SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------------
[X] Filed by the Registrant
[ ] 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
14-a6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Ames Department Stores, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
<PAGE>
Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, CT 06067-2598
Notice of Annual Meeting of Stockholders To Be Held on June 16, 1999
The Annual Meeting of Stockholders of Ames Department Stores, Inc., a
Delaware corporation (the "Company"), will be held at the Ames Corporate
Headquarters, 2418 Main Street, Rocky Hill, Connecticut on Wednesday, June 16,
1999 at 10:00 a.m., to consider and act upon the following matters:
1. the election of six (6) directors for a term of one year or until
their successor(s) have been elected and qualified;
2. the ratification and approval of the appointment of Arthur
Andersen LLP as independent certified public accountants and
auditors for the Company for the fiscal year ending January 29,
2000; and
3. the transaction of such other business as may properly come
before the meeting or any adjournment(s) thereof.
Pursuant to the By-Laws of the Company, the Board of Directors has
fixed the time and date for the determination of stockholders entitled to notice
of and to vote at the meeting as of the close of business on April 19, 1999. The
stock transfer books of the Company will not be closed. Accordingly, only
holders of record of issued and outstanding shares of Common Stock of the
Company at such time and on such date will be entitled to notice of and to vote
at the Annual Meeting notwithstanding any transfer of any stock on the books of
the Company thereafter. A complete list of the stockholders entitled to vote
will be available for inspection by any stockholder during the meeting. In
addition, the list will be open for examination by any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least 10 days prior to the meeting at the Ames Corporate Headquarters located
at 2418 Main Street, Rocky Hill, Connecticut 06067, at the office of the
Corporate Secretary.
By Order of the Board of Directors
/s/David H. Lissy
Rocky Hill, Connecticut David H. Lissy
May 12, 1999 Secretary
EVEN IF YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY AS SOON AS POSSIBLE. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES IS ENCLOSED FOR YOUR CONVENIENCE. IF FOR ANY
REASON YOU DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO IN THE MANNER SET FORTH IN
THE ACCOMPANYING PROXY STATEMENT AT ANY TIME PRIOR TO THE CLOSE OF BALLOTING.
<PAGE>
Ames Department Stores, Inc.
2418 Main Street
Rocky Hill, CT 06067-2598
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 16, 1999
General Information
This proxy statement is furnished to holders of record of the Common
Stock of Ames Department Stores, Inc. ("Ames" or the "Company") in connection
with the solicitation of proxies by the Board of Directors for use at the Annual
Meeting of Stockholders to be held on June 16, 1999 at 10:00 a.m. (the "Annual
Meeting"), and at all adjournments or postponements thereof, for the purposes
set forth in the accompanying notice of meeting.
The mailing address of the principal executive offices of the Company is
2418 Main Street, Rocky Hill, Connecticut 06067-2598 (telephone number
860/257-2000). The enclosed proxy and this proxy statement are first being
mailed to stockholders of the Company, together with the Annual Report for the
fiscal year ended January 30, 1999 ("fiscal year 1998"), on or about May 14,
1999.
Holders of outstanding shares of Common Stock of record at the close of
business on April 19, 1999 (the "Record Date") are entitled to notice of and to
vote at the meeting. Stockholders representing a majority of the outstanding
shares must be present in person or represented by proxy at the meeting for
there to be a quorum for the conduct of business. For this purpose, shares which
are present or represented by a proxy will be counted for quorum purposes
regardless of whether the holder of the shares or proxy fails to vote on, or
whether a broker with discretionary authority fails to exercise its
discretionary voting authority with respect to, any particular matter. Once a
quorum of the stockholders is established, a plurality of the votes represented
by shares of Common Stock present in person or represented by proxy at the
meeting is necessary for the election of directors; the remaining proposals
require approval by a majority of the outstanding shares. For voting purposes on
a particular matter (as opposed to establishing a quorum), abstentions and
broker non-votes will not be counted. Broker non-votes occur when a broker
nominee (which has voted on one or more matters at the meeting) does not vote on
one or more other matters because it has not received instructions to so vote
from the beneficial owner and does not have discretionary authority to so vote.
At the close of business on the Record Date, there were 24,037,149 shares of
Common Stock, par value $.01 per share, of the Company issued and outstanding,
each of which is entitled to one vote on each matter to be acted upon at the
meeting.
PROXIES
Solicitation: Proxies in the form enclosed are solicited by and on
behalf of the Board of Directors of the Company. The persons named in the proxy
have been designated as proxies by the Board of Directors.
Actions to be Taken under Proxy: Shares represented by properly executed
proxies received by the Company will be voted at the meeting in the manner
specified therein or, if no specification is made, will be voted FOR: (1)
election of the six (6) directors listed herein; and (2) ratification and
approval of the appointment of Arthur Andersen LLP as the independent certified
public accountants and auditors for the Company for the fiscal year ending
January 29, 2000.
Proxies will also be voted FOR or AGAINST such other matters as may
properly come before the meeting in the discretion of the persons named in the
proxy. The management of the Company is not aware of any other matters to be
presented for action at the meeting.
Execution: If stock is registered in the names of two or more persons,
the proxy must be signed by each of them. If stock is registered in the name of
a decedent, the proxy must be signed by an executor or administrator whose title
must follow his or her signature. If a stockholder is a corporation, the proxy
must be signed by an executive officer whose title must be indicated.
Revocation: Any proxy given by a stockholder pursuant to this
solicitation may be revoked by the stockholder at any time before it is
exercised by written notification delivered to the Company, addressed to David
H. Lissy, Secretary, Ames Department Stores, Inc., 2418 Main Street, Rocky Hill,
CT 06067-2598, or by executing another proxy bearing a later date or by voting
in person at the meeting.
ELECTION OF DIRECTORS
(Proposal No. 1)
Six directors are to be elected at the Annual Meeting of Stockholders to
hold office until the next annual meeting of stockholders or until the election
and qualification of their respective successors. With the exception of Laurie
M. Shahon, who has informed the Company that she will not stand for re-election
at the Annual Meeting, all persons who currently serve as directors are named in
the table below and have been nominated to serve as directors for the coming
year.
Unless otherwise specified in a duly executed and returned proxy, the
shares voted pursuant thereto will be cast for the nominees. If, for any reason,
any of the nominees should be unable to accept the nomination or election, such
proxy will be voted for the election of a substitute nominee recommended by the
Board of Directors. The Board of Directors, however, has no reason to believe
that any nominee will be unable to serve as a director.
Set forth below is certain relevant information with respect to each
nominee as of April 1, 1999:
<TABLE>
Shares of
First Common Stock
Name, Age, Principal Occupation, Became Beneficially
Business Experience and Directorships Director Owned (1)
------------------------------------- -------- ------------
<S> <C> <C>
Joseph R. Ettore, age 59 ...................................... 1994 320,200
He has been President, Chief Executive Officer and a director of Ames since
he joined our company in June 1994. Mr. Ettore has over 35 years of
experience in the retail industry. From July 1993 to June 1994, he was
President, Chief Executive Officer and a director of Jamesway Corp., a
regional discount store chain based in Secaucus, New Jersey, where he had
previously served in various merchandise management positions from 1982
to 1989. He served as President, Chief Operating Officer and a director
of Stuarts Department Stores Inc., a regional discount store chain based
in Franklin, Massachusetts, from October 1989 until October 1992, when he
was promoted to President, Chief Executive Officer and Chairman of the
Board of that company. Mr. Ettore remained a director of Stuarts until
May 1994. Jamesway filed for protection under chapter 11 of the
Bankruptcy Code in July 1993, emerged from the chapter 11 case in January
1995 and re-filed for protection under chapter 11 in October 1995.
Stuarts filed under chapter 11 in December 1990, emerged from the chapter
11 case in October 1992 and re-filed for protection under chapter 11 in
May 1995.
Francis X. Basile, age 66 ..................................... 1992 23,500
From 1986 to his retirement in January 1992, he served as Chairman and Chief
Executive Officer of the CIT Group/Factoring, Inc. He also served as a
director and Chairman of the National Commercial Finance Association and
a member of its Executive Committee.
Shares of
First Common Stock
Name, Age, Principal Occupation, Became Beneficially
Business Experience and Directorships Director Owned (1)
------------------------------------- -------- -------------
Paul Buxbaum, age 44 .......................................... 1992* 27,000
He has been President of Buxbaum Group & Associates, Inc., a nationwide
retail consulting company since 1984, and since 1998 has been Chief
Executive Officer of Global Health Sciences, Inc., a developer,
manufacturer and packager of vitamins, herbs, dietary supplements and
protein powders. He is also a director of Lamonts Apparel, Inc. and was
formerly a director of Herbalife International, Inc. and Richmond Gordman
1/2 Price Stores.
Alan Cohen, age 62 ............................................ 1992 22,500
He has been Chairman of Alco Capital Group, Inc., a diversified financial
service and investment company, since 1975, and Chief Executive Officer of
Russ Toggs, Inc., since November 1993. He also serves as Chairman of the
Board of Alco Cadillac-Pontiac Sales Corp., and formerly served as
court-appointed trustee of Tower Financial Corporation and as Chief
Executive Officer of Health-Tex, Inc.
Richard M. Felner, age 63 ..................................... 1994 26,000
Since 1991, he has been the head of Richard M. Felner Associates, a
consulting firm specializing in retail and commercial real estate. From
1985 to 1991, he was Vice President of Real Estate and Corporate
Development, and a director of Worths Stores Corporation, a subsidiary
of Reitmans Ltd., Canada's largest women's apparel retailer.
Sidney S. Pearlman, age 67 .................................... 1992 25,500
He has been retired since May 1991, after 40 years in the retailing
industry, including service as President of three department store chains
and as Senior Vice President/General Merchandise Manager of Younkers, Inc.
from 1987 to March 1991.
(1) As used herein, "beneficial ownership" means the sole or shared power to
vote or invest either Common Stock or Warrants, or the right to acquire
Common Stock or Warrants within sixty (60) days (e.g., through the
exercise of stock options). Each director has sole voting and investment
power in the shares listed.
* Chairman of the Board of Directors since July 1993.
The Board of Directors unanimously recommends a vote FOR each of these
nominees. Your proxy will be so voted unless you specify otherwise.
</TABLE>
<PAGE>
Board Meetings and Committees
During fiscal year 1998, the Board of Directors held fifteen (15)
meetings. Each of the directors attended more than 75% of the total number of
meetings of the Board of Directors and committees of which they were members
during fiscal year 1998.
During fiscal year 1998, the Board of Directors had an Audit Committee
comprised of Messrs. Cohen (Chairman), Basile and Buxbaum, a Compensation
Committee comprised of Ms. Shahon (Chairman) and Messrs. Buxbaum and Pearlman,
and a Corporate Governance Committee comprised of Messrs. Felner (Chairman),
Pearlman and Ms. Shahon. Commencing with the start of Fiscal 1999, the Audit
Committee consists of Messrs. Buxbaum (Chairman), Basile and Ms. Shahon, the
Compensation Committee consists of Messrs. Cohen (Chairman), Buxbaum and
Pearlman, and the Corporate Governance Committee consists of Messrs. Felner
(Chaiman), Cohen and Pearlman. The Audit Committee is responsible for
recommending the appointment of independent accountants and for reviewing the
audit reports and fees of the Company's independent public accountants. The
Compensation Committee is responsible for recommending the compensation to be
paid to the Company's executive officers, and the amount of and the persons to
whom stock options should be granted by the Company. The Corporate Governance
Committee is responsible for reviewing board structure and process in order to
facilitate board oversight of management, representation of stockholder
interests, and the performance of other self-determined board functions and
duties under applicable law. During fiscal year 1998, there were six formal
meetings and numerous other conversations held by the Compensation Committee.
The Audit Committee met two times during fiscal year 1998; at each of these
meetings, the Audit Committee was joined by other outside directors. The
Corporate Governance Committee met formally four times and had numerous other
conversations during fiscal year 1998.
Compensation of Directors
Ames' directors who are not full-time Ames employees (the "Outside
Directors") receive a base fee of $40,000 in director's fees ($80,000 per year
for the Chairman) for six regular meetings and $3,000 for each additional Board
meeting and are reimbursed for their expenses. Directors are also compensated at
the rate of $10,000 per year for up to four meetings for each committee on which
they serve and $2,500 for each additional committee meeting. For fiscal year
1998, Board activity and meetings exceeded the anticipated number of regular
meetings. The directors, however, determined to limit their compensation for
fiscal year 1998 to the base fee, and to forego any additional compensation for
additional meetings.
Pursuant to Ames' 1994 Non-Employee Directors Stock Option Plan, as
amended (the "Amended Non-Employee Plan"), directors who are not full-time Ames
employees are granted options to purchase common stock of Ames on the date of
each annual meeting of stockholders of the Company. Commencing with the May 27,
1998 Annual Meeting, the number of shares granted on the date of each annual
meeting is 7,500. All options terminate ten years after date of grant. The
exercise prices of the options are equal to the fair market value of the Common
Stock on the date of grant. The options become exercisable in full six months
after date of grant. As of January 30, 1999, Messrs. Basile, Buxbaum, Cohen and
Pearlman had been granted 22,500 options each and Mr. Felner and Ms. Shahon had
been granted 15,000 options each.
Executive Compensation
The following table sets forth each item of compensation paid, earned
or awarded over each of the preceding three years to the Chief Executive Officer
and the four other most highly paid executive officers serving at January 30,
1999.
<PAGE>
<TABLE>
Summary Compensation Table
Long-Term Compensation
------------------------------------------
Annual Compensation Awards
------------------------------------- ------------
(#)Securities
Other Restricted Underlying All
Fiscal Annual Stock Options Other
Name & Principal Position Year Salary Bonus (a) Comp. (g) Awards (b) SARs (c) Comp. (d)
- -------------------------- ---- --------- -------- ------------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph R. Ettore.....................1998 $939,423 $750,000 $2,311,675 (f) $ 0 325,000 (f) $2,840,538(f)
President & Chief 1997 866,346 425,000 (e) 0 0 39,589
Executive Officer 1996 815,385 575,000 (e) 0 300,000 (f) 39,938
Denis T. Lemire..................... 1998 387,500 160,000 387,575 695,700 15,000 6,900
Executive Vice President and 1997 369,712 150,000 (e) 0 0 7,860
Chief Operating Officer 1996 324,038 140,000 (e) 0 59,000 6,017
Eugene E. Bankers................. 1998 245,654 99,360 268,325 347,850 7,500 8,419
Senior Vice President, 1997 240,161 96,000 (e) 0 0 6,833
Marketing 1996 224,473 90,853 (e) 0 6,300 8,016
David H. Lissy...................... 1998 234,844 94,995 268,325 347,850 7,500 7,222
Senior Vice President, 1997 231,183 91,783 (e) 0 0 6,559
General Counsel and 1996 220,193 88,679 (e) 0 6,300 6,881
Corporate Secretary
Richard L. Carter................... 1998 227,049 91,835 268,325 347,850 7,500 5,689
Senior Vice President, 1997 223,853 88,729 (e) 0 0 7,806
Human Resources 1996 205,634 71,788 (e) 0 6,300 5,746
- --------------------
(a) Includes certain signing bonuses and bonuses earned under the Annual
Incentive Compensation Plan (see below).
(b) Pursuant to the 1998 Stock Incentive Plan (the "1998 Incentive Plan";
see below) and the 1995 Long Term Incentive Plan (the "1995 Incentive
Plan"; see below), a total of 215,000 shares of Restricted Stock in the
aggregate were awarded in Fiscal 1998. The awards were made to each
Executive Vice President and each Senior Vice President. The dollar value
of the Restricted Stock award shown in the table was calculated by
multiplying the share price of Ames' common stock on the date of the award
by the number of shares awarded. As of January 30, 1999, a total of 240,000
shares of the Restricted Stock that had been awarded under the 1998
Incentive Plan and the 1995 Incentive Plan remained outstanding and
unvested. The total aggregate value of these shares was $7,380,000, based
on a market price of Ames' common stock of $30.75 as of January 30, 1999.
(c) Stock Options were granted to certain members of management pursuant to the
1998 Incentive Plan and the 1994 Option Plan (see below).
(d) Includes Ames' matching contributions under the Retirement and Savings Plan
(see below), excess paid life insurance; and for J. Ettore, $40,112,
$31,629 and $31,943 of paid disability and life insurance coverage in
fiscal years 1998, 1997 and 1996, respectively.
(e) Includes a car allowance and/or living allowance (for J. Ettore and D.
Lemire) that aggregated to the lesser of $50,000 or 10% of the individual
executive's total salary and bonus.
(f) Pursuant to the terms of an employment agreement entered into between Ames
and Mr. Ettore on June 1, 1998, Mr. Ettore surrendered rights with regard
to 300,000 shares of common stock. In consideration therefor, Mr. Ettore
received (i) 70,200 shares of common stock, (ii) 125,000 stock appreciation
rights, and (iii) $2,666,100 in cash (including $1,514,700 for the payment
of taxes by Mr. Ettore on the 70,200 shares of common stock). See
"Employment Contracts" below.
(g) Amounts shown primarily represent the Cash Payment made on the Vesting Date
for the Restricted Stock (as each such term is defined below) awarded
pursuant to the 1995 Incentive Plan: Mr. Ettore ($759,375), Mr. Lemire
($354,375), Mr. Bankers, Mr. Lissy and Mr. Carter ($253,125 each). In
addition, Mr. Ettore's amount includes $1,514,700 for the payment of taxes
referenced in (f) above.
</TABLE>
<PAGE>
Option and SAR Grants in Last Fiscal Year
The table below discloses information regarding grants of stock options
and stock appreciation rights (SARs) to the named executive officers during
fiscal 1998:
<TABLE>
Potential
Individual Grants Realizable Value
-------------------------------------------------------------------- at Assumed
Annual
Number of % of Rate of
Securities Total Stock Price
Underlying Options/SARs Exercise Appreciation
Options/SARs Granted to or Base for Option Term
Granted Employees in Price Expiration ----------------------------
Name (#) Fiscal 1998 ($/Sh) Date 5% 10%
------ ---------------- ---------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Joseph R. Ettore 200,000 35.5% $23.38 5/31/08 $2,942,000 $7,452,000
125,000(a) 22.2% $2.00(b) 5/31/08 $1,838,750 $4,657,500
Denis T. Lemire 15,000 2.7% $15.00 10/9/03 $62,250 $137,550
Eugene E. Bankers 7,500 1.3% $15.00 10/9/03 $31,125 $68,775
Richard Carter 7,500 1.3% $15.00 10/9/03 $31,125 $68,775
David H. Lissy 7,500 1.3% $15.00 10/9/03 $31,125 $68,775
</TABLE>
(a) Pursuant to the terms of an employment agreement entered into between the
Company and Mr. Ettore on June 1, 1998, Mr. Ettore surrendered certain
rights with regard to 300,000 shares of common stock. In consideration
therefor, Mr. Ettore received (i) 70,200 shares of common stock, (ii)
125,000 stock appreciation rights, and (iii) $2,666,100 in cash (including
$1,514,700 for the payment of taxes by Mr. Ettore on the 70,200 shares of
common stock). See "Employment Contracts" below.
(b) Equals the exercise price of the rights surrendered by Mr. Ettore as
described in footnote (a) above. The market price of the common stock on
June 1, 1998 was $23.38.
Pursuant to the 1994 Management Stock Option Plan (the "1994 Option
Plan"), Ames may grant options with respect to an aggregate of up to 1,700,000
shares of common stock, provided that no individual optionee may receive in
excess of 200,000 shares of common stock upon exercise of options granted under
the 1994 Option Plan. During fiscal year 1998, options with respect to a total
of 65,000 shares of common stock were issued under the 1994 Option Plan to
members of management. After terminations and exercises, options with respect to
a total of 520,251 shares of common stock were outstanding as of January 30,
1999. The exercise prices of the options are equal to the fair market value of
the common stock on the date the options were granted. Except as noted below,
one-third of the shares underlying the options may be purchased annually for
each of three years, beginning one year from the grant date. For options granted
to J. Ettore in June 1994, one-fifth of the shares underlying the options may be
purchased annually for each of five years, beginning one year after the grant
date. Except as noted below, all options granted on May 21, 1996 and all options
granted after May 1, 1997, may be purchased one year after the grant date. For
options granted to R. de Aguiar (Executive Vice President and Chief Financial
and Administrative Officer) in April 1998, one-third of the shares underlying
options may be purchased annually for each of three years, beginning one year
after the grant date. The unexercised portion of the options granted under the
1994 Option Plan will terminate upon the expiration of five years from the grant
date, except as follows: the options granted to J. Ettore in June 1994 terminate
six years from grant date, and the options granted to D. Lemire in August 1996
terminate ten years from grant date.
The 1998 Incentive Plan, approved by stockholders in May 1998, provides
for the grant of Awards (as defined in the 1998 Incentive Plan) and makes
available for Awards an aggregate amount of 1,800,000 shares of common stock.
The maximum number of shares of common stock with respect to which Awards may be
granted (or measured) to any individual participant may not exceed 300,000.
During fiscal 1998, options with respect to a total of 497,600 shares of common
stock were issued under the 1998 Incentive Plan to members of management. As of
January 30, 1999, 10,250 shares had been forfeited and the remaining 487,350
were unvested. The exercise prices are equal to the fair market value of the
common stock on the date the stock option is granted. Awards issued under the
1998 Incentive Plan may be exercised as determined by the Compensation Committee
of the Board of Directors upon the grant thereof. This Plan will terminate in
May 2008.
<PAGE>
Aggregated SAR Exercises in Last Fiscal Year and FY-End SAR/Option Values
The table below discloses information regarding aggregated exercises of
stock options and SARs by the named executive officers during Fiscal 1998 and
stock options and SARs held by the named executive officers as of January 30,
1999. There were no stock options or SARs repriced during Fiscal 1998.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End SAR/Option Values
# of Shares Value of
Underlying Unexercised
Unexercised In-the-Money
SARs/Options SARs/Options
at 1/30/99 at 1/30/99($)
# Shares ($) Value Exercisable / Exercisable /
Name Exercised Realized(a) Unexercisable Unexercisable
----- ---------- -------------- ------------------- ----------------------
<S> <C> <C> <C> <C>
Joseph R. Ettore -0- $ -0- 160,000 / 365,000(b) $4,320,000 / $5,897,625(b)
Denis T. Lemire 29,000 625,710 33,333 / 31,667 947,657 / 710,093
Eugene E. Bankers 27,300 546,544 -0- / 7,500 -0- / 118,125
David H. Lissy 27,300 522,656 -0- / 7,500 -0- / 118,125
Richard L. Carter -0- -0- 17,300 / 7,500 444,385 / 118,125
(a) Dollar value realized represents the number of options exercised
multiplied by the difference between the market price of Ames'
common stock at date of exercise and the strike price of the
options.
(b) Includes 125,000 SARs granted to J. Ettore pursuant to an
employment contract which is more fully described below. The
dollar value of the SARs in the table is calculated by
multiplying the number of SARs times the difference between (i)
$2.00 (representing the exercise price of certain rights
surrendered by Mr. Ettore in connection with the Ettore
Agreement (as defined)) and (ii) $28.741, the average closing
price of a share of common stock during the twenty trading days
prior to January 30, 1999.
All SARs granted to members of management in connection with the Ames'
emergence from Chapter 11 protection in 1992 expired as of December 30, 1997.
During Fiscal 1997, a total of 166,683 such SARs were exercised.
</TABLE>
Long-Term Incentive Plan Awards
There were 215,000 shares of Restricted Stock (35,000 pursuant to the 1995
Incentive Plan and 180,000 pursuant to the 1998 Incentive Plan as defined
previously) awarded to certain executive officers during fiscal year 1998.
Ames' 1995 Incentive Plan was approved by the stockholders on May 24,
1995. The purpose of the 1995 Incentive Plan is to promote Ames' long term
success by affording certain officers with an opportunity to acquire an
ownership interest in Ames in order to incentivize such persons and to align
their financial interests with Ames' stockholders. Pursuant to the 1995
Incentive Plan, Ames may make awards ("Awards") of an aggregate of up to 500,000
shares of common stock that are subject to restrictions on transfer thereof
("Restricted Stock") and a cash payment (a "Cash Payment") in an amount up to
50% of the Fair Market Value (as defined in the 1995 Incentive Plan) of the
Restricted Stock determined as of, and paid on, the third anniversary of the
date of grant (the "Vesting Date"). The Cash Payment is intended to defray a
substantial portion of an Award recipient's federal and state income tax
liabilities on the Award (including the Cash Payment) in order to allow the
recipient to receive the Restricted Stock substantially free and clear on the
Vesting Date.
Officers eligible for Awards under the 1995 Incentive Plan are the Chief
Executive Officer, each Executive Vice President and each Senior Vice President.
The Compensation Committee administers the 1995 Incentive Plan. During 1998,
there were 35,000 shares of Restricted Stock issued pursuant to the 1995
Incentive Plan. As of January 30, 1999, 295,000 shares in the aggregate had
vested, and 60,000 shares remain unvested.
The 1998 Incentive Plan (as defined above) was approved by the
stockholders in May 1998. The purpose of the 1998 Incentive Plan is intended to
provide incentives which will attract, retain and motivate highly competent
persons as key employees by providing them opportunities to acquire shares of
common stock or receive monetary payments based on the value of such shares. The
1998 Incentive Plan makes available for Awards (as defined in the 1998 Incentive
Plan) an aggregate amount of 1,800,000 shares of common stock. The maximum
number of shares of common stock with respect to which Awards (as defined in the
1998 Incentive Plan) may be granted (or measured) to any individual participant
may not exceed 300,000. Common stock awarded under the 1998 Incentive Plan vests
50% on the fourth anniversary from the date of grant and 50% on the fifth
anniversary. There is no cash payment to be made related to the vesting of the
grant.
Officers eligible for Awards under the 1998 Incentive Plan are such key
employees of Ames as the Board of Directors in its sole discretion determines to
be significantly responsible for the success, future growth and profitability of
Ames. During 1998, there were 180,000 shares of Restricted Stock issued pursuant
to the 1998 Incentive Plan and as of January 30, 1999, all 180,000 shares remain
unvested.
Annual Incentive Compensation Plan
Ames has an Annual Incentive Compensation Plan (the "Annual Bonus Plan")
that is subject to annual review by the Compensation Committee and the Board of
Directors. The Annual Bonus Plan provides annual incentive cash bonuses based on
the achievement of Ames' financial goals for the year (as well as customer
service goals for store and field management). Pursuant to the Annual Bonus
Plan, bonuses for fiscal year 1998 will be paid in May 1999. Participants must
be active Ames employees at the time the bonus payments are made to earn a
bonus.
Retirement and Savings Plan
Ames Plan
Ames has a defined contribution retirement and savings plan (the
"Retirement and Savings Plan") that is qualified under Sections 401(a) and
401(k) of the Internal Revenue Code of 1986, as amended. Employees who have
reached the age of 21 are eligible to participate after one year of service
provided they have completed at least 1,000 hours of service in a 12-month
period. For each participant's contribution (up to a maximum of 5% of such
participant's total compensation), Ames contributes to the Retirement and
Savings Plan an amount equal to 50% of such contribution. A participant may
contribute to the plan from 1% to 18% of annual compensation on a pre-tax or
after-tax basis, or a combination of both. Participants who terminate their
employment with Ames are entitled to receive the full amount of their
contributions and, depending on the length of the participant's service to Ames,
a portion of Ames' matching contributions.
Hills Plan
As reported in the Form 10-K for the year ended January 30, 1999, the
Company has acquired Hills Stores Company. Hills has a defined contribution
retirement and savings plan (the "Hills Retirement and Savings Plan ") that is
qualified under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986,
as amended, for full-time employees who are eligible to participate at the first
of each calendar quarter and for all regular and part-time employees who, after
one year of service have completed at least 1,000 hours of service in a 12-month
period. For each participant's contribution (after one year of service) Hills
contributes 100% of the first 2% from service years 1-3 and 100% of the first 4%
for service years 4 and over.
The Company intends to merge the two retirement and savings plans after
further review and consideration of how to structure the merged plan and how to
transition to the merged plan.
The following table sets forth as to the named executive officers (those
listed in the Summary Compensation Table), and all other officers and employees
of Ames as a group, the aggregate matching contributions by Ames under the
Retirement and Savings Plan during fiscal year 1998:
Aggregate Matching
Contributions
Joseph R. Ettore $ 4,952
Denis T. Lemire 4,880
Eugene E. Bankers 5,270
David H. Lissy 5,016
Richard L. Carter 4,470
All other employees and officers $3,130,783
Retirement Plan
Ames has an unfunded Retirement Plan for officers/directors (the
"Retirement Plan"). It provides that every person who is employed by Ames when
he or she retires, dies or becomes disabled and who serves as both a full-time
officer and a director of Ames and has completed five years of service, not
necessarily consecutive, in both of these capacities, is eligible for benefits
under the Retirement Plan.
Benefits under the Retirement Plan are payable upon termination of
employment due to retirement, death or disability. The annual benefit is equal
to two-thirds of the participant's average annual base salary during the
five-year period of highest compensation preceding such termination of
employment. The maximum annual benefit under the Retirement Plan is $100,000,
reduced by an amount equal to certain of such participant's annual Social
Security benefits. Each participant in the Retirement Plan is entitled to
benefits for a period of 10 years. Upon the earlier death of the participant, at
Ames' option, the future payments as scheduled or the then present value of all
unpaid benefits would be paid to the participant's estate. Joseph Ettore,
current President, Chief Executive Officer and Director, potentially qualifies
for benefits under this plan. As of January 30, 1999, Mr. Ettore had completed
approximately fifty-six months of credited service as a full-time officer and
director of Ames. No payments were made under this plan in fiscal year 1998.
Employment Contracts, Termination, Severance
and Change-in-Control Arrangements
Employment Contracts
Set forth below are descriptions of the material features of the
employment contracts between Ames and Joseph R. Ettore, President and Chief
Executive Officer, Denis T. Lemire, Executive Vice President and Chief Operating
Officer, and Rolando de Aguiar, Executive Vice President and Chief Financial and
Administrative Officer.
Ames is party to an employment agreement with Joseph Ettore dated June 1,
1998 and expiring May 31, 2004 (the "Ettore Agreement"), pursuant to which Mr.
Ettore serves as President and Chief Executive Officer of Ames. Under the Ettore
Agreement, Mr. Ettore is entitled to a base salary of $1,000,000 per year
through May 31, 2002, and $1,250,000 thereafter; an annual bonus of up to 75% of
his base salary then in effect; an option to acquire up to 200,000 shares of
common stock, which will vest and become exercisable on May 31, 2003; a bonus of
$450,000 and $550,000, payable on June 30, 1999, and at the end of the term of
Mr. Ettore's employment, respectively; and an annual automobile allowance,
payable in equal monthly installments of not less than $1,800 per month.
In addition, in consideration of Mr. Ettore's surrender of options to
purchase an aggregate of 300,000 shares of common stock, which right was granted
to Mr. Ettore pursuant to his prior employment agreement, Mr. Ettore received
(a) a stock award of 70,200 shares of common stock in accordance with Ames' 1998
Incentive Plan, (b) $2,666,100 in cash and (c) 125,000 fully vested stock
appreciation rights ("SARs"), which entitle Mr. Ettore to receive, in the
aggregate, an amount equal to (x) the number of SARs which Mr. Ettore elects to
exercise on or after May 31, 1999 multiplied by (y) the difference between (i)
$2.00 (representing the exercise price of certain rights surrendered by Mr.
Ettore in connection with the Ettore Agreement) and (ii) the Average Stock Price
(as defined in the Ettore Agreement) as of the date of such election.
During the term of the Ettore Agreement, Ames is required to reimburse Mr.
Ettore $12,000 per year for the cost of maintaining a policy insuring the life
of Mr. Ettore with a face amount of $500,000; provide additional life insurance
in the face amount of $500,000 and maintain a disability insurance policy that
will pay Mr. Ettore 60% of his base salary during any period of disability up to
age 65. In addition, Ames will maintain customary directors' and officers'
liability insurance for Mr. Ettore if such insurance is available to Ames at
reasonable cost.
In the event that Ames terminates the employment of Mr. Ettore without
cause (as such term is defined in the Ettore Agreement), or if Mr. Ettore
terminates his employment for Good Reason (as such term is defined in the Ettore
Agreement) Mr. Ettore will be entitled to (a) his base salary for the remaining
term of the Ettore Agreement when it would otherwise be payable; (b) any annual
bonus prorated to the effective date of termination; (c) immediate vesting of
his stock options as of the date of termination; and (d) coverage under Ames'
medical plan for one year after the date of termination. If Mr. Ettore's
employment is terminated by Ames for cause or if Mr. Ettore terminates his
employment without Good Reason, he will receive no further compensation or other
benefits under the Ettore Agreement except for any amounts to which he was
entitled prorated to the effective date of termination. If Mr. Ettore terminates
his employment upon a Change in Control of the Company (as such term is defined
in the Continuity Plan referred to below) or any successor or replacement plan,
he will be entitled to the greater of the benefits provided by (x) the
Continuity Plan, and (y) any such successor or replacement plan and (z) the
benefits provided by the Ettore Agreement.
Ames is party to an employment agreement with Denis Lemire dated as of
March 23, 1999 and expiring May 31, 2003 (the "Lemire Agreement"), pursuant to
which Mr. Lemire serves as Executive Vice President and Chief Operating Officer
of Ames. Under the Lemire Agreement, Mr. Lemire is entitled to an initial base
salary of $500,000 per year increasing to $600,000 per year over the term of the
contract; an annual bonus under the Ames' Annual Bonus Plan; a sign-on bonus of
$100,000 payable at the end of the Term of Employment (as such term is defined
in the Lemire Agreement); an option to acquire 100,000 shares of common stock
under the 1998 Incentive Plan; an annual automobile allowance; and other
compensation and benefits in effect from time to time for Ames' senior executive
officers.
During the term of the Lemire Agreement, Ames is required to provide a
policy insuring the life of Mr. Lemire in the face amount of Mr. Lemire's base
salary then in effect, and maintain a disability insurance policy that will pay
Mr. Lemire 60% of his base salary during any period of disability up to age 65.
In the event that Ames terminates the employment of Mr. Lemire without
cause (as such term is defined in the Lemire Agreement), or if Mr. Lemire
terminates his employment for Good Reason (as such term is defined in the Lemire
Agreement), Mr. Lemire would be entitled to (a) his base salary for the
remaining term of the Lemire Agreement when it would otherwise be payable; (b)
any annual bonus prorated to the effective date of termination; (c) immediate
vesting of his stock options as of the date of termination; and (d) coverage
under the Ames' medical plan for one year after the date of termination. If Mr.
Lemire's employment is terminated by Ames for cause, or if Mr. Lemire terminates
his employment without Good Reason, he shall receive no further compensation or
other benefits under the Lemire Agreement except for any amounts to which he was
entitled prorated to the effective date of termination. If Mr.Lemire terminates
his employment upon a Change in Control of the Company (as such term is defined
in the Continuity Plan referred to below) or any successor or replacement plan,
he will be entitled to the greater of the benefits provided by (x) the
Continuity Plan, and (y) any such successor or replacement plan and (z) the
benefits provided by the Lemire Agreement.
Ames is party to an employment agreement with Rolando de Aguiar dated as
of March 23, 1999 and expiring May 31, 2003 (the "de Aguiar Agreement"),
pursuant to which Mr. de Aguiar serves as Executive Vice President and Chief
Financial and Administrative Officer of Ames. Under the de Aguiar Agreement, Mr.
de Aguiar is entitled to an initial base salary of $400,000 per year increasing
to $500,000 per year over the term of the contract; an annual bonus under Ames'
Annual Bonus Plan; a sign-on bonus of $75,000 payable at the end of the Term of
Employment (as such term is defined in the de Aguiar Agreement); an option to
acquire 75,000 shares of common stock under the 1998 Incentive Plan; an annual
automobile allowance; and other compensation and benefits in effect from time to
time for Ames' senior executive officers.
During the term of the de Aguiar Agreement, Ames is required to provide a
policy insuring the life of Mr. de Aguiar in the face amount of Mr. de Aguiar's
base salary then in effect, and maintain a disability insurance policy that will
pay Mr. de Aguiar 60% of his base salary during any period of disability up to
age 65.
In the event that Ames terminates the employment of Mr. de Aguiar without
cause (as such term is defined in the de Aguiar Agreement), or if Mr. de Aguiar
terminates his employment for Good Reason (as such term is defined in the de
Aguiar Agreement), Mr. de Aguiar would be entitled to (a) his base salary for
the remaining term of the de Aguiar Agreement when it would otherwise be
payable; (b) any annual bonus prorated to the effective date of termination; (c)
immediate vesting of his stock options as of the date of termination; and (d)
coverage under Ames' medical plan for one year after the date of termination. If
Mr. de Aguiar's employment is terminated by Ames for cause, or if Mr. de Aguiar
terminates his employment without Good Reason, he shall receive no further
compensation or other benefits under the de Aguiar Agreement except for any
amounts to which he was entitled prorated to the effective date of termination.
If Mr. de Aguiar terminates his employment upon a Change in Control of Ames (as
such term is defined in the Continuity Plan referred to below) or any successor
or replacement plan, he will be entitled to the greater of the benefits provided
by (x) the Continuity Plan, and (y) any such successor or replacement plan and
(z) the benefits provided by the de Aguiar Agreement.
Income Continuation Plan
The named executive officers of Ames (those listed in the Summary
Compensation Table), except for Mr. Ettore and Mr. Lemire, who have separate
contracts (see above), participate in an Income Continuation Plan that
guarantees up to one year's salary in the event of termination other than for
cause. Certain other officers of Ames also participate in the plan.
Key Employee Continuity Benefit Plan
Ames has a Key Employee Continuity Benefit Plan (the "Continuity Plan")
that covers all officers (Vice President and above) and certain other employees
of Ames. If the employment of any participant in the Continuity Plan is
terminated by the Company other than for death, disability, cause (as defined in
the Continuity Plan) or by the participant for good reason (as defined in the
Continuity Plan) within 18 months after a change of control of Ames, the
participant will receive a lump sum cash severance payment. The severance
payment is 2.99 times Base Compensation for the President and Executive Vice
Presidents, 2 times Base Compensation for Senior Vice Presidents and selected
Vice Presidents, and 1 times Base Compensation for other Vice Presidents. Base
Compensation is defined generally as the sum of the participant's annual base
compensation in effect immediately prior to the participant's termination plus
one-third of the value of the cash and stock bonuses paid to the participant
during the 36 months ending on the date of termination. For purposes of the
Continuity Plan, a change of control includes, but is not limited to, the
acquisition by any person of beneficial ownership of 20% or more of the
Company's outstanding voting securities or the failure of the individuals who
constituted the Board of Directors at the beginning of any period of 12
consecutive months to continue to constitute a majority of the Board during such
period.
Additional Information with Respect to Board of Directors Interlocks
and Insider Participation in Compensation Decisions
Joseph Ettore has been a member of the Board of Directors and an executive
officer of Ames since June 1994. However, he did not participate as a Board
member in Board deliberations in fiscal year 1998 relating to his own executive
compensation.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, that would otherwise incorporate
future filings, including this Proxy Statement, in whole or in part, the
Compensation Committee's Report on Executive Compensation and the Performance
Graph that follow below shall not be incorporated by reference into any such
filings.
The Compensation Committee's Report on Executive Compensation
The Compensation Committee of the Company's Board of Directors (the
"Committee") is responsible for recommending to the full Board of Directors (the
"Board") the compensation to be paid to the Company's principal executive
officers, including the Chief Executive Officer ("CEO"), the persons to whom and
the amount in which stock options should be granted by the Company under the
Company's 1998 Incentive Plan and the 1994 Option Plan and the persons to whom
shares of Restricted Stock should be awarded by the Company under the 1998
Incentive Plan and the 1995 Incentive Plan. As previously described, the Company
currently has employment contracts with Joseph R. Ettore, CEO, Denis T. Lemire,
Executive Vice President and Chief Operating Officer, and Rolando de Aguiar,
Executive Vice President and Chief Financial and Administrative Officer. During
Fiscal 1998, the Company entered into new employment agreements with Mr. Ettore
and Mr. de Aguiar. During March 1999, the Company entered into new employment
agreements with Mr. Lemire and Mr. de Aguiar. Set forth below is a report
submitted by the Committee regarding the compensation policies for fiscal year
1998, as they related to the Company's principal executive officers, including
the CEO.
Compensation Policies
In April of each year, the Committee reviews management's proposed annual
salaries for principal executive officers for the remainder of the new fiscal
year and the beginning of the next fiscal year. In determining whether to accept
management's proposed salaries, or recommend different salaries, the Committee
considers a number of factors, including but not limited to the following: (1)
the Company's financial performance for the prior fiscal year, including whether
the Company had a net profit or loss, the amount thereof, the reasons for such
performance, and whether such performance was primarily as a result of the
executive officers' performance, or whether the performance might have related
to unforeseen events or events not in the executives' control; and (2) the
extent to which an executive officer achieved certain objectives in his or her
area of primary responsibility that might have been set in the prior fiscal
year, or otherwise made a significant contribution to the Company. The Committee
believes that an important factor in attracting, motivating, and retaining key
executive officers is to insure that the compensation paid to such individuals
is competitive with that paid by comparable companies. In its review of
management's proposed goals under the Annual Bonus Plan for a fiscal year, the
Committee utilizes criteria similar to that which it uses in reviewing annual
salaries.
In considering the grant of stock options to employees, including the
Company's principal executive officers, the Committee considers the
responsibility level of the position, job performance and salary level, and
reviews the long-term objectives of management and the Board.
Fiscal Year 1998 Executive Compensation
Employing its compensation review factors described above, the Committee
recommended to the Board that management's salary recommendations for its senior
executives and the recommendations for eligible participants in, and the
Company's goals for, the Annual Bonus Plan for the fiscal year ending January
30, 1999 be adopted.
In accepting the salary recommendations for those executive officers who
had served in the prior year, the Committee noted that management's recommended
salaries were, for the principal executive officers, slightly higher in the
aggregate than the previous year's salaries. The Committee specifically
considered that the Company had increased net income from $17.3 million in
fiscal 1996 to $34.5 million in fiscal 1997, and, in addition, continued to take
extensive measures to enhance profitability in future years.
The Committee approved the grants of stock options to certain members of
management in fiscal year 1998 pursuant to the 1998 Incentive Plan, approved by
stockholders in May 1998, and the 1994 Option Plan, approved by stockholders in
June 1994. The purpose of the 1998 Incentive Plan and the 1994 Option Plan is to
provide incentives which will motivate highly competent persons as key employees
of the Company by providing them the opportunity to acquire an ownership
interest in the Company and thereby aligning the interests of such employees
with those of its stockholders. Such options were granted during fiscal year
1998 with an exercise price equal to the market price of the Common Stock on the
date of grant, so that individuals receiving such grants benefit only if
stockholders benefit through appreciation in the post-grant value of Ames
shares.
During fiscal year 1998, the Board of Directors approved the establishment
of the 1998 Stock Incentive Plan, which was recommended by the Committee and
subsequently approved by the stockholders at the Annual Meeting in May 1998.
The Compensation Committee
Alan Cohen, Chairman
Paul Buxbaum
Sidney S. Pearlman
<PAGE>
Stock Performance Graph
------------------------
The following graph compares the changes in the cumulative total return on
the Company's Common Stock with the cumulative total return of the NASDAQ Stock
Market Index (U.S. Companies) and the cumulative total return of the NASDAQ
Retail Stock Index during the preceding five fiscal years ended January 30,
1999. The comparison assumes $100 was invested on January 28, 1994 in the
Company's Common Stock and in each of the foregoing indices.
<TABLE>
1/28/94 1/27/95 1/26/96 1/25/97 1/31/98 1/30/99
<S> <C> <C> <C> <C> <C> <C>
Ames Department Stores, Inc. $100 $104 $58 $255 $575 $1,230
CRSP Index for NASDAQ Stock Market (U.S. Companies) $100 $95 $135 $177 $209 $326
CRSP Index for NASDAQ Retail Companies $100 $94 $130 $148 $212 $180
</TABLE>
Security Ownership of Certain Beneficial Owners
Ames is not aware of any person or group of persons who is known to have
beneficially owned more than 5% of the total outstanding shares of the common
stock as of April 1, 1999.
Security Ownership of Management
As of April 1, 1999, Ames' directors and officers as a group were
beneficial owners of 1,145,892 shares of its common stock. As used herein,
"beneficial ownership" means the sole or shared power to vote or invest either
common stock or warrants of Ames, or the right to acquire common stock or
warrants within sixty days.
Ames is not aware of any arrangements, including any pledge by any person
of securities of Ames, which may at a subsequent date result in a change of
control of Ames.
Listed below are the number of shares of common stock beneficially owned
by the named executive officers (those listed in the Summary Compensation Table)
and all executive officers as a group as of April 1, 1999:
<TABLE>
Total
Shares of
Name of Shares of Exercisable Common Stock Percent
Beneficial Common Stock Stock Beneficially of
Owner Owned (a) Options (b) Owned Class
<S> <C> <C> <C> <C>
J. Ettore 160,200 160,000 320,200 1.3%
D. Lemire 99,000 33,333 132,333 *
E. Bankers 62,750 0 62,750 *
D. Lissy 62,264 0 62,264 *
R. Carter 50,000 17,300 67,300 *
All executive officers
as a group 732,875 256,633 989,508 4.0%
(a) The shares listed include 180,000 shares of outstanding
Restricted Stock awarded under the 1998 Incentive Plan. These
shares vest 50% each on the fourth and fifth anniversaries of
the date of grant. Except as noted in the following sentence,
each named executive has sole voting and investment power in
the shares listed. Mr. Lemire holds 40,000 of his shares
jointly with his wife and Mr. Lissy holds 47,264 of his shares
jointly with his wife.
(b) Represents shares of common stock that may be acquired within
60 days through the exercise of stock options under the 1994
Management Stock Option Plan.
* Percentage is less than 1%
</TABLE>
Transactions with Management and Others
Mr. Ettore's brother-in-law is principal and partner of Tri-Star
Connection, Inc., a supplier to the Company. The Company did business with
Tri-Star prior to Mr. Ettore's joining the Company. In fiscal year 1998, in the
normal course of business, the company purchased approximately $1.0 million of
merchandise from Tri-Star Connection, Inc.
Since 1996, Mr. Buxbaum has owned a 50% equity interest in Dealco, Inc.,
an entity that has assisted Ames in identifying opportunities for close-out and
other off price purchases in exchange for commissions. In fiscal year 1998, Ames
paid approximately $135,198 and $4,056 for direct purchases and commissions,
respectively, to Dealco, Inc.
During fiscal 1998, Grant Sanborn, Senior Vice President, Store
Operations and Gregory Lambert, former Senior Vice President, Finance received
loans from Ames each in the amount of $100,000. Mr. Lambert's loan was forgiven
by Ames in connection with his termination in January 1999. Mr. Sanborn's loan
remains outstanding and bears interest at the annual rate of 5.51%. During April
1999, Eugene E. Bankers, Senior Vice President, Marketing, received a loan from
Ames in the amount of $178,000. Mr. Banker's loan remains outstanding and bears
interest at the annual rate of 5.21%. To the knowledge of Ames, there were no
other related transactions or business relationships, with directors or
executive officers of Ames during fiscal year 1998, or any currently proposed,
that would require disclosure.
Compliance with Section 16 (a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires Ames'
officers and directors and persons who own more than ten percent of Ames' common
stock, to file initial reports of ownership and changes in ownership with the
Securities and Exchange Commission and NASDAQ. Additionally, Item 405 of
Regulation S-K under the Exchange Act requires Ames to identify in its proxy
statement those individuals for whom one of the above referenced reports was not
filed on a timely basis during the most recent fiscal year or prior fiscal
years.
To the knowledge of Ames, there were no director or officer reporting
delinquencies except for a filing of a Form 4 by Paul Lanham regarding a sale of
stock and a filing of a Form 5 by Paul Buxbaum reflecting an acquisition (by
gift) of shares of common stock.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal No. 2)
Upon recommendation of the Audit Committee, the Board of Directors has
selected Arthur Andersen LLP, independent public accountants, as auditors of the
Company for the fiscal year ending January 29, 2000, subject to ratification by
stockholders at the Annual Meeting. It is intended that, unless otherwise
directed by the stockholders, proxies will be voted for the ratification and
approval of this appointment. A member of the firm of Arthur Andersen LLP will
be present at the meeting to make such statements as that firm may desire and to
answer questions by stockholders.
The Board of Directors unanimously recommends a vote FOR the appointment
of the named auditors. Your proxy will be so voted unless you specify otherwise.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals which are intended to be presented at the 2000
Annual Meeting of Stockholders must be received at the principal executive
offices of the Company on or before February 16, 2000. If a stockholder wishes
to present a proposal for consideration at the 2000 annual meeting of
stockholders of the Company without having such matter included in the proxy
statement of the Company for such annual meeting but does not give the Company
notice of such matter by March 30, 2000, then the proxies solicited by the Board
of Directors for such annual meeting may confer discretionary authority on the
persons holding such proxies to vote on such matter in accordance with their
judgment. Any such proposal should be submitted to the attention of David H.
Lissy, Secretary, Ames Department Stores, Inc., 2418 Main Street, Rocky Hill, CT
06067-2598.
FORM 10-K OR QUARTERLY REPORTS
To receive additional financial information about Ames, please write to
Carolyn M. Skahill, Investor Relations Department, Ames Department Stores, Inc.,
MS # 1030, 2418 Main Street, Rocky Hill, CT 06067-2598.
EXPENSES OF SOLICITATION
The expenses of solicitation of proxies hereunder will be paid by the
Company. Proxies will be solicited by mail. They may also be solicited by
directors, officers and employees of the Company (personally, by mail or
telephone), but such persons will not be specifically compensated for such
services. The Company will reimburse banks, brokers, nominees and other
custodians and fiduciaries for their reasonable out-of-pocket expenses in
forwarding the proxy soliciting materials to their principals.
OTHER MATTERS
The Board of Directors does not intend to present any other business at
the meeting and knows of no other matter which will be properly presented. If,
however, any other matter calling for a vote of stockholders is properly
presented at the meeting, it is the intention of the persons named in the
accompanying proxy to vote in accordance with their judgement on such matters.
By order of the Board of Directors
/s/ David H. Lissy
May 12, 1999 David H. Lissy,
Secretary
<PAGE>
AMES DEPARTMENT STORES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Francis X. Basile, Paul M. Buxbaum, Alan Cohen,
Joseph R. Ettore, Richard M. Felner, Sidney S. Pearlman, or any of them,
attorneys and proxies with full power of substitution, to represent and to vote
all of the shares of Common Stock of Ames Department Stores, Inc. standing on
the books of the Company in the name of the undersigned at the Annual Meeting of
Shareholders of the Company to be held at the Ames Corporate Headquarters, Rocky
Hill, Connecticut, on Wednesday, June 16, 1999, at 10:00 a.m., local time, and
at any and all adjournments thereof, upon the matters set forth on the reverse.
A majority of said attorneys and proxies shall be present and voting (or if only
one shall be present and voting, then that one) in person or by substitute or
substitutes at said meeting, or at any adjournments thereof, and shall have and
may exercise all of the powers of said attorneys and proxies hereunder. The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated May 12, 1999, and instructs said attorneys and proxies to
vote as set forth on the reverse side of this Proxy.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
(Continued, and to be signed and dated on the reverse side)
The Board of Directors recommends a vote FOR the items 1, 2, and 3.
Item 1 - The election of directors duly nominated: WITHHELD
(01)Francis X. Basile; (02)Paul M. Buxbaum; FOR FOR ALL
(03)Alan Cohen; (04)Joseph R. Ettore; [ ] [ ]
(05)Richard M. Felner; (06) Sidney S. Pearlman.
WITHHELD FOR: (Write that nominee's name in the space provided below.)
- -----------------------
Item 2 - The ratification and approval of Arthur
Andersen LLP as independent certified public FOR AGAINST ABSTAIN
accountants and auditors for the fiscal year [ ] [ ] [ ]
ending January 29, 2000.
Item 3 - In their discretion, upon such other
matters as may properly come before the meeting.
The shares represented by this Proxy will be voted as specified. If no choice is
specified, the proxies will be voted in favor of proposals 1and 2, and pursuant
to Item 3.
Please check this box if you
plan to attend the Annual
Meeting of Stockholders. [ ]
Signatures(s) Date
------------------------------------------- --------------
(Where shares are held jointly, each holder must sign. When signing as attorney,
executor, administrator, trustee or guardian, please add your title as such. If
signing as a corporation, please sign the full corporate name by an authorized
officer.) PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
VOTE BY TELEPHONE
QUICK***EASY***IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
You will be asked to enter a Control Number which is located in the lower
right hand corner of this form.
OPTION #1: To vote as the Board of Directors recommends on ALL proposals:Press 1
When asked, please confirm your vote by Pressing 1.
OPTION #2: If you choose to vote on each proposal separately, press 0. You will
hear these instructions:
Proposal 1: To vote FOR ALL nominees, press 1; WITHHOLD FOR ALL nominees,
press 9.
To withhold FOR AN INDIVIDUAL nominee, press 0 and listen to
the instructions.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
The instructions are the same for all remaining proposals.
When asked, please confirm your vote by Pressing 1.
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF VOTING BY PHONE.
Call **Toll Free** On a Touch Tone Telephone
1-800-840-1208-ANYTIME
There is NO CHARGE to you for this call.
AMES DEPARTMENT STORES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Francis X. Basile, Paul M. Buxbaum, Alan Cohen,
Joseph R. Ettore, Richard M. Felner, Sidney S. Pearlman, or any of them,
attorneys and proxies with full power of substitution, to represent and to vote
all of the shares of Common Stock of Ames Department Stores, Inc. standing on
the books of the Company in the name of the undersigned at the Annual Meeting of
Shareholders of the Company to be held at the Ames Corporate Headquarters, Rocky
Hill, Connecticut, on Wednesday, June 16, 1999, at 10:00 a.m., local time, and
at any and all adjournments thereof, upon the matters set forth on the reverse.
A majority of said attorneys and proxies shall be present and voting (or if only
one shall be present and voting, then that one) in person or by substitute or
substitutes at said meeting, or at any adjournments thereof, and shall have and
may exercise all of the powers of said attorneys and proxies hereunder. The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated May 12, 1999, and instructs said attorneys and proxies to
vote as set forth on the reverse side of this Proxy.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
(Continued, and to be signed and dated on the reverse side)
The Board of Directors recommends a vote FOR the items 1, 2, and 3.
Item 1 - The election of directors duly nominated: WITHHELD
(01)Francis X. Basile; (02)Paul M. Buxbaum; FOR FOR ALL
(03)Alan Cohen; (04)Joseph R. Ettore; [ ] [ ]
(05)Richard M. Felner; (06) Sidney S. Pearlman.
WITHHELD FOR: (Write that nominee's name in the space provided below.)
- -----------------------
Item 2 - The ratification and approval of Arthur
Andersen LLP as independent certified public FOR AGAINST ABSTAIN
accountants and auditors for the fiscal year [ ] [ ] [ ]
ending January 29, 2000.
Item 3 - In their discretion, upon such other
matters as may properly come before the meeting.
The shares represented by this Proxy will be voted as specified. If no choice is
specified, the proxies will be voted in favor of proposals 1and 2, and pursuant
to Item 3.
Please check this box if you
plan to attend the Annual
Meeting of Stockholders. [ ]
Signatures(s) Date
------------------------------------------- --------------
(Where shares are held jointly, each holder must sign. When signing as attorney,
executor, administrator, trustee or guardian, please add your title as such. If
signing as a corporation, please sign the full corporate name by an authorized
officer.) PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
