April 24, 1998
TO LOWE'S SHAREHOLDERS:
It is my pleasure to invite you to the 1998 Annual Meeting to be held at
our Regional Distribution Center located at 711 Tomlin Mill Road, Statesville,
North Carolina, on Friday, May 29, 1998, at 10:00 a.m. Statesville is located
near the intersection of Interstate Routes 77 and 40 midway between Winston-
Salem and Charlotte. A map giving directions to the Distribution Center is on
the back cover of the Proxy Statement.
We are extremely proud of this new state of the art Distribution Center
which is contributing significantly to Lowe's current success. Tours will be
available following the Shareholders Meeting, and I hope many of you will take
advantage of the tour opportunity which should be both enjoyable and
educational.
The formal Notice of Annual Meeting and Proxy Statement are enclosed with
this letter. The principal item of business to be transacted at our meeting
is the election of six Directors, as described in the Proxy Statement. I look
forward to reporting on an outstanding 1997, and at the meeting I expect to
report results of our first fiscal quarter of 1998.
Yours cordially,
/s/ Robert L. Tillman
Robert L. Tillman
LOWE'S COMPANIES, INC.
P. O. Box 1111
North Wilkesboro, NC 28656
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 29, 1998
The Annual Meeting of Shareholders of Lowe's Companies, Inc. (the
"Company") will be held at the Company's Regional Distribution Center located
at 711 Tomlin Mill Road, Statesville, North Carolina, on Friday, May 29, 1998,
at 10:00 a.m. to consider and act upon the following proposals:
To elect one Class I Director to a term of one year, one Class II
Director to a term of two years and four Class III Directors to a
term of three years; and
To transact such other business as may be properly brought before the
Annual Meeting.
Shareholders of record at the close of business on April 3, 1998, are
entitled to notice of and to vote at the meeting. All properly executed
proxies delivered pursuant to this solicitation will be voted at the meeting
in accordance with instructions, if any. If two or more proxies are submitted
by the same shareholder, the proxy bearing the later date will revoke the
prior proxy. Any proxy delivered before the meeting may be revoked by
attending the meeting and voting in person.
By order of the Board of Directors,
/s/ William C. Warden, Jr.
William C. Warden, Jr.
Executive Vice President, General Counsel
& Secretary
North Wilkesboro, North Carolina
April 24, 1998
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE DATE AND SIGN THE PROXY AND
MAIL AT ONCE IN THE ENCLOSED ENVELOPE.
LOWE'S COMPANIES, INC.
P. O. Box 1111
North Wilkesboro, North Carolina 28656
336/658-4000
Proxy Statement
for
Annual Meeting of Shareholders
May 29, 1998
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of Lowe's Companies, Inc. (the
"Company") of proxies to be voted at the Annual Meeting of Shareholders to be
held at the Company's Regional Distribution Center located at 711 Tomlin Mill
Road, Statesville, North Carolina, on Friday, May 29, 1998, at 10:00 a.m.
(A map is included on the back cover of this Proxy Statement.) It is
anticipated that this Proxy Statement and the enclosed form of proxy will be
sent to shareholders on April 24, 1998.
Only shareholders of record at the close of business on April 3, 1998,
are entitled to notice of and to vote at the meeting or any adjournment thereof
On April 3, 1998, there were 175,583,890 shares of Common Stock of the Company
outstanding and entitled to vote. Shareholders are entitled to one vote for
each share held on all matters to come before the meeting.
The shares represented by a proxy will be voted as directed unless the
proxy is revoked. Any proxy may be revoked before it is exercised by filing
with the Secretary of the Company an instrument revoking the proxy or a proxy
bearing a later date. A proxy is revoked if the person who executed the proxy
is present at the meeting and elects to vote in person.
Abstentions and shares held of record by a broker or its nominee ("broker
shares") that are voted on any matter are included in determining the number of
votes present or represented at the meeting. Broker shares that are not voted
on any matter at the meeting are not included in determining whether a quorum
is present. The vote required on matters to be considered is disclosed under
the caption for such matters. Votes that are withheld and broker shares that
are not voted (commonly referred to as "broker non-votes") are not included in
determining the number of votes cast in the election of Directors or on other
matters.
ELECTION OF DIRECTORS
There are currently 13 members of the Board of Directors, which is divided
into three classes: Class I (five members), Class II (four members) and Class
III (four members), with one class being elected each year for a three-year
term. As recommended by the Governance Committee (acting as a nominating
committee), the Board of Directors has nominated six individuals for election
as Directors. The six nominees, all of whom are currently Directors, and their
classes and terms are:
Name Class and Term
Richard K. Lochridge Class I, expiring 1999
Peter C. Browning Class II, expiring 2000
Leonard L. Berry Class III, expiring 2001
Paul Fulton Class III, expiring 2001
James F. Halpin Class III, expiring 2001
Robert L. Tillman Class III, expiring 2001
Messrs. Berry, Browning and Lochridge were elected as Directors by the Board
since the 1997 Annual Meeting.
If elected, each nominee will serve the term indicated above or until a
successor is elected and qualifies. The election of each nominee requires the
affirmative vote of the holders of the plurality of the shares of Common Stock
cast in the election of Directors. Unless authority to vote in the election
of Directors is withheld, it is the intention of the persons named as Proxies
to vote FOR the six nominees. If at the time of the meeting any of these
nominees is unavailable for election as a Director for any reason, which is
not expected to occur, the persons named as Proxies will vote for such
substitute nominee or nominees, if any, as shall be designated by the Board
of Directors.
INFORMATION CONCERNING CLASS I NOMINEE
The nominee for election for a one-year term as a Class I Director to serve
until the 1999 Annual Meeting is Richard K. Lochridge
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
Richard K. Lochridge, 54 1998 Member of Audit Committee and Governance
Committee of the Company. President and
Chief Executive Officer, Lochridge &
Company (General Management Consulting
Firm), Boston, Mass. since 1986. Other
directorships: Dynatech Corporation,
Burlington, Mass., since 1986; Hannaford
Brothers Co., Portland, Me., since 1993.
INFORMATION CONCERNING CLASS II NOMINEE
The nominee for election for a two-year term as a Class II Director to serve
until the 2000 Annual Meeting is Peter C. Browning
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
Peter C. Browning, 56 1998 Member of Compensation Committee and
Governance Committee of the Company.
President and Chief Operating Officer,
Sonoco Products Company (Global Packaging
Company), Hartsville, S.C., since 1996
having previously served as Executive
Vice-President (1993-1996) of that
company; Director since 1995. Other
directorships: Phoenix Home Life Mutual
Ins. Co., Hartford, Conn., since 1989;
Wachovia Corporation, Winston-Salem,
N.C. since 1997.
INFORMATION CONCERNING CLASS III NOMINEES
The nominees for election to three-year terms as Class III Directors to serve
until the 2001 Annual Meeting are Leonard L. Berry, Paul Fulton, James F.
Halpin and Robert L. Tillman
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
Leonard L. Berry, Ph.D., 55 1998 Member of Audit Committee and Governance
Committee of the Company. Professor of
Marketing, Holder of the J.C. Penney
Chair in Retailing Studies, and Director
of the Center for Retailing Studies,
Texas A&M University, College Station,
Tex., since 1982. Other directorships:
CompUSA Inc., Dallas, Tex., since 1993;
Hastings Entertainment, Inc., Amarillo,
Tex., since 1994; Council of Better
Business Bureaus (Public Member),
Arlington, Va., since 1995.
Paul Fulton, 63 1996 Member of Compensation Committee and
Governance Committee of the Company.
Chairman and Chief Executive Officer,
Bassett Furniture Industries, Bassett,
Va., since 1997; Director since 1993.
Dean, Kenan-Flagler Business School,
University of North Carolina, Chapel
Hill, N.C., 1994-1997. President, Sara
Lee Corporation (Manufacturer and
Marketer of Consumer Products), Chicago,
Ill., 1988-1993. Other directorships:
Sonoco Products Company, Hartsville, SC,
since 1989; NationsBank Corporation,
Charlotte, N.C., since 1993; The Cato
Corporation, Charlotte, N.C., since 1994;
Hudson Bay Company, Toronto, Ontario,
since 1997.
James F. Halpin, 47 1996 Member of Compensation Committee,
Executive Committee and Governance
Committee of the Company. President
and Chief Executive Officer, CompUSA Inc.
(Computer Superstores), Dallas, Tex.
since 1993; President, HomeBase (Home
Improvement Retail Chain), Irvine, Cal.,
1990-1993. Other directorships:
Interphase Corporation, Dallas, Tex.,
since 1995; Invincible Technologies
Corp., Boston, Mass., since 1995; ToyBiz,
Inc., New York, N.Y., since 1995.
Robert L. Tillman, 54 1994 Chairman of the Board since January 1998,
President and Chief Executive Officer
since August 1996, having previously
served as Senior Executive Vice President
and Chief Operating Officer (1994-July
1996) and Executive Vice President -
Merchandising (1991-1994), Chairman of
Executive Committee of the Company.
Other directorships: International Mass
Retail Association, Arlington, Va., since
1996.
INFORMATION CONCERNING CONTINUING DIRECTORS
The remaining Directors whose terms expire after 1998 are:
Class I Directors, term expiring in 1999
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
William A. Andres, 71 1986 Chairman of Governance Committee, Member
of Compensation Committee and Executive
Committee of the Company. Previously
Chairman of the Board and Chief
Executive Officer (1976-1983), Chairman
of Executive Committee (1983-1985) of
Dayton Hudson Corporation (Retail
Chain), Minneapolis, Minn. (Mr. Andres
retired in September 1985.)
John M. Belk, 78 1986 Chairman of Audit Committee, Member of
Governance Committee of the Company.
Chairman of the Board, Belk Stores
Services, Inc. (Retail Department
Stores), Charlotte, N.C., since 1980.
Other directorships: Coca-Cola Bottling
Company Consolidated, Charlotte, N.C.,
since 1972; Chaparral Steel, Midlothian,
Tex., since 1987.
Leonard G. Herring, 70 1956 President and Chief Executive Officer
1978-July 1996, (Mr. Herring resigned as
President and CEO effective August 1,
1996 and retired as an employee of the
Company January 31, 1997), Member of
Audit Committee and Executive Committee
of the Company.
Claudine B. Malone, 61 1995 Member of Audit Committee and Governance
Committee of the Company. President and
Chief Executive Officer, Financial &
Management Consulting, Inc., McLean, Va.
since 1984. Other directorships:
Chairman, Federal Reserve Bank, Richmond,
Va., since 1996 (Member since 1994); Dell
Computer Corporation, Austin, Tex., since
1993; Hannaford Bros., Scarborough, Me.,
since 1991; Hasbro, Inc., Pawtucket, R.I.
since 1992; Houghton Mifflin, Boston,
Mass., since 1982; LaFarge Corporation,
Reston, Va., since 1994; The Limited,
Inc., Columbus, Oh., since 1982;
Mallinckrodt Group Inc., St. Louis, Mo.,
since 1994; SAIC-Science Applications
International Corporation, San Diego,
Calif., since 1993; Union Pacific
Resources Corporation, Fort Worth, Tex.,
since 1995.
Class II Directors, term expiring in 2000
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
Carol A. Farmer, 53 1994 Member of Compensation Committee and
Governance Committee of the Company.
President, Carol Farmer Associates, Inc.
(Trend Forecasting and Consulting), Boca
Raton, Fla., since 1985. Other
directorships: The Sports Authority,
Inc., Ft. Lauderdale, Fla., since 1995.
Robert G. Schwartz, 70 1973 Chairman of Compensation Committee,
Member of Governance Committee of the
Company. Director of Metropolitan Life
Insurance Company, New York, N.Y., since
1980, having previously served as
Chairman of the Board (1983-1993),
President and Chief Executive Officer
(1989-1993) of that company. (Mr.
Schwartz retired in March 1993.) Other
directorships: Potlatch Corporation,
Spokane, Wash., since 1973; Comsat
Corporation, Bethesda, Md., since 1986;
Mobil Corporation, Fairfax, Va. since
1987; The Reader's Digest Association,
Inc., Pleasantville, N.Y., since 1989;
Consolidated Edison Company of New York,
New York, N.Y., since 1989; Lone Star
Industries, Inc., Stamford, Conn., since
1994; Ascent Entertainment Group, Inc.,
Denver, Colo., since 1995.
Robert L. Strickland, 67 1961 Chairman of the Board 1978-January 1998,
(Mr. Strickland retired as an employee of
the Company effective January 30, 1998),
Member of Audit Committee and Executive
Committee of the Company. Other
directorships: Deputy Chairman, Federal
Reserve Bank, Richmond, Va., since 1996;
T. Rowe Price Associates, Inc.,
Baltimore, Md., since 1991; Hannaford
Bros., Scarborough, Me., since 1994.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
Classification of Directors. Each Lowe's Director is classified as an
"Independent Director" or a "Management Director". A "Management Director"
is a present or former employee who serves as a Director. An "Independent
Director" is a Director within the scope of Securities and Exchange Commission
rules defining "non-employee directors". Ms. Farmer and Ms. Malone and
Messrs. Andres, Belk, Berry, Browning, Fulton, Halpin, Lochridge and Schwartz
are Independent Directors. Messrs. Herring, Strickland and Tillman are
Management Directors.
Compensation of Directors - Standard Arrangements. Mr. Tillman receives
no Director or Committee compensation. Directors (other than Founding
Directors, a designation discussed below under "Resolution of Director
Emeritus Retirement Benefit") who are not employed by the Company are paid an
annual retainer of $35,000 plus $5,000 annually for serving as a Committee
Chairman and $1,000 per Board meeting or Committee meeting attended (with the
maximum annual amount payable to any one Director being $60,000). Founding
Directors who are not employed by the Company are paid an annual retainer of
$60,000 each, with no additional fees for attending meetings or for Committee
Chairmanships. In 1997, Mr. Herring was also paid $5,000 for serving as a
Director of one of the Company's wholly owned subsidiaries.
Resolution of Director Emeritus Retirement Benefit. Certain Directors
historically have been classified as "Founding Directors", defined in the
Bylaws as a person who was a Director when Lowe's became a public company in
1961 and who has served continuously as a Director since 1961. Of the current
Directors, only Messrs. Herring and Strickland are Founding Directors. Once a
Founding Director retires from the Board, the Bylaws permit the Board to
designate him as a Director Emeritus. Former Founding Directors William H.
McElwee, Gordon E. Cadwgan and Petro Kulynych are Directors Emeritus. A
Director Emeritus receives a retirement benefit for life at an annual rate
equal to 50% of the basic annual Founding Director retainer in effect at the
time he was named Director Emeritus. Under this arrangement, Mr. McElwee has
been paid $20,000 annually since his retirement as a Director in 1991; Mr.
Cadwgan has been paid $30,000 annually since his retirement as a Director in
1996; and Mr. Kulynych has been paid $30,000 annually since his retirement as
a Director in 1997. The Board has designated Messrs. Herring and Strickland
as Directors Emeritus effective upon their retirement from the Board. As a
Director Emeritus, each would be paid $30,000 annually for life, commencing on
his retirement date. No Director Emeritus compensation has been paid for
1998.
The Board of Directors has determined to resolve the Company's
obligations for Directors Emeritus benefits. The Board has proposed to pay
each Director Emeritus, and each Director Emeritus has agreed to accept, a
one-time lump sum cash payment in satisfaction of the Company's retirement
benefit obligation to such individual attributable to his status as Director
Emeritus. (As noted, Messrs. Herring and Strickland have been designated
Directors Emeritus effective upon their scheduled retirement as Directors.)
The planned one-time, lump sum cash payments are: Mr. McElwee, $82,994; Mr.
Cadwgan, $167,223; Mr. Kulynych, $225,974; Mr. Herring, $237,240; and Mr.
Strickland, $241,906. The present values were arrived at using agreed upon
mortality tables and a discount rate of 6%. (Mr. McElwee died March 30, 1998.
The Company reached agreement respecting his Founding Director retirement
benefit prior to his death.)
During their remaining years of service, Directors Herring and Strickland
will be compensated under the arrangement for Founding Directors discussed
under "Compensation of Directors - Standard Arrangements".
Compensation of Directors - Other Arrangements. In 1989, shareholders
approved the Lowe's Companies, Inc. 1989 Non-Employee Directors' Stock Option
Plan. Under this Plan, eligible Directors were granted annually an
immediately exercisable stock option to purchase 4,000 shares of Common Stock
at the first Directors' Meeting following the Annual Meeting in 1989, 1990,
1991, 1992 and 1993. The option price was the shares' fair market value on
the date of grant. In accordance with a formula set forth in the option
agreement, the Company makes a federal income tax deposit on behalf of
Directors who exercise options. Two hundred thousand shares of Common Stock
were reserved under the Plan for the granting of options and options covering
140,000 shares were granted. No options were granted under this Plan during
Fiscal 1997 and no options will be granted under this Plan in the future.
During Fiscal 1997, Mr. Andres exercised options for 8,000 shares and
realized a net gain on the shares of $234,875 (representing the difference
between the market value at the date of exercise and the option exercise
price). In accordance with the provisions of the option agreements, the
Company applied part of the gross proceeds of the option exercise price to
make federal income tax deposits ($65,126) on behalf of Mr. Andres.
In 1994, the Board adopted the Lowe's Companies, Inc. Directors' Deferred
Compensation Plan. This Plan allows each non-employee Director to defer
receipt of all, but not less than all, of the annual retainer and meeting fees
otherwise payable to the Director. Deferrals are credited to a bookkeeping
account and account values are adjusted based on the investment measure
selected by the Director. One investment measure adjusts the account based on
the Wachovia Bank and Trust Company prime rate plus 1%. The other investment
measure assumes that the deferrals are invested in the Company's Common Stock.
A Director may allocate deferrals between the two investment measures in 25%
multiples. Account balances are paid in cash following the termination of a
Director's service.
In 1994, shareholders approved the Lowe's Companies, Inc. Directors'
Stock Incentive Plan. This Plan provides for each eligible Director to be
awarded 500 shares of Company Common Stock at the first Directors' Meeting
following the Annual Meeting in 1994, 1995, 1996, 1997 and 1998. Up to 25,000
shares may be issued under this Plan. During Fiscal 1997, 4,000 shares
(having a fair market value of $39.375 per share on May 30, 1997) were
awarded to eight eligible Directors (500 shares each to Directors Andres,
Belk, Farmer, Fulton, Halpin, Herring, Malone and Schwartz).
Board of Directors - During Fiscal 1997, the Board of Directors held six
meetings. The Board has four standing committees which met the number of
times set forth in parentheses: Executive (0), Audit (5), Compensation (3)
and Governance (3). All Directors attended at least 75% of the meetings of
the Board and the committees on which they served.
Audit Committee - The Audit Committee has six members: John M. Belk
(Chairman), Leonard L. Berry, Leonard G. Herring, Richard K. Lochridge,
Claudine B. Malone and Robert L. Strickland. The Audit Committee meets with
the internal auditing staff and representatives of the Company's independent
accounting firm without senior management present, and with representatives of
senior management. The Committee reviews the general scope of the Company's
annual audit and the fee charged by the independent accountants, determines
the duties and responsibilities of the internal auditors, reviews financial
statements and the accounting principles being applied and reviews audit
results and other matters relating to internal control and compliance with the
Company's code of ethics. In addition, the Audit Committee recommends
annually the engagement of the Company's independent accountants.
Compensation Committee - The Compensation Committee has six members:
Robert G. Schwartz (Chairman), William A. Andres, Peter C. Browning, Carol A.
Farmer, Paul Fulton and James F. Halpin. This Committee reviews and sets the
compensation of Directors who are employees of the Company; reviews the
compensation of all other employees whose annual salary and bonus
opportunities exceed $125,000; reviews and approves all annual bonus plans;
reviews and approves all forms of compensation which exceed one year in
duration, including employee stock option and deferred compensation awards;
administers and interprets all provisions of all compensation, employee stock
option, stock appreciation rights and other incentive plans; and approves
awards pursuant to the terms of any employee stock option or stock
appreciation rights plan.
Executive Committee - The Executive Committee has five members: Robert
L. Tillman (Chairman), William A. Andres, James F. Halpin, Leonard G. Herring
and Robert L. Strickland. The Executive Committee exercises all of the powers
of the Board of Directors between meetings, except as otherwise limited by
law.
Governance Committee - The Governance Committee has ten members: William
A. Andres (Chairman), John M. Belk, Leonard L. Berry, Peter C. Browning, Carol
A. Farmer, Paul Fulton, James F. Halpin, Richard K. Lochridge, Claudine B.
Malone and Robert G. Schwartz. This Committee's responsibilities include
screening suggestions for new Board members and making recommendations to the
full Board; conducting an annual performance evaluation of the Chief Executive
Officer; and conducting an annual review of the performance of the full Board
and structure of Board Committees. This Committee functions as a nominating
committee by recommending nominees for election as Directors of the Company.
The Committee considers nominees recommended by shareholders. Any such
recommendation should be submitted in writing to the Secretary of the Company
no later than 120 days prior to the date of mailing the proxy materials for
each annual meeting (generally, not later than the end of November preceding
the annual meeting). The recommendation should include information that will
enable the Committee to evaluate the qualifications of the proposed nominee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership as of April 3, 1998,
except as noted, of Common Stock of each incumbent Director of the Company,
each nominee for election as a Director of the Company, the Officers named in
the Summary Compensation Table, each shareholder known to the Company to be
the beneficial owner of more than 5% of the Company's Common Stock, and
Directors and Executive Officers as a group:
Name or Number Percent
of Persons in Group Number of Shares (1) (2) of Class
William A. Andres 41,000 *
John M. Belk 42,125 *
Leonard L. Berry -0- *
Peter C. Browning 330 *
Carol A. Farmer 2,601 *
Paul Fulton 2,500 *
James F. Halpin 7,100 *
Leonard G. Herring 1,647,862 (3) *
Richard K. Lochridge 1,500 *
Claudine B. Malone 2,000 *
Robert G. Schwartz 42,000 *
Robert L. Strickland 1,239,027 (4) *
Larry D. Stone 71,122 *
Robert L. Tillman 233,105 *
William C. Warden, Jr. 59,676 *
Thomas E. Whiddon 48,333 *
Incumbent Directors, Director Nominees
and Executive Officers as a Group
(25 in total) 4,101,827 (5) 2.336
Lowe's Companies Employee Stock
Ownership Trust
P.O. Box 1111
North Wilkesboro, NC 28656 8,024,191 (5) 10.265
FMR Corp.
82 Devonshire Street
Boston, MA 02109 24,527,280 (6) 13.969
Putnam Investments, Inc.
One Post Office Square
Boston, MA 02109 11,282,805 (6) 6.426
The Capital Group Companies, Inc.
333 South Hope St.
Los Angeles, CA 90071 9,448,500 (6) 5.381
___________
* Less than 1%.
Includes shares that may be acquired within 60 days under the Company's
Stock Option Plans as follows: Mr. Andres 12,000 shares; Mr. Belk 20,000
shares; Mr. Schwartz 20,000 shares; Mr. Stone 13,333 shares; Mr. Strickland
16,666 shares; Mr. Tillman 50,000 shares; Mr. Warden 13,333 shares; Mr.
Whiddon 13,333 shares; with aggregate shares for all Executive Officers and
Directors as a group (25) being 235,165. Also includes Stock Awards
(Performance Stock and Performance Accelerated Restricted Stock) that have
been granted but not vested as follows: Mr. Herring, 21,250 shares; Mr. Stone
33,000 shares; Mr. Strickland 33,750 shares; Mr. Tillman 79,750 shares; Mr.
Warden 35,000 shares; Mr. Whiddon 30,000 shares; with aggregate shares for all
Executive Officers and Directors as a group (25) being 465,750.
Does not include phantom shares credited to the accounts of Directors
under the Company's Deferred Compensation Plan as follows: Mr. Andres 4,893
shares; Mr. Belk 4,918 shares; and Ms. Farmer 2,469 shares.
Includes 76,750 shares of shared voting and investment power.
Includes 155,000 shares of shared voting and investment power.
Shares allocated to participants' ESOP accounts are voted by the
participants by giving voting instructions to Wachovia Bank, N.A. (the
"Trustee"). The ESOP's Management Committee directs the Trustee in the manner
in which shares not allocated to participants' accounts are to be voted. The
Management Committee has 19 members, including Messrs. Stone, Tillman, Warden
and Whiddon. At April 3, 1998, there were 139,620 unallocated shares.
Shares held at December 31, 1997, according to Schedules 13G filed with
the Securities and Exchange Commission.
Based solely on its review of the forms required to be filed by Section
16(a) of the Securities Exchange Act of 1934 that have been received by the
Company and written representations from certain reporting persons that no
annual statements on Form 5 were required, the Company believes that all
filing requirements under Section applicable to its Officers, Directors
and beneficial owners have been complied with.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's
Chief Executive Officer and the four other most highly paid Executive Officers
for the three fiscal years ended January 30, 1998:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-term Compensation
Annual Compensation Awards Payouts
Other Restricted Stock
Name & Principal Fiscal Year Annual Stock Options # LTIP All other
Position Ended Salary Bonus Compensation Awards 1) shares 2) Payout Compensation 3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert L. Tillman January 30, 1998 $675,000 $311,175 $157,173 (4) 30,000 shares 60,000 $0 $20,800
Chairman of the Board,
President and Chief January 31, 1997 548,269 412,500 153,531 30,000 shares 120,000 0 21,000
Executive Officer January 31, 1996 400,000 46,204 83,430 12,500 shares 0 0 21,000
Robert L. Strickland January 30, 1998 650,000 299,650 187,065 (5) 0 shares 0 0 20,800
Chairman of the Board
(retired) January 31, 1997 623,077 468,750 212,538 12,500 shares 50,000 0 21,000
January 31, 1996 575,000 88,558 162,040 15,000 shares 0 0 21,000
Larry D. Stone January 30, 1998 340,000 156,740 63,674 (6) 12,500 shares 20,000 0 20,800
Executive Vice President
and Chief Operating January 31, 1997 266,385 125,000 46,548 12,500 shares 40,000 0 21,000
Officer January 31, 1996 167,885 12,802 18,240 6,000 shares 0 0 21,000
William C. Warden, Jr. January 30, 1998 315,000 145,215 62,030 (7) 12,500 shares 20,000 0 20,800
Executive Vice President,
Chief Administrative January 31, 1997 267,445 137,500 54,391 12,500 shares 40,000 0 21,000
Officer, General January 31, 1996 214,616 19,508 40,068 6,000 shares 0 0 21,000
Counsel and Secretary
Thomas E. Whiddon January 30, 1998 305,000 140,605 21,580 (8) 12,500 shares 20,000 0 20,800
Executive Vice President
and Chief Financial January 31, 1997 287,452 89,375 41,257 12,500 shares 40,000 0 0
Officer January 31, 1996 0 0 0 0 shares 0 0 0
Footnotes:
(1) Restricted stock awards made as of January 30, 1998, are Performance Stock Award shares granted under the 1997
Incentive Plan. These awards fully vest at the end of the three-year performance period if the average annual return
on non-cash beginning assets for the performance period is at least 13%. None of the Performance Stock Award shares
vest if the average annual return for the performance period is less than 11%. If the Average Annual Return for the
Performance Period is at least 11% but less than 13%, the executive's interest in the Performance Stock Award shares
shall become vested according to a formula which provides that one-half of the Performance Stock Award shares shall
become vested if the average annual return for the performance period equals 11% and an additional number of whole
shares that most nearly equals, but does not exceed, 2 1/2% of the Performance Stock Award shares for each one-tenth
of a Percent that the average annual return for the performance period exceeds 11%.
Restricted stock awards made as of January 31, 1997, are Performance Stock Award shares with a three-year performance
period and the same performance standards as the January 30, 1998 awards. The January 31, 1996, restricted stock awards
were Performance Accelerated Restricted Stock (PARS) awards. Dividends are paid to executives on both Performance
Stock Award shares and PARS shares.
Aggregate restricted stock awards subject to future vesting are 79,750 for Mr. Tillman, 33,750 for Mr. Strickland,
33,000 for Mr. Stone, 35,000 for Mr. Warden and, 30,000 for Mr. Whiddon.
(2) Options granted as of December 5, 1997, were granted under the 1997 Incentive Plan at the $47.3125 fair market value
of Lowe's shares on that date.
(3) Amounts shown are employer contributions to the Employee Stock Ownership Plan
(4) Amount shown is the total of a payment under the Company's Benefit Restoration Plan ($140,986), dividends on
restricted stock shares awarded in grants effective January 31, 1994, 1995, 1996, and 1997 ($10,395), taxable value of
group term life insurance in excess of $50,000 ($2,124), and taxable value of personal use of corporate aircraft
($3,668).
(5) Amount shown is the total of a payment under the Company's Benefit Restoration Plan ($134,813), dividends on
restricted stock shares awarded in grants effective January 31, 1994, 1995, 1996, and 1997 ($9,488), taxable value of
group term life insurance in excess of $50,000 ($6,605), and taxable value of personal use of corporate aircraft
($36,159).
(6) Amount shown is the total of a payment under the Company's Benefit Restoration Plan ($58,271), dividends on
restricted stock shares awarded in grants effective January 31, 1994, 1995, 1996, and 1997 ($4,098), taxable value of
group term life insurance in excess of $50,000 ($710), and taxable value of personal use of company vehicle ($595).
(7) Amount shown is the total of a payment under the Company's Benefit Restoration Plan ($52,099), dividends on
restricted stock shares awarded in grants effective January 31, 1994, 1995, 1996, and 1997 ($4,813), director fees paid
by LF Corporation, a subsidiary of Lowe's Companies, Inc.($4,500), and taxable value of group term life insurance in
excess of $50,000 ($618).
(8) Amount shown is the total of dividends on restricted stock shares awarded in grants effective January 31, 1996 and
1997 ($3,163), director fees paid by LF Corporation, a subsidiary of Lowe's Companies, Inc. ($5,000), taxable value of
group term life insurance in excess of $50,000 ($582), and taxable relocation reimbursements ($12,835).
</TABLE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to stock options
and SARs granted to the named Executive Officers during Fiscal 1997:
<CAPTION>
Individual Grants Potential Realizable Value
% of Total at Assumed Annual Rates
Options/SARs of Stock Price
Granted to Exercise or Appreciation for
Options / SARs Employees in Base Price Expiration Option/SAR Term
Name Granted (1) Fiscal Year $/Sh Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Robert L. Tillman 60,000 / 0 8.25 / 0 47.3125 12/4/02 784,290 1,744,338
Robert L. Strickland 0 / 0 0 / 0 47.3125 12/4/02 0 0
Larry D. Stone 20,000 / 0 2.75 / 0 47.3125 12/4/02 261,430 581,446
William C. Warden, Jr. 20,000 / 0 2.75 / 0 47.3125 12/4/02 261,430 581,446
Thomas E. Whiddon 20,000 / 0 2.75 / 0 47.3125 12/4/02 261,430 581,446
(1) All options were granted under the 1997 Incentive Plan.
</TABLE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
No options or SARs were exercised by any of the five named Executive
Officers during Fiscal 1997. The following table provides information
concerning unexercised options/SARs held by each of the named Executive
Officers at January 30, 1998:
<CAPTION>
Shares Annualized
Acquired on Value Value
Name Exercise (1) Realized ($) (2) Realized ($)
<S> <C> <C> <C>
Robert L. Tillman 0 Shares 0 0
4,000 Units 30,000 10,000
Robert L. Strickland 0 Shares 0 0
5,000 Units 37,500 12,500
Larry D. Stone 0 Shares 0 0
2,000 Units 15,000 5,000
William C. Warden, Jr. 0 Shares 0 0
3,000 Units 22,500 7,500
Thomas E. Whiddon 0 Shares 0 0
0 Units 0 0
(1) Awards denominated in Shares represent stock options; Awards denominated in Units represent stock
appreciation rights (STARs).
(2) Stock appreciation rights (STARs) incentive payments as of January 30, 1998 ($7.50 per share
appreciation for each STAR unit).
</TABLE>
<TABLE>
Aggregated Option/SAR Exercises and Fiscal Year-End
Option/SAR Value Table (PART II)
<CAPTION>
Value of Unexercised In-the-Money
Number of Unexercised Options/SARs at FY-End ($) ($50.5625 on 1/30/98)
Options/SARs at FY-End Exercisable
Name Exercisable Unexercisable Aggregate Annualized Unexercisable (3)
<S> <C> <C> <C> <C> <C>
Robert L. Tillman 50,000 Shares 140,000 Shares 575,625 427,372 1,110,000
0 Units 5,000 Units 0 0 5,000
Robert L. Strickland 16,666 Shares 33,334 Shares 190,617 162,921 381,258
0 Units 0 Units 0 0 0
Larry D. Stone 13,333 Shares 46,667 Shares 152,496 130,339 370,004
0 Units 2,500 Units 0 0 2,500
William C. Warden, Jr. 13,333 Shares 46,667 Shares 152,496 130,339 370,004
0 Units 4,000 Units 0 0 4,000
Thomas E. Whiddon 13,333 Shares 46,667 Shares 152,496 130,339 370,004
0 Units 0 Units 0 0 0
(3) Value of the unexercised in-the-money options and SARs which had not been exercised at fiscal year end.
</TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
No awards were made under any long-term incentive plans for the Company
during 1997.
REPORT OF THE COMPENSATION COMMITTEE
This report by the Executive Compensation Committee is required by rules
of the Securities and Exchange Commission. It is not to be deemed
incorporated by reference by any general statement which incorporates by
reference this Proxy Statement into any filing under the Securities Act of
1933 or the Securities Exchange Act of 1934, and it is not to be otherwise
deemed filed under either such Act.
The Compensation Committee (the "Committee") of the Board of Directors
comprises six Independent Directors and is responsible for administering the
Company's Executive Compensation Program for all executives at a compensation
level set by the Committee. In carrying out its responsibilities, the
Committee:
Articulates the Company's executive compensation philosophies and
policies to executive management, participates in compensation program
development, and has authority for approval of awards under the Company's
plans and programs;
Monitors and approves on-going base salary and incentive compensation
programs for executive management, including participation, performance goals
and criteria, interpretation of provisions and determination of award payouts;
Reviews and approves base salary recommendations for Executive Officers
of the Company; and
Initiates all compensation actions for the Chairman of the Board,
President and Chief Executive Officer, subject to final Board approval.
The Committee has retained a national consulting firm (which reports to
the Committee) to be a source of on-going advice to both the Committee and
management.
Executive Compensation Principles
The Company's Executive Compensation Program has been designed to
establish a strong link between the creation of shareholder value and the
compensation earned by its senior executives. It is the intention of the
Committee that all compensation paid under the Executive Compensation Program
of the Company (other than incentive stock options) will be tax deductible to
the Company in the year paid to the executive. The fundamental objectives of
the Program are to:
Align executive compensation with the Company's mission, values and
business strategies;
Attract, motivate, retain and reward the executives whose leadership and
performance are critical to the Company's success in enhancing shareholder
value; and
Provide compensation which is commensurate with the Company's performance
and the contributions made by executives toward this performance.
The Program is intended to provide compensation which is competitive with
comparable companies in the retailing industry (with particular emphasis on
specialty hardgoods retailers and major U.S. retailers) when the Company is
meeting its targeted financial goals. At the same time, the Program seeks to
provide above average compensation when the Company's targeted goals are
exceeded, and below average compensation when targeted performance goals are
not achieved.
The Program provides for larger portions of total compensation to vary on
the basis of Company performance for higher levels of executives (i.e., the
most senior Executive Officers have more of their total compensation at risk
on the basis of Company performance than do lower levels of executives). All
Executive Officers participate in the same direct compensation programs as the
other executives of the Company, with the only differences being the degree of
compensation risk and the overall magnitude of the potential awards.
The Committee believes that Executive Officers of the Company should be
encouraged to own significant holdings of the Company's Common Stock to align
their interests with those of the Company's shareholders. Through the
operation of the Company's Employee Stock Ownership Plan, the Employee Savings
and Investment Plan, the 1994 Incentive Plan, and the 1997 Incentive Plan,
vehicles are provided to enable executives to acquire Company Stock, subject
to regulatory limitations. The Committee has established informal ownership
guidelines for Executive Officers and will take into account each executive's
progress toward attaining those goals when considering future stock option or
restricted stock awards.
Elements in the Executive Compensation Program
The Company's Executive Compensation Program comprises the following
elements:
Base Salary
Salaries for Executive Officers are established on the basis of the
qualifications and experience of the executive, the nature of the job
responsibilities and salaries for competitive positions in the retailing
industry.
Executive Officers' base salaries are reviewed annually and are approved
by the Committee. Salaries of Executive Officers are compared with those of
comparable executive positions in the retailing industry throughout the United
States. The Committee uses the median level of base salary as a guideline, in
conjunction with the executive's performance and qualifications, for
establishing salary levels.
1994 and 1997 Incentive Plans
The 1994 and 1997 Incentive Plans, which were approved by shareholders in
1994 and 1997, respectively, are intended to attract, motivate, retain and
reward the executives whose leadership and performance are critical to the
Company's success in enhancing shareholder value. The Incentive Plans help to
place further emphasis on executive ownership of Company Stock. The Incentive
Plans are designed to assure the deductibility of executive compensation for
federal and state income tax purposes.
Short-Term Incentives. The Management Bonus Program is administered
pursuant to the Incentive Plans. The Management Bonus Program provides bonus
opportunities that can be earned upon the achievement by the Company of
predetermined annual earnings growth objectives. No bonuses are paid if
performance is below the threshold level of corporate profitability. If the
financial goals are fully met, 100% of the stated bonus opportunity is earned.
Bonuses equal to 76.8% of the bonus opportunity were paid for the year ended
January 30, 1998, because the financial results exceeded the threshold but
were below the goals set for full bonus payment.
Long-Term Incentives. The Incentive Plans authorize the grant of stock
options. The option price cannot be less than the market price of the
Company's Common Stock on the date on which the option is granted.
Consequently, stock options granted under the Incentive Plans measure
performance and provide compensation solely on the basis of the appreciation
in the price of the Company's Common Stock.
Stock appreciation rights also may be granted under the Incentive Plans.
These rights entitle the recipient to receive a payment based solely on the
appreciation in the Company's Common Stock following the date of the award.
Stock appreciation rights thus measure performance and provide compensation
only if the price of the Company's Common Stock appreciates. One stock
appreciation rights program is outstanding and it will vest at the end of a
three-year performance period on January 29, 1999, if certain performance
objectives are achieved.
The Incentive Plans also authorize awards of Company Common Stock.
Shares of Performance Accelerated Restricted Stock (PARS) and Performance
Stock Awards have been issued pursuant to this authorization. PARS awards are
nontransferable and subject to forfeiture for a period of time (either five or
seven years) except that earlier vesting is permitted if certain financial
objectives are achieved. The 1997 and 1998 Performance Stock Awards to the
Chairman of the Board, President and Chief Executive Officer and members of
the Executive Staff provide that the shares will vest only if certain
financial objectives are met during the three-year performance period
following the award. The vesting of the grants identified in this paragraph
is tied to a targeted achievement in return on assets.
Benefit Restoration Plan
The Benefit Restoration Plan was adopted by the Company in May 1990, to
provide qualifying executives with benefits equivalent to those received by
all other employees under the Company's basic qualified employee retirement
plans. Qualifying executives are those executives whose annual additions and
other benefits, as normally provided to all participants under those qualified
plans, would be curtailed by the effect of Internal Revenue Code restrictions,
and who are selected by the Committee to participate in the Plan. The Benefit
Restoration Plan benefits are determined annually. Participating executives
may elect annually to defer benefits or to receive a current cash payment.
Other Compensation
The Company's Executive Officers participate in the various qualified and
non-qualified employee benefit plans sponsored by the Company. The Company
makes only nominal use of perquisites in compensating its Executive Officers.
The CEO's Compensation in the Fiscal Year Ended January 30, 1998
Effective January 24, 1998, the Committee increased Mr. Tillman's annual
base salary from $675,000 to $800,000. The Committee based its decision on
the combination of the progress made by the Company in establishing and
implementing its new retailing strategies, the operating performance of the
Company, Mr. Tillman's leadership during a critical management transition, his
promotion and election to the additional position of Chairman of the Board,
and the Committee's assessment that his prior base salary was below market
when compared to other chief executive officers of similarly situated
companies.
The Committee authorized payment to Mr. Tillman of an annual bonus of
$311,175 under the 1997 Management Bonus Program. The Committee determined
Mr. Tillman's bonus solely on the basis of the Company's earnings performance
versus the goals for such performance which the Committee established at the
beginning of the year.
Mr. Tillman was granted options for 60,000 shares of Company Stock on
December 5, 1997 at $47.3125, the fair market value of the Stock on the date
of the grant; 2,100 shares of the grant are incentive stock options which
become exercisable three years after the date of the grant with the remaining
57,900 shares granted being non-qualified stock options which become
exercisable in thirds after one, two and three years from the date of the
grant. The options expire after five years. The Committee also approved a
Performance Stock Award of 30,000 shares which will become vested and
transferable after three years if certain predetermined performance objectives
are met.
Mr. Tillman earned a Benefit Restoration Plan payment of $140,986 for the
fiscal year ended January 30, 1998.
The Committee believes that the payments and stock incentives described
herein were necessary to maintain the competitiveness of Mr. Tillman's
compensation package in comparison to those of other chief executive officers
of similarly situated companies.
* * *
The Committee believes that the Company's Executive Compensation Program
has been strongly linked to the Company's performance and the enhancement of
shareholder value. The Committee intends to continually evaluate the
Company's compensation philosophies and plans to ensure that they are
appropriately configured to align the interests of executives and shareholders
and to ensure that the Company can attract, motivate and retain talented
management personnel.
Robert G. Schwartz, Chairman
William A. Andres
Peter C. Browning
Carol A. Farmer
Paul Fulton
James F. Halpin
April 24, 1998
PERFORMANCE GRAPH
The following graph compares the total returns (assuming reinvestment of
dividends) of the Company's Common Stock, the S&P 500 Index and the S&P Retail
Index. The graph assumes $100 invested on January 31, 1993, in the Company's
Common Stock and each of the indices.
Comparison of 5 Year Cumulative Return of Lowe's
the S&P 500 and S&P Retail Index
Jan. 31, Jan. 31, Jan. 31, Jan. 31, Jan. 31, Jan. 30,
'93 '94 '95 '96 '97 '98
LOWE'S 100 222.54 269.41 229.60 245.82 377.22
S&P 500 100 112.83 113.43 157.23 198.63 252.06
S&P RETAIL INDEX 100 97.75 97.11 90.46 108.06 164.77
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
reappointed Deloitte & Touche LLP as independent auditors to audit the
consolidated financial statements of the Company and its subsidiaries for 1998.
Deloitte & Touche LLP has served in such capacity continuously since 1982.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting, where they will have the opportunity to make a statement, if
they desire to do so, and be available to respond to appropriate questions.
GENERAL
The cost of solicitations of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally, by
telephone, by telegraph or by certain employees of the Company. The Company
may reimburse brokers or other persons holding stock in their names or in the
names of nominees for their expense in sending proxy materials to principals
and obtaining their proxies. The Company has engaged the proxy soliciting
firm of D. F. King & Co., Inc. to solicit proxies for the Annual Meeting at an
anticipated cost of $7,000 (plus handling fees).
The shares represented by a proxy will be voted as directed unless the
proxy is revoked. Any proxy may be revoked before it is exercised by filing
with the Secretary of the Company an instrument revoking the proxy or a proxy
bearing a later date. A proxy is revoked if the person who executed the proxy
is present at the meeting and elects to vote in person.
Where a choice is specified with respect to any matter to come before the
meeting, the shares represented by the proxy will be voted in accordance with
such specifications.
Where a choice is not so specified, the shares represented by the proxy
will be voted FOR Proposal 1 as set forth in the Notice of Annual Meeting and
Proxy Card.
Management is not aware that any matters other than those specified
herein will be presented for action at the meeting, but if any other matters
do properly come before the meeting, the persons named as Proxies will vote
upon such matters in accordance with their best judgment.
In the election of Directors, a specification to withhold authority to
vote for the slate of management nominees will not constitute an authorization
to vote for any other nominee.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1999 Annual
Meeting must be received by the Board of Directors for consideration for
inclusion in the Proxy Statement and form of proxy relating to that meeting on
or before December 25, 1998.
ANNUAL REPORT
The Annual Report to shareholders accompanies this Proxy Statement. The
Company's report to the Securities and Exchange Commission on Form 10-K for
the fiscal year ended January 30, 1998, is available upon written request
addressed to Lowe's Companies, Inc., Investor Relations Department, P. O. Box
1111, North Wilkesboro, NC 28656.
By order of the Board of Directors,
William C. Warden, Jr.
Executive Vice President, General Counsel
& Secretary
North Wilkesboro, North Carolina
April 24, 1998
Appendix to PROXY (DEF 14A)
Graphic and Image Material
Back cover:
A map showing where the annual shareholders meeting will be held (Regional
distribution center in Statesville, NC)
Proxy Card mailed to shareholders with Proxy:
<TABLE>
LOWE'S COMPANIES, INC.
P. O. Box 1111, North Wilkesboro, NC 28656
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Theresa A. Anderson and Karen R. Worley as Proxies, each with the power to appoint
his/her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side,
all the shares of Common Stock of Lowe's Companies, Inc. held of record by the undersigned on April 3, 1998, at the
Annual Meeting of Shareholders to be held on May 29, 1998, or any adjournment thereof. The Board of Directors
Recommends a vote FOR Proposal 1.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder.
If no direction is made, this proxy will be voted FOR Proposal 1.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company.Joint owners should each sign
personally.Trustees, custodians and other fiduciaries should indicate the capacity in which they sign, and
where more than one name appears, a majority must sign. If the shareholder is a corporation, the signature
should be that of an authorized officer who should indicate his or her title.
HAS YOUR ADDRESS CHANGED?
____________________________________________
____________________________________________
____________________________________________
____________________________________________
PLEASE MARK VOTES
_X__AS IN THIS EXAMPLE
<S> <C> <C> <C> <C>
LOWE'S
COMPANIES, INC. 1. Election ofDirectorsNominees: For All With- For All
CLASS I DIRECTOR (One-year Term Nominees hold Except
1998-1999)Richard K. Lochridge ____ ____ ____
CLASS II DIRECTOR (Two-year Term
1998-2000)Peter C. Browning
CLASS III DIRECTORS (Three-year
Term 1998-2001)Leonard L. Berry,
Paul Fulton, James F. Halpin,
Robert L.Tillman
Note: If you do not wish your
shares voted "FOR" a particular
nominee, mark the "FOR ALL
EXCEPT" box and strike a line
through that nominee's name.
Your shares will be voted for
the remaining nominees.
2. In their discretion, the Proxies
are authorized to vote upon such
other
business as may properly come
before the meeting
Mark box at right if an address _____
change has been noted on the
reverse side of this card.
Please be sure to sign and date this Proxy. Date:_________
Shareholder sign here Co-owner sign here
</TABLE>
