosenfeld Trust and shares voting and investment power over the 270,766 shares
held in that trust. Any two of the three brothers may vote all shares subject
to the Agreement. The transfer of the shares is restricted by the terms of the
Agreement. The Agreement continues until December 31, 2000, unless it is
terminated earlier according to its terms. Each party disclaims any beneficial
interest in the shares owned by his brothers and the wife, trusts and issue of
his brothers. All shares subject to the Agreement, as well as 11,459 shares
that may be acquired on exercise of options and conversion of debentures, as
referred to in note (8) above, are shown in the stock ownership tables as
beneficially owned by each of the brothers, but are counted only once in the
total for all directors and executive officers.
2
<PAGE>
40,279 shares of Common Stock are held by Richard Z. Rosenfeld as
trustee under revocable Trust Agreement dated December 14, 1968, established
by Jacques A. Preis. Richard Z. Rosenfeld disclaims any beneficial interest in
the shares, but they are shown as beneficially owned by him.
As of December 31, 1995, David L. Babson & Co., Inc., a registered
investment advisor, exercised investment discretion with respect to 521,100
shares of the Company's Common Stock which were owned by various investors.
The foregoing information is based solely on a Schedule 13G report, dated
February 12, 1996, filed by David L. Babson & Co., Inc. with the Securities
and Exchange Commission.
As of March 1, 1996, Comerica Bank held, as beneficial owner, an
aggregate of 337,384 shares of the Company's Common Stock, which includes 979
shares which may be acquired on the conversion of debentures, in various
fiduciary capacities, including 28,890 shares as Trustee of the Company's
Pension Plan. Comerica Bank has sole voting power over 66,393 of these shares,
sole dispositive power over 35,803 of these shares, shared voting power over
270,766 of these shares and shared investment power over 270,991 of these
shares, including 270,766 shares held in the Marjorie L. Rosenfeld Trust for
which Comerica Bank acts as Co-Trustee with Robert L. Rosenfeld. The
foregoing information is based solely on information furnished to the Company
by Comerica Bank on March 29, 1996.
As of December 31, 1995, Dimensional Fund Advisors Inc., a registered
investment advisor, was deemed to have beneficial ownership of 344,750 shares
of the Company's Common Stock held in portfolios of DFA Investment Dimensions
Group Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and the DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, for all of which Dimensional Fund Advisors Inc. serves
as investment manager. Dimensional Fund Advisors Inc. disclaims beneficial
ownership of all such shares. The foregoing information is based solely on a
Schedule 13G report, dated February 7, 1996, filed by Dimensional Fund
Advisors Inc. with the Securities and Exchange Commission.
As of December 31, 1995, (i) Franklin Resources, Inc., an investment
advisor and parent holding company, (ii) Charles B. Johnson and Rupert H.
Johnson, Jr., principal shareholders of Franklin Resources, Inc. and
investment advisors, and (iii) Franklin Balance Sheet Investment Fund, an
investment company, were deemed to have sole voting power and shared
investment power over 297,200 shares of the Company's Common Stock. The
foregoing information is based solely on a Schedule 13G report, dated February
12, 1996, filed by Franklin Resources, Inc., Charles B. Johnson, Rupert H.
Johnson, Jr. and Franklin Balance Sheet Investment Fund with the Securities
and Exchange Commission.
The shareholdings reported above exclude the beneficial interest of
the executive officers of the Company in 234,632 shares of Common Stock held
in the Company's pension and profit sharing plans.
Stock Ownership Reports
Under the securities laws of the United States, the Company's
directors, executive officers, and any persons holding 10% or more of its
Common Stock are required to report their ownership of the Company's Common
Stock and any changes in that ownership to the Securities and Exchange
Commission (the "S.E.C."). The Company is required to report in this proxy
statement any late filings of reports of stock transactions in fiscal 1995,
and any known failure to file a required report. Based on written
representations of its directors, executive officers and 10% shareholders, and
copies of reports that have been filed with the S.E.C. and furnished to the
Company, the Company believes that all such persons complied with the filing
requirements for all transactions in fiscal 1995.
ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation provide for a Board
of Directors consisting of not less than three members as determined by the
affirmative vote of at least two-thirds of the entire Board. The directors are
divided into three classes, as nearly equal in number as possible, with the
term of office of one class expiring each year. At each annual meeting of
shareholders, the successors of the class of directors whose term expires at
that meeting are elected for a three-year term. If a quorum is present, the
four nominees receiving the greatest number of votes cast at the meeting or
its adjournment shall be elected. Withheld votes and broker non-votes will not
be deemed votes cast, but will be counted for purposes of determining whether
a quorum is present.
3
<PAGE>
The directors whose term of office expires at the 1996 Annual Meeting
of Shareholders are Herbert S. Amster, James B. Fowler, Herman S. Kohlmeyer,
Jr., and Mark K. Rosenfeld (Class I Directors). The Board of Directors has
determined that the number of directors shall be twelve and has nominated
Herbert S. Amster, James B. Fowler, Herman S. Kohlmeyer, Jr., and Mark K.
Rosenfeld, each of whom is currently a director, as Class I Directors, to
serve until the 1999 Annual Meeting of Shareholders and until their successors
are elected and qualified. The terms of office of the Class II and Class III
Directors will expire at the annual meetings of shareholders in 1997 and 1998,
respectively.
It is intended that each proxy given pursuant to this solicitation
will be voted in favor of election of each of the four director nominees
named, unless the shareholder withholds authority to vote for any one or more
or all nominees in the manner indicated on the proxy.
Management has no reason to believe that any nominee will be unable
to serve; but if any should be unable to serve, the persons named in the
enclosed proxy will vote for a substitute nominee or nominees, and/or for
fewer nominees, according to their judgment.
Proxies cannot be voted for more than four nominees.
The following information is furnished with respect to the members of
the Board of Directors and nominees:
<TABLE>
<CAPTION>
First Current
Principal Occupation and Became Term
Name Positions with the Company Age Director Class Expires
---- -------------------------- --- -------- ----- -------
<S> <C> <C> <C> <C> <C>
Herbert S. Amster (2,3) Management consultant 61 1967 I 1996
James B. Fowler (1,2) President, Jacobson Stores Inc. 48 1988 I 1996
Paul W. Gilbert (1) Vice Chairman of the Board, 51 1988 II 1997
Jacobson Stores Inc.
Herman S. Kohlmeyer, Jr. (2) Senior Vice President-Investments, 63 1971 I 1996
Prudential Securities, Inc.,
New Orleans, Louisiana
Kathleen McCree Lewis Attorney; member, Dykema Gossett 48 1993 III 1998
PLLC, Detroit, Michigan
Patricia Shontz Longe, Ph.D. (3) Economist; Senior partner, 62 1973 II 1997
The Longe Company, investment,
management and economic consulting
company, Naples, Florida
Michael T. Monahan (3) President, Comerica Bank, 57 1990 III 1998
Detroit, Michigan
Philip H. Power (3) Chairman of the Board, Suburban 57 1985 II 1997
Communications Corporation,
newspaper publisher, Livonia, Michigan
Mark K. Rosenfeld (1,2,3) Chairman of the Board and 50 1976 I 1996
Chief Executive Officer,
Jacobson Stores Inc.
Richard Z. Rosenfeld (3) Of Counsel, Rosenfeld, 64 1957 III 1998
Grover & Frang, P.C., Attorneys,
Jackson, Michigan; Secretary,
Jacobson Stores Inc.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
First Current
Principal Occupation and Became Term
Name Positions with the Company Age Director Class Expires
---- -------------------------- --- -------- ----- -------
<S> <C> <C> <C> <C> <C>
Robert L. Rosenfeld, Ph.D. Program Manager, Defense 58 1967 II 1997
Advanced Research Projects Agency,
U.S. Department of Defense,
Arlington, Virginia
James L. Wolohan Chairman, President and Chief 44 1993 III 1998
Executive Officer, Wolohan
Lumber Co., Saginaw, Michigan
<FN>
(1) Members of Executive Committee.
(2) Class I Directors, whose current term expires at the 1996 Annual Meeting;
nominated to serve until 1999.
(3) See information on page 6 under the caption "Certain Relationships and
Related Transactions."
</TABLE>
Mr. Amster has been an independent management consultant for the past
five years. He is a director of TriMas Corporation and First of America
Bank-Michigan, N.A.
Mr. Fowler has held merchandising positions with the Company since
1972, was Vice President-Divisional Merchandise Manager, 1984-1987, was
Executive Vice President-Marketing, 1987-1993, and has been President since
1993.
Mr. Gilbert was Vice President and Controller of the Company,
1976-1984, Senior Vice President and Chief Financial Officer, 1984-1988,
Executive Vice President and Chief Financial Officer, 1988-1993, and
Treasurer, 1991-1993, and has been Vice Chairman of the Board since 1993.
Mr. Kohlmeyer was First Vice President of Thomson McKinnon
Securities, Inc., 1981-1987, and has been Senior Vice President-Investments of
Prudential Securities, Inc., a broker-dealer, since 1988.
Ms. Lewis has been a member of Dykema Gossett PLLC, a law firm, and
its predecessor since 1973.
Dr. Longe was Professor of Business Administration in the Graduate
School of Business Administration of the University of Michigan for more than
five years prior to 1986. She has been senior partner of The Longe Company, an
investment, management and economic consulting company, of Naples, Florida,
since 1981. She is a director of The Detroit Edison Company, The Kroger
Company, Comerica Incorporated, The Warner-Lambert Company, and DTE Energy
Company.
Mr. Monahan was an executive officer of Manufacturers Bank, N.A. for
more than five years, and was President and Chief Operating Officer,
1989-1992. Following the merger of Comerica Incorporated and Manufacturers
National Corporation in 1992, he has been President and a director of Comerica
Bank. In addition, he has been President and a director of Comerica
Incorporated since 1993.
Mr. Power founded Suburban Communications Corporation, a publisher of
newspapers, in 1965, and has been its Chairman of the Board since that date.
He is a director of Daedalus Enterprises, Inc., and a Regent of the University
of Michigan.
Mark K. Rosenfeld has been an executive officer of the Company since
1976, was President, 1982-1993, Chief Operating Officer, 1987-1992, and has
been Chief Executive Officer since 1992 and Chairman of the Board since 1993.
He is a director of TCF Financial Corporation.
Richard Z. Rosenfeld was a member of Rosenfeld, Grover & Frang, P.C.,
a law firm, from 1981 until his retirement in 1995, and he continues to serve
as of Counsel to the firm. He has been Secretary of Jacobson Stores Inc. since
1964.
Dr. Robert L. Rosenfeld held various engineering and administrative
positions with Consumers Power Company, a public utility, from 1970-1984; was
Principal Engineer with Technical Analysis Corporation, technical consultants,
1984-1985; and has been Program Manager, Defense Advanced Research Projects
Agency (formerly Advanced Research Projects Agency from 1993-1996) since
1985.
5
<PAGE>
Mr. Wolohan has held executive positions with Wolohan Lumber Co. for
more than ten years. He was Vice President and General Merchandise Manager,
1984-1986, President and Chief Operating Officer, 1986-1987, has been
President and Chief Executive Officer since 1987, and has also been Chairman
of the Board since 1994.
Robert L. and Mark K. Rosenfeld are brothers. Richard Z. Rosenfeld is
their first cousin.
Certain Relationships and Related Transactions
The Company and its subsidiaries have business relationships and
transactions in the ordinary course of business with the following entities,
of which the directors of the Company named below are officers or directors.
The Company considers that the terms of all transactions referred to are
comparable to those which would have been reached with unaffiliated parties.
The Company and its subsidiaries regularly deposit money with and
borrow money from various banks, including Comerica Bank and First of America
Bank-Michigan, N.A. Michael T. Monahan is President and a director of Comerica
Bank, and President and a director of Comerica Incorporated. Patricia Shontz
Longe is a director of Comerica Incorporated, the holding company which
operates Comerica Bank. Herbert S. Amster is a director of First of America
Bank-Michigan, N.A. During its last fiscal year, the Company and its
subsidiaries paid $1,500,000 of interest to First of America Bank-Michigan,
N.A. at rates ranging from 6.44% to 7.51%. At January 27, 1996, the total
unpaid principal balance of all borrowings of the Company and its subsidiaries
from that bank was $21,273,000. Information on the Company's banking
relationships with Comerica Bank in fiscal 1995 is reported on page 12 under
the caption "Compensation Committee Interlocks and Insider Participation."
The Company regularly advertises in various newspapers and other
periodicals, including newspapers published by Suburban Communications
Corporation, of which Philip H. Power is Chairman of the Board. During its
last fiscal year, the Company paid newspapers published by Suburban
Communications Corporation $86,000 for advertising space.
The Company retained Rosenfeld, Grover & Frang, P.C., of which
Richard Z. Rosenfeld was a member and continues to serve as of Counsel, as its
primary legal counsel until June 30, 1995, and that law firm continues to
provide legal services to the Company. Information on the fees paid by the
Company to that law firm is reported on page 12 under the caption
"Compensation Committee Interlocks and Insider Participation".
Compensation of Directors
The Company compensates its directors at the rate of $9,000 per year
($12,000 for committee chair) plus $750 for each Board meeting attended and
each committee meeting attended; except that no director fees are paid to any
director who is a full-time employee of the Company (Mark K. Rosenfeld, Mr.
Gilbert, and Mr. Fowler). Directors are eligible to defer director fees, with
interest thereon, until after termination of service as a director of the
Company.
Under the Company's Stock Option Plan of 1994, non-statutory stock
options were granted in 1995 to the following directors who are not full-time
employees of the Company, at $9 3/4, which was the fair market value on the
date of grant:
<TABLE>
<CAPTION>
Name Options
- ---- -------
<S> <C>
Herbert S. Amster 500 sh.
Herman S. Kohlmeyer, Jr 500
Kathleen McCree Lewis 500
Patricia Shontz Longe, Ph.D 500
Michael T. Monahan 500
Philip H. Power 500
Richard Z. Rosenfeld 500
Robert L. Rosenfeld, Ph.D 500
James L. Wolohan 500
</TABLE>
The term of each director option is five years. No director options
have been exercised.
<PAGE>
The Company retained Rosenfeld, Grover & Frang, P.C., of which
Richard Z. Rosenfeld was a member and continues to serve as of Counsel, as its
primary legal counsel until June 30, 1995, and that law firm continues to
provide legal services to the Company. Information on the fees paid by the
Company to that law firm is reported on page 12 under the caption
"Compensation Committee Interlocks and Insider Participation".
6
<PAGE>
Committees and Meetings of the Board of Directors
The Company's Board of Directors held six meetings during the year
ended January 27, 1996.
There are four permanent committees of the Board of Directors:
Executive Committee, Audit Committee, Compensation Committee and Directors
Committee.
The Audit Committee consists of Directors Amster (Chair), Lewis,
Power and Robert L. Rosenfeld. It met three times during the year. The Audit
Committee reviews the Company's accounting policies and reporting practices,
and the adequacy of the system of internal controls; reviews and evaluates the
scope and results of the audits completed by the Company's internal auditor;
recommends to the Board, subject to shareholder approval, the selection of
independent public accountants; reviews the quality standards maintained in
their audit of the Company's financial statements; and evaluates their
independence and professional competence, as well as the scope and results of
their audit.
The Compensation Committee consists of Directors Kohlmeyer (Chair),
Monahan, Richard Z. Rosenfeld and Wolohan. It met four times during the year.
It provides general oversight for the compensation and benefit policies of the
Company, reviews the development of corporate management and succession,
including considering the Chairman of the Board and Chief Executive Officer's
recommendations for officer promotions and compensation, reviews the salaries,
bonuses and total compensation levels of Company officers, reviews the
Company's employee benefit plans and policies, administers the Company's
Deferred Compensation Plan, evaluates the performance and makes
recommendations to the Board of Directors as to the compensation of all of the
Company's executive officers, and serves as the employee option committee
under the Company's Stock Option Plan of 1994.
The Directors Committee consists of Directors Monahan (Chair),
Kohlmeyer, Longe, Richard Z. Rosenfeld and Mark K. Rosenfeld. It met twice
during the year. It considers nominees for directorship in the Company. The
Company's Restated Articles of Incorporation contain procedures to be followed
by any shareholder who intends to nominate a candidate for the Board of
Directors. A written notice should be delivered to the Secretary of the
Company not less than 120 days before the anniversary date of the Company's
proxy statement for the previous year's annual meeting of shareholders. The
notice should set forth the name, age, business address and residence address
of each nominee proposed; the principal occupation or employment of each
nominee; the number of shares of stock of the Company which are beneficially
owned by each nominee; a statement that the nominee is willing to be
nominated; and such other information concerning each nominee as is required
under the rules of the Securities and Exchange Commission in a proxy statement
soliciting proxies for the election of such nominees. Any nomination not made
in accordance with this procedure will be void.
During the year, every director attended at least 75% of the meetings
of the Board and any committees on which the director served.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table and footnotes summarize the compensation for the
last three fiscal years of each of the Company's five most highly compensated
executive officers in fiscal 1995:
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Awards
Annual Securities
Compensation (1) Underlying
------------------- Options/ All Other
Salary Bonus SARs Compensation (2)
Name and Principal Position Year ($) ($) (#) ($)
- --------------------------- ---- ---------- ------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Mark K. Rosenfeld 1995 $310,000 $0 30,000 sh $ 2,171
Chairman of the Board 1994 310,000 0 5,000 2,037
and Chief Executive Officer 1993 280,000 0 0 2,480
Paul W. Gilbert 1995 220,000 0 24,000 1,449
Vice Chairman of the Board 1994 210,000 0 3,000 1,463
1993 180,000 0 0 1,429
James B. Fowler 1995 210,000 0 24,000 1,377
President 1994 210,000 0 3,000 1,382
1993 180,000 0 0 1,340
George P. Kelly (3) 1995 200,000 0 9,000 900
Senior Vice President- 1994 195,000 0 2,500 0
General Merchandise Manager
Robert L. Moles 1995 130,000 0 11,000 786
Senior Vice President-Stores 1994 126,000 0 1,500 737
1993 120,000 0 0 645
<FN>
(1) The only types of other annual compensation for each of the named
executive officers were in the form of perquisites in amounts
less than the level required for reporting.
(2) The amounts shown as other compensation include, for 1995, 1994
and 1993, respectively: (a) Company contributions to the
Jacobson's Retirement Savings & Profit Sharing Plan (401(k) plan)
(Mr. Rosenfeld $901, $978 and $1,472; Mr. Gilbert $905, $956 and
$961; Mr. Fowler $900, $956 and $963; Mr. Kelly $900, $0 and $0;
and Mr. Moles $786, $737 and $645); (b) the taxable economic
benefit, or portion of the premium paid by the Company that is
attributable to term life insurance coverage under split-dollar
life insurance agreements (Mr. Rosenfeld $321, $301 and $283; Mr.
Gilbert $544, $507 and $468; and Mr. Fowler $477, $426 and $377);
and (c) the dollar increase in the excess of the cash surrender
value of split dollar life insurance policies over the cumulative
net premiums paid by the Company (Mr. Rosenfeld $949, $758 and $725).
(3) Mr. Kelly was first employed by the Company in fiscal 1994 and he
resigned as an officer of the Company effective March 25, 1996.
</TABLE>
8
<PAGE>
Options
The table below reports options granted during the last fiscal year to
each of the five most highly compensated executive officers of the Company.
The Company has not granted any stock appreciation rights (SARs).
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants Potential
- ----------------------------------------------------------------------------------------- Realizable Value at
Number of % of Total Assumed Annual
Securities Options/SARs Rates of Stock Price
Underlying Granted to Appreciation
Options/SARs Employees Exercise for Option Term
Granted in Fiscal or Base Price Expiration ------------------------
Name (#) Year ($/sh) Date 5%($) 10%($)
- ---- ------------- ------------ ------------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Mark K. Rosenfeld 15,000 7.5 $ 10.25 March 14, 2005 $ 96,693 $ 245,038
15,000 7.5 9.00 January 23, 2006 84,901 215,155
Paul W. Gilbert 12,000 6 10.25 March 14, 2005 77,354 196,030
12,000 6 9.00 January 23, 2006 67,921 172,124
James B. Fowler 12,000 6 10.25 March 14, 2005 77,354 196,030
12,000 6 9.00 January 23, 2006 67,921 172,124
George P. Kelly 4,500 2.25 10.25 March 14, 2005 29,008 73,511
4,500 2.25 9.00 January 23, 2006 25,470 64,547
Robert L. Moles 5,500 2.75 10.25 March 14, 2005 35,454 89,847
5,500 2.75 9.00 January 23, 2006 31,130 78,890
</TABLE>
Each option referred to in the foregoing table is a non-statutory
option, has a term of ten years, and vests at the rate of 25% per year,
commencing on the first anniversary of the date of grant. The exercise price
is not less than the market value of the Company's Common Stock on the date of
grant. Mr. Kelly's options expired upon his resignation on March 25, 1996.
The table below reports options exercised in the last fiscal year by
each of the five most highly compensated executive officers of the Company,
and the number and fiscal year-end value of options held by each such
executive officer.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options/SARs
Shares Acquired Value Options/SARs at Fiscal Year-end at Fiscal Year-end (1)
on Exercise Realized (1) (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ---------------- ------------ ------------------------------- -------------------------
<S> <C> <C> <C> <C>
Mark K. Rosenfeld 0 $ 0 4,750/33,750 sh. $ 0/0
Paul W. Gilbert 0 0 3,750/26,250 0/0
James B. Fowler 0 0 3,750/26,250 0/0
George P. Kelly (2) 0 0 625/10,875 0/0
Robert L. Moles 0 0 1,875/12,125 0/0
<FN>
(1) Market value of underlying securities at exercise or fiscal year-end,
minus the exercise or base price.
(2) Mr. Kelly's options expired upon his resignation on March 25, 1996.
</TABLE>
Long-Term Incentive Plans
The Company does not have a long-term incentive plan.
9
<PAGE>
Pension Plan
The following table summarizes benefits under the Company's pension
plan:
<TABLE>
<CAPTION>
Years of Service
Average ----------------------------------------------------------
Remuneration 15 20 25 30
- ----------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 125,000 $ 18,850 $ 25,100 $ 31,350 $ 37,600
150,000 22,600 30,100 37,600 45,100
175,000 26,350 35,100 43,850 52,600
200,000 30,100 40,100 50,100 60,100
225,000 33,850 45,100 56,350 67,600
250,000 37,600 50,100 62,600 75,100
300,000 45,100 60,100 75,100 90,100
350,000 52,600 70,100 87,600 105,100
</TABLE>
The Plan recognizes a maximum of 30 years credited service.
Benefits under the plan are based on an employee's cash compensation,
including contributions to the Company's 401(k) plan, but excluding deferred
compensation and compensation which exceeds the applicable limitation under
the Internal Revenue Code. Benefits are computed on the basis of total
compensation for the 30 calendar years during which an employee's compensation
was highest, or the entire period of employment if less than 30 years.
Benefits are paid as a monthly annuity, and are not subject to deduction for
social security or other offset amounts.
For each of the five most highly compensated executive officers, all
of their salary reported in the Summary Compensation Table, and the Company's
contributions on their behalf to the 401(k) plan, are eligible for
consideration in computing their benefits under the pension plan, subject to
the applicable limitation under the Internal Revenue Code. That limitation was
$150,000, $150,000 and $235,840, for 1995, 1994 and 1993, respectively.
The years of credited service of the five most highly compensated
executive officers are:
<TABLE>
<CAPTION>
Years of Service
----------------
<S> <C>
Mark K. Rosenfeld 24 years
Paul W. Gilbert 21 years
James B. Fowler 24 years
George P. Kelly 2 years
Robert L. Moles 30 years
</TABLE>
Executive Officer Employment and Severance Agreements
The Company's employment agreement with Mark K. Rosenfeld is for a
term of five years commencing February 1, 1996 at an annual salary of
$310,000. The Agreement authorizes Mr. Rosenfeld to defer payment of any part
of the salary and interest thereon until after his retirement or death
pursuant to the Company's Deferred Compensation Plan. None of Mr. Rosenfeld's
salary for the year ended January 1996 was deferred. The agreement provides
that, in the event of Mr. Rosenfeld's death during the term of the agreement,
(i) his salary will continue for three years at the rate in effect immediately
before his death, (ii) he will receive a pro-rata bonus for the year of his
death, based on the actual number of days worked in that year, and (iii) the
Company will continue to maintain medical and hospitalization insurance for
his spouse and dependents for five years. The Company may offset against these
payments the proceeds of any increased insurance it provides on Mr.
Rosenfeld's life after January 31, 1996.
If Mr. Rosenfeld's employment is terminated as a result of his
permanent incapacity during the term of the agreement, (i) his salary will
continue for three years at the rate in effect immediately prior to his
incapacity, and then at one-half such rate for two more years, (ii) he will
receive a pro-rata bonus for the year of his termination, based on the actual
number of days worked in that year, and (iii) the Company will continue to
maintain medical, hospitalization and life insurance for Mr. Rosenfeld and his
spouse and dependents for five years. The Company may offset against these
payments (i) any disability benefits paid under any insurance maintained by
the Company, and (ii) if Mr. Rosenfeld dies while these payments are being
made, the proceeds of any increased insurance the Company provides on Mr.
Rosenfeld's life after January 31, 1996.
10
<PAGE>
If the Company terminates employment without good cause before the
expiration of the term, (i) Mr. Rosenfeld's salary will continue at the rate
in effect immediately prior to termination and the Company will provide
continued medical and hospitalization insurance for the balance of the term or
one year, whichever is greater, and (ii) he will receive a pro-rata bonus for
the year of his termination, based on the actual number of days worked in that
year. Commencing one year after termination, the Company's continuing payment
obligation, if any, will be reduced by the amount of any salary, consulting
fees, or other compensation or remuneration for services thereafter received
by him with respect to any remaining part of the period covered by the
Company's obligation, and the Company's continuing medical and hospitalization
insurance obligation shall be reduced by the amount of any other medical and
hospitalization insurance provided to Mr. Rosenfeld with respect to any
remaining part of such period.
The Company's employment agreements with Mr. Gilbert and Mr. Fowler
are each for a term of three years commencing February 1, 1996. The agreements
provide for an annual salary of $220,000 for Mr. Gilbert and $210,000 for Mr.
Fowler. Each agreement authorizes the executive to defer payment of any part
of the salary and interest thereon until after his retirement or death
pursuant to the Company's Deferred Compensation Plan. None of Mr. Gilbert's or
Mr. Fowler's salary for the year ended January 1996 was deferred. Each
agreement also provides that, in the event of the executive's death during the
term of the agreement, (i) his salary will continue for two years at the rate
in effect immediately before his death, (ii) he will receive a pro-rata bonus
for the year of his death, based on the actual number of days worked in that
year, and (iii) the Company will continue to maintain medical and
hospitalization insurance for his spouse and dependents for five years. The
Company may offset against these payments the proceeds of any increased
insurance it provides on the executive's life after January 31, 1996.
If the executive's employment is terminated as a result of his
permanent incapacity during the term of the agreement, (i) his salary will
continue for two years at the rate in effect immediately before his incapacity
and then at one-half such rate for one more year, (ii) he will receive a
pro-rata bonus for the year of his termination, based on the actual number of
days worked in that year, and (iii) the Company will continue to maintain
medical, hospitalization and life insurance for the executive and his spouse
and dependents for five years. The Company may offset against these payments
(i) any disability benefits paid under any insurance maintained by the
Company, and (ii) if the executive dies while these payments are being made,
the proceeds of any increased insurance the Company provides on the
executive's life after January 31, 1996.
If the Company terminates employment without good cause before the
expiration of the term, (i) the executive's salary will continue, at the rate
in effect immediately before termination, and the Company will provide
continued medical and hospitalization insurance, for the balance of the term
or one year, whichever is greater, and (ii) he will receive a pro-rata bonus
for the year of his termination, based on the actual number of days worked in
that year. Commencing one year after termination, the Company's continuing
payment obligation, if any, will be reduced by the amount of any salary,
consulting fees, or other compensation or remuneration for services thereafter
received by him with respect to any remaining part of the period covered by
the Company's obligation, and the Company's continuing medical and
hospitalization insurance obligation shall be reduced by the amount of any
other medical and hospitalization insurance provided to the executive with
respect to any remaining part of such period.
The Company had an employment agreement with Mr. Kelly that continued
on a month-to-month basis at an annual salary of $200,000. This agreement
terminated effective March 25, 1996, upon Mr. Kelly's resignation. The Company
has offered to pay Mr. Kelly approximately $45,600 (less applicable
withholding taxes) in severance benefits. Mr. Kelly has not yet accepted the
Company's offer.
The Company's employment agreement with Mr. Moles is for a term of
one year ending January 25, 1997, at an annual salary of $130,000. The
agreement provides that if the Company terminates Mr. Moles' employment
without cause or if Mr. Moles terminates his employment for good reason within
one year after a change in control (defined as described below in connection
with the agreements with Messrs. Rosenfeld, Gilbert and Fowler), his salary
will continue until 12 months after the date such change in control occurs.
<PAGE>
The Company and each of Mark K. Rosenfeld, Paul W. Gilbert, and James
B. Fowler have entered into change in control severance agreements providing
the benefits described below if (i) a change in control of the Company occurs
within the period described below, and (ii) (A) the executive's employment is
terminated by the Company without cause or by the executive for good reason
during the period beginning 90 days before the change in control and ending
two years after the change in control, or (B) the executive terminates his
employment with the Company at any time during the 13th month after the change
in control for any reason or for no reason. The change in control must occur
on or before the earliest of (A) the expiration of the term of the written
employment agreement between the executive and the Company, (B) the
executive's death or disability, and (C) January 31, 2001.
11
<PAGE>
For purposes of the agreements, a change in control generally includes (i) the
acquisition by any person or group (excluding specified persons affiliated
with the Company) of 40% or more of the Company's voting securities, (ii)
various business combinations involving the Company if the Company's
shareholders do not own more than 50% of the surviving entity, (iii) specified
sales of substantially all of the Company's assets, and (iv) the continuing
directors of the Company cease to be a majority of the Company's directors.
The severance benefits provided by the agreements are (i) continued
salary through the later of two years after termination of employment and the
termination date of the executive's written employment agreement with the
Company (the "Time"), (ii) a pro-rata bonus for the year of termination, equal
to the prior year's bonus adjusted for the actual number of days worked in the
year of termination, (iii) an amount equal to the prior year's bonus
multiplied by the Time (in years and fractions of a partial year), and (iv)
continued medical, dental, life, disability, hospitalization, optical and
prescription drug coverage, automobile allowances and benefits and payments
under the Company's Split Dollar Agreements with the executives during the
Time. The benefits are limited, however, to the amount equal to $1.00 less
than the amount that would result in the executive receiving a parachute
payment resulting in an excise tax under Section 280G of the Internal Revenue
Code. Pursuant to the agreements, each executive has also agreed to
non-competition, confidentiality and non-solicitation provisions.
The Company has amended the Jacobson Stock Option Plan of 1994 to
provide that all options granted to employees under that plan shall become
immediately exercisable in full immediately before a change in control of the
Company. The definition of change in control under the plan is substantially
the same as the definition under the change in control severance agreements.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors has
consisted of Directors Kohlmeyer (Chair), Monahan, Richard Z. Rosenfeld and
Wolohan since May 25, 1995. During 1995 before May 25, 1995, the Compensation
Committee consisted of Directors Amster, Kohlmeyer, Longe, Monahan, Power,
Wolohan and Mark K. Rosenfeld.
During fiscal 1995, Mark K. Rosenfeld and Richard Z. Rosenfeld served
as Chairman of the Board and Chief Executive Officer and as Secretary of the
Company, respectively. In addition, Herbert S. Amster is a former officer of
the Company. No executive officer of the Company serves as a director or as a
member of the compensation committee (or other board committee performing
equivalent functions or, in the absence of such committee, the entire board of
directors) of another entity, one of whose executive officers also serves as a
director of the Company.
Mr. Monahan is President and a director of Comerica Bank and
President and a director of Comerica Incorporated. During its last fiscal
year, the Company and its subsidiaries borrowed $10,931,000 from Comerica
Bank, paid $2,421,000 in interest to Comerica Bank at rates ranging from 6.38%
to 8.75%, paid $51,000 in fees to Comerica Bank pursuant to various loan
agreements, and paid $772,000 in rent to a subsidiary of Comerica Bank for
leased computer equipment and software. At January 27, 1996, the total unpaid
principal balance of all borrowings of the Company and its subsidiaries from
Comerica Bank, and total rental to be paid under the equipment lease, was
$33,173,000.
Comerica Bank is also a depository of funds of the Company and its
subsidiaries; trustee under an indenture relating to indebtedness of one of
the Company's subsidiaries; and trustee of the Company's Pension Plan, which
holds 28,890 shares of the Company's Common Stock. The Company paid
approximately $148,000 in fees for such services in fiscal 1995.
Information concerning the Company's banking relationships with
Comerica Bank and First of America Bank-Michigan, N.A. and the relationship of
Directors Monahan, Longe and Amster with those banks is reported on page 6
under the caption "Certain Relationships and Related Transactions".
Information concerning the Company's advertising in newspapers published by
Suburban Communications Corporation and the relationship of Director Power to
that corporation is reported on page 6 under the caption "Certain
Relationships and Related Transactions".
Richard Z. Rosenfeld was a member of Rosenfeld, Grover & Frang, P.C.,
General Counsel to the Company, until his retirement on June 30, 1995. He
continues to serve as of Counsel to that firm, and the firm continues to
provide legal services to the Company. Mr. Rosenfeld also continues to be
Secretary to the Company. During its last fiscal year, the Company paid
Rosenfeld, Grover & Frang, P.C. $28,000 for legal services and $2,000 for
reimbursed expenses.
12
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the
"Committee") provides general oversight for the compensation and benefit
policies of the Company, reviews the development of corporate management and
succession, including considering the Chairman of the Board and Chief
Executive Officer's recommendations for officer promotions and compensation,
reviews the salaries, bonuses and total compensation levels of Company
officers, reviews the Company's employee benefit plans and policies,
administers the Company's Deferred Compensation Plan, and evaluates the
performance and makes recommendations to the Board of Directors as to the
compensation of all of the Company's executive officers (including the five
most highly compensated). The Committee also serves as the employee option
committee under the Company's Stock Option Plan.
The Committee uses a number of resources to assist the Committee in
making informed decisions regarding compensation. The Committee utilizes
Company research on industry practices and financial performance, including
those of companies included in the Company's peer group index, as support to
the Committee in fulfilling its responsibilities. In addition, the Company and
the Committee from time to time consult with independent compensation
consultants.
The Company seeks to provide executive compensation that will support
achievement of the Company's goals while attracting and retaining talented
executives and rewarding superior performance. The Company implements this
policy through salaries, bonuses, stock options, and employment and severance
agreements, and benefit plans which are generally available to all Company
employees.
Base salary. The Company's practice is to set base salary levels for
the Company's executive officers which generally are competitive in relation
to the salary levels of executive officers in other companies of comparable
size within the retail industry, taking into consideration the position's
complexity, responsibility, working environment, and need for special
expertise. Increases in base salary are determined by merit as measured by the
Committee's subjective evaluation of the Company's performance and financial
condition, the executive's individual performance and position in the salary
range, developments within the industry and management's recommendations.
Bonuses. The Company has a bonus plan to compensate its executive
officers for achieving the Company's return on sales target set near the
beginning of each fiscal year and for their individual performance during the
year. Bonuses are intended to make a significant portion of each executive
officer's compensation dependent on the Company's performance and to provide
executive officers with incentives to achieve Company goals, increase
shareholder value, and work as a team. Bonuses are also intended to recognize
the executive officer's individual contributions to the Company.
For the fiscal year ended January 27, 1996, the Jacobson Stores Inc.
1995 Management Incentive Plan (the "1995 Plan") covered all the executive
officers of the Company. Pursuant to the 1995 Plan, a bonus pool was
established for each executive officer equal to 15% to 35% of the executive
officer's 1995 base salary if 100% of the corporate and individual performance
targets were reached. The bonus pool was to be reduced pro-rata for
performance less than the target and eliminated entirely if certain minimum
performance thresholds (80% of the targets) were not met, or increased to a
maximum of 22.5% to 52.5% of base salary if 125% of the targets were achieved.
For Messrs. Rosenfeld, Gilbert and Fowler, 75% of their bonuses under the plan
were payable based on the Company's targeted return on sales, and 25% of their
bonuses under the plan were payable at the discretion of the Board, based on
the Committee's recommendations after its subjective evaluation of the
executives' individual contributions to the implementation of the Company's
strategic business plan, all if the threshold return on sales was achieved.
For Messrs. Moles and Kelly, 50% of their bonuses under the plan were payable
based on the Company's targeted return on sales. For Mr. Moles, 25% was based
on the percentage comparable store sales increase and the remaining 25% was
based on the operating profit of stores supervised by Mr. Moles. For Mr.
Kelly, 37.5% was based on the gross margin (in dollars) and the remaining
12.5% based on the gross margin return on investment of the merchandise
departments supervised by Mr. Kelly.
In 1995, the performance thresholds were not met and no bonuses were
paid to these executives.
<PAGE>
Stock Options. The Company's practice is to award stock options to
the Company's executive officers in amounts reflecting the Committee's
subjective evaluation of the executive officer's position and ability to
influence the Company's overall performance, previously issued option grants
and management's recommendations, without any specific weight being given to
any of these factors. Options are intended to provide executives with an
increased incentive to make contributions to the long-term performance and
growth of the Company, to join the interests of the executive officers with
the interests of the shareholders of the Company, and to attract and retain
qualified employees.
13
<PAGE>
Stock options granted in fiscal 1995 are non-statutory options, have
a term of ten years, and vest at the rate of 25% per year commencing on the
first anniversary of the date of grant, to provide a long-term incentive. The
exercise price is not less than the fair market value of the underlying shares
at the date of grant. Such options only provide compensation if the Company's
stock price increases.
Generally, the Compensation Committee reserves the right to recommend
the payment of compensation to the Company's executives in amounts it deems
appropriate regardless of whether such compensation is deductible for federal
income tax purposes.
Employment and Severance Agreements. The Company's practice is to
have written employment agreements with all officers and store general
managers to provide them with specified periods of employment, salaries and
severance benefits. In 1995, the Company also entered into change in control
severance agreements with its top three executive officers after reviewing the
recommendations of an independent compensation consultant. These agreements
are intended to encourage executives to focus their attention on performing
their duties to the Company, rather than on the security of their employment.
The employment and severance agreements with each of the Company's five most
highly compensated executive officers are summarized on pages 10-12 of this
proxy statement.
Performance Evaluation of Mark K. Rosenfeld. Factors used by the
Committee in evaluating Mark K. Rosenfeld's performance as Chairman of the
Board and Chief Executive Officer included the Company's 1995 financial
performance, management succession planning, strategic planning,
organizational development, investor relations, formulation of major corporate
policies, keeping the Board fully informed on the condition of the Company,
maintaining sound corporate governance policies, and working with the
directors to effectively use their talents to the best strategic advantage to
the Company. Mr. Rosenfeld's 1995 salary was not increased from his 1994 base
salary based on management's recommendation, the Company's results of
operations in fiscal 1994 and the Committee's subjective evaluation of
developments in the industry. No bonus was approved for Mr. Rosenfeld for
fiscal 1995 because the Company did not meet its threshold return on sales
target for fiscal 1995 under the 1995 Plan. As described in "Stock Options",
the number of shares subject to options granted to Mr. Rosenfeld in fiscal
1995 reflect his position and ability to influence the Company's overall
performance, determined based on the Committee's subjective judgment after
reviewing management's recommendations, the amounts of proposed grants to
other employees and the amount of options previously granted to Mr. Rosenfeld.
The Committee recommended that the Company extend and revise its employment
agreement with Mr. Rosenfeld and enter into a change in control severance
agreement with him to encourage him to focus his attention on performing his
duties to the Company, rather than on the security of his employment. The
Committee recommended approval of the specific agreements based on its
subjective judgment of what was appropriate in the circumstances after
consultation with a compensation consultant with respect to the change in
control agreements and review of the consultant's recommendations.
COMPENSATION COMMITTEE
Herman S. Kohlmeyer, Jr., Chairman
Michael T. Monahan
Richard Z. Rosenfeld
James L. Wolohan
14
<PAGE>
Performance Graph
The following graph compares the Company's cumulative shareholder
return on its Common Stock for the last five fiscal years with the cumulative
total return of retailers in a peer group index, and with the cumulative total
return of companies included in the Total Return Index for the NASDAQ Stock
Market (U.S. Companies), a broad equity market index.
<TABLE>
<CAPTION>
Comparison of Five Year Cumulative Total Return*
Among Jacobson Stores Inc., NASDAQ Stock Market (U.S. Companies), and a Peer Group Index
(*Assumes $100 invested on January 26, 1991 in Jacobson Common Stock, NASDAQ stocks (U.S. Companies), and
an Index comprised of Peer Group Companies. Total return assumes reinvestment of dividends.)
1-26-91 1-25-92 1-30-93 1-29-94 1-28-95 1-27-96
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Jacobson's 100 141 108 106 91 80
NASDAQ Market 100 162 182 208 200 277
Peer Group 100 129 155 146 139 156
<FN>
(A paper copy of the Performance Graph as contained in the Company's
definitive proxy statement has been submitted to the Securities and Exchange
Commission under separate cover.)
</TABLE>
The peer group is comprised of ten retail companies offering mainly
apparel and accessories, five of which are members of the same buying office
as the Company. The members of the peer group are as follows: Crowley, Milner
& Co.; Dayton Hudson Corporation; Dillard Department Stores, Inc.; Gantos,
Inc.; Gottschalks Inc.; Lamonts Apparel, Inc.; The May Department Stores
Company; Nordstrom, Inc.; Proffitt's, Inc.; and Strawbridge & Clothier. The
shareholder returns for each of these companies have been weighted according
to each company's stock market capitalization at the beginning of each period.
APPOINTMENT OF AUDITORS
Arthur Andersen LLP, independent public accountants, have been
auditors for Jacobson Stores Inc. and its subsidiaries since 1960. One or more
representatives of that firm are expected to be present at the Annual Meeting,
with the opportunity to make a statement if they want to do so, and will be
available to respond to appropriate questions.
The Board of Directors has nominated Arthur Andersen LLP as the
auditors of Jacobson Stores Inc. and its subsidiary corporations for the
fiscal year ending January 25, 1997. The following resolution will be offered
at the meeting:
"RESOLVED, that Arthur Andersen LLP, independent public
accountants, be appointed auditors of Jacobson Stores Inc.
and its subsidiary corporations for the fiscal year ending
January 25, 1997."
The Board of Directors recommends a vote FOR the resolution.
OTHER MATTERS AND VOTE REQUIRED
Shareholders will be asked to approve the minutes of the 1995 Annual
Meeting. The approval of minutes is not considered to be approval of the
actions taken at the previous meeting.
Management does not know of any other matter to be brought before the
meeting. If any other matters properly come before the meeting, the persons
named in the enclosed proxy will vote according to their judgment.
In all matters other than the election of directors, approval is
given by a majority of the votes cast. Broker non-votes and abstentions will
not be deemed votes cast, but will be counted for purposes of determining
whether a quorum is present. Votes in all matters will be counted by Norwest
Bank Minnesota, the Company's Registrar and Transfer Agent, whose address is
P.O. Box 738, South St. Paul, MN 55075-0738.
15
<PAGE>
Cost of Solicitation
The cost of soliciting proxies will be paid by the Company. In
addition to solicitation by mail, proxies may be solicited personally or by
telephone by a few employees of the Company; and brokers, banks and others
known by the Company to hold Common Stock for other beneficial owners will be
requested to forward proxies and proxy soliciting material to the beneficial
owners and will be reimbursed for their expenses.
Proposals for 1997 Annual Meeting
Any shareholder's proposal intended to be presented at the 1997
Annual Meeting must be in writing, must comply with the requirements of the
Securities and Exchange Commission, should be addressed to Secretary, Jacobson
Stores Inc., 3333 Sargent Road, Jackson, Michigan 49201-8847, and must be
received by the Company at that address no later than December 10, 1996, in
order to be considered for inclusion in the Company's proxy material for that
meeting.
By order of the Board of Directors,
RICHARD Z. ROSENFELD, Secretary
Jackson, Michigan, April 9, 1996.
16
<PAGE>
[ Form of Proxy -- Side 1 ]
PROXY COMMON STOCK
JACOBSON STORES INC.
1996 Annual Meeting of Shareholders -- May 23, 1996
The undersigned appoint(s) MARK K. ROSENFELD and MICHAEL T. MONAHAN as
proxies, each with power of substitution, and authorize(s) them to represent
and vote as indicated below all shares of Common Stock of Jacobson Stores Inc.
held of record by the undersigned on March 25, 1996, at the 1996 Annual
Meeting of Shareholders, to be held May 23, 1996, and at any adjournments
thereof.
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed below to vote for all nominees
(except as marked listed below
to the contrary
below)
Class I Directors, to serve until the 1999 Annual Meeting of
Shareholders:
Herbert S. Amster, James B. Fowler, Herman S. Kohlmeyer, Jr.,
and Mark K. Rosenfeld
(To withhold authority to vote for any nominee(s), write that
person's name(s) in the following space:)
_______________________________
2. APPOINTMENT OF AUDITORS:
Proposal to appoint Arthur Andersen LLP as auditors for the
fiscal year ending January 25, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote on any
other matters that may properly come before the meeting or any
adjournments thereof.
(Continued and to be signed on reverse side)
<PAGE>
[ Form of Proxy -- Side 2 ]
(Continued from the other side)
This proxy is solicited on behalf of the Company's Board of Directors.
Properly executed proxies will be voted as specified. If no direction is given
or if no instructions to the contrary are indicated, proxies will be voted FOR
items 1 and 2, and according to the judgment of the proxies on all other
matters.
The undersigned acknowledge(s) receipt of the Notice of the 1996 Annual
Meeting of Shareholders, the proxy statement for said meeting, and the Annual
Report of Jacobson Stores Inc. to its shareholders for the year ended January
27, 1996.
Please sign below exactly as name(s) appear(s) below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, or on behalf of a corporation or
partnership, please sign in the name of the shareholder, sign your name, and
give your title. Unsigned or improperly signed proxies will not be counted.
_______________________________
Signature
_______________________________
Signature
Dated: ________________, 1996
Please sign, date and return
this proxy promptly in the
enclosed envelope. This proxy
will not be used if you attend
the meeting in person and so
request.
