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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 1999 ANNUAL MEETING OF SHAREHOLDERS
May 27, 1999
TO THE SHAREHOLDERS OF
JACOBSON STORES INC.:
The 1999 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 27, 1999, at 11:30 a.m., local time, for the
following purposes:
(1) To elect Herbert S. Amster, Herman S. Kohlmeyer, Jr., P.
Gerald Mills and M. Marnette Perry as Class I Directors, to
serve until the 2002 Annual Meeting of Shareholders or until
their successors are elected and qualified; and to elect
Leslie E. Dietzman as a Class II Director, to serve until the
2000 Annual Meeting of Shareholders or until his successor is
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 29, 2000; 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 29,
1999 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 13, 1999
- ------------------------------------------------------------------------------
It is important that your shares be represented at the
meeting, even if you expect to attend.
PLEASE DATE, SIGN AND RETURN YOUR PROXY CARD PROMPTLY.
- ------------------------------------------------------------------------------
<PAGE>
JACOBSON STORES INC.
PROXY STATEMENT
FOR
1999 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 1999 Annual Meeting of Shareholders, to be held Thursday, May
27, 1999, 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 13, 1999.
If the enclosed proxy is properly executed and returned to Norwest
Shareowner Services, P.O. Box 64859, St. Paul, MN 55164-9445, 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, 1999, 5,788,209-2/3 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 29, 1999 will be
entitled to notice of and to vote at the meeting. Each shareholder is
entitled to one vote for each share of Common Stock held on the record date.
Shares may not be voted cumulatively.
The following table and the corresponding explanations on pages 2 and
3 provide information as of March 1, 1999 (or in 2 cases, December 31, 1998)
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:
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Ownership of Class
- ------------------------------------ ---------- --------
David L. Babson and Company Incorporated 726,600 12.6%
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Franklin Resources, Inc. 385,300 6.7
777 Mariners Island Blvd.
San Mateo, California 94404
Dimensional Fund Advisors Inc. 382,300 6.6
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Mark K. Rosenfeld 356,005(1) 6.2
4816 Culbreath Isles Rd.
Tampa, Florida 33629
Robert L. Rosenfeld, Ph.D. 357,120-1/3(2) 6.2
4535 Fourth Road North
Arlington, Virginia 22203-2342
David A. Rosenfeld 327,909(3) 5.7
180 Grand Ave., Suite 400
Oakland, California 94612
P. Gerald Mills 306,000(4) 5.0
3333 Sargent Rd.
Jackson, Michigan 49201-8847
<PAGE>
(1) Includes 15,793 shares held by his wife, 1,500 shares held by his wife as
custodian and 306 shares that may be acquired by Mark K. Rosenfeld or his
wife as custodian on the conversion of debentures.
(2) Includes 7,312 shares held jointly with his wife, 18,418 shares held by
his wife and 2,500 shares that may be acquired on exercise of options.
(3) Includes 11,445 shares held jointly with his wife and 14,493 shares
held by his wife.
(4) Includes 300,000 shares that may be acquired on exercise of options.
The following table and explanations provide information as of March
1, 1999 about shares of the Company's Common Stock beneficially owned by each
director, each of the executive officers identified on page 9, and all
directors and executive officers as a group.
Amount and Nature of Percent
Name Beneficial Ownership(1) of Class
- ---- ----------------------- --------
Herbert S. Amster 21,062 (2) *
Leslie E. Dietzman 1,000 (3) *
Paul W. Gilbert 78,337 (4) 1.3
George P. Kelly 500 *
Herman S. Kohlmeyer, Jr. 213,501 (5) 3.7
Theodore R. Kolman 13,125 (6) *
Kathleen McCree Lewis 3,500 (7) *
P. Gerald Mills 306,000 (8) 5.0
Michael T. Monahan 4,000 (9) *
M. Marnette Perry 1,000 (10) *
Philip H. Power 4,300 (11) *
James A. Rodefeld 25,750 (12) *
Richard Z. Rosenfeld 129,064 (13) 2.2
Robert L. Rosenfeld, Ph.D. 357,120 (14) 6.2
James L. Wolohan 3,500 (15) *
All directors and executive
officers (17 persons) 1,174,895 (16) 18.9
* Less than 1% of the class
(1) Includes shares the spouse and/or minor children of the named individual
owns or has the right to acquire individually or jointly with the named
individual. Also includes shares that may be acquired on exercise of
options which are exercisable within 60 days after March 1, 1999.
(2) Includes 7,812 shares subject to shared voting and investment power and
2,500 shares that may be acquired on exercise of options.
(3) Includes 1,000 shares that may be acquired on exercise of options.
(4) Includes 20,000 shares subject to shared voting and investment power,
56,500 shares that may be acquired on exercise of options and 1,837
shares that may be acquired on conversion of debentures subject to
shared voting and investment power.
(5) Includes 206,001 shares subject to shared voting and investment power
and 2,500 shares that may be acquired on exercise of options.
(6) Includes 13,125 shares that may be acquired on exercise of options.
(7) Includes 2,500 shares that may be acquired on exercise of options.
(8) Includes 300,000 shares that may be acquired on exercise of options.
(9) Includes 2,500 shares that may be acquired on exercise of options.
(10) Includes 1,000 shares that may be acquired on exercise of options.
(11) Includes 2,500 shares that may be acquired on exercise of options.
(12) Includes 18,750 shares that may be acquired on exercise of options.
(13) Includes 40,710 shares subject to shared voting and investment power and
3,000 shares that may be acquired on exercise of options.
(14) Includes 25,730 shares subject to shared voting and investment power and
2,500 shares that may be acquired on exercise of options.
2
<PAGE>
(15) Includes 2,500 shares that may be acquired on exercise of options.
(16) Includes 421,688 shares that may be acquired on exercise of options and
1,837 shares that may be acquired on conversion of debentures.
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:
40,279 shares of Common Stock are held by Richard Z. Rosenfeld as
trustee under a 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, 1998, David L. Babson and Company Incorporated, a
registered investment advisor, exercised investment and voting discretion
with respect to 726,600 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 January 21, 1999, filed by David L. Babson and Company
Incorporated with the Securities and Exchange Commission.
As of March 1, 1999 (i) Franklin Resources, Inc., a parent holding
company, (ii) Charles B. Johnson and Rupert H. Johnson, Jr., principal
shareholders of Franklin Resources, Inc., and (iii) Franklin Advisory
Services, Inc., an investment advisor, were deemed to have sole voting and
investment power over 385,300 shares of the Company's Common Stock. The
address of Franklin Advisory Services, Inc. is One Parker Plaza, Sixteenth
Floor, Ft. Lee, New Jersey 07024. The foregoing information is based on a
Schedule 13G report, dated January 30, 1998, filed by Franklin Resources,
Inc., Charles B. Johnson, Rupert H. Johnson, Jr. and Franklin Advisory
Services, Inc. with the Securities and Exchange Commission and discussions
with Franklin Resources officers concerning holdings as of March 1, 1999.
As of December 31, 1998, Dimensional Fund Advisors Inc., a
registered investment advisor, was deemed to have beneficial ownership of
382,300 shares of the Company's Common Stock, all of which shares are held in
portfolios of certain registered investment companies and certain other
investment vehicles for all of which Dimensional Fund Advisors Inc. serves as
investment manager and advisor. Dimensional Fund Advisors Inc. disclaims
beneficial ownership of all such shares. The foregoing information is based
solely on a Schedule 13G report, dated February 11, 1999, filed by
Dimensional Fund Advisors Inc. with the Securities and Exchange Commission.
The shareholdings reported above exclude the beneficial interest of
the executive officers of the Company in 247,147 shares of Common Stock held
in the Company's pension and profit sharing plans.
Section 16(a) Beneficial Ownership Reporting Compliance
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 1998,
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 1998.
3
<PAGE>
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. In addition, Mr. Leslie E.
Dietzman and Ms. M. Marnette Perry were elected by the Board of Directors
pursuant to the Company's Restated Articles of Incorporation to fill
newly-created directorships resulting from an increase in the number of
directors and hold office until the election of directors by the shareholders
at the meeting. If a quorum is present, the four Class I nominees and the one
Class II nominee receiving the greatest number of votes cast at the meeting
or its adjournment will 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.
The directors whose term of office expires at the 1999 Annual Meeting
of Shareholders are Herbert S. Amster, Herman S. Kohlmeyer, Jr., P. Gerald
Mills and M. Marnette Perry (Class I Directors) and Leslie E. Dietzman (Class
II Director). Class I director, Mark K. Rosenfeld, a director since 1976,
resigned as a director effective March 1, 1999. The Board of Directors has
determined that the number of directors shall be twelve effective May 27,
1999, and has nominated Herbert S. Amster, Herman S. Kohlmeyer, Jr., P.
Gerald Mills, and M. Marnette Perry, each of whom is a current director, as
Class I Directors, to serve until the 2002 Annual Meeting of Shareholders or
until their successors are elected and qualified; and has nominated Leslie E.
Dietzman, a current director, as a Class II Director, to serve until the 2000
Annual Meeting of Shareholders or until his successor is elected and
qualified. The terms of office of the Class II and Class III Directors will
expire at the annual meetings of shareholders in 2000 and 2001, respectively.
It is intended that each proxy given pursuant to this solicitation
will be voted in favor of election of each of the five 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 as Class I
Directors or for more than one nominee as Class II Director.
The following information is furnished with respect to the members of
the Board of Directors, whose term of office will continue after the 1999
Annual Meeting of Shareholders, 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 (1,3) Management consultant 64 1967 I 1999
Leslie E. Dietzman (2) President and 56 1999 II 1999
Chief Executive Officer,
Family Christian Stores, Inc.
Grand Rapids, Michigan
Paul W. Gilbert (3) Vice Chairman of the Board, 54 1988 II 2000
Jacobson Stores Inc.
Herman S. Kohlmeyer, Jr. (1,3) Senior Vice President-Investments, 66 1971 I 1999
Prudential Securities, Inc.,
New Orleans, Louisiana
4
<PAGE>
<CAPTION>
First Current
Principal Occupation and Became Term
Name Positions with the Company Age Director Class Expires
- ---- -------------------------- --- -------- ----- -------
<S> <C> <C> <C> <C> <C>
Kathleen McCree Lewis Attorney; member, Dykema Gossett 51 1993 III 2001
PLLC, Detroit, Michigan
P. Gerald Mills (1,3) Chairman of the Board, President and 70 1996 I 1999
Chief Executive Officer,
Jacobson Stores Inc.
Michael T. Monahan (3,4) President, Comerica Bank, 60 1990 III 2001
Detroit, Michigan
M. Marnette Perry (1) President, 47 1999 I 1999
Kroger Co. of Michigan,
Livonia, Michigan
Philip H. Power (4) Chairman of the Board, HomeTown 60 1985 II 2000
Communications Network, Inc.,
newspaper publisher,
Livonia, Michigan
Richard Z. Rosenfeld (3,4) Of Counsel, Rosenfeld, 67 1957 III 2001
Grover & Frang, P.C., Attorneys,
Jackson, Michigan; Secretary,
Jacobson Stores Inc.
Robert L. Rosenfeld, Ph.D. Program Manager, Defense 61 1967 II 2000
Advanced Research Projects Agency,
U.S. Department of Defense,
Arlington, Virginia
James L. Wolohan Chairman of the Board, President 47 1993 III 2001
and Chief Executive Officer, Wolohan
Lumber Co., Saginaw, Michigan
(1) Class I Directors, whose current term expires at the 1999 Annual Meeting;
nominated to serve until 2002.
(2) Class II Director, whose current term expires at the 1999 Annual Meeting;
nominated to serve until 2000.
(3) Members of the Executive Committee.
(4) 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 also a director of Mechanical Dynamics, Inc.
Mr. Dietzman has been President and Chief Executive Officer of Family
Christian Stores, Inc., a family-oriented bookstore, since 1992. He was first
elected to the Board of Directors of the Company effective February 1, 1999.
Mr. Gilbert has been Vice Chairman of the Board of the Company since
1993. He was also 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.
Mr. Kohlmeyer 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, since
1982.
5
<PAGE>
Mr. Mills has served as Chairman of the Board and Chief Executive
Officer of the Company since October 31, 1996, and also as President of the
Company since December 20, 1996. He was Chairman and Chief Executive Officer
of Dayton Corporation, 1978-1981; was Chairman and Chief Executive Officer,
the J. L. Hudson Company, 1981-1983; was Chairman and Chief Executive
Officer, Dayton Hudson Department Store Company and Executive Vice President,
Dayton Hudson Corporation, 1983-1985; was Chairman and Chief Executive
Officer, Millston Corporation, a specialty store retailer, 1986-1992; and was
a business consultant from 1992-1996.
Mr. Monahan has been President and a director of Comerica Incorporated
since 1993, and President and a director of Comerica Bank since 1992. He is
also a director of Hertz Corporation.
Ms. Perry was Vice President of Merchandising for the Kroger Co.,
1991-1997 and has been President of Kroger Co. of Michigan, a division of the
Kroger Co., since August 1997. She was first elected to the Board of
Directors of the Company effective February 1, 1999.
Mr. Power founded HomeTown Communications Network, Inc., a publisher
of newspapers, in 1965, and has been its Chairman of the Board since that
date. He is also a director of Sensys Technologies Inc.
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
of Counsel to the firm. He has been Secretary of Jacobson Stores Inc. since
1964.
Dr. Robert L. Rosenfeld has been Program Manager, Defense Advanced
Research Projects Agency (formerly Advanced Research Projects Agency) since
1985.
Mr. Wolohan has been a director, President and Chief Executive Officer
of Wolohan Lumber Co. since 1987, and has also been Chairman of the Board
since 1995. He is also a director of Citizens Banking Corporation.
Richard Z. Rosenfeld is the first cousin of Robert L. Rosenfeld.
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. Michael T. Monahan
is President and a director of Comerica Bank, and President and a director of
Comerica Incorporated. Information on the Company's banking relationships
with Comerica Bank in fiscal 1998 is reported on page 14 under the caption
"Compensation Committee Interlocks and Insider Participation."
The Company regularly advertises in various newspapers and other
periodicals, including newspapers published by HomeTown Communications
Network, Inc., of which Philip H. Power is Chairman of the Board. During its
last fiscal year, the Company paid newspapers published by HomeTown
Communications Network, Inc. $275,000 for advertising space.
The Company retained Rosenfeld, Grover & Frang, P.C. for legal
services in fiscal 1998. Richard Z. Rosenfeld serves of Counsel to that law
firm. Information on the fees paid by the Company to that law firm is
reported on page 14 under the caption "Compensation Committee Interlocks and
Insider Participation".
Compensation of Directors
The Company compensates its directors at the rate of $10,000 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 (Messrs. Mills and
Gilbert). Directors are eligible to defer director fees, with interest
thereon, until after termination of service as a director of the Company. The
interest rate used by the Company's Deferred Compensation Plan, which is
currently equal to the one-year Treasury Bill rate plus 125 basis points, or
5.75%, is determined from time to time by the Compensation Committee of the
Board of Directors.
6
<PAGE>
Under the Company's Stock Option Plan of 1994, non-statutory
stock options were granted in fiscal 1998 to the following directors who are
not full-time employees of the Company, at the following prices, which in
each case was the fair market value on the date of grant:
Exercise Price
Name Options per Share
- ----------------------------------------------------------
Herbert S. Amster 500 sh. $9 7/8
Leslie E. Dietzman 1,000 6 7/8
Herman S. Kohlmeyer, Jr. 500 9 7/8
Kathleen McCree Lewis 500 9 7/8
Michael T. Monahan 500 9 7/8
M. Marnette Perry 1,000 6 7/8
Philip H. Power 500 9 7/8
Richard Z. Rosenfeld 500 9 7/8
Robert L. Rosenfeld, Ph.D. 500 9 7/8
James L. Wolohan 500 9 7/8
The stock options granted to Mr. Dietzman and Ms. Perry were
effective February 1, 1999 at the time of their election to the Board of
Directors. The term of each director option is five years. Director options
exercised during 1998 consisted of the following:
Market Value
Number of Less
Name Shares Exercise Price
---------------------------------------------------------
Herbert S. Amster 500 sh. $ 1,000.00
Herman S. Kohlmeyer, Jr. 500 687.50
Michael T. Monahan 500 1,000.00
Philip H. Power 500 1,000.00
Robert L. Rosenfeld 500 1,000.00
The Company retained Rosenfeld, Grover & Frang, P.C. for legal
services in fiscal 1998. Richard Z. Rosenfeld serves of Counsel to that law
firm. Information on the fees paid by the Company to that law firm is
reported on page 14 under the caption "Compensation Committee Interlocks and
Insider Participation".
Committees and Meetings of the Board of Directors
The Company's Board of Directors held five meetings during the year
ended January 30, 1999.
There are four permanent committees of the Board of Directors:
Executive Committee, Audit Committee, Compensation Committee and Directors
Committee.
The Executive Committee met one time during the year. The Executive
Committee has the authority of the Board of Directors, between Board
meetings, to take action and adopt resolutions in the ordinary course of
business of the Company. The Executive Committee also has authority with
respect to any matters designated by the Board of Directors, subject to any
limitations in the Michigan Business Corporation Act.
The Audit Committee consists of Directors Amster (Chair), Lewis and
Wolohan. 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 auditors; 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.
7
<PAGE>
The Compensation Committee consists of Directors Kohlmeyer (Chair),
Monahan, Richard Z. Rosenfeld and Robert L. Rosenfeld. 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,
President 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, Mills, Power and Richard Z. Rosenfeld. It met five times during
the year. The Directors Committee determines a desirable balance of expertise
among Board members; identifies and recommends to the Board qualified
candidates to fill positions and vacancies on the Board; considers director
nominees proposed by shareholders and recommends to the Board the slate of
director nominees for election by the shareholders at the Annual Meeting;
reviews and recommends to the Board the performance criteria for members of
the Board, the size of the Board, the committee structure and assignments,
and the conduct and frequency of Board meetings; reviews and recommends
compensation arrangements for members of the Board; and evaluates the
performance of the members of the Board and assesses the Board's
effectiveness as a whole.
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.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table and footnotes summarize the compensation for the
last three fiscal years of the Company's Chief Executive Officer during
fiscal 1998 and the Company's four most highly compensated executive officers
other than the Chief Executive Officer who were serving as executive officers
of the Company at the end of fiscal 1998:
<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> <C>
P. Gerald Mills (3) 1998 $285,000 $0 0 $4,710
Chairman of the Board, President 1997 221,000 0 0 2,210
and Chief Executive Officer 1996 52,700 0 300,000 0
Paul W. Gilbert 1998 295,000 0 25,000 2,136
Vice Chairman of the Board 1997 280,289 0 25,000 1,447
1996 246,866 0 40,000 1,444
James A. Rodefeld (4) 1998 188,500 0 20,000 3,573
Executive Vice President - 1997 132,596 0 15,000 625
Marketing & Stores 1996 7,212 0 10,000 0
Theodore R. Kolman 1998 148,500 0 7,500 2,922
Senior Vice President - 1997 142,692 70,000 7,500 1,755
General Merchandise Manager 1996 137,443 5,923 0 832
George P. Kelly (5) 1998 115,000 0 15,000 0
Former Senior Vice President - 1997 0 0 0 0
General Merchandise Manager 1996 35,400 0 0 45,600
<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 1998: (a) Company
contributions to the Jacobson's Retirement Savings & Profit Sharing Plan
(401(k) plan) (Mr. Gilbert $900; Mr. Rodefeld $900; and Mr. Kolman $900)
and (b) amounts paid by the Company for term life insurance (Mr. Mills
$4,710; Mr. Gilbert $1,236; Mr. Rodefeld $2,673; and Mr. Kolman $2,022).
(3) Mr. Mills became Chairman of the Board and Chief Executive Officer of the
Company effective October 31, 1996 and became President effective
December 20, 1996.
(4) Mr. Rodefeld became an executive officer of the Company effective
January 6, 1997.
(5) Mr. Kelly became an executive officer of the Company effective August 27,
1998. Compensation included in the table above includes compensation for
all of fiscal 1998. Mr. Kelly's position was eliminated effective
March 29, 1999.
</TABLE>
9
<PAGE>
Options
The table below reports options granted during the last fiscal year to
each of the executive officers of the Company listed in the Summary
Compensation Table on page 9. The Company has not granted any stock
appreciation rights (SARs).
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants Potential
- ---------------------------------------------------------------------------------- Realizable Value at
Number of % of Total Assumed Annual
Securities Options/SARs Rates of Stock Price
Underlying Granted to Appreciation
Options/SARs Employees Exercise for Option Term
Granted in Fiscal or Base Price Expiration ----------------------
Name (#) Year ($/sh) Date 5%($) 10%($)
- ---- ------------ ------------ ------ ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
P. Gerald Mills -- -- -- -- -- --
Paul W. Gilbert 25,000 14.8% $14.000 March 25, 2008 $220,113 $557,810
James A. Rodefeld 20,000 11.9 14.000 March 25, 2008 176,090 446,248
Theodore R. Kolman 7,500 4.5 14.000 March 25, 2008 66,034 167,343
George P. Kelly 15,000 8.9 10.188 August 26, 2008 96,103 243,544
</TABLE>
Each option referred to in the foregoing table is a non-statutory
option and has a term of ten years. The options granted vest at the rate of
25% per year, commencing on the first anniversary of the date of grant. The
exercise price is not less than the market value of the Company's Common
Stock on the date of grant. Mr. Kelly's options expired as a result of the
elimination of his position effective March 29, 1999.
The table below reports options exercised in the last fiscal year by
each of the executive officers of the Company listed in the Summary
Compensation Table on page 9, and the number and fiscal year-end value of
options held by each such executive officer.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options/SARs
Shares Acquired Value Options/SARs at Fiscal Year-end at Fiscal Year-end(1)
on Exercise Realized(1) (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ---------- ------------------------------- -------------------------
<S> <C> <C> <C> <C>
P. Gerald Mills 0 $0 300,000 / 0 $0/0
Paul W. Gilbert 0 0 47,250 / 69,750 0/0
James A. Rodefeld 0 0 13,750 / 31,250 0/0
Theodore R. Kolman 0 0 10,125 / 15,375 0/0
George P. Kelly (2) 0 0 0 / 15,000 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 as a result of the elimination of his position
effective March 29, 1999.
</TABLE>
10
<PAGE>
Long-Term Incentive Plans
The Company does not have a long-term incentive plan.
Pension Plan
The following table summarizes annual benefits under the Company's
pension plan:
Average Years of Service
----------------------------------------------------
Remuneration 15 20 25 30
- ----------------------------------------------------------------------------
$125,000 $11,250 $15,000 $18,750 $22,500
150,000 13,500 18,000 22,500 27,000
175,000 15,750 21,000 26,250 31,500
200,000 18,000 24,000 30,000 36,000
225,000 20,250 27,000 33,750 40,500
250,000 22,500 30,000 37,500 45,000
300,000 27,000 36,000 45,000 54,000
350,000 31,500 42,000 52,500 63,000
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 under the plan prior to an amendment were
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. Effective January 1, 1998, the pension plan
of the Company was modified to provide benefits to employees as illustrated
in the above table. Benefits of the amended plan are computed on the basis of
the average yearly compensation for the highest five consecutive years during
the ten years preceding the employee's last day of employment. In accordance
with the plan provisions, all present and former employees as of January 1,
1998 will receive the greater of the benefits as determined under the prior
plan and under the terms of the modified plan. Certain of the executive
officers' minimum annual benefits will be determined as 1% of their total
compensation, subject to the limitations described herein, during their years
of service with the Company, plus $100. Benefits are paid as a monthly
annuity, and are not subject to deduction for social security or other offset
amounts.
For each of the executive officers named in the Summary Compensation
Table, all of their salary reported in the Summary Compensation Table,
including 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 $160,000 for 1998 and 1997 and $150,000 for 1996.
The years of credited service of the executive officers named in the
Summary Compensation Table are:
Years of Service
----------------
P. Gerald Mills 2 years
Paul W. Gilbert 24 years
James A. Rodefeld 2 years
Theodore R. Kolman 8 years
George P. Kelly 4 years
Mr. Kelly's years of service includes previous employment with the
Company prior to becoming an executive officer in 1998.
11
<PAGE>
Executive Officers Employment Agreements
The Company's employment agreement with P. Gerald Mills, as amended
effective April 15, 1999, is for a term ending April 15, 2001 at an annual
salary of $350,000. The Agreement authorizes Mr. Mills 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.
Mills' salary for the year ended January 30, 1999 was deferred. Pursuant to
the agreement, Mr. Mills is entitled (i) to participate in the Company's
management incentive plan, (ii) to four weeks of vacation a year, and (iii)
to participate in such other plans and additional benefits as are generally
available to other executives and for which he is eligible. Mr. Mills'
agreement provides an option to purchase 300,000 shares of Common Stock,
which was granted to him on October 31, 1996, and which vested in one-third
cumulative annual installments beginning October 31, 1996 and was fully
vested as of October 31, 1998.
The agreement provides that, in the event of the termination of Mr.
Mills' employment during the term of the agreement as a result of death or
disability, or termination by the Company for cause, (i) he will be entitled
to his accrued salary through the date of termination and a pro-rata bonus,
if any, for the year of such termination, based on the actual number of days
worked in that year, and (ii) if such termination is a result of Mr. Mills'
death or disability, he will be entitled to any benefits contained in any
wage continuation program, insurance or other employee benefit plans that are
generally applicable to all executive officers of the Company and that are
maintained by the Company at that time. If such termination is by the Company
without cause, Mr. Mills' salary and benefits will be continued as described
below. His agreement also includes change in control severance provisions as
described below.
The Company's employment agreements with Messrs. Gilbert and Rodefeld
are for a term of three years ending April 14, 2001, which term is
automatically extended one year each April 15 beginning April 15, 1999,
unless either party gives the other notice that such extension will not
occur. Effective April 15, 1999, Mr. Gilbert's and Mr. Rodefeld's annual
salaries under their agreements are $350,000 and $250,000, respectively. The
agreements authorize the executive to defer payment of any part of the salary
and interest thereon until after the executive's retirement or death pursuant
to the Company's Deferred Compensation Plan. None of the executives' salaries
for the year ended January 30, 1999 was deferred. The agreements also provide
that, in the event of the death of the executive 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 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. Gilbert's life after January 31, 1996 and on Mr. Rodefeld's
life after April 15, 1998.
If the executive's employment is terminated as a result of his
disability during the term of the agreement (i) his salary will continue for
two years at the rate in effect immediately before his disability 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, 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 Mr. Gilbert's
life after January 31, 1996, and on Mr. Rodefeld's life after April 15, 1998.
If the Company terminates employment of Messrs. Mills, Gilbert or
Rodefeld without 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 of the agreement 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.
12
<PAGE>
The Company's employment agreements with Messrs. Mills, Gilbert and
Rodefeld also provide for change in control severance 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 3rd 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, and (B) the executive's
death or disability.
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 20% 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 agreement in the event of a
change in control are (i) a lump-sum cash payment equal to (a) the amount of
the executive's salary for a period of two years after termination of
employment, or through the termination date of his employment agreement with
the Company, whichever is greater (the "Time "), (b) 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, and (c) the executive's
prior year's bonus multiplied by the Time (in years and fractions of a
partial year), and (ii) continued medical, dental, life, disability,
hospitalization, optical and prescription drug coverage, automobile
allowances and benefits during the Time and, if applicable, payments under
the Company's Split Dollar Agreement with Mr. Gilbert, during the Time.
Pursuant to the agreement, the executive has also agreed to non-competition,
confidentiality, and non-solicitation provisions.
In the event that any payments made in connection with the change in
control provisions would be subject to an excise tax imposed under Section
4999 of the Internal Revenue Code, the agreement provides that the Company is
obligated to make the executive whole with respect to such excise tax and any
related income tax.
The Company had an employment agreement with Mr. Kelly for a term
ending April 15, 2000 at an annual salary of $200,000, and has an agreement
with Mr. Kolman for a term of one year ending April 15, 2000, at an annual
salary of $175,000. The agreements provide that if the Company terminates the
executive's employment without cause or if the executive terminates his
employment for good reason within one year after a change in control of the
Company (defined as described above in connection with the agreements with
Messrs. Mills, Gilbert and Rodefeld) his salary will continue for a period of
24 months after the change in control occurred. If his employment is
terminated because of any other termination by the Company or the executive
for any or no reason or because of his death, permanent incapacity or
retirement, benefits may continue to the extent provided in any severance
program, wage continuation program, insurance or other employee benefit plans
that are generally applicable to all employees of the Company and that are
maintained by the Company at that time.
Mr. Kelly's position was eliminated effective March 29, 1999.
The Jacobson Stock Option Plan of 1994 provides 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
as described above.
13
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Company's Board of Directors since
May 28, 1998 has consisted of Directors Kohlmeyer (Chair), Monahan, Richard
Z. Rosenfeld and Robert L. Rosenfeld. During fiscal 1998 before May 28, 1998
Director Wolohan was a member of the Compensation Committee instead of Robert
L. Rosenfeld.
During fiscal 1998 Richard Z. Rosenfeld served as Secretary 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 paid $1,116,000 in interest to Comerica Bank at
rates ranging from 7.22% to 8.50%, paid $25,000 in fees to Comerica Bank
pursuant to its Revolving Credit loan agreement, and paid $12,000 in rent to
a subsidiary of Comerica Bank under an expired lease for computer equipment
and software. At January 30, 1999, the total unpaid principal balance of all
borrowings of the Company and its subsidiaries from Comerica Bank was
$12,901,000.
Comerica Bank is also a depository of funds of the Company and its
subsidiaries and trustee of the Company's Pension Plan, which holds 28,890
shares of the Company's Common Stock. The Company paid approximately $105,000
in fees for such services in fiscal 1998.
Richard Z. Rosenfeld serves of Counsel to Rosenfeld, Grover & Frang,
P.C., and the firm provides legal services to the Company. Mr. Rosenfeld is
also Secretary of the Company. During its last fiscal year, the Company paid
Rosenfeld, Grover & Frang, P.C. $15,000 for legal services and $500 for
reimbursed expenses.
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, President 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 those
named in the Summary Compensation Table on page 9). The Committee also serves
as the employee option committee under the Company's Stock Option Plan of
1994.
The Committee uses a number of resources to assist the Committee in
making informed decisions regarding compensation. In prior years, the
Committee has obtained 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 have, in prior years, consulted
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, 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 approximate the median
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 the Committee's
subjective evaluation of the Company's performance and financial condition,
the executive's individual performance and position in the salary range, and
management's recommendations. The salary increases given to executives in
1998 were based primarily on management's recommendations, the Company's
improved financial performance in fiscal 1997 and the Committee's judgment
that their salaries, adjusted for inflation, were low relative to executives
at comparable companies.
14
<PAGE>
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 and increase
shareholder value. They are also intended to establish high levels for
expected performance, foster awareness of the benefits of teamwork, and
recognize the executive officer's individual contributions to the Company.
For the fiscal year ended January 30, 1999, the Jacobson Stores Inc.
1998 Management Incentive Plan (the "1998 Plan") covered all the executive
officers of the Company. Pursuant to the 1998 Plan, a bonus pool was
established for each executive officer equal to 15% to 35% of the executive
officer's 1998 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 (70% of the targets) were not met, or
increased to a maximum of 22.5% to 52.5% of base salary if 190% of the
targets were achieved. For Messrs. Mills, Gilbert and Rodefeld, 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 executive's individual contribution to the implementation
of the Company's strategic business plan. For Messrs. Kelly and Kolman, 50%
of their bonuses under the plan were payable based on the Company's targeted
return on sales, and the remaining 50% of their bonuses under the plan on the
executive's individual performance specific to their position, based on gross
margin (in dollars) and gross margin return on investment of the merchandise
departments supervised by Messrs. Kelly and Kolman, respectively. Under the
1998 Plan, bonuses would be paid only if the Company achieved or exceeded its
threshold return on sales.
In 1998, no bonuses were paid under the Plan, as the Company did not
meet the threshold return on sales.
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, the amount
necessary to attract new executives, 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.
The Company made its 1998 annual key employee option grants in March 1998.
Stock options granted in fiscal 1998 are non-statutory options, have a
term of ten years, and generally 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.
Employment Agreements. The Company's practice is to have written
employment agreements with all officers to provide them with specified
periods of employment, salaries and severance benefits, including change in
control severance provisions. The employment agreements with each of the
Company's executive officers named in the Summary Compensation Table are
summarized on pages 12-13 of this proxy statement.
Section 162 (m) of the Internal Revenue Code provides that publicly
held corporations may not deduct compensation paid to certain executive
officers in excess of $1 million annually, with certain exemptions. The
Company has not had more than $1 million in compensation deductions for any
executive officer in any one year, but 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.
15
<PAGE>
Basis for Compensation of P. Gerald Mills. Factors used by the
Committee in evaluating Mr. Mills' performance as Chairman of the Board,
President and Chief Executive Officer included the Company's 1998 financial
performance compared to the previous year, strategic planning, organizational
development and reorganization, investor and vendor relations, formulation of
major corporate policies, including corporate governance policies, keeping
the Board fully informed on the condition of the Company, and working with
the directors to effectively use their talents to the best strategic
advantage of the Company. The Committee recommended that the Company enter
into an amended and restated employment agreement with Mr. Mills, including
its terms relating to salary, participation in future bonus plans and stock
options (as described under "Executive Officers Employment Agreements"
above), based on its judgment of what was appropriate in Mr. Mills' agreement
and the terms that were necessary to retain Mr. Mills with the Company. The
salary in Mr. Mills' amended employment agreement increased from his fiscal
1997 base salary based on the Committee's judgment that his salary was low
relative to other Chief Executive Officers at comparable companies and the
salaries of other Company officers. No bonus was approved for Mr. Mills for
fiscal 1998 because the Company did not meet its threshold return on sales
target under the 1998 Plan. Mr. Mills was granted options upon his employment
with the Company as described in the "Summary Compensation Table" on page 9.
No additional options were granted to Mr. Mills during 1998 based on
previously issued stock options.
COMPENSATION COMMITTEE
Herman S. Kohlmeyer, Jr., Chair
Michael T. Monahan
Richard Z. Rosenfeld
Robert L. Rosenfeld
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 two peer group indexes, 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.
Comparison of Five Year Cumulative Total Return*
Among Jacobson Stores Inc., The Nasdaq Stock Market (U.S. Companies),
and Two Peer Group Indexes
(A paper copy of the Performance Graph is contained in
the Company's definitive proxy statement.)
*Assumes $100 invested on January 29, 1994 in Jacobson Common Stock,
The Nasdaq Stock Market (U.S. Companies), and each of two indexes comprised
of Peer Group companies. Total Return assumes reinvestment of dividends.
The dollar values for total shareholder return plotted in the graph
above are shown in the table below.
1-29-94 1-28-95 1-27-96 1-25-97 1-31-98 1-30-99
------- ------- ------- ------- ------- -------
Jacobson's 100 86 76 68 116 60
Nasdaq Market 100 96 133 175 210 328
Peer Group - 1 100 97 108 134 189 255
Peer Group - 2 100 95 107 132 194 N/A
16
<PAGE>
The first peer group included in the graph is comprised of eleven
retail companies offering mainly apparel and accessories, four of which are
members of the same buying office as the Company. The members of the peer
group are as follows: AnnTaylor Stores Corp., Bon-Ton Stores, Inc.; Dayton
Hudson Corp.; Dillard's, Inc.; Federated Department Stores, Inc.; Gottschalks
Inc.; May Department Stores Company; Neiman Marcus Group, Inc.; Nordstrom,
Inc.; Saks Inc. (formerly Proffitt's, Inc.); and Talbots, Inc. 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.
The second peer group, used in last year's proxy statement, is
comprised of the following eight retail companies: Crowley, Milner & Co.;
Dayton Hudson Corp.; Dillard's, Inc.; Gantos, Inc.; Gottschalks Inc.; May
Department Stores Company; Nordstrom, Inc.; and Proffitt's, Inc. Shareholder
return information is not available for fiscal 1998 for Crowley, Milner & Co.
as their stock was not publicly traded as of the end of fiscal 1998. During
fiscal 1998 Proffitt's, Inc. acquired Saks Inc. and changed its name to Saks
Inc. As a result the first peer group now includes Saks Inc., rather than
Proffitt's, Inc. AnnTaylor Stores Corp., Bon-Ton Stores, Inc., Federated
Department Stores, Inc., Neiman Marcus Group, Inc., and Talbots, Inc. have
also been added to the performance graph as these companies operate retail
stores in a similar line of business as Jacobson Stores Inc. and replace
Crowley, Milner & Co., and Gantos, Inc. previously included in the
performance graph, that are no longer publicly traded or the Company no
longer considers to be in a similar line of business.
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 1999
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 29, 2000. 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 29,
2000."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RESOLUTION.
Approval of this proposal 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.
OTHER MATTERS
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.
Votes in all matters will be counted by Norwest Shareowner Services
whose address is P.O. Box 64859, St. Paul, MN 55164-9445.
Cost of Solicitation
The Company will pay the cost of soliciting proxies. 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.
17
<PAGE>
Proposals for 2000 Annual Meeting
Any shareholder's proposal intended to be presented at the 2000 Annual
Meeting must be in writing, must comply with the requirements set forth in
the Company's Restated Articles of Incorporation (summarized on page 8,
above) and 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 15, 1999, in order to be considered for
inclusion in the Company's proxy material for that meeting.
The Company must receive notice of any shareholder's proposals
intended to be presented at the 2000 Annual Meeting that are not intended to
be considered for inclusion in the Company's Proxy Statement and Proxy
related to that meeting, no later than February 28, 2000 to be considered
timely. Such proposals should be addressed to Secretary, Jacobson Stores
Inc., 3333 Sargent Rd., Jackson, Michigan 49201-8847 by certified mail,
return receipt requested. If the Company does not have notice of the matter
by that date, the Company's form of proxy in connection with that meeting may
confer discretionary authority to vote on that matter, and the persons named
in the Company's form of proxy will vote the shares represented by such
proxies in accordance with their best judgment.
By order of the Board of Directors,
RICHARD Z. ROSENFELD, Secretary
Jackson, Michigan, April 13, 1999.
18
<PAGE>
[Proxy Card]
JACOBSON'S
PROXY JACOBSON STORES INC. COMMON STOCK
1999 ANNUAL MEETING OF SHAREHOLDERS
Thursday, May 27, 1999
The undersigned appoint(s) P. GERALD MILLS 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 29, 1999, at the 1999 Annual Meeting of
Shareholders, to be held May 27, 1999, and at any adjournments thereof.
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
Class I Directors to serve until the 2002 Annual Meeting of
Shareholders:
01 Herbert S. Amster 02 Herman S. Kohlmeyer, Jr.
03 P. Gerald Mills 04 M. Marnette Perry
Class II Director to serve until the 2000 Annual Meeting of
Shareholders:
05 Leslie E. Dietzman.
(To withhold authority to vote for any individual nominee, write the
number(s) of the nominee(s) in the box provided to the right.)
Please fold here
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2. APPOINTMENT OF AUDITORS:
Proposal to appoint Arthur Andersen LLP as auditors for the fiscal
year ending January 29, 2000. [ ] 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.
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 1999 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 30, 1999.
Please sign in the space provided exactly as name(s) appear(s) below. For
joint accounts, each joint owner is requested to 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. Signed but unmarked proxies will be voted in
accordance with the Board of Director's recommendation.
Address Change? Mark Box [ ] Indicate changes below:
Dated ___________________ , 1999
[graphic omitted]
Signature(s) in Box
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.
