<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
LOWE'S COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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LOWE'S COMPANIES, INC.
P. O. Box 1111
North Wilkesboro, NC 28656
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 28, 1999
The Annual Meeting of Shareholders of Lowe's Companies, Inc. (the "Company")
will be held at the Company's new Customer Support Center (former Wilkes
Mall), 1605 Curtis Bridge Rd., at the intersection of US 421 Business and 421
Bypass, Wilkesboro, North Carolina, on Friday, May 28, 1999, at 10:00 a.m. to
consider and act upon the following proposals:
1. To elect three Class I Directors to a term of three years;
2. To approve the Lowe's Companies, Inc. Directors' Stock Option Plan; and
3. To transact such other business as may be properly brought before the
Annual Meeting.
Shareholders of record at the close of business on April 2, 1999, 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.
You are cordially invited to attend and we look forward to seeing you at the
meeting.
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 23, 1999
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE DATE AND SIGN THE PROXY AND
MAIL AT ONCE IN THE ENCLOSED ENVELOPE.
<PAGE>
LOWE'S COMPANIES, INC.
P. O. Box 1111
North Wilkesboro, North Carolina 28656
336/658-4000
Proxy Statement
for
Annual Meeting of Shareholders
May 28, 1999
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
new Customer Support Center (former Wilkes Mall), 1605 Curtis Bridge Rd., at
the intersection of US 421 Business and 421 Bypass, Wilkesboro, North
Carolina, on Friday, May 28, 1999, at 10:00 a.m. It is anticipated that this
Proxy Statement and the enclosed form of proxy will be sent to shareholders on
April 23, 1999.
Only shareholders of record at the close of business on April 2, 1999, are
entitled to notice of and to vote at the meeting or any adjournment thereof.
On April 2, 1999, there were 359,217,081 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.
1
<PAGE>
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 reduced the size of the Board to ten
effective at the 1999 Annual Meeting to reflect the retirement of William A.
Andres, John M. Belk and Leonard G. Herring as Class I Directors. Due to the
nomination of two Class I Directors whose terms expire at the 1999 Annual
Meeting and the realignment of James F. Halpin from Class III to Class I to
make the three Board classes as nearly equal in size as possible, three
nominees are standing for election as Class I Directors at the Annual Meeting.
The three nominees, all of whom are currently Directors, are: James F. Halpin,
Richard K. Lochridge and Claudine B. Malone.
If elected, each Class I nominee will serve three consecutive years with
his/her term expiring in 2002 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 three 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.
2
<PAGE>
INFORMATION CONCERNING CLASS I NOMINEES
The nominees for election for a three-year term as a Class I Director to
serve until the 2002 Annual Meeting are James F. Halpin, Richard K. Lochridge
and Claudine B. Malone
<TABLE>
<CAPTION>
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
-------------------------- -------- -------------------------------------------------------
<C> <C> <S>
James F. Halpin, 48....... 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.
Richard K. Lochridge, 55.. 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:
Hannaford Brothers Co., Scarborough, Me., since 1993;
Petsmart, Inc., Phoenix, Ariz., since 1998.
Claudine B. Malone, 62.... 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.
</TABLE>
3
<PAGE>
INFORMATION CONCERNING CONTINUING DIRECTORS
The remaining Directors whose terms expire after 1999 are:
Class II Directors, term expiring in 2000
<TABLE>
<CAPTION>
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
-------------------------- -------- -------------------------------------------------------
<C> <C> <S>
Peter C. Browning, 57..... 1998 Member of Compensation Committee and Governance
Committee of the Company. President and Chief Executive
Officer, Sonoco Products Company (Global Packaging
Company), Hartsville, S.C., since 1998 having
previously served as President and Chief Operating
Officer (1995-1998), Executive Vice-President (1993-
1995) of that company; Director since 1995. Chairman,
President and Chief Executive Officer, National Gypsum
Co., 1990-1993. Other directorships: Phoenix Home Life
Mutual Ins. Co., Hartford, Conn., since 1989; Wachovia
Corporation, Winston-Salem, N.C. since 1997.
Carol A. Farmer, 54....... 1994 Member of Compensation Committee and Governance Commit-
tee of the Company. President, Carol Farmer Associates,
Inc. (Trend Forecasting and Consulting), Boca Raton,
Fla., since 1985. Other directorships: The Sports Au-
thority, Inc., Ft. Lauderdale, Fla., since 1995.
Robert G. Schwartz, 71.... 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; Consolidated
Edison Company of New York, New York, N.Y., since 1989;
Lone Star Industries, Inc., Stamford, Conn., since
1994.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
-------------------------- -------- -------------------------------------------------------
<C> <C> <S>
Robert L. Strickland, 68.. 1961 Chairman of the Board 1978-1998, (Mr. Strickland
retired as an employee of the Company in January 1998),
Member of Audit Committee and Executive Committee of
the Company. Other directorships: T. Rowe Price
Associates, Inc., Baltimore, Md., since 1991; Hannaford
Bros., Scarborough, Me., since 1994.
</TABLE>
5
<PAGE>
Class III Directors, term expiring in 2001
<TABLE>
<CAPTION>
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
-------------------------- -------- -------------------------------------------------------
<C> <C> <S>
Leonard L. Berry, Ph.D., 1998 Member of Audit Committee and Governance Committee of
56....................... the Company. Distinguished 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, 64........... 1996 Member of Compensation Committee and Governance Commit-
tee of the Company. Chairman and Chief Executive Offi-
cer, 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 (Manu-
facturer and Marketer of Consumer Products), Chicago,
Ill., 1988-1993. Other directorships: Sonoco Products
Company, Hartsville, S.C., since 1989; BankAmerica
Corp. (previously NationsBank Corporation), Charlotte,
N.C., since 1993; The Cato Corporation, Charlotte,
N.C., since 1994; Hudson Bay Company, Toronto, Ontario,
since 1997.
Robert L. Tillman, 55..... 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.
</TABLE>
6
<PAGE>
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". Certain Directors are also "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. 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. Messrs.
Herring and Strickland are Founding Directors.
Compensation of Directors--Standard Arrangements. Mr. Tillman receives no
Director or Committee compensation. Independent Directors (other than Founding
Directors) 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 1998, Mr. Herring was also paid
$3,894 for serving as a Director of one of the Company's wholly owned
subsidiaries.
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 8,000 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. Four hundred thousand shares of Common Stock were reserved under the
Plan for the granting of options and options covering 280,000 shares were
granted. No options were granted under this Plan during Fiscal 1998 and no
options will be granted under this Plan in the future.
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, N.A. 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 provided for each eligible Director to be awarded
1,000 shares of Company Common Stock at the first Directors' Meeting following
the Annual Meeting in 1994, 1995, 1996, 1997 and 1998. Fifty thousand shares
of Common Stock were reserved under the Plan with 43,000 shares being issued
during the five-year period. During Fiscal 1998, 12,000 shares (having a fair
market value of $39.59375 per share on May 29, 1998, as adjusted for the 1998
stock split) were awarded to 12 eligible Directors (1,000 shares each to
Directors Andres, Belk, Berry, Browning, Farmer, Fulton, Halpin, Herring,
Lochridge, Malone, Schwartz and Strickland).
Board of Directors--During Fiscal 1998, the Board of Directors held six
meetings. The Board has four standing committees which met the number of times
set forth in parentheses: Executive (1), Audit (4),
7
<PAGE>
Compensation (5) and Governance (1). All Directors attended at least 75% of
the meetings of the Board and the committees on which they served with the
exception of Ms. Farmer who attended 50% of such meetings.
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 and Corporate Compliance Plan. 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 makes awards
to Executive Officers 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.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership as of April 2, 1999,
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:
<TABLE>
<CAPTION>
Name or Number Number of Percent
of Persons in Group Shares (1) (2) of Class
------------------- -------------- --------
<S> <C> <C>
William A. Andres 83,000 *
John M. Belk 85,250 *
Leonard L. Berry 4,500 *
Peter C. Browning 1,660 *
Carol A. Farmer 6,202 *
Paul Fulton 8,000 *
James F. Halpin 15,200 *
Leonard G. Herring 3,110,820(3) *
Richard K. Lochridge 4,000 *
Claudine B. Malone 4,000 *
Dale C. Pond 111,113(4) *
Robert G. Schwartz 85,000 *
Robert L. Strickland 1,873,614(5) *
Larry D. Stone 181,540 *
Robert L. Tillman 480,880 *
William C. Warden, Jr. 152,585 *
Thomas E. Whiddon 130,838 *
Incumbent Directors, Director Nominees and
Executive Officers as a Group (28 in total) 7,796,326(6) 2.165
Lowe's Companies Employee Stock Ownership Trust
P.O. Box 1111
North Wilkesboro, NC 28656 33,046,506(6) 9.200
FMR Corp.
82 Devonshire Street
Boston, MA 02109 33,440,365(7) 9.309
</TABLE>
- ----------
*Less than 1%.
(1) Includes shares that may be acquired within 60 days under the Company's
Stock Option Plans as follows: Mr. Andres 24,000 shares; Mr. Belk 32,000
shares; Mr. Pond 48,600 shares; Mr. Schwartz 40,000 shares; Mr. Stone
65,267 shares; Mr. Tillman 196,933 shares; Mr. Warden 65,267 shares; Mr.
Whiddon 65,267 shares; with aggregate shares for all Executive Officers
and Directors as a group (28) being 825,300. Also includes Stock Awards
(Performance Stock and Performance Accelerated Restricted Stock) that have
been granted but not vested as follows: Mr. Herring 27,500 shares; Mr.
Pond 46,000 shares; Mr. Stone 58,000 shares; Mr. Strickland 52,500 shares;
Mr. Tillman 141,000 shares; Mr. Warden 60,000 shares; Mr. Whiddon 55,000
shares; with aggregate shares for all Executive Officers and Directors as
a group (28) being 755,000.
(2) Does not include phantom shares credited to the accounts of Executive
Officers and Directors under the Company's Deferred Compensation Plans as
follows: Mr. Andres 11,050 shares; Mr. Belk 11,127 shares;
9
<PAGE>
Mr. Browning 178 shares; Ms. Farmer 5,956 shares; Mr. Fulton 194 shares; Mr.
Tillman 18,500; Mr. Whiddon 5,000; with aggregate shares for all Executive
Officers and Directors as a group (28) being 85,989.
(3) Includes 167,150 shares of shared voting and investment power.
(4) Includes 470 shares of shared voting and investment power.
(5) Includes 240,000 shares of shared voting and investment power.
(6) 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. Pond,
Stone, Tillman, Warden and Whiddon. At April 2, 1999, there were 510,598
unallocated shares.
(7) Shares held at December 31, 1998, 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, as amended, 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 16(a) applicable to its Officers, Directors and
beneficial owners have been complied with.
10
<PAGE>
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 29, 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term Compensation
-------------------------------------------------------
Annual Compensation Awards Payouts
-------------------------------- ------------------------------ -------
Name & Principal Fiscal Year Other Annual Restricted Stock Stock Options LTIP All Other
Position Ended Salary Bonus Compensation Awards (1) # shares (2) Payouts Compensation (3)
---------------- ----------- -------- ---------- ------------ ---------------- ------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert L. Tillman.. 01/29/99 $800,000 $1,015,200 $290,084(4) $ 0 200,000 $ 0 $19,200
Chairman of the
Board, 01/30/98 675,000 311,175 157,173 1,516,875 120,000 0 20,800
President and
Chief 01/31/97 548,269 412,500 153,531 993,750 240,000 0 21,000
Executive Officer
Larry D. Stone..... 01/29/99 434,616 507,600 133,135(5) 0 100,000 0 19,200
Executive Vice
President 01/30/98 340,000 156,740 63,674 632,031 40,000 0 20,800
and Chief
Operating 01/31/97 266,385 125,000 46,548 414,062 80,000 0 21,000
Officer
William C. Warden,
Jr................ 01/29/99 360,000 456,840 114,808(6) 0 57,800 0 19,200
Executive Vice
President, 01/30/98 315,000 145,215 62,030 632,031 40,000 0 20,800
Chief
Administrative 01/31/97 267,445 137,500 54,391 414,062 80,000 0 21,000
Officer, General
Counsel and
Secretary
Thomas E. Whiddon.. 01/29/99 350,000 444,150 113,235(7) 0 56,200 0 19,200
Executive Vice
President 01/30/98 305,000 140,605 21,580 632,031 40,000 0 20,800
and Chief
Financial Officer 01/31/97 287,452 89,375 41,257 414,062 80,000 0 0
Dale C. Pond....... 01/29/99 300,000 380,700 89,940(8) 0 48,200 0 19,200
Executive Vice
President-- 01/30/98 262,500 121,013 43,479 505,625 30,000 0 20,800
Merchandising/Marketing 01/31/97 249,888 137,500 46,117 331,250 60,000 0 21,000
</TABLE>
- ---------
(1) The amounts appearing in the Restricted Stock Awards column represent the
value of restricted stock awards granted during Fiscal 1996 and 1997 based
on the closing price for the Company's Common Stock on the date of grant.
No Restricted Stock Awards were granted during Fiscal 1998. As of January
29, 1999, the number and value (based on the closing price of $58.3125 for
the Common Stock on such date) of shares of restricted stock held by the
Named Executive Officers were as follows: Mr. Tillman 141,000 shares,
$8,222,063; Mr. Stone 58,000 shares, $3,382,125; Mr. Warden 60,000 shares,
$3,498,750; Mr. Whiddon 55,000 shares, $3,207,188; and Mr. Pond 46,000
shares, $2,682,375. None of such shares will vest, in whole or in part in
less than three years from the date of grant, except that such shares will
vest as of the date of a change in control of the Company. Dividends are
paid on shares of restricted stock at the same rate and times as on all
other shares of Common Stock.
(2) Options granted as of December 4, 1998, were issued under the 1997
Incentive Plan at the $45.00 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 ($263,710), dividends on restricted stock awarded in
grants effective January 31, 1994, 1995, 1996, 1997, and January 30, 1998
($16,926), taxable value of group term life insurance in excess of $50,000
($3,510), and taxable value of personal use of corporate aircraft
($5,938).
(5) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($124,900), dividends on restricted stock awarded in
grants effective January 31, 1994, 1995, 1996, 1997, and January 30, 1998
($6,958), taxable value of group term life insurance in excess of $50,000
($864), and taxable value of personal use of corporate aircraft ($413).
(6) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($104,970), dividends on restricted stock awarded in
grants effective January 31, 1994, 1995, 1996, 1997, and January 30, 1998
($7,473), taxable value of group term life insurance in excess of $50,000
($686), and director fees paid by LF Corporation, a subsidiary of Lowe's
Companies, Inc. ($1,679).
(7) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($101,360), dividends on restricted stock awarded in
grants effective January 31, 1996, 1997 and January 30, 1998 ($6,213),
taxable value of group term life insurance in excess of $50,000 ($662),
and director fees paid by LF Corporation, a subsidiary of Lowe's
Companies, Inc. ($5,000).
(8) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($83,320), dividends on restricted stock awarded in
grants effective January 31, 1994, 1995, 1996, 1997 and January 30, 1998
($5,513), and taxable value of group term life insurance in excess of
$50,000 ($1,107).
11
<PAGE>
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 1998:
<TABLE>
<CAPTION>
Individual Grants
- -------------------------------------------------------------------------- Potential Realizable Value
Number of % of Total at Assumed Annual Rates of
Securities Options/SARs Stock Price Appreciation
Underlying Granted to Exercise or for Option/SAR Term (2)
Options/SARs Employees in Base Price Expiration ---------------------------
Name Granted (1) Fiscal Year $/Sh Date 5% 10%
- ---- ------------ ------------ ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Tillman....... 200,000 / 0 8.91 / 0 45.00 12/3/05 3,663,900 8,538,300
Larry D. Stone.......... 100,000 / 0 4.46 / 0 45.00 12/3/05 1,831,950 4,269,150
William C. Warden, Jr... 57,800 / 0 2.58 / 0 45.00 12/3/05 1,058,867 2,467,569
Thomas E. Whiddon....... 56,200 / 0 2.50 / 0 45.00 12/3/05 1,029,556 2,399,262
Dale C. Pond............ 48,200 / 0 2.15 / 0 45.00 12/3/05 883,000 2,057,730
</TABLE>
- ----------
(1) All options were granted under the 1997 Incentive Plan. The exercise price
was set as the closing price of a share of Common Stock as reported on the
New York Stock Exchange on the date the option was granted, or if no
Common Stock was traded on the New York Stock Exchange on such date, on
the next preceding day that the Common Stock was traded on such exchange.
The exercise price may be paid in cash, in a cash equivalent acceptable to
the plan administrator, in shares of Common Stock (valued as of the day
preceding the exercise date), or a combination thereof. On December 4,
1998, both nonqualified options and incentive stock options were granted
to the Executive Officers listed in the table. The options become
exercisable with respect to one-third of the shares subject to the options
on each of the first, second and third anniversaries of the December 4,
1998 date of grant.
(2) The potential realizable value is based upon future prices for the Common
Stock that are derived from the specified assumed rates of appreciation.
Actual gains, if any, on stock option exercises and Common Stock holdings
are dependent on the actual future performance of the Common Stock. There
can be no assurance that the amounts reflected in this table will be
achieved.
12
<PAGE>
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 1998. The following table provides information
concerning unexercised options/SARs held by each of the named Executive
Officers at January 29, 1999:
<TABLE>
<CAPTION>
Value of Unexercised In-the-Money
Options/SARs at FY-End
($) ($58.3125 on 1/29/99)
-----------------------------------
Number of Securities
Underlying Unexercised
Options/SARs at FY-End Exercisable
----------------------------- --------------------
Shares Annualized
Acquired on Value Value
Name Exercise (1) Realized($)(2) Realized($) Exercisable Unexercisable Aggregate Annualized Unexercisable
---- ------------- -------------- ----------- -------------- -------------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert L. Till-
man............ 0 Shares 0 0 216,931 Shares 363,069 Shares 8,251,808 4,203,137 8,648,193
10,000 Units 37,500 12,500 0 Units 0 Units 0 0 0
Larry D. Stone.. 0 Shares 0 0 65,268 Shares 154,732 Shares 2,480,280 1,321,599 3,337,220
5,000 Units 18,750 6,250 0 Units 0 Units 0 0 0
William C. War-
den, Jr........ 0 Shares 0 0 65,268 Shares 112,532 Shares 2,480,280 1,321,599 2,775,432
8,000 Units 30,000 10,000 0 Units 0 Units 0 0 0
Thomas E.
Whiddon........ 0 Shares 0 0 65,268 Shares 110,932 Shares 2,480,280 1,321,599 2,754,132
0 Units 0 0 0 Units 0 Units 0 0 0
Dale C. Pond.... 0 Shares 0 0 48,600 Shares 89,600 Shares 1,848,044 980,634 2,158,306
5,000 Units 18,750 6,250 0 Units 0 Units 0 0 0
</TABLE>
- ----------
(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 29,
1999 ($3.75 per share appreciation for each STAR unit).
13
<PAGE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
No awards were made under any long-term incentive plans for the Company
during 1998.
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.
14
<PAGE>
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 126.9% of February 1, 1998 base salary were paid to the Chief
Executive Officer and his staff for the year ended January 29, 1999, because
the Company's financial results exceeded the predetermined annual earnings
growth objectives.
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. During Fiscal 1998, the Committee
approved a broad-based stock option grant to executives, senior management,
middle managers and professionals, and retail store managers and co-managers.
15
<PAGE>
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. No stock
appreciation rights grants were made during Fiscal 1998, nor are any previous
grants outstanding.
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. No Performance Accelerated
Restricted Stock (PARS) or Performance Stock Awards were issued during Fiscal
1998.
During 1998, the Company's Board of Directors amended the 1994 Incentive
Plan and the 1997 Incentive Plan to include a Deferral Program. The Deferral
Program, available to executives with the title of Vice President or higher,
permits deferral of receipt of certain stock incentives (vested performance
stock awards and performance accelerated restricted stock and gain on non-
qualified stock options), but not salary or bonus. The single exception to
this provision is that the Deferral Program under the 1997 Incentive Plan will
accept the mandatory deferral of a participant's base salary to the extent
that it would not be a tax deductible item for the Company under the Internal
Revenue Code Section 162(m).
The Deferral Program generally requires that the executive make a deferral
election in the year prior to the year in which a stock option is exercised or
the year a restricted stock grant vests. An executive's initial deferral
election under the Deferral Program may be made within thirty days of the date
he or she becomes eligible to participate under the program. Such mid-year
election will not apply to compensation that vested or that became payable
prior to the election. Deferred shares are cancelled upon the participant's
election and tracked as phantom shares. During the deferral period, the
participant's account is credited with amounts equal to the dividends paid on
actual shares. Shares are reissued when distributable to the executive. A
participant's account also is credited with the portion of a participant's
stock award that vests and/or base salary to the extent that such compensation
would not be a tax deductible item for the Company under the Internal Revenue
Code Section 162(m). Unless a participant elects otherwise, deferred benefits
are generally payable beginning on the March 15 following the earlier of the
executive's retirement or other termination of employment or his 65th
birthday.
The Deferral Program is unfunded. A deferred benefit under the Program is at
all times a mere contractual obligation of the Company. A participant and his
beneficiaries have no right, title, or interest in the benefits deferred under
the Program or any claim against them.
Benefit Restoration Plan
The Benefit Restoration Plan, adopted by the Company in May 1990 and amended
and restated as of February 1, 1997, is intended 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 who are selected by the Committee to
participate in the Plan and whose annual additions and other benefits, as
normally provided to all participants under those qualified plans, would be
curtailed by the effect of
16
<PAGE>
Internal Revenue Code restrictions. 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 29, 1999
Effective January 23, 1999, the Committee increased Mr. Tillman's annual
base salary from $800,000 to $850,000. The Committee made its decision based
upon Mr. Tillman's leadership, the progress made by the Company in
establishing and implementing its new retailing strategies, and the operating
performance of the Company.
The Committee authorized payment to Mr. Tillman of an annual bonus of
$1,015,200 under the 1998 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 200,000 shares of Company Stock on
December 4, 1998 at $45.00, the fair market value of the Stock on the date of
the grant; 2,222 shares of the grant are incentive stock options which become
exercisable three years after the date of the grant with the remaining 197,778
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 seven years.
Mr. Tillman earned a Benefit Restoration Plan payment of $263,710 for the
fiscal year ended January 29, 1999.
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 23, 1999
17
<PAGE>
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, 1994, in the Company's
Common Stock and each of the indices.
Comparison of 5 Year Cumulative Total Return of Lowe's,
the S&P 500, and the S&P Retail Index
[PERFORMANCE GRAPH APPEARS HERE]
(AS OF FYE)
---------------------------------------------------
COMPANY 1/31/94 1/31/95 1/31/96 1/31/97 1/30/98 1/29/99
- ------- ------- ------- ------- ------- ------- -------
LOWE'S 100.00 121.06 103.17 110.46 169.51 392.15
S&P 500 100.00 100.53 139.35 176.03 223.40 295.97
S&P RETAIL INDEX 100.00 99.34 92.54 110.55 168.55 277.45
18
<PAGE>
APPROVAL OF THE DIRECTORS' STOCK OPTION PLAN
The Board of Directors proposes that shareholders approve the Lowe's
Companies, Inc. Directors' Stock Option Plan (the "Plan") which was adopted by
the Board on February 5, 1999, subject to the approval of the Company's
shareholders. The Plan permits the grant of options to purchase shares of the
Company's Common Stock from the Company. Approval of the Plan requires the
affirmative vote of a majority of the shares represented at and voted at the
Meeting.
The Board of Directors believes that the Plan will benefit the Company by
assisting it in recruiting and retaining directors and providing greater
identity of interest between non-employee Directors and shareholders by
enabling such Directors to participate in the future success of the Company.
The more significant features of the Plan are described below. This summary
is subject, in all respects, to the terms of the Plan. The Company will
provide promptly, upon request and without charge, a copy of the full text of
the Plan to each person to whom a copy of this proxy statement is delivered.
Requests should be directed to: Lowe's Companies, Inc., Corporate Secretary,
P. O. Box 1111, North Wilkesboro, NC 28656.
Administration
The Company's Board of Directors will administer the Plan. The Board will
have the authority to grant options upon such terms (not inconsistent with the
terms of the Plan) as it considers appropriate. In addition, the Board of
Directors will have complete authority to interpret all provisions of the
Plan, to prescribe the form of agreements evidencing awards under the Plan, to
adopt, amend and rescind rules and regulations pertaining to the
administration of the Plan and to make all other determinations necessary or
advisable for the administration of the Plan.
Eligibility
Any person who, during the term of the Plan, is a member of the Board of
Directors and is not an employee of the Company on the date of the first Board
meeting after an annual meeting of the Company's shareholders (the "Award
Date") is eligible to participate under the Plan. Currently nine members of
the Board of Directors are not employed by the Company and would be eligible
to participate under the Plan.
Awards
On each Award Date, each eligible Director ("Participant") will be awarded
an option for 2,000 shares of Common Stock.
Exercise of Options
An option will become exercisable with respect to 666 of the shares of
Common Stock subject to the option on May 15 of the first and the second
calendar years following the Award Date and with respect to the remaining 668
shares subject to the option on May 15 of the third calendar year following
the option's Award Date.
An option generally will remain exercisable until the date that is seven
years after the Award Date (the "Expiration Date"). If a Participant dies
while serving on the Board of Directors, his option or options will remain
exercisable until the Expiration Date and may be exercised by the
Participant's estate or the person or persons to whom his rights under the
option or options pass by will or the laws of descent and distribution.
19
<PAGE>
Otherwise, a Participant's options will remain exercisable by the Participant
until the earlier of (i) the Expiration Date; (ii) the first anniversary of
the Participant's separation from the Board of Directors due to becoming
permanently and totally disabled; or (iii) the date that is three months after
the Participant's separation from the Board of Directors for a reason other
than death or permanent and total disability.
An option may be exercised in whole or in part, but may not be exercised for
less than fifty shares unless it is exercised for the full number of shares
that remain subject to the option.
Option Price
The price per share of Common Stock purchased on the exercise of an option
will be the closing price of a share of Common Stock as reported on the New
York Stock Exchange composite tape on the Award Date, or, if the Common Stock
is not traded on the New York Stock Exchange on such day, then on the next
preceding day that the Common Stock is traded on such exchange, all as
reported by such source as the Board of Directors may select. The option price
may be paid in cash, in a cash equivalent, or by surrendering shares of Common
Stock to the Company.
Shareholder Rights
No Participant will have any rights as a shareholder with respect to shares
subject to his option until the date of exercise of such option.
Transferability
Options will be nontransferable except by will or the laws of descent and
distribution; except that options may be transferred by the Participant to his
spouse, children or grandchildren, to a trust or trusts for the benefit of
such family members or to a partnership in which such family members are the
only partners, on such terms as permitted under Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act.
Change in Control
All outstanding options granted under the Plan will become exercisable, in
whole or in part, on the date the Board approves a transaction or series of
transactions which, if consummated, would result in a "Change in Control" (as
defined in the Plan) or on the date an agreement is entered into with respect
to a transaction or transactions which, if consummated, would result in a
Change in Control.
Participants will be indemnified against the application of Sections 280G
and 4999 of the Internal Revenue Code (the "Code") in the event that any
benefit payment, accelerated vesting, or other right under the Plan
constitutes a "parachute payment" under Code Section 280G.
Share Authorization
The maximum aggregate number of shares of Common Stock that may be issued
under the Plan is 250,000. If an option is terminated, in whole or in part,
the number of shares allocated to the option or portion thereof may be
reallocated to other options to be granted under the Plan. The maximum
aggregate number of shares of Common Stock that may be issued under the Plan
and the number of shares of Common Stock for which options
20
<PAGE>
are granted on subsequent Award Dates will be adjusted as the Board of
Directors determines is equitably required in the event that (a) the Company
(i) effects one or more stock dividends, stock splits, subdivisions, or
consolidations of shares or (ii) engages in a transaction to which Section 424
of the Internal Revenue Code applies, or (b) there occurs any other event
which, in the judgment of the Board of Directors, necessitates such action.
The terms of outstanding options also may be adjusted by the Board of
Directors to reflect such changes.
Market Value of Securities
The market value of the securities underlying Plan options was $64.00 per
share on April 13, 1999.
Amendment and Termination
No option may be granted under the Plan after the Award Date in 2008. The
Board of Directors may amend or terminate the Plan from time to time, except
that no amendment that increases the aggregate number of shares of Common
Stock that may be issued under the Plan (other than an adjustment as described
above) or changes the class of individuals who may be selected to participate
in the Plan will become effective until it is approved by shareholders.
Federal Income Tax Consequences
The Company has been advised by counsel regarding the federal income tax
consequences of the Plan. No income is recognized by a Participant at the time
an option is granted. The exercise of an option generally is a taxable event
that requires the holder to recognize, as ordinary income, the difference
between the option price and the share's fair market value on the date of
exercise. The Company will be entitled to claim a federal income tax deduction
as result of the exercise of an option. The amount of the deduction is equal
to the ordinary income recognized by the holder.
New Plan Benefits
-----------------
Lowe's Companies, Inc. Directors' Stock Option Plan
<TABLE>
<CAPTION>
Number of
Name and Position Dollar Value ($) Units
- ----------------- ---------------- ---------
<S> <C> <C>
Robert L. Tillman
Chairman of the Board, President and Chief
Executive Officer............................. $ 0 0
Larry D. Stone
Executive Vice President and Chief Operating
Officer....................................... $ 0 0
William C. Warden, Jr.
Executive Vice President, Chief Administrative
Officer, General Counsel and Secretary........ $ 0 0
Thomas E. Whiddon
Executive Vice President and Chief Financial
Officer....................................... $ 0 0
Dale C. Pond
Executive Vice President--
Merchandising/Marketing....................... $ 0 0
Executive Group................................ $ 0 0
Non-Executive Director Group................... $1,900,500(/1/) 24,000(/2/)
Non-Executive Officer Employee Group........... $ 0 0
</TABLE>
21
<PAGE>
- ----------
(1) This amount represents the fair market value of the Common Stock for which
options would have been granted to members of the Board who would have
been eligible to participate in the Plan. Each eligible member of the
Board would have received an option for 2,000 shares of Common Stock with
a fair market value of $158,375 on May 29, 1998 with an option price of
$79.1875.
(2) The number of shares was determined by multiplying 2,000 by the number of
Directors who would have been eligible to participate in the Plan on May
29, 1998.
The Board of Directors recommends that shareholders vote "FOR" the Lowe's
Companies, Inc. Directors' Stock Option Plan.
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
1999. 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 $8,000 (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 Proposals 1 and 2 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.
22
<PAGE>
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2000 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 24, 1999.
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 29, 1999, 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,
/s/ William C. Warden, Jr.
William C. Warden, Jr.
Executive Vice President, General
Counsel
& Secretary
North Wilkesboro, North Carolina
April 23, 1999
23
<PAGE>
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 T. Carson Anderson, IV and Robert A. Niblock 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 2, 1999, at the Annual Meeting of Shareholders to be held
on May 28, 1999, or any adjournment thereof. The Board of Directors recommends
a vote FOR Proposals 1 and 2.
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 Proposals 1 and 2.
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?
____________________________________________
____________________________________________
____________________________________________
____________________________________________
<PAGE>
[X]PLEASE MARK VOTES
AS IN THIS EXAMPLE
______________________________________
LOWE'S
COMPANIES, INC.
_______________________________________
Please be sure to sign and date this Proxy. Date:_________
_____________________ ________________________
Shareholder sign here Co-owner sign here
For All With- For All
Nominees hold Except
1. Election of Directors [ ] [ ] [ ]
Nominees:
CLASS I DIRECTORS (Three-year Term 1999-2002)
James F. Halpin, Richard K. Lochridge,
Claudine B. Malone
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. PROPOSAL TO APPROVE THE LOWE'S COMPANIES, INC. For Against Abstain
DIRECTORS' STOCK OPTION PLAN [ ] [ ] [ ]
3. 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. [ ]
