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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
LOWE'S COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO OF LOWE'S APPEARS HERE]
April 21, 2000
TO LOWE'S SHAREHOLDERS:
It is my pleasure to invite you to the 2000 Annual Meeting to be held at our
Customer Support Center located at 1605 Curtis Bridge Road (at the
intersection of U.S. 421 Business and 421 Bypass), Wilkesboro, North Carolina,
on Friday, May 26, 2000 at 10:00 a.m. A map giving directions to the Customer
Support Center is on the back of the Proxy Statement.
The formal Notice of Annual Meeting and Proxy Statement are enclosed with
this letter. There are three items of business, as described in detail in the
Proxy Statement; so your vote or attendance is extremely important this year.
I look forward to reporting on an outstanding 1999, and at the meeting I
expect to report results of our first Fiscal Quarter of 2000.
Yours cordially,
/s/ Robert L. Tillman
Robert L. Tillman
Chairman of the Board,
President & Chief
Executive Officer
<PAGE>
LOWE'S COMPANIES, INC.
P.O. Box 1111
North Wilkesboro, North Carolina 28656
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 26, 2000
The Annual Meeting of Shareholders of Lowe's Companies, Inc. (the "Company")
will be held at the Company's Customer Support Center, 1605 Curtis Bridge Road
(at the intersection of U.S. 421 Business and 421 Bypass), Wilkesboro, North
Carolina, on Friday, May 26, 2000 at 10:00 a.m. to consider and act upon the
following proposals:
1. To elect four Class II Directors to a term of three years. The Board of
Directors recommends a vote "FOR" the election of the Director nominees
proposed for election by the Board.
2. To vote on an amendment to the Amended and Restated Articles of
Incorporation to set the maximum number of Directors at 12. The Board of
Directors recommends a vote "FOR" the amendment.
3. To approve the Lowe's Companies, Inc. Employee Discount Stock Purchase
Plan (the "Plan"). The Board of Directors recommends a vote "FOR" the
approval of the Plan.
4. To transact such other business as may be properly brought before the
Annual Meeting.
Shareholders of record at the close of business on March 31, 2000 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/ Stephen A. Hellrung
Stephen A. Hellrung
Senior Vice President, General
Counsel
& Secretary
Wilkesboro, North Carolina
April 21, 2000
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 26, 2000
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
Customer Support Center, 1605 Curtis Bridge Road (at the intersection of U.S.
421 Business and 421 Bypass), Wilkesboro, North Carolina, on Friday, May 26,
2000 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 21, 2000.
Only shareholders of record at the close of business on March 31, 2000 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
On March 31, 2000 there were 382,529,286 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>
PROPOSAL 1
ELECTION OF DIRECTORS
There are currently 12 members of the Board of Directors, which is divided
into three classes: Class I (four 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 2000 Annual Meeting to reflect the retirement of Carol A.
Farmer and Robert L. Strickland as Class II Directors.
Due to the nomination of two Class II Directors, whose terms expire at the
2000 Annual Meeting, and the realignment of Class I Director Kenneth D. Lewis
and Class III Director Thomas D. O'Malley as Class II Directors to make the
three Board classes as nearly equal in size as possible, four nominees are
standing for election as Class II Directors at the Annual Meeting. The four
nominees, all of whom are currently Directors, are: Peter C. Browning, Kenneth
D. Lewis, Thomas D. O'Malley, and Robert G. Schwartz. (Messrs. Lewis and
O'Malley were elected by the Board since the 1999 Annual Meeting.)
If elected, each Class II nominee will serve three consecutive years with
his term expiring in 2003 or until a successor is elected and qualified. 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 four 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 II Director to
serve until the 2003 Annual Meeting are Peter C. Browning, Kenneth D. Lewis,
Thomas D. O'Malley, and Robert G. Schwartz.
<TABLE>
<CAPTION>
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
-------------------------- -------- -------------------------------------------------------
<C> <C> <S>
Peter C. Browning, 58..... 1998 Chairman of Governance Committee and member of
Compensation Committee and Executive Committee of the
Company. President and Chief Executive Officer, Sonoco
Products Company (Global Packaging Company) since 1998,
having previously served as President and Chief
Operating Officer (1995-1998), and Executive Vice-
President (1993-1995) of Sonoco. Director of Sonoco
since 1995. Other directorships: Nucor Corporation and
Wachovia Corporation.
[PHOTO OF PETER C. BROWNING]
Kenneth D. Lewis, 53...... 2000 Member of Audit Committee and Governance Committee of
the Company. President and Chief Operating Officer of
Bank of America Corp. (previously NationsBank
Corporation) since 1999, having previously served as
President (Jan. 1999--Oct. 1999), President, Consumer
and Commercial Banking (1998-1999) of that Company, and
President of NationsBank Corporation (1993-1998).
Director of Bank of America Corp. since 1999. Other
directorships: Health Management Associates, Inc. and
E-Loan, Inc.
[PHOTO OF KENNETH D. LEWIS]
Thomas D. O'Malley, 57.... 2000 Member of Audit Committee and Governance Committee of
the Company. Chairman of the Board and Chief Executive
Officer of Tosco Corporation (Oil Refiner and Marketer)
since 1990. Director of Tosco Corporation since 1988.
[PHOTO OF THOMAS D. O'MALLEY]
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
-------------------------- -------- -------------------------------------------------------
<C> <C> <S>
Robert G. Schwartz, 72.... 1973 Member of Compensation Committee and 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, COMSAT
Corporation, and Consolidated Edison Company of New
York, Inc.
[PHOTO OF ROBERT G. SCHWARTZ]
</TABLE>
4
<PAGE>
INFORMATION CONCERNING CONTINUING DIRECTORS
Directors whose terms expire after 2000 are:
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
57....................... the Company. Distinguished Professor of Marketing,
Texas A&M University, since 1982. Other directorships:
Canned Foods, Inc., Genesco Inc., and Hastings
Entertainment, Inc.
[PHOTO OF LEONARD L. BERRY, PHD]
Paul Fulton, 65........... 1996 Chairman of Compensation Committee and member of
Executive Committee and Governance Committee of the
Company. Chairman and Chief Executive Officer, Bassett
Furniture Industries, since 1997 and Director since
1993. Dean, Kenan-Flagler Business School, University
of North Carolina, Chapel Hill, N.C., 1994-1997. Other
directorships: Sonoco Products Company, Bank of America
Corp. (previously NationsBank Corporation), The Cato
Corporation, and Hudson Bay Company.
[PHOTO OF PAUL FULTON]
Robert L. Tillman, 56..... 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.
[PHOTO OF ROBERT L. TILLMAN]
</TABLE>
5
<PAGE>
Class I Directors, term expiring in 2002
<TABLE>
<CAPTION>
Director Business Experience, Directorships, and
Name and Age Since Positions within the Last Five Years
-------------------------- -------- -------------------------------------------------------
<C> <C> <S>
James F. Halpin, 49....... 1998 Member of Audit Committee and Governance Committee of
the Company. President and Chief Executive Officer,
CompUSA Inc. (Computer Superstores) since 1993.
Director of CompUSA since 1993. Other directorships:
Interphase Corporation and Marvel Enterprises, Inc.
[PHOTO OF JAMES F. HALPIN]
Richard K. Lochridge, 56.. 1998 Chairman of Audit Committee and member of Executive
Committee and Governance Committee of the Company.
President, Lochridge & Company (General Management
Consulting Firm) since 1986. Other directorships:
Hannaford Brothers Co., PetsMart, Inc., John H. Harland
Company, and Dover Corporation.
[PHOTO OF RICHARD K. LOCHRIDGE]
Claudine B. Malone, 63.... 1995 Member of Audit Committee and Governance Committee of
the Company. President and Chief Executive Officer,
Financial & Management Consulting, Inc., since 1984.
Other directorships: Chairman, Federal Reserve Bank,
Richmond, Va., since 1996 (Member since 1994); Dell
Computer Corporation, Hannaford Brothers Co., Houghton
Mifflin, LaFarge Corporation, The Limited, Inc.,
Mallinckrodt Inc., SAIC-Science Applications
International Corporation, and Union Pacific Resources
Corporation.
[PHOTO OF CLAUDINE B. MALONE]
</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". Directors Berry, Browning, Farmer,
Fulton, Halpin, Lewis, Lochridge, Malone, O'Malley, and Schwartz are
Independent Directors. Messrs. Strickland and Tillman are Management
Directors.
Compensation of Directors--Standard Arrangements. Mr. Tillman receives no
Director or Committee compensation. Directors 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).
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. There are options for 48,000 shares still outstanding and
exercisable. No options were granted under this Plan during Fiscal Year 1999,
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 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 1999, shareholders approved the Lowe's Companies, Inc. Directors' Stock
Option Plan. This Plan provides for each eligible non-employee Director to be
awarded a stock option to purchase 2,000 shares of Company Common Stock at the
first Directors' Meeting following the Annual Meeting (the "Award Date"). Two
hundred fifty thousand shares of Common Stock are reserved under the Plan,
with 18,000 shares being reserved for options granted in Fiscal Year 1999. 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 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. The options have a seven-year term. The exercise price is set
based on the closing price of a share of common stock as reported on the New
York Stock Exchange composite tape on the Award Date, which was $51.0625 as of
May 27, 1999. Options for 2,000 shares each were granted to Directors Berry,
Browning, Farmer, Fulton, Halpin, Lochridge, Malone, Schwartz, and Strickland.
7
<PAGE>
Board of Directors--During Fiscal Year 1999, the Board of Directors held
five meetings. The Board has four standing committees, which met the number of
times set forth in parentheses: Executive (0), Audit (6), Compensation (3) and
Governance (3). All incumbent Directors attended at least 75% of the meetings
of the Board and the Committees on which they served with the exception of Mr.
Halpin, who attended 8 of 13 (61%) Board and Committee meetings held, and Ms.
Malone, who attended 10 of 14 (71%) Board and Committee meetings held.
Audit Committee--The Audit Committee has six members: Richard K. Lochridge
(Chairman), Leonard L. Berry, James F. Halpin, Kenneth D. Lewis, Claudine B.
Malone, and Thomas D. O'Malley. 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 four members: Paul
Fulton (Chairman), Peter C. Browning, Carol A. Farmer and Robert G. Schwartz.
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 four members: Robert L.
Tillman (Chairman), Peter C. Browning, Paul Fulton, and Richard K. Lochridge.
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: Peter C.
Browning (Chairman), Leonard L. Berry, Carol A. Farmer, Paul Fulton, James F.
Halpin, Richard K. Lochridge, Kenneth D. Lewis, Claudine B. Malone, Thomas D.
O'Malley, 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 middle of December
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 March 31, 2000,
except as noted, of Common Stock of each 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>
Leonard L. Berry 3,916 *
Peter C. Browning 2,326 *
Carol A. Farmer 6,686 *
Paul Fulton 11,666 *
James F. Halpin 15,866 *
Kenneth D. Lewis -0- *
Richard K. Lochridge 4,666 *
Claudine B. Malone 4,666 *
Thomas D. O'Malley -0- *
Dale C. Pond 140,435(3) *
Robert G. Schwartz 85,666 *
Robert L. Strickland 1,805,427(4) *
Larry D. Stone 253,877 *
Robert L. Tillman 679,722 *
William C. Warden, Jr. 207,247 *
Thomas E. Whiddon 166,064 *
Incumbent Directors, Director Nominees and
Executive Officers as a Group (30 in total) 5,622,685(5) 1.47
Lowe's Companies Employee Stock Ownership Trust
P.O. Box 1111
North Wilkesboro, NC 28656 28,977,107(5) 7.575
FMR Corp.
82 Devonshire Street
Boston, MA 02109 39,868,945(6) 10.422
State Street Bank and
Trust Company, Trustee
225 Franklin Street
Boston, MA 02110 38,307,573(7) 10.014
AXA Financial, Inc.
1290 Avenue of the Americas
New York, NY 10104 23,538,804(8) 6.153
</TABLE>
- ----------
*Less than 1%.
(1) Includes shares that may be acquired within 60 days under the Company's
Stock Option Plans as follows: Mr. Pond 72,526 shares; Mr. Schwartz 16,666
shares; Mr. Stone 137,200 shares; Mr. Tillman 403,867 shares; Mr. Warden
123,133 shares; Mr. Whiddon 118,300 shares; Directors Berry, Browning,
Farmer, Fulton, Halpin, Lochridge, Malone, and Strickland 666 shares each;
with aggregate shares for all Executive
9
<PAGE>
Officers and Directors as a group (30) being 1,413,370. Also includes Stock
Awards (Performance Stock and Performance Accelerated Restricted Stock)
that have been granted but not vested as follows: Mr. Pond 23,000 shares;
Mr. Stone 31,000 shares; Mr. Strickland 15,000 shares; Mr. Tillman 72,500
shares; Mr. Warden 31,000 shares; Mr. Whiddon 30,000 shares; with aggregate
shares for all Executive Officers and Directors as a group (30) being
423,850.
(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. Browning 901 shares; Ms. Farmer 5,269 shares Mr. Fulton 917
shares; Mr. Tillman 27,032 shares Mr. Whiddon 30,009 shares with aggregate
shares for all Executive Officers and Directors as a group (30) being
101,143.
(3) Includes 470 shares of shared voting and investment power.
(4) Includes 240,000 shares of shared voting and investment power.
(5) Shares allocated to participants' ESOP accounts are voted by the
participants by giving voting instructions to State Street Bank (the
"Trustee"). The ESOP's Management Committee directs the Trustee in the
manner in which shares not voted by participants or not allocated to
participants' accounts are to be voted. The Management Committee has 14
members, including Messrs. Stone, Tillman, Warden and Whiddon. At March
31, 2000, there were 5,253,000 unallocated shares.
(6) Shares held at February 14, 2000 according to Schedules 13G filed with the
Securities and Exchange Commission.
(7) Shares held at March 31, 2000 according to Schedules 13G filed with the
Securities and Exchange Commission.
(8) Shares held at December 31, 1999 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 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 28, 2000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term Compensation
-------------------------------------------------
Annual Compensation Awards Payouts
-------------------------------- ------------------------ -------
Stock
Options
Fiscal Year Other Annual Restricted Stock # LTIP All Other
Name & Principal Position Ended Salary Bonus Compensation Awards (1) shares Payouts Compensation (2)
- ------------------------- ----------- -------- ---------- ------------ ---------------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert L. Tillman........ 01/28/00 $850,000 $1,700,000 $406,711(3) 0 shares 0 $ 0 $19,200
Chairman of the Board, 01/29/99 800,000 1,015,200 290,084 0 shares 200,000 0 19,200
President and Chief 01/30/98 675,000 311,175 157,173 60,000 shares 120,000 0 20,800
Executive Officer
Larry D. Stone........... 01/28/00 500,000 1,000,000 221,984(4) 0 shares 0 0 19,200
Executive Vice President 01/29/99 434,616 507,600 133,135 0 shares 100,000 0 19,200
and Chief Operating 01/30/98 340,000 156,740 63,674 25,000 shares 40,000 0 20,800
Officer
William C. Warden, Jr.... 01/28/00 400,000 800,000 173,890(5) 0 shares 0 0 19,200
Executive Vice President
and 01/29/99 360,000 456,840 114,808 0 shares 57,800 0 19,200
Chief Administrative 01/30/98 315,000 145,215 62,030 25,000 shares 40,000 0 20,800
Officer
Thomas E. Whiddon........ 01/28/00 390,000 780,000 167,904(6) 0 shares 0 0 19,200
Executive Vice President 01/29/99 350,000 444,150 113,235 0 shares 56,200 0 19,200
and Chief Financial
Officer 01/30/98 305,000 140,605 21,580 25,000 shares 40,000 0 20,800
Dale C. Pond............. 01/28/00 350,000 700,000 148,637(7) 0 shares 0 0 19,200
Executive Vice
President-- 01/29/99 300,000 380,700 89,940 0 shares 48,200 0 19,200
Merchandising/Marketing 01/30/98 262,500 121,013 43,479 20,000 shares 30,000 0 20,800
</TABLE>
- ----------
(1) The amounts appearing in the Restricted Stock Awards column represent the
value of restricted stock awards granted during Fiscal Year 1997 based
upon the closing price for the Company's Common Stock on the date of
grant. No Restricted Stock Awards were granted during Fiscal Years 1998 or
1999. As of January 28, 2000, the number and value (based on the closing
price or $44.5625 for the Common Stock on such date) of shares of
restricted stock held by the Named Executive Officers were as follows: Mr.
Tillman 72,500 shares, $3,230,781; Mr. Stone 31,000 shares, $1,381,438;
Mr. Warden 31,000 shares, $1,381,438; Mr. Whiddon 30,000 shares,
$1,336,875; Mr. Pond 23,000 shares, $1,024,938. 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) Amounts shown are employer contributions to the Employee Stock Ownership
Plan.
(3) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($380,540), dividends on restricted stock shares awarded
in grants effective January 31, 1995, 1996, 1997, and January 30, 1998
($16,350), taxable value of group term life insurance in excess of $50,000
($2,617), and taxable value of personal use of corporate aircraft
($7,204).
(4) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($213,591), dividends on restricted stock shares awarded
in grants effective January 31, 1995, 1996, 1997, and January 30, 1998
($7,200), taxable value of group term life insurance in excess of $50,000
($665), and taxable value of personal use of corporate aircraft ($528).
(5) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($165,890), dividends on restricted stock shares awarded
in grants effective January 31, 1995, 1996, 1997, and January 30, 1998
($7,500), and taxable value of group term life insurance in excess of
$50,000 ($500).
(6) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($161,120), dividends on restricted stock shares awarded
in grants effective January 31, 1996, 1997, and January 30, 1998 ($6,300),
taxable value of group term life insurance in excess of $50,000 ($484),
and director fees paid by LF Corporation, a subsidiary of Lowe's
Companies, Inc. ($5,000).
(7) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($142,040), dividends on restricted stock shares awarded
in grants effective January 31, 1995, 1996, 1997, and January 30, 1998
($5,700), and taxable value of group term life insurance in excess of
$50,000 ($897).
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 Year 1999:
<TABLE>
<CAPTION>
Individual Grants (1)
- --------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual
% of Total Rates of Stock Price
Options/SARs Appreciation for
Granted to Exercise or Option/SAR Term
Options/SARs Employees in Base Price Expiration --------------------------
Name Granted Fiscal Year $/Sh Date 5% 10%
---- ------------ ------------ ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Tillman....... 0 / 0 0 / 0 N/A N/A 0 0
Larry D. Stone.......... 0 / 0 0 / 0 N/A N/A 0 0
William C. Warden, Jr... 0 / 0 0 / 0 N/A N/A 0 0
Thomas E. Whiddon....... 0 / 0 0 / 0 N/A N/A 0 0
Dale C. Pond............ 0 / 0 0 / 0 N/A N/A 0 0
</TABLE>
- ----------
(1) The Board of Directors decided at the December 2, 1999 meeting to defer
option grants until after January 28, 2000, the end of Fiscal Year 1999,
in order for the grants to more accurately reflect the Company's
performance.
12
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information concerning options exercised during
Fiscal Year 1999 and the unexercised options/SARs held by each of the named
Executive Officers at January 28, 2000:
Aggregated Option/SAR Exercises in Last Fiscal Year-End and Fiscal Year-End
Option/SAR Values
<TABLE>
<CAPTION>
Value of Unexercised
In-the-Money Options/SARs
Number of Unexercised at FY-End ($)
Shares Options/SARs at FY-End ($44.5625 on 1/28/00)
Acquired on Value ----------------------------- -------------------------
Name Exercise (1) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------- ------------ -------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Tillman....... 0 Shares 0 403,867 Shares 176,133 Shares 8,117,713 894,788
Larry D. Stone.......... 0 Shares 0 137,200 Shares 82,800 Shares 2,498,949 337,301
William C. Warden, Jr... 0 Shares 0 123,133 Shares 54,667 Shares 2,498,949 337,301
Thomas E. Whiddon....... 4,300 Shares 170,119 118,300 Shares 53,600 Shares 2,391,449 337,301
Dale C. Pond............ 20,000 Shares 677,500 72,526 Shares 45,674 Shares 1,359,588 267,600
</TABLE>
- ----------
(1) All shares acquired on exercise are stock options. There are no currently
outstanding stock appreciation rights (SAR) grants.
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 1999.
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 four 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 critia, 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 the Company's Common 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 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 200% of February 1, 1999 base salary were paid to the Chief
Executive Officer and the four other most highly paid Executive Officers for
the year ended January 28, 2000, because the Company's financial results
substantially 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 Year 1999, the
Committee approved a broad-based stock option grant to retail store managers
and co-managers. Options were also granted to certain key executives of Eagle
Hardware and Garden, Inc., acquired in April, 1999. No option grants were made
to the Chief Executive Officer nor to senior management during Fiscal Year
1999.
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 Year 1999, nor are any
previous grants outstanding.
The Incentive Plans also authorize awards of the Company's 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 PARS or Performance
Stock Awards were issued during Fiscal Year 1999.
The 1994 Incentive Plan and the 1997 Incentive Plan 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 will accept the
mandatory deferral of cash compensation to the extent that it would not be a
tax-deductible item for the Company under the Internal Revenue Code ("IRC")
Section 162(m).
The Deferral Program 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. 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. 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 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.
In December 1999, Mr. Tillman was paid $130,000 in deferred Benefit
Restoration Plan benefits, representing partial payment of benefits earned
under the plan in a prior year, but mandatorily deferred due to tax
deductibility limitations of IRC Section 162(m).
16
<PAGE>
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 28, 2000
Effective January 22, 2000, the Committee increased Mr. Tillman's annual
base salary from $850,000 to $935,000. 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
$1,700,000 under the 1999 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.
No stock options or other stock incentives were granted to Mr. Tillman
during Fiscal Year 1999.
Mr. Tillman earned a Benefit Restoration Plan payment of $380,540 for the
Fiscal Year ended January 28, 2000 but elected to defer receipt of this
amount. Mr. Tillman was paid a Benefit Restoration Plan benefit of $130,000
which had been mandatorily deferred in prior years due to IRC Section 162(m)
limitations.
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.
Paul Fulton, Chairman
Peter C. Browning
Carol A. Farmer
Robert G. Schwartz
April 21, 2000
17
<PAGE>
PROPOSAL 2
AMENDMENT OF THE COMPANY'S
AMENDED AND RESTATED ARTICLES
OF INCORPORATION TO SET THE
MAXIMUM NUMBER OF DIRECTORS AT 12
At the Annual Meeting, shareholders will vote on a proposal to amend the
first sentence of Article 9(a) of the Company's Amended and Restated Articles
of Incorporation to reduce the maximum number of Directors from 15 to 12.
Approval of the Amendment requires the affirmative vote of a majority of the
issued and outstanding shares of Common Stock.
On February 4, 2000, the Board of Directors approved the proposed Amendment
to Article 9(a) of the Amended and Restated Articles of Incorporation to bring
the Company's Amended and Restated Articles of Incorporation in line with the
general trend in corporate governance to have smaller boards and to more
closely reflect the Company's general practice to have between 10 and 12
Directors at any given time. The number of Directors at the time of the Annual
Meeting for previous years is as follows: 1995--10 Directors, 1996--11
Directors, 1997--12 Directors, 1998--13 Directors, and 1999--10 Directors.
As proposed to be amended, the first sentence of Article 9(a) would read as
follows:
"The number of Directors shall be set forth within the Bylaws, but shall
not exceed at any time twelve (12) members."
The proposed Amendment to reduce the maximum number of Directors could,
under certain circumstances, have an anti-takeover effect by making it more
difficult for a hostile shareholder to increase the size of the Board to elect
enough new Directors to obtain a majority of the Board. The Board, however, is
not aware of any attempt or plans to take over control of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO AMEND THE COMPANY'S AMENDED AND RESTATED ARTICLES OF
INCORPORATION TO SET THE MAXIMUM NUMBER OF DIRECTORS AT 12.
18
<PAGE>
PROPOSAL 3
APPROVAL OF THE LOWE'S COMPANIES, INC.
EMPLOYEE DISCOUNT STOCK PURCHASE PLAN
The Board of Directors recommends that shareholders approve the Lowe's
Companies, Inc. Employee Discount Stock Purchase Plan (the "Plan"), adopted by
the Board on December 3, 1999, subject to the approval of the Company's
shareholders. The Plan allows eligible employees to purchase stock in
accordance with Section 423 of the Internal Revenue Code of 1986, as amended.
The Board believes that the Plan will benefit the Company by (i) assisting
it in recruiting and retaining the services of employees with ability and
initiative, (ii) providing greater incentive for employees and (iii)
associating the interests of employees with those of the Company and its
shareholders through opportunities for increased stock ownership.
The more significant features of the Plan are described below; however, the
following description of the Plan is not intended to be complete and is
qualified in its entirety by the complete text 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 Stephen A. Hellrung, Senior Vice President,
General Counsel and Secretary, Lowe's Companies, Inc., P.O. Box 1111, North
Wilkesboro, North Carolina 28656.
The Plan must be approved by the holders of a majority of the shares of
Common Stock represented at the Annual Meeting.
Administration
The Compensation Committee of the Board of Directors will administer the
Plan. The Compensation Committee will have complete authority to interpret the
provisions of the Plan, to prescribe the forms that are used 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
Each full-time employee of the Company or any subsidiary is eligible to
participate in the Plan as of the June or December following the date of his
or her employment. Each other employee of the Company or any subsidiary is
eligible to participate in the Plan as of the June or December following the
date that he or she completes one year of employment. Directors who are
employees of the Company or any subsidiary are eligible to participate in the
Plan.
Enrollment
Each eligible employee may elect to participate in the Plan during the
applicable enrollment period. The enrollment period is the month of May for
the June 1 Date of Grant and the month of November for the December 1 Date of
Grant. An eligible employee who elects to participate in the Plan is referred
to as a "Participant".
19
<PAGE>
Terms and Conditions of Options
Option Grants. Each individual who is a Participant on a Date of Grant will
be granted an option as of that Date of Grant. As noted above, the term "Date
of Grant" means each June and December 1 during the term of the Plan. The
number of shares of Common Stock subject to such option will be determined by
dividing the Option Price (as described below) into the balance credited to
each Participant's account from payroll deductions as of the Date of Exercise
next following the Date of Grant. The "Date of Exercise" means each November
30 next following the June 1 Date of Grant and each May 31 next following the
December 1 Date of Grant. Notwithstanding the foregoing, no Participant will
be granted an option as of any Date of Grant for more than a number of shares
of Common Stock determined by dividing $12,500 by the fair market value of the
Common Stock on the Date of Grant.
Option Price. The purchase price per share for Common Stock purchased on the
exercise of an option shall be the lesser of (i) eighty-five percent of the
fair market value of the Common Stock on the applicable Date of Grant and (ii)
eighty-five percent of the fair market value of the Common Stock on the
applicable Date of Exercise.
Exercise. Unless a Participant withdraws from the Plan, each option will be
exercised automatically on each Date of Exercise for the number of whole
shares of Common Stock that may be purchased at the option price for that
option. The balance of any accumulated payroll deductions credited to the
Participant's account will be held for the following option period unless the
Participant withdraws from the Plan. Fractional shares will not be issued
under the Plan.
Payment. The purchase price for shares of Common Stock is accumulated by
payroll deductions from the Participant's base compensation each payroll
period and credited to the Participant's account under the Plan. The amount of
the deduction is equal to a whole percentage of the Participant's base
compensation which is at least one percent, but not greater than twenty
percent, as specified by the Participant on an election form. The term "base
compensation" means the Participant's biweekly base salary or, in the case of
a Participant who is compensated on an hourly basis, the Participant's hourly
rate of pay multiplied by 80. A Participant may not alter the amount of
payroll deduction on or after the applicable Date of Grant except in the case
of a withdrawal from the Plan.
Withdrawal. A Participant may discontinue his or her participation in the
Plan at any time by giving written notice to that effect prior to the Date of
Exercise. A Participant who elects to withdraw from the Plan will be paid the
amount of payroll deductions accumulated in his or her account. A Participant
who withdraws from the Plan may not resume participation in the Plan until a
subsequent enrollment period.
Transferability. Options granted under the Plan are nontransferable except
by will or the laws of descent and distribution. No right or interest of a
Participant in any option may be liable for, or subject to, any lien,
obligation or liability of the Participant.
Shareholder Rights. No Participant will, as a result of the grant of an
option, have any rights as a shareholder until the applicable Date of
Exercise.
Shares Subject to Plan
Upon the exercise of an option, the Company may issue shares from its
authorized but unissued Common Stock. The maximum aggregate number of shares
of Common Stock that may be issued under the Plan is 5,000,000 shares.
20
<PAGE>
If an option is terminated for any reason other than its exercise, the
number of shares of Common Stock allocated to the option may be reallocated to
other options to be granted under the Plan.
In the event that (a) the Company (i) effects one or more stock dividends,
stock split-ups, subdivisions or consolidations 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 Committee
necessitates such action, then the maximum number of shares as to which
options may be granted under the Plan will be adjusted, and the terms of
outstanding options will be adjusted, as the Committee determines to be
equitably required.
Amendment and Termination
No options may be granted under the Plan after December 1, 2009. The Board
may, without further action by shareholders, terminate or suspend the Plan
prior to that date. The Board also may amend the Plan except that no amendment
that increases the number of shares of Common Stock that may be issued under
the Plan (except as described above in the event of a recapitalization, etc.)
or changes the class of individuals who may 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 will be recognized by a Participant upon
the grant or the exercise of an option. A Participant will recognize income if
and when he or she disposes of the shares acquired under the option. If the
disposition does not occur within two years after the grant of the option or
within one year after the exercise of the option (the "option holding
period"), the Participant will recognize ordinary income measured as the
lesser of (i) the excess of the fair market value of the shares at the time of
the sale or disposition over the option price or (ii) an amount equal to
fifteen percent of the fair market value of the shares as of the applicable
Date of Grant. Any additional gain will be treated as capital gain.
If Common Stock acquired under an option is disposed of prior to the end of
the option holding period, the Participant will recognize, as ordinary income,
the difference between the fair market value of the Common Stock on the
applicable Date of Exercise and the option price. Any gain in excess of that
amount will be characterized as capital gain.
The Company will not be entitled to a federal income tax deduction with
respect to the grant or exercise of an option unless the Participant disposes
of the Common Stock acquired thereunder prior to the expiration of the option
holding period. In that event, the employer corporation (the Company or a
subsidiary), generally will be entitled to a federal income tax deduction
equal to the amount of ordinary income recognized by the Participant.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE PLAN.
21
<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, 1995 in the Company's
Common Stock and each of the indices.
[GRAPH APPEARS HERE]
1/31/95 1/31/96 1/31/97 1/30/98 1/29/99 1/31/00
------- ------- ------- ------- ------- -------
LOWE'S $100.00 $ 84.69 $ 90.14 $137.59 $317.35 $242.86
S&P 500 $100.00 $135.20 $167.12 $208.38 $272.02 $296.42
S&P RETAIL INDEX $100.00 $ 92.53 $110.03 $167.16 $274.42 $299.81
Source: Bloomberg Financial Services
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 2000.
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 $8,000.00 (plus handling fees).
22
<PAGE>
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, 2 and 3 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
FOR THE 2001 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2001 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 22, 2000. In addition, if the Company receives notice of a
shareholder proposal after March 6, 2001, the persons named as Proxies in the
Proxy Statement for the 2001 Annual Meeting will have discretionary voting
authority to vote on such proposal at the 2001 Annual Meeting.
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 28, 2000 is available upon written request
addressed to Lowe's Companies, Inc., Investor Relations Department, P. O. Box
1111, North Wilkesboro, North Carolina 28656.
By order of the Board of Directors,
/S/ Stephen A. Hellrung
Stephen A. Hellrung
Senior Vice President, General
Counsel & Secretary
Wilkesboro, North Carolina
April 21, 2000
23
<PAGE>
[WILKESBORO/NORTH WILKESBORO
MAP APPEARS HERE]
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------- 1. Election of Directors Nominees:
LOWE'S COMPANIES, INC.
- --------------------------------------------------- CLASS II DIRECTORS
ESOP (Three-year Term 2000-2003) For All With- For All
Nominees hold Except
Mark box at right if an address change has been [_] (01) Peter C. Browning [_] [_] [_]
noted on the reverse side of this card. (02) Kenneth D. Lewis
(03) Thomas D. O'Malley
(04) Robert G. Schwartz
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
CONTROL NUMBER: the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted for the remaining nominee(s).
For Against Abstain
2. Proposal to amend the Amended and Restated [_] [_] [_]
Articles of Incorporation to set the maximum
number of Directors at 12.
3. Proposal to approve the Company's Discount [_] [_] [_]
Stock Purchase Plan.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
-------
Please be sure to sign and date this Proxy. Date
- -----------------------------------------------------
- ---Shareholder sign here--------Co-owner sign here---
DETACH CARD DETACH CARD
</TABLE>
Important Proxy voting instructions on reverse side.
<PAGE>
P.O. Box 1111, North Wilkesboro, NC 28856
This Proxy is Solicited on Behalf of the Board of Directors.
TO: STATE STREET BANK AND TRUST COMPANY, TRUSTEE OF THE LOWE'S COMPANIES
EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")
As a participant in the Lowe's Companies Employee Stock Ownership Plan. I direct
State Street Bank and Trust Company, Trustee, to vote the shares of Lowe's
Companies, Inc. Common Stock allocated to my ESOP account at the Annual Meeting
of Shareholders to be held on May 26, 2000, and at any adjournment thereof, in
accordance with the direction on the reverse side of this card. Any allocated
shares for which no written instructions are timely received and any unallocated
shares held in the trust will be voted by the Trustee in the manner directed by
the Lowe's Companies ESOP Management Committee.
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, 2 and 3.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name appears on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY VOTING INSTRUCTIONS
Lowe's Companies, Inc. encourages all stockholders to vote. We provide three
convenient methods for voting listed below.
- ----------------------- ----------------------
1. Vote by Internet 2. Vote by Telephone
- ----------------------- ----------------------
It's fast, convenient, and your vote is It's fast, convenient, and immediate!
immediately confirmed and posted. Call Toll-Free on a Touch-Tone Phone
Follow these four easy steps: Follow these four easy steps:
- --------------------------------------- ---------------------------------
1. Read the accompanying Proxy Statement 1. Read the accompanying Proxy
and Proxy Card. Statement and Proxy Card.
2. Go to the Website 2. Call the toll-free number
http://www.eproxyvote.com/low 1-877-PRX-VOTE (1-877-779-3583).
There is NO CHARGE for this call.
3. Enter your Control Number located on
your Proxy Card. 3. Enter your Control Number located
on your Proxy Card.
4. Follow the instructions provided.
4. Follow the recorded instructions.
- ----------------------------------------- ------------------------------------
Your vote is important! Your vote is important!
Go to http://www.eproxyvote.com/low Call 1-877-PRX-VOTE anytime!
anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
- ---------------------
3. Vote by Mail
- ---------------------
Complete, sign, date and return the Proxy Card attached above in the enclosed
envelope.
RECEIVE FUTURE PROXY MATERIALS ELECTRONICALLY. Receiving stockholder material
electronically reduces mailing and printing costs and is better for the
environment. Would you like to receive future proxy materials electronically? If
so go to http://www.econsent.com/low and follow the instructions provided.
Stockholders who elect this option will be notified each year by e-mail how to
access the proxy materials and how to vote their shares on the Internet.
You may access Lowe's Companies, Inc's. 1999 Annual Report at:
www.lowes.com/annualreport and Proxy Statement at: www.lowes.com/proxy
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------- 1. Election of Directors Nominees:
LOWE'S COMPANIES, INC.
- --------------------------------------------------- CLASS II DIRECTORS
COMMON STOCK (Three-year Term 2000-2003) For All With- For All
Nominees hold Except
Mark box at right if an address change has been [_] (01) Peter C. Browning [_] [_] [_]
noted on the reverse side of this card. (02) Kenneth D. Lewis
(03) Thomas D. O'Malley
(04) Robert G. Schwartz
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
CONTROL NUMBER: the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted for the remaining nominee(s).
For Against Abstain
2. Proposal to amend the Amended and Restated [_] [_] [_]
Articles of Incorporation to set the maximum
number of Directors at 12.
3. Proposal to approve the Company's Discount [_] [_] [_]
Stock Purchase Plan.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
-------
Please be sure to sign and date this Proxy. Date
- -----------------------------------------------------
- ---Shareholder sign here--------Co-owner sign here---
DETACH CARD DETACH CARD
</TABLE>
Important Proxy voting instructions on reverse side.
<PAGE>
COMMON STOCK
P.O. Box 1111, North Wilkesboro, NC 28856
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints T. Carson Anderson, IV and Marshall A. Croom as
Proxies, each with the power to appoint his/her substitute, and hereby
authorizes them to represent and 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 March 31, 2000, at the Annual Meeting of Shareholders to be held
on May 26, 2000, or any adjournment thereof. The Board of Directors recommends a
vote FOR Proposals 1, 2 and 3.
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, 2 and 3.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name appears on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY VOTING INSTRUCTIONS
Lowe's Companies, Inc. encourages all stockholders to vote. We provide three
convenient methods for voting listed below.
- ----------------------- ----------------------
1. Vote by Internet 2. Vote by Telephone
- ----------------------- ----------------------
It's fast, convenient, and your vote is It's fast, convenient, and immediate!
immediately confirmed and posted. Call Toll-Free on a Touch-Tone Phone
Follow these four easy steps: Follow these four easy steps:
- --------------------------------------- ---------------------------------
1. Read the accompanying Proxy Statement 1. Read the accompanying Proxy
and Proxy Card. Statement and Proxy Card.
2. Go to the Website 2. Call the toll-free number
http://www.eproxyvote.com/low 1-877-PRX-VOTE (1-877-779-3583).
There is NO CHARGE for this call.
3. Enter your Control Number located on
your Proxy Card. 3. Enter your Control Number located
on your Proxy Card.
4. Follow the instructions provided.
4. Follow the recorded instructions.
- ----------------------------------------- ------------------------------------
Your vote is important! Your vote is important!
Go to http://www.eproxyvote.com/low Call 1-877-PRX-VOTE anytime!
anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
- ---------------------
3. Vote by Mail
- ---------------------
Complete, sign, date and return the Proxy Card attached above in the enclosed
envelope.
RECEIVE FUTURE PROXY MATERIALS ELECTRONICALLY. Receiving stockholder material
electronically reduces mailing and printing costs and is better for the
environment. Would you like to receive future proxy materials electronically? If
so go to http://www.econsent.com/low and follow the instructions provided.
Stockholders who elect this option will be notified each year by e-mail how to
access the proxy materials and how to vote their shares on the Internet.
You may access Lowe's Companies, Inc's. 1999 Annual Report at:
www.lowes.com/annualreport and Proxy Statement at: www.lowes.com/proxy
