<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 240.14a-11(c) or 240.14a-12
THE MAY DEPARTMENT STORES COMPANY
-------------------------------------
(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/X/ 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 previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previous Paid:
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<PAGE> 2
MAY
The May Department Stores Company
611 Olive Street
St. Louis, Missouri 63101-1799
April 22, 1996
Dear Fellow Shareowner:
You are cordially invited to attend the annual meeting of
shareowners to be held at the Cervantes Convention Center, Washington at
8th Street, St. Louis, Missouri, on Friday, May 24, 1996, at 10:00 a.m.
Central Daylight Time.
We are pleased to have achieved our 21st consecutive year of
record sales and earnings per share from continuing operations. During
1995 we focused our efforts on delivering more value to our customers, by
broadening our assortments of higher-quality prestige merchandise,
introducing exciting new merchandise, speeding the delivery of merchandise
to the selling floor, and becoming a more powerful holiday and gift store.
We continue to target significant growth from new stores, acquisitions, and
expansions and remain dedicated to developing the best talent in retailing
and treating the customer right.
Thomas A. Hays, deputy chairman, will retire on April 30th. In
his 27 years with May, 13 as director, he has contributed significantly to
the success of the Company. We are deeply indebted to him and most
appreciative of all that he has done. We will miss him both personally and
professionally.
We appreciate your continued support for our efforts. We are
committed to continuing to grow and enhance the value of your investment.
It is important that your shares be represented at this
meeting. Even if you plan to attend, we encourage you to promptly sign,
date and return your proxy in the enclosed postage-paid envelope.
Very truly yours,
David C. Farrell Jerome T. Loeb
Chairman of the Board and President
Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
The annual meeting of shareowners of The May Department Stores Company, a
New York corporation (the "Company"), will be held at the Cervantes
Convention Center, Washington at Eighth Street, St. Louis, Missouri, on
Friday, May 24, 1996, at 10:00 a.m., Central Daylight Time, to consider and
act upon the following matters:
(a) The election of seven directors;
(b) The ratification of the appointment of independent auditors;
(c) The proposal to approve a change in the state of incorporation of the
Company from New York to Delaware pursuant to an Agreement and Plan
of Share Exchange, a copy of which is attached to the accompanying
proxy statement as Appendix A; and
(d) A proposal by a certain shareowner.
The foregoing matters are more fully described in the following proxy
statement. All common shareowners and owners of ESOP preference shares of
record at the close of business on April 4, 1996 (the "Record Date") are
entitled to vote at the meeting.
PROXY STATEMENT
This proxy statement is furnished to shareowners of common stock of the
Company and to owners of ESOP (Employee Stock Ownership Plan) preference
shares of the Company ("ESOP stock") in connection with the solicitation by
the board of directors of proxies for use at the annual meeting of
shareowners and at all adjournments thereof. This proxy statement and the
enclosed form of proxy are being mailed to shareowners on or about April
22, 1996.
Management knows of no matters to be presented at the meeting other than as
mentioned below. However, if any matter not specifically set forth in the
foregoing notice properly comes before the meeting, it is intended that the
holders of the proxies will vote thereon in their discretion. Any
shareowner has the power to revoke his or her proxy at any time during or
prior to the annual meeting.
Owners of common stock are entitled to cast one vote for each share owned.
The outstanding voting securities of the Company as of the Record Date,
which carry 264,295,934 votes, consisted of (i) 249,869,322 shares of
common stock (excluding 63,767,674 shares of treasury stock), and (ii)
704,069 shares of ESOP stock which carry 14,426,612 votes. The owners of
the outstanding common stock and of the ESOP stock are entitled to vote
together as a single class and, with respect to Proposal (c) on the
accompanying proxy card, as separate classes also.
The Company knows of no person who is the beneficial owner of more than 5%
of the Company's voting securities, except that:
(i) the Oppenheimer Group, Oppenheimer Tower, World Financial Center, New
York, New York, has filed a Form 13G indicating that, as of February 1,
1996, it owned 13,403,147 shares of common stock (5.38% of the outstanding
shares of common stock); and
(ii) as of the Record Date, the Company's Profit Sharing Plan beneficially
owned 11,023,411 shares of common stock (4.4% of the outstanding shares of
common stock) and 100% of the outstanding shares of ESOP stock which carry
14,426,612 votes. Members direct the voting of all shares held by the
Profit Sharing Plan. Together, the ESOP stock and the common stock owned by
the Profit Sharing Plan represent 9.63% of the votes which can be cast at
the meeting.
THE ELECTION OF DIRECTORS
Proposal (a) on the accompanying proxy card.
Nominees. The board of directors proposes the election of seven directors.
These seven directors, together with the seven directors whose terms
continue beyond this year's annual meeting, will comprise the board of
directors.
The shares represented by the accompanying proxy card will be voted (unless
voting authority is withheld) in favor of electing the persons named below
as directors. Such proxies will be voted to elect Eugene S. Kahn and
Andrall E. Pearson to serve as directors for terms expiring at the 1998
annual meeting of shareowners and Richard L. Battram, David C. Farrell,
Robert D. Storey, Anthony J. Torcasio and Edward E. Whitacre, Jr., to serve
as directors for terms expiring at the 1999 annual meeting of shareowners
and until their respective successors have been elected and qualified.
Messrs. Loeb, Palmer, Quinlan and Stiritz were previously elected to serve
as directors for terms expiring at the 1997 annual meeting of shareowners,
and Mrs. Kaplan and Messrs. Meyer and Weidenbaum were previously elected to
serve as directors for terms expiring at the 1998 annual meeting of
shareowners, and, accordingly, these directors do not stand for election at
the 1996 annual meeting. If the Reincorporation (as defined below under
the caption "PROPOSAL TO CHANGE THE COMPANY'S STATE OF INCORPORATION FROM
NEW YORK TO DELAWARE") is approved by the Company's shareowners, each of
the directors elected at the annual meeting and each of the other directors
named above will continue to serve as directors of the reincorporated
Delaware entity for the same term as such director has been elected to
serve. (See Proposal (c) below.)
If any nominee should subsequently become unavailable for election, the
holders of proxies may, in their discretion, vote for a substitute or the
board of directors may reduce the number of directors to be elected. The
ages shown on the following pages are as of May 24, 1996, and the shares
shown are the shares of common stock of the Company over which the director
had sole or shared voting and investment power as of March 25, 1996. No
director reported beneficial ownership of any shares of preferred stock of
the Company other than ESOP stock owned by the Profit Sharing Plan. The
shares reported reflect interests in shares owned by the Company's Profit
Sharing Plan.
The executive officers and directors, as a group (23 individuals), (i) had,
as of March 25, 1996, sole voting and investment power over 2,133,802
shares of common stock (less than 1% of common shares outstanding) and
disclaim beneficial ownership as to 4,384 of such shares and (ii) have the
right to acquire sole or shared voting and investment power over 381,985
shares on or before May 24, 1996, and disclaim beneficial ownership as to
all of such shares. The figures in this paragraph include the shares
reported on the following pages with respect to each of the nominees.
1
<PAGE> 4
[PHOTO] David C. Farrell, Director Since 1974, Age 62 (Standing for
election at this meeting)
Mr. Farrell, Chairman of the Board and Chief Executive Officer of
the Company, joined the Company in 1956. He became Chief Executive
Officer in 1979 and Chairman of the Board in 1985. He is also a
director of Emerson Electric Co. and Ralston Purina Company. Mr.
Farrell beneficially owns 879,781 shares and has the right to
acquire an additional 116,250 shares on or before May 24, 1996.
- -------------------------------------------------------------------------------
[PHOTO] Richard L. Battram, Director Since 1984, Age 61 (Standing for
election at this meeting)
Mr. Battram, Executive Vice Chairman of the Company, joined the
Company in 1972. He became Vice Chairman of the Company in 1984
and Executive Vice Chairman in 1996. Mr. Battram is also a
director of Boatmen's Bancshares, Inc. Mr. Battram beneficially
owns 204,045 shares and has the right to acquire an additional
48,125 shares on or before May 24, 1996.
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[PHOTO] Eugene S. Kahn, Became a Director in 1996, Age 46 (Standing for
election at this meeting)
Mr. Kahn, Vice Chairman of the Company, joined the Company in
1990. He served as President of G. Fox from 1990 to 1992 and as
President and Chief Executive Officer of Filene's from 1992 to
March 1996 when he became Vice Chairman. Mr. Kahn beneficially
owns 128,235 shares and has the right to acquire an additional
38,750 shares on or before May 24, 1996.
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[PHOTO] Helene L. Kaplan, Director Since 1985, Age 62
Mrs. Kaplan is Of Counsel to the law firm of Skadden, Arps, Slate,
Meagher & Flom. She was a partner in the law firm of Webster &
Sheffield from 1978 to 1985 and served as Counsel to Webster &
Sheffield from 1986 to 1990. She is a director of Chase Manhattan
Corporation, Metropolitan Life Insurance Company, Mobil Corporation
and NYNEX Corporation. Mrs. Kaplan also serves as a trustee or
director of many non-profit cultural, educational and scientific
organizations. Mrs. Kaplan beneficially owns 8,100 shares.
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[PHOTO] Jerome T. Loeb, Director Since 1984, Age 55
Mr. Loeb, President of the Company, joined the Company in 1964. He
served as Vice Chairman from 1986 to 1993, when he became President.
Mr. Loeb also serves as the Company's chief financial officer. Mr.
Loeb beneficially owns 285,343 shares (and disclaims beneficial
interest in 4,384 of those shares) and has the right to acquire an
additional 52,635 shares on or before May 24, 1996.
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[PHOTO] Edward H. Meyer, Director Since 1979, Age 69
Mr. Meyer is Chairman of the Board of Directors, President and
Chief Executive Officer of Grey Advertising Inc. Mr. Meyer joined
Grey Advertising Inc. in 1956 and became President in 1968, Chief
Executive Officer in 1970 and Chairman of the Board in 1972. Mr.
Meyer is also a director of Bowne & Co., Inc., Ethan Allen Interiors,
Inc. and Harman International Industries, Incorporated, and he is a
director/trustee of 31 mutual funds advised by Merrill Lynch Asset
Management, Inc. Mr. Meyer beneficially owns 14,340 shares.
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[PHOTO] Russell E. Palmer, Director Since 1984, Age 61
Mr. Palmer is the Chairman and Chief Executive Officer of The
Palmer Group, a corporate investment firm. He is the retired
managing director and Chief Executive Officer of Touche Ross
International and the retired Dean of The Wharton School and
Reliance Professor of Management and Private Enterprise at the
University of Pennsylvania. Mr. Palmer is also a director of
Allied-Signal Inc., Bankers Trust New York Corporation, Federal
Home Loan Mortgage Corporation, GTE Corporation, Imasco Limited
and Safeguard Scientifics, Inc. Mr. Palmer beneficially owns 4,700
shares.
2
<PAGE> 5
[PHOTO] Andrall E. Pearson, Director Since 1982, Age 70 (Standing for
election at this meeting)
Mr. Pearson is a general partner in Clayton, Dubilier and Rice, a
private investment firm, and has served as the Chairman of the
Board of Kraft Foodservice, Inc. since February 13, 1995. He is
the retired President and Chief Operating Officer of PepsiCo, Inc.
He also served as the Class of 1958 Professor of Business
Administration, Harvard University Graduate School of Business
Administration. Mr. Pearson is also a director of Homeland Stores,
Inc., PepsiCo, Inc., Lexmark International and Travelers, Inc. Mr.
Pearson beneficially owns 4,700 shares.
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[PHOTO] Michael R. Quinlan, Director Since 1993, Age 51
Mr. Quinlan is Chairman and Chief Executive Officer of McDonald's
Corporation. He joined McDonald's in 1963 and served as Chief
Operating Officer from 1982 to 1987 and as President from 1982 to
1989. He became Chief Executive Officer in 1987 and Chairman in
1990. Mr. Quinlan is also a director of Dun & Bradstreet and a
member of the board of trustees of Ronald McDonald Children's
Charities and Loyola University of Chicago. Mr. Quinlan
beneficially owns 3,000 shares.
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[PHOTO] William P. Stiritz, Director Since 1983, Age 61
Mr. Stiritz is Chairman of the Board of Directors and Chief Executive
Officer of Ralston Purina Company. Mr. Stiritz is also a director of
Angelica Corporation, Ball Corporation, Boatmen's Bancshares, Inc.,
Interstate Bakeries Corporation, Ralcorp Holdings, Inc. and
Reinsurance Group of America, Inc. Mr. Stiritz beneficially owns
4,700 shares.
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[PHOTO] Robert D. Storey, Director Since 1989, Age 60 (Standing for
election at this meeting)
Mr. Storey is a partner in the law firm of Thompson, Hine and Flory
in Cleveland, Ohio. Prior to joining his present law firm in 1993,
Mr. Storey was a partner for 19 years in the law firm of Burke, Haber
& Berick, also in Cleveland. Mr. Storey is also a director of Bank
One, Cleveland, GTE Corporation and The Procter & Gamble Company and
a trustee of the Kresge Foundation. Mr. Storey beneficially owns
4,834 shares.
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[PHOTO] Anthony J. Torcasio, Became a Director in 1996, Age 50 (Standing
for election at this meeting)
Mr. Torcasio, President and Chief Executive Officer of May
Merchandising Company, joined the Company in 1967. He served as
President and Chief Executive Officer of L. S. Ayres from 1988 to
1991 and as President and Chief Executive Officer of Famous-Barr
from 1991 to 1993, when he assumed his current position. Mr.
Torcasio beneficially owns 82,315 shares and has the right to
acquire an additional 51,125 shares on or before May 24, 1996.
- -------------------------------------------------------------------------------
[PHOTO] Murray L. Weidenbaum, Director 1978-1981 and Since 1982, Age 69
Dr. Weidenbaum is Chairman of the Center for the Study of American
Business and is the Mallinckrodt Distinguished University Professor
at Washington University. He joined the faculty of Washington
University in 1964, and from time to time served in certain
governmental positions, including Chairman of the Council of Economic
Advisers in 1981 and 1982. Dr. Weidenbaum is also a director of
Harbour Group, Ltd. and Tesoro Petroleum. Dr. Weidenbaum beneficially
owns 4,700 shares.
- -------------------------------------------------------------------------------
[PHOTO] Edward E. Whitacre, Jr., Director Since 1989, Age 54 (Standing for
election at this meeting)
Mr. Whitacre is Chairman of the Board and Chief Executive Officer
of SBC Communications, Inc. (formerly Southwestern Bell Corporation)
and has served in this capacity since January 1990. He is a director
of Anheuser-Busch Companies, Inc., Burlington Northern Santa Fe
Corporation and Emerson Electric Co. Mr. Whitacre beneficially owns
4,700 shares.
3
<PAGE> 6
Executive Compensation. The Summary Compensation Table on the next page
shows the compensation in each of the last three fiscal years of the
executive officers whose compensation is required to be disclosed pursuant
to current proxy rules.
Performance Based Bonus Plans. The Company has three performance based
bonus plans that cover approximately 3,280 associates. Each plan links a
major portion of the associates' potential total pay to the associates'
performance and to the Company's performance.
Executive Incentive Compensation Plan for Corporate Executives. The
Executive Incentive Compensation Plan for Corporate Executives applies to 7
individuals, including the five individuals named in the Summary Compensation
Table. Participants may receive annual cash awards (for individual fiscal
years) and long-term cash awards (for three-year long-term performance
periods). These awards are based upon attaining earnings per share and return
on net assets (RONA) performance standards relating to the Company as a whole
and are also based on the performance of the Company's stock price over the
long-term performance periods. In addition, awards are subject to an automatic
upward or downward adjustment to reflect the Company's performance as compared
to the performance of the group of competitors included in the Company's stock
price performance graph on page 8. The plan is administered by the executive
compensation and development committee of the board of directors (the
"Committee"), which is comprised solely of non-management directors. The
performance standards are set by the Committee at the beginning of the
measurement periods and are measured by the Committee after the close of the
measurement periods. The maximum annual award payable under the plan's formula
is 45% (90% for the Chief Executive Officer) of the executive's base salary,
and the maximum long-term award payable under the plan's formula is 45% (90%
for the Chief Executive Officer) of the executive's average base salary over
the three-year period. The awards for the named executive officers can be
adjusted downward on a discretionary basis by the Committee. (See the Long-
Term Incentive Plan table on this page.)
Executive Incentive Compensation Plan for Company Principals. The Executive
Incentive Compensation Plan for Company Principals applies to the 19
presidents, chairmen and vice chairmen of the Company's operating divisions.
Participants may receive annual cash awards (for individual fiscal years) and
long-term cash awards (for three-year long-term performance periods). These
awards are based upon attaining earnings growth and RONA performance standards
relating to the participants' respective divisions and are also based on the
performance of the Company's stock price over the long-term performance
periods. The plan is administered by the Committee, which may (and has)
delegated certain decisions regarding the implementation of the plan to a
management committee comprised of the Chief Executive Officer, the Deputy
Chairman and certain other management executives, none of whom can be
participants in the plan (the "Management Committee"). The performance
standards are set by the Management Committee at the beginning of the
measurement periods and are measured by the Management Committee after the
close of the measurement periods. For 1995, the maximum annual award payable
under the plan's formula is 30% of the participants' base salary, and the
maximum long-term award payable under the plan's formula is 45% of the
participants' average base salary over the three-year period. The Management
Committee may adjust any of the awards upward or downward, in its sole and
absolute discretion. Awards are reviewed annually by the Committee.
Performance Incentive Plan. The Performance Incentive Plan applies to
approximately 3,250 associates of the Company and its subsidiaries.
Participants may receive annual cash awards based upon attaining certain
measures of performance tailored to the participant's job. Performance
standards are set at the beginning of the fiscal year and measured after
the close of the fiscal year. The maximum annual award payable under
the plan's formula ranges from 10% to 50% of the associate's base salary.
Approximately $30.5 million was awarded to all participants in the three
plans for the performance periods ending in the last fiscal year. Amounts
awarded under these plans are reflected in the Summary Compensation Table.
During the last fiscal year, each of the five executive officers named in
the Summary Compensation Table became eligible to receive a potential long-term
cash award for the three fiscal years 1995 to 1997. The table below shows the
maximum long-term cash awards payable to each of them for that long-term
period.
<TABLE>
- ------------------------------------------------------------------
LONG-TERM INCENTIVE PLAN
AWARDS IN LAST FISCAL YEAR
<CAPTION>
Performance
or Other Estimated Maximum
Period Until Future Payouts
Maturation Under Non-Stock
Name or Payout Price Based Plan <F1>
- ------------------------------------------------------------------
<S> <C> <C>
David C. Farrell Earned over $1,072,500
Thomas A. Hays three fiscal $438,750
Jerome T. Loeb years (1995-1997) $412,088
Richard L. Battram ending 1/31/98 $359,963
Anthony J. Torcasio $286,050
- ------------------------------------------------------------------
<FN>
<F1> Payouts may range from $0 to the "maximum" award value. The
estimate above assumes that the individual remains eligible
to participate throughout the three-year period, the maximum
performance goals have been met and that the stock price has
increased sufficiently to result in the maximum stock price
adjustment.
</TABLE>
4
<PAGE> 7
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual
Compensation <F2> Long-Term Compensation
---------------------------------------------------------------------
Awards Payouts
----------------------------------------
Restricted Long-Term All Other
Name and Bonus Stock Stock Incentive Compen-
Principal Position Year Salary<F1><F3> <F1><F4> Awards<F5> Options<F6> Payouts<F1><F7> sation<F8>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
David C. Farrell 1995 $1,175,000 $720,000 $0 35,000 $675,300 $5,576
Chairman of the Board and 1994 $1,100,000 $532,820 $0 35,000 $827,584 $5,329
Chief Executive Officer 1993 $1,100,000 $660,000 $0 40,000 $896,076 $10,729
Thomas A. Hays 1995 $975,000 $292,500 $0 23,500 $284,800 $5,576
Deputy Chairman 1994 $961,250 $236,136 $0 23,500 $344,985 $5,329
1993 $910,000 $276,000 $0 26,680 $362,504 $10,729
Jerome T. Loeb 1995 $843,750 $255,000 $0 23,500 $239,700 $5,576
President 1994 $812,500 $199,807 $2,062,500 73,500 $277,351 $5,329
1993 $739,952 $232,500 $749,376 26,680 $275,187 $10,729
Richard L. Battram 1995 $743,750 $225,000 $0 17,500 $213,100 $5,576
Executive Vice Chairman 1994 $713,750 $175,588 $343,125 17,500 $254,076 $5,329
1993 $672,500 $204,000 $0 20,000 $262,035 $10,729
Anthony J. Torcasio 1995 $600,000 $180,000 $1,299,375 17,500 $165,100 $5,576
Chief Executive Officer 1994 $550,000 $145,314 $0 17,500 $181,818 $5,329
May Merchandising Company 1993 $503,205 $150,000 $0 20,000 $168,354 $10,729
- ----------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Total Cash Compensation. As supplemental information, the following table shows the total cash compensation
(Salary, Bonus and Long-Term Incentive Payouts) paid to the named executive officers for the fiscal year.
<CAPTION>
Year Mr. Farrell Mr. Hays Mr. Loeb Mr. Battram Mr. Torcasio
<S> <C> <C> <C> <C> <C>
1995 $2,570,300 $1,552,300 $1,338,450 $1,181,850 $945,100
1994 $2,460,404 $1,542,371 $1,289,658 $1,143,414 $877,132
1993 $2,656,076 $1,548,504 $1,247,639 $1,138,535 $821,559
<F2> The Summary Compensation Table does not reflect certain non-cash compensation made available to the named
executive officers for the last three fiscal years because the aggregate amounts of such compensation are below
the required disclosure thresholds.
<F3> The table reflects salary paid or deferred during the respective fiscal years shown. Annual salary changes for
each of the named executives and for all salaried associates normally occur on May 1 of each year.
<F4> "Bonus" reflects the annual portion of the bonus payable under the Company's Executive Incentive Compensation
Plan for Corporate Executives. See "Performance Based Bonus Plans" on page 4. The bonuses were paid or were
deferred under the Company's Deferred Compensation Plan, which provides that all deferrals will be distributed to
participants in lump sum cash payments immediately following a change in control of the Company (as defined in
the plan).
<F5> Restricted Stock is valued at the average price of the common stock on the date of grant. The aggregate value of
the restricted stock owned by each of the named executive officers as of the end of the last fiscal year (at
$44.25 per share) was $863,229 for Mr. Farrell (19,508 shares), $2,112,849 for Mr. Hays (47,748 shares),
$3,947,100 for Mr. Loeb (89,200 shares), $442,500 for Mr. Battram (10,000 shares), and $2,655,000 for Mr.
Torcasio (60,000 shares). Dividends are paid on these shares quarterly. Mr. Battram's 1994 grant of 10,000
shares vests one year after the date of the grant. Shares of restricted stock are included in the common stock
ownership numbers on pages 1 through 3. Under some circumstances, restricted shares continue to be forfeitable
for up to 10 years from the date of grant. The restricted stock plan and the 1994 Stock Incentive Plan provide
that, upon a change in control of the Company (as defined in the plans), restricted stock grants will be fully
vested and all restrictions will be waived.
<F6> "Stock Options" represent non-qualified 10-year options under the Company's 1976 and 1987 stock option plans and
the 1994 Stock Incentive Plan. Generally, one-fourth of the options become exercisable on each of the first
through fourth anniversaries of the grant date. The plans provide that all outstanding options become fully
exercisable upon the occurrence of a change in control of the Company (as defined in the plans). 1993 option
numbers are adjusted to reflect the June 1, 1993 2-for-1 stock split.
<F7> "Long-Term Incentive Payouts" represents the long-term portion of the bonus payable under the Executive Incentive
Compensation Plan for Corporate Executives. Such amounts were paid or were deferred under the Company's Deferred
Compensation Plan. See "Performance Based Bonus Plans" on page 4 and note 4 above.
<F8> "All Other Compensation" represents the Company's effective matching allocation to the named individuals'
accounts in the Company's Profit Sharing Plan. See "Profit Sharing Plan" on page 6.
</TABLE>
5
<PAGE> 8
Profit Sharing Plan. During 1995, over 49,000 associates invested $67.3
million in the Profit Sharing Plan, $42.5 million of which was invested in
the Company's common stock. In addition, $32.6 million of the Company's
common stock and ESOP stock was added to associates' accounts as a result of
the matching formula. As of the Record Date, the plan beneficially owned 4.4%
(11,023,411 shares) of the outstanding common stock and 100% (equivalent to
14,426,612 shares of common stock) of the outstanding ESOP stock, which
together represent 9.63% of the voting power of the Company.
The plan links its benefits to the Company's performance each year and
to the value of the Company's common stock. Generally, the Company matches up
to the first 5% of pay each pay period that an associate invests in the plan.
In 1995, our associates made $43.8 million of "matchable" contributions to
the plan. The matching rate for any year is variable and discretionary. The
matching rate is based on the Company's earnings per share (EPS) performance.
If the EPS increases by 6% from one year to the next, the matching rate is 50%
(i.e., 50 cents for every matchable dollar invested). The matching rate
increases by 1.25 percentage points over 50% for every one percentage point by
which the EPS increase exceeds 6%; the matching rate also decreases based on
the same formula if the EPS change is less than a 6% increase. In addition, if
the price of the Company's common stock exceeds $24.74 per share, the effective
matching rate will be higher as a result of the operation of the ESOP feature
of the plan (added in April 1989). The effective matching rate for 1995 was
74.4% and has averaged 74.3% over the last five years.
Associates with one year of service (with at least 1,000 hours of paid
employment) and who are at least 21 years old may participate. The plan
offers associates four professionally managed investment funds for associate
contributions: a money market fund, a fixed income index fund, a common stock
index fund and a Company common stock fund.
Retirement Plans. The Company has a noncontributory retirement plan
covering substantially all associates who are paid for 1,000 or more hours
per year.
In addition, the Company has a supplementary retirement plan (the
"Supplementary Plan") covering, generally, associates who, at one time, had
compensation in a calendar year equal to at least twice the amount of "wages"
then subject to the payment of old age, survivor and disability insurance
Social Security taxes. Under the Supplementary Plan, covered associates
become entitled to a single life annuity retirement benefit equal to (i) 2%
of the average of the highest three out of the last five fiscal years of
final annual salary and bonuses (reported as salary, bonus and long-term
incentive payouts in the Summary Compensation Table) multiplied by their
years of service, up to a maximum of 25 years (ii) reduced by primary Social
Security benefits, Company-provided benefits provided under the Company's
retirement, profit sharing and disability plans and, if appropriate, by
amounts to reflect early retirement. The minimum benefit under the
Supplementary Plan is the amount of Company-provided benefits which would
have been payable under the Company's retirement and profit sharing plans,
determined without regard to any statutory limits, less the amount of
Company-provided benefits actually payable under those plans.
The Supplementary Plan provides that, in the event of a change in control
(as defined in the plan), vesting would be accelerated in limited circumstances
and benefits would not be forfeitable. The Company established a trust which
would be funded upon a potential change in control to provide accrued
benefits under the Supplementary Plan and which would, upon an actual change
in control, become irrevocable.
The following table shows the estimated aggregate annual benefits
payable upon retirement (assuming a retirement in 1995) for persons in
specified compensation and years of service classifications covered by the
Company's retirement plan and, if eligible, the Supplementary Plan. (The
individuals named in the Summary Compensation Table had, as of
December 31, 1995, the following years of service, respectively: David C.
Farrell, 40 years; Thomas A. Hays, 27 years; Jerome T. Loeb, 32 years;
Richard L. Battram, 23 years; and Anthony J. Torcasio, 24 years.)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Average
Annual Years of Service
Earnings --------------------------------------------------------------------------
20 25 30 35 40
<S> <C> <C> <C> <C> <C>
$ 800,000 $176,455 $217,006 $257,557 $298,109 $338,660
$1,000,000 223,374 274,257 325,141 376,024 426,908
$1,300,000 293,752 360,134 426,517 492,898 559,280
$1,600,000 364,131 446,011 527,891 609,771 691,651
$1,900,000 434,509 531,887 629,266 726,644 824,023
$2,200,000 504,887 617,763 730,640 843,517 956,394
$2,500,000 575,265 703,641 832,015 960,390 1,088,765
$2,800,000 645,643 789,517 933,390 1,077,264 1,221,137
- ---------------------------------------------------------------------------------------
</TABLE>
With respect to the last fiscal year, the expense to the Company of the
Company's retirement plans for associates aggregated $31.2 million.
Employment Contracts, Termination of Employment and Change in Control
Arrangements. More than five years ago, the Company entered into severance
agreements with the five executive officers named in the Summary Compensation
Table. The agreements provide that the executive is entitled to benefits if
(i) a change in control of the Company (as defined in the agreement) occurs
and (ii) during the 180 days following such change in control, the executive
determines in good faith that as a result of the change in control he is
unable to execute his duties effectively. Following such 180-day period,
employment must be actually or constructively terminated other than for cause
or disability during the term of the agreement for benefits to be payable.
Under the severance agreements, a change in control
6
<PAGE> 9
would include any of the following events: (i) any "person," as defined in the
Securities Exchange Act of 1934, as amended, acquires 50% or more of the
Company's voting securities; (ii) a majority of the Company's directors are
replaced during a two-year period; or (iii) shareowners approve certain
mergers, or a liquidation, or sale of all or substantially all of the Company's
assets.
The severance agreements provide a lump sum payment equal to three times
the sum of (i) base salary at termination or, if greater, base salary
immediately prior to the change in control plus (ii) target bonus with maximum
share price adjustment for the year in which the change in control occurs. Each
agreement also provides 36 months of continued medical and life insurance
benefits and, if the terminated executive is within five years of his or her
eligibility date, eligibility in the Company's post-retirement life and
medical insurance benefits. The agreements with officers who are subject to
Section 16(b) of the Securities Exchange Act of 1934 provide for a cash
payment in cancellation of stock options. The agreement with the Chairman of
the Board and Chief Executive Officer provides a "tax gross-up" payment to
ensure that the above-mentioned payments are not subject to net reduction due
to imposition of excise taxes which are payable under Section 4999 of the
Internal Revenue Code. The agreement with the President provides for 50% of
such payment. The Company established a trust which would be funded upon a
potential change in control to provide the benefits under the severance
agreements and which would, upon an actual change in control, become
irrevocable.
Messrs. Battram, Farrell, Loeb and Torcasio have individual contracts
of employment with the Company which expire at various dates on or before
September 30, 2000 and which provide for annual base salaries at rates not
less than the amounts reported in the Summary Compensation Table.
<TABLE>
- ----------------------------------------------------------------------------------------------------
STOCK OPTION GRANTS IN FISCAL 1995
<CAPTION>
Percent of
Options Total Options Exercise or Expiration Grant Date
Name Granted<F1> Granted Base Price<F2> Date Present Value<F3>
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David C. Farrell 35,000 2.3% $36.5625 5/10/2005 $386,050
Thomas A. Hays 23,500 1.5% $36.5625 5/10/2005 $259,205
Jerome T. Loeb 23,500 1.5% $36.5625 5/10/2005 $259,205
Richard L. Battram 17,500 1.1% $36.5625 5/10/2005 $193,025
Anthony J. Torcasio 17,500 1.1% $36.5625 5/10/2005 $193,025
<FN>
<F1> One-fourth of the options become exercisable on May 10, 1996, the first anniversary of the date
of the grant, and on each of the second through fourth anniversaries thereafter.
<F2> The exercise price is the market price on the date the options were granted.
<F3> The Grant Date Present Values were determined using the Black-Scholes option pricing model. The
estimated values under the model are based on assumptions as to variables such as option term,
interest rates, stock price volatility and dividend yield. The actual value, if any, the option
holder may realize will depend on the excess of the actual market price of the stock over the
exercise price on the date the option is exercised. The Grant Date Present Value calculation is
presented in accordance with SEC proxy disclosure requirements, and the Company has no way to
determine whether the Black-Scholes model can properly determine the value of an option. There
is no assurance that the value that may be realized by the option holder will be at or near the
value estimated by the Black-Scholes model. The model assumes: (a) an option term of 10 years,
which represents the length of time between the grant date of options under the Company's plans
and the latest possible exercise date by the named executive officers; (b) an interest rate
that represents the interest rate on a U.S. Treasury Bond with a maturity date corresponding to
that of the option's term; (c) stock price volatility calculated using daily stock prices for
the 250 trading days prior to the grant date; and (d) dividends at the rate of $1.14 per share,
the annual dividend rate with respect to a share of stock on the grant date.
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
AGGREGATED STOCK OPTION EXERCISES IN FISCAL 1995
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Total Number of Value of Unexercised
Shares Total Unexercised Options Held In-the-Money Options<F2>
Acquired Gain ----------------------------- ----------------------------
Name on Exercise Realized<F1> Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David C. Farrell 360,646 $6,633,695 28,750 191,250 $185,859 $3,064,453
Thomas A. Hays 33,565 $446,393 19,215 61,135 $124,154 $474,121
Jerome T. Loeb 18,644 $278,512 42,215 109,465 $514,997 $686,513
Richard L. Battram 20,644 $240,430 49,375 45,625 $689,647 $354,101
Anthony J. Torcasio 8,258 $85,854 33,625 44,375 $404,555 $327,695
- ---------------------------------------------------------------------------------------------------------------
<FN>
<F1> The amounts "realized" reflect the appreciation on the date of exercise (based on the excess of the fair
market value of the shares on the date of exercise over the exercise price). However, because the
executive officers may keep the shares they acquired upon the exercise of the option (or sell them at
different prices), these amounts do not reflect cash realized upon the sale of those shares.
<F2> "In the-Money Options" are options outstanding at the end of the last fiscal year for which the fair
market value of the Company's common stock at the end of the last fiscal year ($44.25 per share) exceeded
the exercise price of the options.
</TABLE>
7
<PAGE> 10
Stock Price Performance. The graph below compares the Company's cumulative
total shareowner return against the returns of the S&P's 500 stock index and
of an index of the competitors used in determining bonuses under the
Company's performance based bonus plans.
Comparison of 5-Year Cumulative Return
May, S&P 500 Index and Competitor Group Index
[GRAPH]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
May $100.0 $122.2 $160.9 $184.8 $168.6 $219.5
S&P 500 $100.0 $122.7 $135.7 $153.1 $154.0 $213.5
Competitor Group $100.0 $114.7 $137.2 $140.6 $127.3 $141.5
- ---------------------------------------------------------------------------------------------
</TABLE>
The graph assumes $100 invested on January 27, 1990 (the beginning of fiscal
1990) in Company common stock, in the S&P 500 Index and in an index of the
competitors (which is comprised of Dayton Hudson, Dillard's, J.C. Penney,
Melville, Mercantile and Nordstrom) used in determining bonuses under the
Company's performance based bonus plans and assumes dividends are reinvested.
Executive Stock Ownership. The Company encourages all of its associates to make
a personal investment in Company stock, further aligning their interests with
those of shareowners. In 1994, the Company adopted the following minimum stock
ownership guidelines for the Company's top management group:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Ownership
Guideline
(Multiple of
Executive Level Base Salary)
- ------------------------------------------------------------------
<S> <C>
Chief Executive Officer 5.0 times
Corporate Senior Management
Committee<Fa> 3.5 times
Presidents and Chairmen of Operating
Divisions 2.5 times
Corporate Executive Vice Presidents and
Senior Vice Presidents and the
Senior Management Committees of
Operating Divisions 1.5 times
- ------------------------------------------------------------------
<FN>
<Fa> Currently includes Mr. Farrell (whose guideline is the CEO guide-
line above) and the other named executive officers.
</TABLE>
These minimum guidelines are expected to be satisfied over the next three
years and may be satisfied through direct ownership of shares, share
equivalents under the Company's Profit Sharing Plan or phantom stock under
the Deferred Compensation Plan.
Executive Compensation and Development Committee Report. The executive
compensation and development committee (the "Committee") reviews and
approves, among other things, the compensation payable to each of the
executive officers named in the Summary Compensation Table. Each member of
the Committee is an independent, non-management director.
Compensation Philosophy. The Company's basic compensation philosophy is
that the compensation program should:
* attract, retain and motivate highly qualified executives;
* be competitive;
* align the executive's compensation with the Company's objectives; and
* be meaningfully related to the value created for shareowners.
Compensation for senior executives is comprised of a base salary, bonus
opportunities (a significant portion of total compensation) and long-term
stock related incentives. The Committee reviews compensation based on the
foregoing philosophy, on the performance of the Company and on competitive
practices. As part of its review of competitive pay levels, the Committee
looks at the base salary levels, annual bonus levels and long-term related
incentives at a broad group of companies, including the companies which are
included in the Company's stock price performance graph on this page, other
retail companies and companies in other industries of similar size and
complexity to the Company. The Committee did not target a specific percentage
level of compensation within the group, but, as discussed under the
"Additional Information" heading below, determined, based on that review,
that the Company's current overall compensation program is consistent with
and furthers the compensation philosophy described above.
Base Salary. Base salaries are reviewed by the Committee on an annual
basis and may be increased at that time based on (i) the individual's
contribution to the Company, (ii) competitive pay levels and (iii)
management's recommendations. As a result of its overall review, the annual
rate of the base salaries for the named executive officers increased in May
1995 by an average of 3.6%.
Bonus Opportunities. The Company has three performance based bonus
plans that cover approximately 3,280 associates. Each plan links a major
portion of the associates' potential total pay to the associates' performance
and to the Company's performance. The three plans are described on page 4.
The bonus opportunities for the most senior executives and executive
officers include both annual and long-term opportunities.
8
<PAGE> 11
Each named executive participates in the Executive Incentive Compensation Plan
for Corporate Executives, which provides an opportunity for both an annual
bonus and a long-term bonus.
For 1995, the annual bonus opportunity was for up to 45% (90% for Mr.
Farrell) of base salary, and was determined based on whether the Company
achieved certain performance levels (threshold, target or maximum) determined
in advance by the Committee for (i) earnings per share ("EPS") and (ii)
return on net assets ("RONA") over the year. The annual bonus is subject to
an automatic upward or downward adjustment based on the Company's performance
relative to the EPS and RONA performances of the predetermined group of
competitors included in the Company's stock price performance graph on page
8. While return on equity is the Company's principal measure in evaluating
its performance for shareowners and its ability to profitably invest
shareowners' funds, the bonus plans use RONA in evaluating this element of
bonus opportunity in order to facilitate industry comparisons without having
to make adjustments for different levels of leverage among the competitor
group. The Company's rank relative to the competitor group is determined
based on data provided to the Committee by the Company's independent public
accountants. The annual bonus also can be adjusted downward on a
discretionary basis by the Committee. For 1995, the Company's rank relative
to the competitor group was second with respect to EPS and was first with
respect to RONA. Based on these results, the annual bonus represented 60% of
base salary for Mr. Farrell and 30% of base salary for each of the other
named executive officers.
For the three-fiscal-year period ended in 1995, the long-term bonus
opportunity was for up to 45% (90% for Mr. Farrell) of average base salary,
and was determined based on whether the Company achieved certain performance
levels (threshold, target or maximum) determined in advance by the Committee
for (i) compound growth rate for EPS and (ii) average RONA over the three-
fiscal-year period. The long-term bonus is subject to an automatic upward or
downward adjustment (i) based on predetermined levels of changes in the common
stock price over the period and (ii) based on the Company's performance as
compared to the EPS and RONA performances of the predetermined group of
competitors included in the Company's stock price performance graph on page 8.
The Company's rank relative to the competitor group is determined based on data
provided to the Committee by the Company's independent public accountants. The
long-term bonus also can be adjusted downward on a discretionary basis by the
Committee. For the three-year period which ended with fiscal 1995, the
Company's performance exceeded the target performance level set by the
Committee for compound growth for EPS and exceeded the target performance level
set for average RONA (no adjustment was made based on the Company's relative
rank in the competitor group), and the common stock price increased by 27.3%,
resulting in a 27.3% increase in the long term bonuses. Based on these
results, the long-term bonuses awarded for the three-year period which ended
with fiscal 1995 represented approximately 60% of average base salary for Mr.
Farrell and approximately 30% of average base salary for each of the other
named executive officers.
Long-Term Stock Related Incentives. The Company provides long-term
stock related incentives with stock options and restricted stock, which are
designed to attract, retain and motivate management associates and relate
their compensation directly to the performance of the Company's stock. Stock
options are granted at fair market value on the date of the grant and will
only have value to the executives if the Company's stock price increases. The
Committee establishes guidelines for the grant of options for all executives
and specifically approves any grants to executive officers. The Committee has
established option guidelines for annual grants based on competitive practices
and position levels. Restricted stock grants are approved by the Committee in
special circumstances.
The 1995 annual option grants to the named executive officers (including
Mr. Farrell) were consistent with the normal annual grant levels previously
established for those officers. In addition, during 1995, the Committee
approved a grant to Mr. Torcasio of an aggregate of 35,000 shares of restricted
stock. Except as described above, no other grants were made to the named
executive officers in 1995.
Additional Information. During each of 1993, 1994 and 1995, the Company
selected and retained independent, professional compensation experts to study
the compensation of the executive group in the Company's operating divisions
and of the senior management committee in the corporate office. The experts
reviewed the Company's base salary levels, annual bonus levels and long-term
incentives as compared with the compensation packages of a broad group of
companies, including the companies which are included in the Company's stock
price performance graph on page 8, other retail companies and companies in
other industries of similar size and complexity to the Company. Based on the
experts' review, the Committee has determined that the Company's current
compensation program, taking into account base compensation, bonus
opportunities and long-term incentive opportunities, is consistent with and
furthers the compensation philosophy described above. In 1994, the Committee
recommended, and the Company adopted, minimum stock ownership guidelines for
the Company's top management group in the operating divisions and in the
corporate office. The guidelines are described on page 8.
During 1995, the Committee continued to review the new tax law and
proposed IRS regulations limiting the tax deducti-bility of executive
compensation in excess of $1 million. The
9
<PAGE> 12
Committee also reviewed the exceptions that permit tax deductions on such
compensation, including exceptions for performance based compensation. The
Committee's policy continues to be that the Company should attempt, wherever
reasonably possible, to qualify future compensation to be tax deductible.
Executive Compensation and Development Committee:
Edward H. Meyer, Chairman
Helene L. Kaplan Andrall E. Pearson
Russell E. Palmer Edward E. Whitacre, Jr.
Miscellaneous. On December 11, 1995, the Company paid approximately $653,000
in premiums to purchase policies of directors' and officers' liability
insurance from Federal Insurance Company, National Union Fire Insurance
Company and Continental Casualty Company providing coverage for a one-year
period. Such policies cover all directors and officers of the Company and its
subsidiaries. As of April 4, 1996, no claims have been made nor have any sums
been paid under policies of directors' and officers' liability insurance
purchased by the Company.
Executive officers and directors are required to report to the Securities
and Exchange Commission, pursuant to Section 16(a) of the Securities Exchange
Act of 1934, ownership of and transactions in Company common stock. With the
exception of one report covering one transaction (filed late by Mr. L.J. Jay,
a senior vice president), based solely on a review of copies of reports
provided to it by such individuals, the Company believes that all reporting
requirements were satisfied.
THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
The board of directors held 9 meetings during the last fiscal year. Each
incumbent director attended at least 75% of the aggregate of (i) the total
number of board meetings held during the period for which such director held
such office and (ii) the total number of meetings held by all board committees
on which such director served during the periods that such director served.
Overall, the average percentage for all directors' attendance was 93%.
Compensation of Directors. Directors receive an annual fee of $30,000 and, in
addition, $1,500 for attending each board meeting and $1,000 for attending
each committee meeting. A non-management chairperson of a committee receives
an additional annual fee of $5,000. Non-management directors may defer all
or any portion of their cash fees under a deferred compensation plan that is
substantially similar to the Deferred Compensation Plan for management
associates.
Each new director, upon joining the board, receives 2,000 shares of common
stock which are subject to restrictions on transferability and to forfeiture
for five years. In addition, effective in 1996, each director receives an
annual grant of shares of common stock equivalent to $40,000 which are subject
to transferability restrictions. Management board members receive no
compensation or fees for attending board or committee meetings.
The Company terminated its retirement plan for non-management directors,
and no further benefits will accrue under that plan, effective with the 1996
annual meeting. The accrued benefits under the plan were credited to each
director's phantom stock or deferred cash account in the directors' deferred
compensation plan.
The board of directors has an audit committee, an executive committee, an
executive compensation and development committee, a finance committee and a
nominating committee, each of which is described below. If the Reincorporation
described below under "PROPOSAL TO CHANGE THE COMPANY'S STATE OF INCORPORATION
FROM NEW YORK TO DELAWARE" is approved by the Company's shareowners, the board
of directors of the reincorporated Delaware entity will have the same
committees comprised of the same directors as the Company's board of directors.
Audit Committee. The audit committee is comprised of Messrs. Meyer, Palmer
(chairman), Quinlan, Stiritz, Storey and Weidenbaum. The committee met four
times during the last fiscal year. The audit committee makes recommendations to
the board of directors as to the selection of and proposed arrangements with
the firm of independent public accountants and auditors that examines the
books and accounts of the Company for each fiscal year, reviews the results
of audits, reviews the coordination between the independent public accountants
and auditors and the Company's internal auditing staff, and oversees the
Company's policies concerning sensitive payments and conflict of interest.
Executive Committee. The executive committee is comprised of Messrs. Farrell
(chairman), Loeb, Meyer, Palmer, Pearson and Stiritz. The committee met one
time during the last fiscal year. The executive committee exercises, on a
"standby" or "emergency" basis, and subject to the direction of the full board
of directors, all of the powers of the board of directors (with certain
specified exceptions required by law) during intervals between meetings.
Executive Compensation and Development Committee. The executive compensation
and development committee is comprised of Mrs. Kaplan and Messrs. Meyer
(chairman), Palmer and Whitacre. The committee met six times during the last
fiscal year and acted by unanimous written consent on several other occasions.
The committee considers and recommends to the board the Company's overall
compensation programs, reviews and approves the compensation payable to all
senior
10
<PAGE> 13
management personnel, reviews the compensation payable to store company
principals, reviews and approves new compensation programs that involve Company
stock or affect compensation to senior management personnel and store company
principals, advises management on all other executive compensation matters as
requested, and reviews and monitors management development efforts to assure
development of a group of executives that would provide for adequate and
orderly management succession. The committee also administers (directly, or in
some circumstances by delegation or the establishment of operating guidelines)
the 1994 Stock Incentive Plan, the Executive Incentive Compensation Plan for
Corporate Executives, the Executive Incentive Compensation Plan for Company
Principals and the Deferred Compensation Plan.
Finance Committee. The finance committee is comprised of Mrs. Kaplan and
Messrs. Loeb, Quinlan, Pearson (chairman), Stiritz, Weidenbaum and Whitacre.
The committee met one time during the last fiscal year. In addition, frequent
telephone conversations occurred among the committee members. The finance
committee reviews the financial policies, plans and structure of the Company
and reviews and recommends to the board the Company's long-range financial
plans, the Company's capital expenditure program, specific debt and equity
placement activities, financial public relations and communications programs,
financial aspects of proposed acquisitions or divestitures, and the
administration and evaluation of the retirement and profit sharing plans'
investments.
Nominating Committee. The nominating committee is comprised of Mrs. Kaplan
and Messrs. Stiritz (chairman), Storey and Whitacre. The committee met one
time during the last fiscal year. In addition, frequent telephone conversations
occurred among the committee members. The nominating committee recommends to
the board nominees for directors, nominees for the successor to the chief
executive officer when a vacancy in that office occurs, and nominees for
chairpersons and members of all committees of the board. The committee also
advises the board with respect to criteria relating to director tenure and
compensation of non-management directors. The committee considers suggestions
as to nominees for directors from any source, including any shareowner.
Nominations by shareowners should be submitted in writing to the Company's
Secretary, 611 Olive Street, St. Louis, Missouri 63101-1799 and, to be
effective, must comply with the notice procedures set forth in the Company's
by-laws. A copy of the notice procedures is available upon request to the
Company's Secretary.
THE RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
Proposal (b) on the accompanying proxy card.
Upon recommendation of the audit committee, the board of directors appointed
Arthur Andersen LLP, independent public accountants, as auditors of the
Company and its subsidiaries for the fiscal year ending February 1, 1997,
subject to ratification by the shareowners at the annual meeting. It is
intended that, unless otherwise directed by shareowners, proxies will be
voted for the ratification 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 any questions by shareowners. The
aggregate amount of fees paid in fiscal 1995 by the Company to Arthur
Andersen LLP was $4.2 million. The board of directors unanimously recommends
a vote FOR Proposal (b), and your proxy will be so voted unless you specify
otherwise.
PROPOSAL TO CHANGE THE COMPANY'S STATE OF INCORPORATION FROM NEW YORK TO
DELAWARE
Proposal (c) on the accompanying proxy card.
General. The board of directors has unanimously approved, and recommends for
shareowner approval, the change of the Company's state of incorporation from
New York to Delaware (the "Reincorporation"). The transaction will not
result in any change in the business or the consolidated assets, liabilities
or net worth of the reincorporated entity. In addition, the directors and
officers of the reincorporated entity will be the same as those of the
Company. Reincorporation in Delaware will allow the Company to take advantage
of certain provisions of the corporate laws of Delaware and will allow the
Company to manage its state franchise tax and other affairs in ways that will
result in significant savings each year beginning in 1996.
The Company's reincorporation in Delaware will be accomplished by means
of a statutory share exchange (the "Share Exchange"). Subject to the exercise
and perfection of dissenting shareowners' appraisal rights (described below
under the caption "Rights of Dissenting Shareowners"), at the Effective Time
(as defined below) of the Share Exchange, (a) each share of Company common
stock (and associated preferred stock purchase right) outstanding immediately
prior to the Effective Time will be exchanged for one fully paid, nonassessable
share of common stock (and associated preferred stock purchase right) of May
Delaware (as defined below), (b) each share of Company common stock (and
associated preferred stock purchase right) held in the Company's treasury
immediately prior to the Effective Time will be cancelled and restored to the
status of an authorized but unissued share of Company common stock, (c) each
share of ESOP stock outstanding immediately prior to the Effective Time will
be exchanged for one fully paid, nonassessable ESOP (Employee Stock Ownership
Plan) preference share of May Delaware ("Delaware ESOP stock") (which series
will
11
<PAGE> 14
be substantially identical to the ESOP stock), and (d) each share of May
Delaware common stock outstanding immediately prior to the Effective Time
will be cancelled and restored to the status of an authorized but unissued
share of May Delaware common stock. As a result of the Share Exchange, the
Company will become a wholly owned subsidiary of a newly formed holding
company incorporated in Delaware ("May Delaware"), which will assume the name
"The May Department Stores Company."
The Share Exchange will result in all outstanding shares of common stock
of the Company and the ESOP stock being held by May Delaware, and all
outstanding shares of common stock of May Delaware and the Delaware ESOP
stock being owned by the owners of, respectively, shares of Company common
stock and ESOP stock that were outstanding immediately prior to the Effective
Time. The Share Exchange will have no effect on the outstanding shares of
$3.75 Cumulative Preferred Stock, no par value, $3.40 Cumulative Preferred
Stock, no par value, $3.75 Cumulative Preferred Stock, 1947 Series, no par
value, 3-3/4% Cumulative Preferred Stock, par value $100 per share or $1.80
Preference Stock, no par value, of the Company, all of which such shares have
been called for redemption on April 30, 1996.
After the Share Exchange, each certificate which now represents shares
of the Company's common stock (and associated preferred stock purchase rights)
or ESOP stock will automatically represent the same number of shares of common
stock (and associated preferred stock purchase rights) of May Delaware or
Delaware ESOP stock, as the case may be, subject to the exercise and perfection
of dissenting shareowners' appraisal rights. At the Effective Time, each
employee benefit plan of the Company will be assumed by May Delaware and will
not be changed as a result of the Share Exchange. Options and rights to
purchase shares of the Company's common stock under such plans which are
outstanding at the Effective Time will be converted into options or rights to
purchase the same number of shares of May Delaware common stock at the same
price and on the same terms and conditions as in effect immediately prior to
the Effective Time, and future options and rights granted under the plans will
be for shares of May Delaware common stock. It is anticipated that, at the
Effective Time, May Delaware will have in its treasury, a number of shares of
May Delaware common stock equivalent to the number of shares of Company common
stock held in the treasury of the Company immediately prior to the Effective
Time, which shares will be available for purposes of the plans.
IT WILL NOT BE NECESSARY FOR SHAREOWNERS TO EXCHANGE THEIR EXISTING STOCK
CERTIFICATES FOR STOCK CERTIFICATES OF MAY DELAWARE. OUTSTANDING CERTIFICATES
FOR SHARES OF COMMON STOCK OF THE COMPANY SHOULD NOT BE DESTROYED OR SENT TO
THE COMPANY. The May Delaware common stock will be traded on the New York
Stock Exchange, Inc. (the "NYSE"). Delivery of certificates for the common
stock of the Company and the ESOP stock issued prior to the Effective Time of
the Share Exchange will constitute "good delivery" of shares in transactions
subsequent to the Share Exchange. Certificates representing shares of common
stock of May Delaware and Delaware ESOP stock will be issued with respect to
transfers consummated after the Share Exchange.
The Reincorporation is being effectuated pursuant to the terms of the
Agreement and Plan of Share Exchange (the "Share Exchange Agreement"), between
the Company and May Delaware. The Share Exchange Agreement provides that the
consummation of the Share Exchange is conditioned upon, among other things, the
completion of the distribution by the Company to its shareowners of the shares
of common stock of its wholly owned subsidiary, Payless ShoeSource, Inc., which
is expected to occur on May 4, 1996. The "Effective Time" will be the time
that a Certificate of Exchange pursuant to Section 913 of the New York Business
Corporation Law (the "New York BCL") is filed by the Department of State of the
State of New York. Assuming the adoption of the Share Exchange Agreement by
the shareowners of the Company and the satisfaction or waiver of the other
conditions to the Share Exchange, it is presently contemplated that the filings
required to effect the Share Exchange will be made as soon as practicable after
the annual meeting.
A copy of the Share Exchange Agreement is attached hereto as Appendix A.
All statements herein concerning the Share Exchange Agreement are qualified by
reference to the provisions of the Share Exchange Agreement.
Principal Reasons for the Reincorporation. For many years Delaware has
followed a policy of encouraging incorporation in that state and, in
furtherance of that policy, has adopted comprehensive, modern and flexible
corporate laws which are periodically updated and revised to meet changing
business needs. As a result, many corporations initially choose Delaware for
their domicile, and many others reincorporate in Delaware. Because of
Delaware's longstanding policy of encouraging incorporation in that state,
and consequently its preeminence as the state of incorporation for many major
corporations, the Delaware courts have developed a considerable expertise in
dealing with corporate issues and a substantial body of case law has
developed construing Delaware law and establishing public policies with
respect to Delaware corporations. These factors often provide the directors
and management of Delaware corporations with greater certainty and
predictability in managing the affairs of the corporation. Reincorporation in
Delaware will
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<PAGE> 15
allow the Company to manage its state franchise tax and other affairs in ways
that will result in significant savings each year, beginning in 1996. For a
discussion of certain differences in shareowners' rights and the powers of
management under the New York BCL and the Delaware General Corporation Law (the
"Delaware GCL"), see "Material Differences Between the Corporation Laws of New
York and Delaware" and "Differences Between the Charter and By-Laws of the
Company and May Delaware."
Material Differences Between the Corporation Laws of New York and Delaware.
The Reincorporation will effect several changes in the rights of shareowners
as a result of differences between the New York BCL and the Delaware GCL.
Summarized below are the material differences affecting the rights of
shareowners. This summary does not purport to be a complete statement of
differences affecting shareowners' rights under the New York BCL and the
Delaware GCL and is subject to, and qualified in its entirety by reference
to, all the provisions thereof.
Dividends. The Delaware GCL provides that a corporation may, unless
otherwise restricted by its certificate of incorporation, declare and pay
dividends out of surplus, or if no surplus exists, out of net profit for the
current or preceding fiscal year (provided that the amount of capital of the
corporation is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon
the distribution of assets). Under the New York BCL, dividends may be paid
only out of surplus.
Vote Required. The New York BCL requires that certain mergers and
consolidations and sales of all or substantially all of the assets not in the
ordinary course of business be approved by the owners of two-thirds of the
outstanding shares entitled to vote thereon. Under the Delaware GCL, such
transactions require approval by the owners of a majority of the outstanding
stock entitled to vote thereon, and a vote of the shareowners of the surviving
corporation is not necessary where, in the case of a merger, (i) no amendment
of its certificate of incorporation or change in its outstanding stock is
involved and (ii) the merger results in no more than a 20% increase in its
outstanding common stock.
Dissenters' Rights of Appraisal. Under the New York BCL, dissenting
shareowners who follow prescribed statutory procedures are entitled to
appraisal rights in connection with certain mergers, consolidations and sales
of all or substantially all the assets of a corporation. The Delaware GCL
provides similar rights and procedures for mergers and consolidations only.
Furthermore, under the Delaware GCL, even in those cases, such rights are not
provided in certain circumstances, including transactions in which shares of
the corporation being voted in a merger or consolidation are listed on a
national securities exchange (the Company's common stock is, and May Delaware's
common stock will be, listed on the NYSE) or are held of record by more than
2,000 shareowners and in which the shares to be received in such merger or
consolidation are shares of the surviving corporation or are listed on a
national securities exchange or are held of record by more than 2,000
shareowners.
The availability of appraisal rights to shareowners of the Company who
dissent from the Reincorporation is discussed under "Rights of Dissenting
Shareowners" below.
Business Combination Statutes. The New York BCL prohibits any "business
combination" (as therein defined) between a "resident domestic corporation"
and an "interested shareowner" for five years after the date that the
interested shareowner became an interested shareowner unless prior to that
date the board of directors of the domestic corporation approved the business
combination or the transaction that resulted in the interested shareowner
becoming an interested shareowner. After five years, such a business
combination is permitted only if (i) it is approved by a majority of the
shares not owned by, or by an affiliate of, the interested shareowner or (ii)
certain statutory fair price requirements are met. A "resident domestic
corporation" is defined as any corporation that (i) is incorporated in New
York, (ii) has its principal executive offices and significant business
operations in New York or has at least 250 or 25% of its employees in New
York (including employees of its 80% subsidiaries), and (iii) has at least
10% of its stock beneficially owned by New York residents. An "interested
shareowner" is any person who beneficially owns, directly or indirectly, 20%
or more of the outstanding voting stock of the corporation.
The Delaware GCL prohibits any "business combination" (as therein defined)
between a Delaware corporation and an "interested shareowner" for three years
following the date that the interested shareowner became an interested
shareowner unless (i) prior to that date the board of directors approved the
business combination or the transaction that resulted in the interested
shareowner becoming an interested shareowner, (ii) upon consummation of the
transaction that resulted in the interested shareowner becoming an interested
shareowner, the interested shareowner held at least 85% of the outstanding
voting stock of the corporation (not counting shares owned by officers and
directors and certain shares in employee stock plans), or (iii) on or
subsequent to such date the business combination is approved by the board of
directors and at least two-thirds of the outstanding shares of voting stock
not owned by the interested shareowner. The Delaware GCL defines "interested
shareowner" as any person who beneficially owns, directly or indirectly, 15%
or more of the outstanding voting stock of the corporation. Unlike the New
York BCL, the Delaware GCL
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<PAGE> 16
does not require that the corporation's principal executive offices or
significant operations be located in Delaware in order to be covered by this
law.
Consideration for Shares. Under the New York BCL, neither obligations
of the subscriber for future payments nor obligations of the subscriber for
future services constitutes payment or part payment for shares of a
corporation. Furthermore, certificates for shares may not be issued until the
full amount of the consideration therefor has been paid (except in the case of
shares purchased pursuant to stock options under a plan permitting installment
payments). Under the Delaware GCL, shares of stock may be issued, and deemed
to be fully paid and nonassessable, if the corporation receives consideration
(in the form of cash, services rendered, personal property, real property,
leases of real property or a combination thereof) having a value not less
than the par value of such shares, and the corporation receives a binding
obligation of the subscriber to pay the balance of the subscription price.
Redeemable Shares. The Delaware GCL permits redeemable shares to be
redeemed at the option of the corporation or the shareowner, while the New York
BCL generally permits redemption only at the option of the corporation.
Issuance to Officers, Directors and Employees of Rights or Options to
Purchase Shares. The New York BCL requires the affirmative vote of a
majority of the shares entitled to vote in order to issue to officers,
directors or employees options or rights to purchase stock. The Delaware GCL
does not require shareowner approval of such transactions. May Delaware
will, however, remain subject to the rules of the NYSE which require
shareowner approval of May Delaware's option plans and grants thereunder in
certain instances.
Classification of the Board of Directors. The New York BCL permits a
classified board with as many as four classes but prohibits fewer than three
directors in any class. The Delaware GCL permits a classified board of
directors with as many as three classes, but does not specify a minimum
number of directors for each class. Both the May Delaware Certificate of
Incorporation and the Articles of Incorporation of the Company provide for a
classified board with three classes.
Number of Directors. Under the Delaware GCL, a corporation may have as
few as one director and there are no maximum limits. The specific number may
be fixed in the certificate of incorporation but if so, it may be changed only
with both board of directors and shareowner approval. If the certificate of
incorporation is silent as to the number of directors, the board of directors
may fix or change the authorized number of directors pursuant to a provision
of the by-laws.
Under the New York BCL, the number of directors may not be less than
three, and any higher number may be fixed by the by-laws or by action of the
shareowners or of the board of directors under specific provisions of the
by-laws adopted by the shareowners. The number of directors may be increased
or decreased by amendment of the by-laws or by action of the shareowners or
of the board of directors under the specific provisions of a by-law adopted
by the shareowners, subject to certain conditions.
Loans to Directors. Under the Delaware GCL, loans may be made to
directors if the board of directors finds that the loan may benefit the
corporation. The New York BCL requires that loans to directors be authorized by
an affirmative vote of shareowners.
Inspection of Shareowners List. With respect to the inspection of
shareowners lists, the New York BCL provides a right of inspection on at
least five days' written demand to (i) any person who shall have been a
shareowner for at least six months immediately preceding the demand or (ii)
any person holding, or authorized in writing by, at least five percent of any
class of outstanding shares. The corporation has certain rights calculated
to assure itself that the demand for inspection is not for a purpose or
interest other than that of the corporation.
The Delaware GCL permits any shareowner to inspect the shareowners list
for a purpose reasonably related to such person's interest as a shareowner and,
during the ten days preceding the shareowners' meeting, for any purpose germane
to that meeting.
Differences Between the Charter and By-Laws of the Company and May Delaware.
The Certificate of Incorporation of May Delaware (the "May Delaware
Certificate") is substantially similar to the Articles of Incorporation of
the Company (the "Company Articles"). The differences between the two are
primarily as a result of differences between the New York BCL and the
Delaware GCL, but also include the purposes of May Delaware and the
limitation of certain personal liability of directors for monetary damages.
The by-laws of the two corporations are substantially similar except the
by-laws of May Delaware reflect the Delaware GCL and the provisions of the
May Delaware Certificate.
The following is a summary of the material differences between the
provisions of the May Delaware Certificate and by-laws and those of the Company
Articles and by-laws. This summary does not purport to be complete, and
reference is made to the May Delaware Certificate and by-laws, copies of which
are attached hereto as Appendices B and C, respectively. Copies of the Company
Articles and by-laws are available for inspection at the principal executive
offices of the Company and will be sent to shareowners upon written request.
Change of Company Purpose. The purposes for which the Company was formed
as set forth in the Company Articles ini-
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<PAGE> 17
tially adopted in 1910 included numerous purposes primarily related to the
retail business. Since May Delaware will be a holding company engaged in the
retail business through the Company and other subsidiaries, the May Delaware
Certificate states broadly that May Delaware's purpose is to engage in any
lawful activity.
Limitation on Directors' Liability. The May Delaware Certificate provides
that to the fullest extent permitted by law a director will not be personally
liable for monetary damages to May Delaware or its shareowners for or with
respect to any acts or omissions in the performance of such director's duties,
except for liability (i) for any breach of the director's duty of loyalty to
May Delaware or its shareowners, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
for unlawful payments of dividends or unlawful stock repurchases or redemptions
as provided in Section 174 of the Delaware GCL, or (iv) for any transaction
from which the director derived an improper personal benefit. The Company
Articles do not include such a provision but the Company by-laws provide for
indemnification of directors to the full extent permitted by law.
This provision is intended to afford directors additional protection and
limit their potential liability from suits alleging a breach of the duty of
care by a director. As a result of the inclusion of such a provision,
shareowners may be unable to recover monetary damages against directors for
actions taken by them that constitute negligence or that are otherwise in
violation of their fiduciary duty of care, although it may be possible to
obtain injunctive or other equitable relief with respect to such actions. If
equitable remedies are found not to be available to shareowners in any
particular situation, shareowners may not have an effective remedy against a
director in connection with such conduct.
Shareowner Action by Unanimous Written Consent; Special Meetings. The
New York BCL permits corporate action without a shareowners meeting only upon
the written consent of all shareowners entitled to vote on such action.
Accordingly, the Company Articles do not include a provision eliminating
shareowner action by written consent. Since the Delaware GCL permits
corporate action without a meeting of shareowners upon the written consent of
the owners of that number of shares necessary to authorize the proposed
corporate action being taken, unless the certificate of incorporation
expressly provides otherwise, the May Delaware Certificate expressly includes
a provision requiring that corporate action can only be taken by unanimous
written consent in order to provide the same protection currently afforded
the Company's shareowners.
The Company's by-laws provide that special meetings of the shareowners
may be called by resolution of the board of directors. The May Delaware
Certificate includes a similar provision which requires that special meetings
of shareowners may only be called by a majority of the entire Board of
Directors. Currently, shareowners of the Company are not permitted to call
special meetings nor will they be able to following the Reincorporation.
Rights Agreement. The Company has in place a Shareowner Rights Plan pursuant
to which a right is attached to each outstanding share of common stock of the
Company. Pursuant to the Share Exchange Agreement, prior to the consummation
of the Share Exchange, May Delaware will assume the Company's rights and
obligations under the Rights Plan, and Rights to purchase Junior
Participating Preference Shares of the Company will become Rights to purchase
Junior Participating Preference Shares of May Delaware, with substantially
identical terms and conditions. Copies of the Shareowner Rights Plan are
available for inspection at the principal executive offices of the Company
and will be sent to shareowners upon written request.
Federal Income Tax Consequences. The Company has been advised by counsel
that, for Federal income tax purposes, no gain or loss will be recognized by
the owners of Company common stock or ESOP stock as a result of the
consummation of the Share Exchange, and no gain or loss will be recognized by
May Delaware or the Company. In addition, counsel has advised the Company
that each former owner of shares of common stock of the Company and ESOP
stock will have the same basis in the shares of May Delaware common stock and
May Delaware ESOP stock received by such owner pursuant to the Share Exchange
as such owner had in the Company shares owned at the Effective Time. Such
owner's holding period with respect to the shares of May Delaware common
stock and May Delaware ESOP stock will include the period during which such
owner held the corresponding shares of common stock of the Company or ESOP
stock, provided the shares were held by such owner as capital assets at the
Effective Time.
All shareowners should consult their tax advisors as to the particular tax
consequences of the Share Exchange to them, including the applicability and
effect of state, local and foreign tax laws.
Rights of Dissenting Shareowners. Section 910 of the New York BCL sets forth
the rights of shareowners of the Company who object to the Share Exchange and
the adoption of the Share Exchange Agreement. Any owner of the common stock
or the ESOP stock of the Company who does not vote in favor of the
Reincorporation, or who duly revokes his or her vote in favor of such
transaction, may, if the Share Exchange is consummated, obtain payment, in
cash, for the fair market value of such owner's shares by strictly complying
with the requirements of Section 623 of the New York BCL.
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<PAGE> 18
The dissenting shareowner must file with the Company before the taking of
the vote on the Reincorporation proposal a written objection including a notice
of election to dissent, such owner's name and residence address, the number
and class of shares (common stock or ESOP stock or both) as to which such
owner dissents (which number may not be less than all of the shares as to
which such owner has a right to dissent) and a demand for payment of the fair
value of such shares if the Share Exchange is consummated. Any such written
objection should be addressed to: The May Department Stores Company, 611
Olive Street, St. Louis, MO 63101-1799, Attention: Secretary.
Within ten days after the vote of shareowners authorizing the
Reincorporation, the Company must give written notice of such authorization
to each such dissenting shareowner. At the time of filing the notice of
election to dissent or within one month thereafter, the shareowner must
submit certificates representing such owner's shares to the Company or its
transfer agent, The Bank of New York, for notation thereon of the election to
dissent, after which such certificates will be returned to the shareowner.
Any shareowner who fails to submit his or her shares for such notation shall,
at the option of the Company exercised by written notice to the shareowner
within 45 days from the date of filing of the notice of election to dissent,
lose such owner's appraisal rights unless a court, for good cause shown,
shall otherwise direct.
Within 15 days after the expiration of the period within which shareowners
may file their notices of election to dissent or with 15 days after the
Effective Time, whichever is later (but not later than 90 days after the
shareowners' vote authorizing the Reincorporation), the Company must make a
written offer (which, if the Share Exchange has not been consummated, may be
conditioned upon such consummation) to each shareowner who has filed such
notice of election to pay for the shares at a specified price which the
Company considers to be their fair value. If the Company and the dissenting
shareowner are unable to agree as to such value, Section 623(h) provides for
judicial determination of fair value. In the event of such a disagreement, a
court proceeding shall be commenced by the Company in the Supreme Court of
the State of New York, County of New York, or by the dissenting shareowner if
the Company fails to commence the proceeding within the time required by
Section 623 of the New York BCL. The Company intends to commence such a
proceeding in the event of such a disagreement.
A negative vote on the Reincorporation proposal does not constitute a
"written objection" required to be filed by an objecting shareowner. Failure
by a shareowner to vote against the Reincorporation will not, however,
constitute a waiver of rights under Section 623 provided that a written
objection has been properly filed and such shareowner has not voted in favor of
the Reincorporation.
The foregoing does not purport to be a complete statement of the
provisions of Section 623 of the New York BCL and is qualified in its entirety
by reference to the Section, a copy of which is reproduced in full as Appendix
D. Each shareowner intending to exercise dissenters rights should review
such Appendix carefully and consult such owner's counsel for a more complete
and definitive statement of the rights of dissenting shareowners and the
proper procedure to follow to exercise such rights.
Under the Share Exchange Agreement, the board of directors may abandon
the Reincorporation, even after shareowner approval, if for any reason the
board determines that it is inadvisable to proceed with the Reincorporation,
including considering the number of shares for which appraisal rights have
been exercised and the cost to the Company thereof.
The affirmative vote of the owners of (a) two-thirds of all outstanding
shares of common stock and ESOP stock entitled to vote on the Reincorporation
proposal, voting together as a single class, and (b) a majority of all
outstanding shares of common stock and ESOP stock entitled to vote thereon,
each voting as a separate class, is required for approval of the
Reincorporation proposal. A vote for the proposal will constitute specific
shareowner approval for the adoption of the Share Exchange Agreement and all
other transactions related to the Reincorporation (including the assumption
by May Delaware of the Company's employee benefit plans, including the 1994
Stock Incentive Plan, the Deferred Compensation Plan, the Profit Sharing
Plan, the Restricted Stock Plan for Non-Management Directors and the
Executive Incentive Compensation Plan for Corporate Executives). The board
of directors unanimously recommends a vote FOR Proposal (c), and your proxy
will be so voted unless you specify otherwise.
PROPOSAL BY A SHAREOWNER CONCERNING A CLASSIFIED BOARD
Proposal (d) on the accompanying proxy card.
Evelyn Y. Davis, Watergate Office Building, Suite 215, 2600 Virginia Ave.,
N.W., Washington, D.C., who is the owner of 200 shares of common stock of the
Company, has advised the Company that she plans to introduce the following
resolution at the annual meeting:
Resolved, that the shareholders of The May Department Stores
Company recommend that the Board of Directors take the necessary
steps to reinstate the election of directors annually, instead of
the stagger system which was recently adopted.
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<PAGE> 19
This shareowner has submitted the following statement in support of this
resolution:
Until recently, directors of May were elected annually by all
shareholders.
The great majority of New York Stock Exchange listed
corporations elect all their directors each year.
This insures that all directors will be more accountable to all
shareholders each year and to a certain extent prevents the
self-perpetuation of the Board.
Last year, the owners of 92,494,029 shares, representing 45.6%
of shares voting, voted FOR this proposal.
If you agree, please mark your proxy FOR this
resolution.
The board of directors opposes the foregoing resolution. The Company's
shareowners decided in 1985 to install a classified system of electing
directors, with three classes of directors serving staggered three-year
terms. This shareowner decision has been challenged with this same resolution
at every annual meeting since 1988. On each of these occasions, the
shareowners confirmed that they wanted to retain the classified system of
electing directors by voting against the proposal for annual elections. The
board of directors agrees with the results of previous shareowner voting on
this issue and continues to believe that the classified system is
advantageous to the Company and its shareowners because, by providing that
the directors will serve three-year terms rather than one-year terms, it
enhances the likelihood of continuity and stability in the composition
of the Company's board of directors and in the policies formulated by the
board. This, in turn, permits the board to represent more effectively the
interests of all shareowners, including responding to circumstances created
by demands or actions by a single shareowner or a small group of shareowners.
The board of directors unanimously recommends a vote AGAINST Proposal (d),
and your proxy will be so voted unless you specify otherwise.
GENERAL
1997 Shareowner Proposals. Shareowner proposals for the 1997 annual meeting
of shareowners must be received at the Company's principal executive offices,
611 Olive Street, St. Louis, Missouri 63101-1799, Attention: Secretary, on
or prior to December 26, 1996, for inclusion in the Company's proxy statement
and the form of proxy for such meeting.
Vote Required. The election of directors requires a plurality of votes cast.
The affirmative vote of the owners of a majority of the votes cast at the
meeting is required to approve the ratification of auditors and the shareowner
proposal. Approval of the Reincorporation proposal requires the affirmative
vote of the owners of (a) two-thirds of all outstanding shares of common stock
and ESOP stock entitled to vote thereon, voting together as a single class, and
(b) a majority of all outstanding shares of common stock and ESOP stock
entitled to vote thereon, each voting as a separate class. The shares
represented by abstentions and broker non-votes will be considered present at
the meeting for quorum purposes. Abstentions and broker non-votes (i) will not
be counted as either FOR or AGAINST a nominee or a matter, (ii) will have no
effect upon the election of directors, the ratification of auditors and the
shareowner proposal and (iii) will have the effect of a vote AGAINST the
proposal to approve the Reincorporation.
Solicitation of Proxies. Your signature on the accompanying proxy card is
solicited by the Company's board of directors. The expenses of solicitation
of proxies hereunder will be paid by the Company. Proxies may be solicited by
directors, officers and regular employees of the Company personally, by mail,
telegraph and telephone from and through registered owners, nominees and
others acting as principals and as intermediaries. The Company may reimburse
persons holding shares in their names or those of their nominees for their
expenses in sending proxies and proxy material to principals. In addition,
the Company has retained D. F. King & Co., Inc., to assist in the solicitation
of proxies for a fee of $18,000, plus out-of-pocket expenses.
Whether or not you plan to attend the annual meeting, please complete, sign
and return the enclosed proxy card in the enclosed envelope, which requires
no postage if mailed in the United States. Your cooperation in giving this
matter your immediate attention will be appreciated.
By order of the board of directors.
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Appendix A
AGREEMENT AND PLAN OF SHARE EXCHANGE
OF
THE MAY DEPARTMENT STORES COMPANY,
a New York corporation
AND
THE MAY DEPARTMENT STORES COMPANY,
a Delaware corporation
This Agreement and Plan of Share Exchange (the "Agreement" or "Plan of
Exchange") is dated and executed as of the ---- day of May, 1996, by and
between THE MAY DEPARTMENT STORES COMPANY, a New York corporation (the
"Subject Corporation"), and THE MAY DEPARTMENT STORES COMPANY, a Delaware
corporation (the "Acquiring Corporation").
1. The name of the Subject Corporation is The May Department Stores
Company, a New York corporation, and the name of the Acquiring Corporation is
The May Department Stores Company, a Delaware corporation.
2. The designation and number of authorized and outstanding shares of
the Acquiring Corporation are: 1,000 shares of common stock, par value $.50
per share (the "Acquiring Corporation Common Shares"), each of which is
entitled to one vote and 100 shares of which are issued and outstanding.
Immediately prior to the Effective Time (as hereinafter defined), the
designation and number of authorized shares of the Acquiring Corporation will
be: (a) 700,000,000 Acquiring Corporation Common Shares, each of which will
have attached thereto a Right (as defined below); and (b) 25,000,000 shares of
Preference Stock, par value $.50 per share (the "Acquiring Corporation
Preference Shares"), of which (i) 800,000 will be designated as ESOP
Preference Shares (the "Acquiring Corporation ESOP Preference Shares"), each
of which will be entitled to one vote, voting together with the Acquiring
Corporation Common Shares, and (ii) 1,000,000 will be designated Junior
Participating Preference Shares (the "Acquiring Corporation Junior Preference
Shares"), each of which will be entitled to 100 votes, voting together with
the Acquiring Corporation Common Shares.
The designation and number of authorized and outstanding shares of the
Subject Corporation are: (a) 700,000,000 shares of common stock, par value
$.50 per share (the "Subject Corporation Common Shares"), each of which is
entitled to one vote, 249,869,322 shares of which were, as of April 4, 1996,
issued and outstanding and 63,767,674 shares of which were, as of April 4,
1996, held in the treasury of Subject Corporation, and which in each case
have attached thereto a Right; and (b) 25,000,000 shares of Preference Stock,
par value $.50 per share (the "Subject Corporation Preference Shares"), of
which (i) 800,000 are designated ESOP Preference Shares (the "Subject
Corporation ESOP Preference Shares"), each of which is entitled to one vote,
voting together with the Subject Corporation Common Shares, and with respect
to certain matters voting as a separate class, and, 704,069 of which were, as
of April 4, 1996, issued and outstanding, and (ii) 1,000,000 are designated
Junior Participating Preference Shares (the "Subject Corporation Junior
Preference Shares"), each of which is entitled to 100 votes, voting together
with the Subject Corporation Common Shares, and none of which are issued or
outstanding.
For adoption and approval, this Plan of Exchange shall require the
affirmative vote of the owners of (a) two-thirds of all outstanding Subject
Corporation Common Shares and Subject Corporation ESOP Preference Shares
entitled to vote thereon, voting together as a single class, and (b) a
majority of all outstanding Subject Corporation Common Shares and Subject
Corporation ESOP Preference Shares entitled to vote thereon, each voting as a
separate class.
3. Upon the time of filing of a Certificate of Exchange in connection
with the share exchange contemplated hereby (the "Share Exchange") by the
Department of State of the State of New York ( the "Effective Time"):
(a) each outstanding Subject Corporation Common Share (and associated
Right) shall by operation of law and without further action be
exchanged for one Acquiring Corporation Common Share (and associated
Right), subject to dissenting shareowners' rights under Sections 910
and 623 of the New York Business Corporation Law (the "NYBCL");
(b) each Subject Corporation Common Share (and associated Right) held
in the treasury of the Subject Corporation shall without further action
be cancelled and restored to the status of an authorized but unissued
Subject Corporation Common Share;
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<PAGE> 21
(c) each Subject Corporation ESOP Preference Share shall by operation
of law and without further action be exchanged for one Acquiring
Corporation ESOP Preference Share, subject to dissenting shareowners'
rights under Sections 910 and 623 of the NYBCL; and
(d) each Acquiring Corporation Common Share outstanding immediately
prior to the Effective Time shall be cancelled and shall be restored
to the status of an authorized but unissued Acquiring Corporation
Common Share;
so that, immediately after the Effective Time, all of the outstanding Subject
Corporation Common Shares and Subject Corporation ESOP Preference Shares will
be held by the Acquiring Corporation, and all of the outstanding Acquiring
Corporation Common Shares and Acquiring Corporation ESOP Preference Shares
will be held by the owners of the Subject Corporation Common Shares and
Subject Corporation ESOP Preference Shares, respectively, that were
outstanding immediately prior to the Effective Time and the Acquiring
Corporation will hold in its treasury the same number of Acquiring
Corporation Common Shares as the Subject Corporation Common Shares held by
the Subject Corporation immediately prior to the Effective Time.
4. At the Effective Time, the Acquiring Corporation will assume each
employee benefit plan of the Subject Corporation (collectively, the "Plans");
and, by virtue of the Share Exchange and without any action on the part of
the participants in the plans, each option or right under the Plans to purchase
Subject Corporation Common Shares granted and outstanding immediately prior to
the Effective Time shall be converted into and become an option or right to
purchase an equivalent number of Acquiring Corporation Common Shares at the
same per share price and upon the same terms and subject to the same conditions
as applicable immediately prior to the Effective Time under the relevant option
or right. The Acquiring Corporation will have in its treasury, at the
Effective Time, a number of Acquiring Corporation Common Shares equivalent to
the number of Subject Corporation Common Shares held in the treasury of the
Subject Corporation immediately prior to the Effective Time, which shares will
be available for purposes of the Plans.
5. At the Effective Time, the Acquiring Corporation will assume the
Subject Corporation's rights and obligations pursuant to the Rights Agreement,
dated as of August 19, 1994 between the Subject Corporation and The Bank of New
York, as Rights Agent (the "Rights Agreement"), and by virtue of the Share
Exchange, and without any action on the part of the holder thereof, each right
(a "Right") to purchase Subject Corporation Junior Preference Shares and to
otherwise exercise options, rights and privileges, issued pursuant to the
Rights Agreement shall be converted into and become a right to purchase an
equivalent number or amount of Acquiring Corporation Junior Preference Shares,
at the same exercise price, and upon the same terms and subject to the same
conditions, as applicable immediately prior to the Effective Time and to
otherwise exercise options, rights and other privileges pursuant to the Rights
Agreement. The Acquiring Corporation will reserve, for purposes of issuance
pursuant to the Rights Agreement, a number of Acquiring Corporation Junior
Preference Shares equivalent to the number of Subject Corporation Junior
Preference Shares reserved by the Subject Corporation for such purposes
immediately prior to the Effective Time.
6. At the Effective Time, each certificate evidencing ownership of
Subject Corporation Common Shares (and associated Rights) or Subject
Corporation ESOP Preference Shares outstanding at the Effective Time shall
automatically, and without any action by the holder thereof, be deemed to
evidence, an equivalent number of Acquiring Corporation Common Shares (and
associated Rights) or Acquiring Corporation ESOP Preference Shares,
respectively, subject to dissenting shareowners' rights under Sections 910
and 623 of the NYBCL.
7. At the Effective Time, the board of directors and officers of the
Subject Corporation shall become the board of directors and officers of the
Acquiring Corporation.
8. Immediately prior to, and at, the Effective Time, the certificate
of incorporation of the Acquiring Corporation shall be as set forth in
Exhibit A to this Agreement.
9. The Plan of Exchange shall be conditioned upon:
(a) receipt of the requisite vote of shareowners of the Subject
Corporation pursuant to Section 913(c)(2) of the NYBCL;
(b) approval for listing, subject to official notice of issuance, of
the Acquiring Corporation Common Shares (and associated Rights) on
the New York Stock Exchange, Inc.;
(c) completion of the distribution by the Subject Corporation of the
shares of common stock of its wholly owned subsidiary, Payless
ShoeSource, Inc., to shareowners of the Subject Corporation; and
(d) receipt of all consents and approvals of federal or state
regulatory authorities that are necessary and appropriate for the
consummation of the Share Exchange, in form and substance satisfactory
to the Subject Corporation and the Acquiring Corporation.
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10. At any time before or after the adoption of this Agreement by the
shareowners of the Subject Corporation, this Agreement may be amended or
modified by the boards of directors of the Acquiring Corporation and the
Subject Corporation; provided that no such amendment or modification may
affect the rights of any shareowner of the Subject Corporation in any manner
that is materially adverse to such shareowner in the judgment of the board of
directors of the Subject Corporation. The Plan of Exchange may be abandoned
by either the Subject Corporation or the Acquiring Corporation, notwithstanding
the approval of the Plan of Exchange by the shareowners of the Subject
Corporation, if for any reason the board of directors of either of such
corporations determines that it is inadvisable to proceed with the Plan of
Exchange, including without limitation, giving consideration to the number of
shares for which dissenting shareowners' rights pursuant to Sections 910 and
623 of the NYBCL have been exercised and the cost to the Subject Corporation
thereof.
11. The Subject Corporation and the Acquiring Corporation, respectively,
shall take all such action as may be necessary or appropriate in order to
effectuate the Share Exchange and the other transactions contemplated by this
Agreement. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement, the
officers and directors of each of the Acquiring Corporation and the Subject
Corporation, as of the Effective Time, shall take such further action.
THE MAY DEPARTMENT STORES COMPANY
a New York corporation
By: ---------------------------------------
Its:---------------------------------------
THE MAY DEPARTMENT STORES COMPANY
a Delaware corporation
By: ---------------------------------------
Its:---------------------------------------
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Appendix B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE MAY DEPARTMENT STORES COMPANY
The undersigned, , certifies that he is the ,
of The May Department Stores Company, a corporation organized under the laws
of the State of Delaware (the "Corporation"), and does hereby further certify
as follows:
1. The name of the Corporation is The May Department
Stores Company, the name under which the Corporation
was originally incorporated.
2. The original Certificate of Incorporation of the
Corporation was filed in the Office of the Secretary
of State of the State of Delaware on April 11, 1996.
3. The Amended and Restated Certificate of Incorporation
was duly adopted by shareowner written consent in
accordance with Sections 228, 242 and 245 of the
General Corporation Law of the State of Delaware.
4. The text of the Certificate of Incorporation of the
Corporation as amended hereby is restated to read in
its entirety as follows:
FIRST.
The name of the Corporation shall be
THE MAY DEPARTMENT STORES COMPANY.
SECOND.
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle.
The name of the Corporation's registered agent as such address is The
Corporation Trust Company.
THIRD.
The purpose for which the Corporation is formed is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware (the "GCL").
FOURTH.
The total number of shares of stock which the Corporation shall have
authority to issue is 725,000,000 consisting of 700,000,000 shares of common
stock, par value $.50 per share (the "Common Stock"), and 25,000,000 shares
of preference stock, par value $.50 per share (the "Preference Shares").
The owners of shares of Common Stock shall not have any preemptive
right to purchase shares or other securities to be issued by the Corporation
or subjected to rights or options to purchase.
The designations, preferences, privileges and voting powers of the
shares of each class, and the restrictions or qualifications thereof are as
follows:
Preference Shares of the Corporation may be issued from time to time or
in one or more class or series, each of which class or series shall have such
distinctive designation or title as shall be fixed by the Board of Directors
of the Corporation (the "Board of Directors") prior to the issuance of any
shares thereof. Each such class or series of Preference Shares shall have
such voting powers, full or limited, or no voting powers, and such
preferences and relative, participating, optional or other special rights and
such qualifications,
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limitations or restrictions thereof, as shall be stated in such resolution or
resolutions providing for the issue of such class or series of Preference
Shares as may be adopted from time to time by the Board of Directors prior to
the issuance of any shares thereof pursuant to the authority hereby expressly
vested in it, all in accordance with the laws of the State of Delaware.
FIFTH.
Elections of directors at any annual or special meeting of shareowners
shall be by written ballot, unless the By-Laws of the Corporation provide
otherwise.
SIXTH.
The number of directors shall be fixed by the By-Laws. It shall not be
necessary for any director of the Corporation to be a shareowner thereof.
SEVENTH.
Whenever shareowners are allowed to take any action by vote, such
action may be taken without a meeting on written consent, setting forth the
action so taken, signed by the owners of all outstanding shares entitled to
vote thereon. Written consent thus given by the owners of all outstanding
shares entitled to vote shall have the same effect as a unanimous vote of
shareowners.
EIGHTH.
Special meetings of shareowners of the Corporation for any purpose or
purposes may be called at any time by a majority of the entire Board of
Directors. Special meetings of shareowners of the Corporation may not be
called by any other person or persons.
NINTH.
The directors shall have the further power to provide by the By-Laws or
otherwise, for the selection from among their own number, of an executive
committee of such number as they may from time to time designate, and to
delegate to such executive committee all or any of the powers of the Board of
Directors in so far as the delegation of such power is not contrary to law.
TENTH.
No director of the Corporation shall be personally liable to the
Corporation or its shareowners for monetary damages for any breach of
fiduciary duty by such a director as a director to the full extent authorized
or permitted by law (as now or hereafter in effect). Notwithstanding the
foregoing sentence, a director shall be liable to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its shareowners, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the GCL or (iv) for any transaction from which the
director derived an improper personal benefit. No amendment to or repeal of
this Article TENTH shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
ELEVENTH.
The officers and directors of the Corporation and such other persons as
authorized by a majority of the entire Board of Directors consistent with the
provisions of the GCL shall be indemnified by the Corporation to the fullest
extent authorized or permitted by law (as now or hereafter in effect).
TWELFTH.
A. In addition to any affirmative vote required by law or this
Certificate of Incorporation or the By-Laws of the Corporation, and except as
otherwise expressly provided in Section B of this Article TWELFTH, a Business
Combination (as hereinafter defined) with, or proposed by or on behalf of,
any Interested Shareowner (as hereinafter defined) or any Affiliate or
Associate (as hereinafter defined) of any Interested Shareowner or any person
who thereafter would be an Affiliate or Associate of such Interested
Shareowner shall require the affirmative vote of not less than sixty-six and
two-thirds percent (66 2/3%) of the votes entitled to be cast by the owners
of all the then outstanding shares of Voting Stock (as hereinafter defined),
voting together as a single class, excluding Voting Stock beneficially owned
by any Interested Shareowner or any Affiliate or Associate of such Interested
Shareowner. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage or separate class
vote may be specified, by law or in any agreement with any national securities
exchange or otherwise.
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B. The provisions of Section A of this Article TWELFTH shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote, if any, as is required
by law or by any other provision of this Certificate of Incorporation or the
By-Laws of the Corporation, or any agreement with any national securities
exchange, if all of the conditions specified in either of the following
Paragraphs 1 or 2 are met or, in the case of a Business Combination not
involving the payment of consideration to the owners of the Corporation's
outstanding Capital Stock (as hereinafter defined), if the condition specified
in the following Paragraph 1 is met:
1. The Business Combination shall have been approved, either
specifically or as a transaction which is within an approved
category of transactions, by a majority (whether such approval
is made prior to or subsequent to the acquisition of, or
announcement or public disclosure of the intention to acquire,
beneficial ownership of the Voting Stock that caused the
Interested Shareowner to become an Interested Shareowner) of the
Board of Directors prior to the date on which the Continuing
Directors (as hereinafter defined) comprise less than a majority
of the entire Board of Directors.
2. All of the following conditions shall have been met:
a. The aggregate amount of cash and the Fair Market Value (as
hereinafter defined), as of the date of the consummation of the
Business Combination, of consideration other than cash to be
received per share by owners of Common Stock in such Business
Combination shall be at least equal to the highest amount
determined under clauses (i), (ii), (iii) and (iv) below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Shareowner for any share of Common Stock in
connection with the acquisition by the Interested
Shareowner of beneficial ownership of shares of Common
Stock (x) within the two-year period immediately prior to
the first public announcement of the proposed Business
Combination (the "Announcement Date") or (y) in the
transaction in which it became an Interested Shareowner,
whichever is higher, in either case as adjusted for any
subsequent stock split, stock dividend, subdivision or
reclassification with respect to Common Stock;
(ii) the Fair Market Value per share of Common Stock on
the Announcement Date or on the date on which the
Interested Shareowner became an Interested Shareowner (the
"Determination Date"), whichever is higher, as adjusted for
any subsequent stock split, stock dividend, subdivision or
reclassification with respect to Common Stock;
(iii) (if applicable) the price per share equal to the Fair
Market Value per share of Common Stock determined pursuant
to the immediately preceding clause (ii), multiplied by the
ratio of (x) the highest per share price (including any
brokerage commission, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested
Shareowner for any share of Common Stock in connection with
the acquisition by the Interested Shareowner of beneficial
ownership of shares of Common Stock within the two-year
period immediately prior to the Announcement Date, as
adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to Common
Stock to (y) the Fair Market Value per share of Common
Stock on the first day in such two-year period on which the
Interested Shareowner acquired beneficial ownership of any
share of Common Stock, as adjusted for any subsequent stock
split, stock dividend, subdivision or reclassification with
respect to Common Stock; and
(iv) the Corporation's net income per share of Common
Stock for the four full consecutive fiscal quarters
immediately preceding the Announcement Date, multiplied by
the higher of the then price/earnings multiple (if any) of
such Interested Shareowner or the highest price/earnings
multiple of the Corporation within the two-year period
immediately preceding the Announcement Date (such
price/earnings multiples being determined as customarily
computed and reported in the financial community).
b. The aggregate amount of cash and the Fair Market Value, as
of the date of the consummation of the Business Combination, of
consideration other than cash to be received per share by owners
of shares of any class or series of outstanding Capital Stock,
other than Common Stock, shall be at least equal to the highest
amount determined under clauses (i), (ii), (iii) and (iv) below:
(i) (if applicable) the highest per share (including any
brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested
Shareowner for any share of such class or series of Capital
Stock in connection with the acquisition by the Interested
Shareowner of beneficial ownership of shares of such class
or series of Capital Stock (x) within the two-year period
immediately prior to the Announcement Date or (y) in the
transaction in which it became an Interested Shareowner,
whichever is higher, in either case as adjusted for any
subsequent stock split, stock dividend, subdivision or
reclassification with respect to such class or series of
Capital Stock;
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<PAGE> 26
(ii) the Fair Market Value per share of such class or
series of Capital Stock on the Announcement Date or on the
Determination Date, whichever is higher, as adjusted for any
subsequent stock split, stock dividend, subdivision or
reclassification with respect to such class or series of
Capital Stock;
(iii) (if applicable) the price per share equal to the Fair
Market Value per share of such class or series of Capital
Stock determined pursuant to the immediately preceding
clause (ii), multiplied by the ratio of (x) the highest per
share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by or on behalf of
the Interested Shareowner for any share of such class or
series of Capital Stock in connection with the acquisition
by the Interested Shareowner of beneficial ownership of
shares of such class or series of Capital Stock within the
two-year period immediately prior to the Announcement Date,
as adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to such class
or series of Capital Stock to (y) the Fair Market Value per
share of such class or series of Capital Stock on the first
day in such two-year period on which the Interested
Shareowner acquired beneficial ownership of any share of
such class or series of Capital Stock, as adjusted for any
subsequent stock split, stock dividend, subdivision or
reclassification with respect to such class or series of
Capital Stock; and
(iv) (if applicable) the highest preferential amount per
share to which the owners of shares of such class or series
of Capital Stock would be entitled in the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation regardless of
whether the Business Combination to be consummated
constitutes such an event.
The provisions of this Paragraph 2 shall be required to be met
with respect to every class or series of outstanding Capital
Stock, whether or not the Interested Shareowner has previously
acquired beneficial ownership of any shares of a particular class
or series of Capital Stock.
c. The consideration to be received by owners of a particular
class or series of outstanding Capital Stock shall be in cash or
in the same form as previously has been paid by or on behalf of
the Interested Shareowner in connection with its direct or
indirect acquisition of beneficial ownership of shares of such
class or series of Capital Stock. If the consideration so paid
for shares of any class or series of Capital Stock varied as to
form, the form of consideration for such class or series of
Capital Stock shall be either cash or the form used to acquire
beneficial ownership of the largest number of shares of such
class or series of Capital Stock previously acquired by the
Interested Shareowner.
d. After the Determination Date and prior to the consummation
of such Business Combination: (i) there shall have been no
failure to declare and pay at the regular date therefor any full
quarterly dividends (whether or not cumulative) payable in
accordance with the terms of any outstanding Capital Stock; (ii)
there shall have been no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary to
reflect any stock split, stock dividend or subdivision of the
Common Stock); (iii) there shall have been an increase in the
annual rate of dividends paid on the Common Stock as necessary to
reflect any reclassification (including any reverse stock split,
recapitalization, reorganization or any similar transaction that
has the effect of reducing the number of outstanding shares of
Common Stock); and (iv) such Interested Shareowner shall not have
become the beneficial owner of any additional shares of Capital
Stock except as part of the transaction that results in such
Interested Shareowner becoming an Interested Shareowner and
except in a transaction that, after giving effect thereto, would
not result in any increase in the Interested Shareowner's
percentage beneficial ownership of any class or series of Capital
Stock.
e. A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "Act") (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to all
shareowners of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed pursuant
to such Act or subsequent provisions). The proxy or information
statement shall contain on the first page thereof, in a prominent
place, any statement as to the advisability (or inadvisability)
of the Business Combination that the Continuing Directors, or any
of them, may choose to make and, if deemed advisable by a
majority of the Continuing Directors, the opinion of an
investment banking firm selected by a majority of the Continuing
Directors as to the fairness (or not) of the terms of the
Business Combination from a financial point of view to the owners
of the outstanding shares of Capital Stock other than the
Interested Shareowner and its Affiliates or Associates, such
investment banking firm to be paid a reasonable fee for its
services by the Corporation.
f. Such Interested Shareowner shall not have made any major
change in the Corporation's business or equity capital structure.
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C. The following definitions shall apply with respect to
this Article TWELFTH:
1. The term "Business Combination" shall mean:
a. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested
Shareowner or (ii) any other company (whether or not itself an
Interested Shareowner) which is or after such merger or
consolidation would be an Affiliate or Associate of an Interested
Shareowner; or
b. any sale, lease, exchange, mortgage, pledge, transfer or
other disposition or security arrangement, investment, loan,
advance, guarantee, agreement to purchase, agreement to pay,
extension of credit, joint venture participation or other
arrangement (in one transaction or a series of transactions) with
or for the benefit of any Interested Shareowner or any Affiliate
or Associate of any Interested Shareowner involving any assets,
securities or commitments of the Corporation, any Subsidiary or
any Interested Shareowner or any Affiliate or Associate of any
Interested Shareowner which (except for any arrangement, whether
as employee, consultant or otherwise, other than as a director,
pursuant to which any Interested Shareowner or any Affiliate or
Associate thereof shall directly or indirectly, have any control
over or responsibility for the management of any aspect of the
business or affairs of the Corporation, with respect to which
arrangements the value tests set forth below shall not apply),
together with all such other arrangements (including all
contemplated future events), has an aggregate Fair Market Value
and/or involves aggregate commitments of $10,000,000 or more or
constitutes more than 5 percent of the book value of the total
assets (in the case of transactions involving assets or
commitments other than Capital Stock) or 5 percent of the
Shareowners' equity (in the case of transactions in Capital
Stock) of the entity in question (the "Substantial Part"), as
reflected in the most recent fiscal year-end consolidated balance
sheet of such entity existing at the time the shareowners of the
Corporation would be required to approve or authorize the
Business Combination involving the assets, securities and/or
commitments constituting any Substantial Part, except for
transactions made in the ordinary course of the Corporation's
business, consistent with past practices; or
c. the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation or for any amendment to the
Corporation's By-Laws; or
d. any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or
otherwise involving an Interested Shareowner) that has the
effect, directly or indirectly, of increasing the proportionate
share of any class or series of Capital Stock, or any securities
convertible into Capital Stock or into equity securities of any
Subsidiary, that is beneficially owned by any Interested
Shareowner or any Affiliate or Associate of any Interested
Shareowner; or
e. any agreement, contract or other arrangement providing for
any one or more of the actions specified in the foregoing clauses
(a) to (d).
2. The term "Capital Stock" shall mean all capital stock of
the Corporation authorized to be issued from time to time under
Article FOURTH of this Certificate of Incorporation, and the term
"Voting Stock" shall mean all Capital Stock which by its terms
may be voted on all matters submitted to shareowners of the
Corporation generally.
3. The term "person" shall mean any individual, firm, company
or other entity and shall include any group comprised of any
person and any other person with whom such person or any
Affiliate or Associate of such person has any agreement,
arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of Capital
Stock.
4. The term "Interested Shareowner" shall mean any person
(other than the Corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee
benefit plan of the Corporation or any Subsidiary or any trustee
of or fiduciary with respect to any such plan when acting in such
capacity) who (a) is or has announced or publicly disclosed a
plan or intention to become the beneficial owner of Voting Stock
representing ten percent (10%) or more of the votes entitled to
be cast by the owners of all then outstanding shares of Voting
Stock; or (b) is an Affiliate or Associate of the Corporation and
at any time within the two-year period immediately prior to the
date in question was the beneficial owner of Voting Stock
representing ten percent (10%) or more of the votes entitled to
be cast by the owners of all then outstanding shares of Voting
Stock.
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5. A person shall be a "beneficial owner" of any Capital Stock
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; (b) which such person
or any of its Affiliates or Associates has, directly or
indirectly, (i) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote pursuant to any
agreement, arrangement or understanding; or (c) which is
beneficially owned, directly or indirectly, by any other person
with which such person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of Capital
Stock. For the purposes of determining whether a person is an
Interested Shareowner pursuant to Paragraph 4 of this Section C,
the number of shares of Capital Stock deemed to be outstanding
shall include shares deemed beneficially owned by such person
through application of this Paragraph 5, but shall not include
any other shares of Capital Stock that may be issuable pursuant
to any agreement, arrangement or understanding, or upon exercise
of conversion rights, warrants or options, or otherwise.
6. The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 under
the Act, as amended and in effect as of the date hereof (the term
"registrant" in said Rule 12b-2 meaning in this case the
Corporation).
7. The term "Subsidiary" means any company of which a majority
of any class of equity security is beneficially owned by the
Corporation; provided, however, that for the purposes of the
definition of Interested Shareowner set forth in Paragraph 4 of
this Section C, the term "Subsidiary" shall mean only a company
of which a majority of each class of equity security is
beneficially owned by the Corporation.
8. The term "Continuing Director" means any member of the
Board of Directors, while such person is a member of the Board of
Directors, who is not an Affiliate or Associate or representative
of the Interested Shareowner and was a member of the Board of
Directors prior to the time that the Interested Shareowner became
an Interested Shareowner, and any successor of a Continuing
Director while such successor is a member of the Board of
Directors, who is not an Affiliate or Associate or representative
of the Interested Shareowner and is recommended or elected to
succeed the Continuing Director by a majority of Continuing
Directors.
9. The term "Fair Market Value" means (a) in the case of cash,
the amount of such cash; (b) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding
the date in question of a share of such stock on the Composite
Tape for New York Stock Exchange-Listed Stocks, or, if such stock
is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on
the principal United States securities exchange registered under
the Act on which such stock is listed, or, if such stock is not
listed on any such exchange, the highest closing bid quotation
with respect to a share of such stock during the 30-day period
preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any
similar system then in use, or if no such quotations are
available, the fair market value on the date in question of a
share of such stock as determined by a nationally recognized
investment banking firm selected by a majority of the Continuing
Directors; and (c) in the case of property other than cash or
stock, the fair market value of such property on the date in
question as determined by a nationally recognized investment
banking firm selected by a majority of the Continuing Directors.
10. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash
to be received" as used in Paragraphs 2.a and 2.b of Section B of
this Article TWELFTH shall include the shares of Common Stock
and/or the shares of any other class or series of Capital Stock
retained by the owners of such shares.
D. The Board of Directors shall have the power and duty to determine
for the purposes of this Article TWELFTH, on the basis of information known
to them after reasonable inquiry, all questions arising under this Article
TWELFTH, including, without limitation, (a) whether a person is an Interested
Shareowner, (b) the number of shares of Capital Stock or other securities
beneficially owned by any person, (c) whether a person is an Affiliate or
Associate of another, (d) whether a Proposed Action is with, or proposed by,
or on behalf of an Interested Shareowner or an Affiliate or an Associate of
an Interested Shareowner, (e) whether the assets that are the subject of any
Business Combination have, or the consideration to be received for the
issuance or transfer of securities by the Corporation or any Subsidiary in
any Business Combination has, an aggregate Fair Market Value of $10,000,000
or more, and (f) whether the assets or securities that are the subject of any
Business Combination constitutes a Substantial Part. Any such determination
made in good faith shall be binding and conclusive on all parties.
E. Nothing contained in this Article TWELFTH shall be construed to
relieve any Interested Shareowner from any fiduciary obligation imposed by
law.
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F. The fact that any Business Combination complies with the
provisions of Section B of this Article TWELFTH shall not be construed to
impose any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business Combination or
recommend its adoption or approval to the shareowners of the Corporation, nor
shall such compliance limit, prohibit or otherwise restrict in any manner the
Board of Directors, or any member thereof, with respect to evaluations of or
actions and responses taken with respect to such Business Combination.
G. For the purposes of this Article TWELFTH, a Business Combination
or any proposal to amend, repeal or adopt any provision of this Certificate
of Incorporation inconsistent with this Article TWELFTH (collectively
"Proposed Action") is presumed to have been proposed by, or on behalf of, an
Interested Shareowner or an Affiliate or Associate of an Interested
Shareowner or a person who thereafter would become such if (1) after the
Interested Shareowner became such, the Proposed Action is proposed following
the election of any director of the Corporation who, with respect to such
Interested Shareowner, would not qualify to serve as a Continuing Director or
(2) such Interested Shareowner, Affiliate, Associate or person votes for or
consents to the adoption of any such Proposed Action, unless as to such
Interested Shareowner, Affiliate, Associate or person a majority of the
Continuing Directors make a good faith determination that such Proposed
Action is not proposed by or on behalf of such Interested Shareowner,
Affiliate, Associate or person, based on information known to them after
reasonable inquiry.
H. Notwithstanding any other provisions of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding the fact
that a lesser percentage or separate class vote may be specified by law, this
Certificate of Incorporation or the By-Laws of the Corporation), any proposal
to amend, repeal or adopt any provision of this Certificate of Incorporation
inconsistent with this Article TWELFTH which is proposed by or on behalf of
an Interested Shareowner or an Affiliate or Associate of an Interested
Shareowner shall require the affirmative vote of the owners of not less than
sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast
by the owners of all the then outstanding shares of Voting Stock, voting
together as a single class, excluding Voting Stock beneficially owned by any
Interested Shareowner; provided, however, that prior to the time such number
of persons constituting a quorum of the Board of Directors are nominated by
or on behalf of the Interested shareowner and elected to the Board of
Directors, this Section H shall not apply to, and such sixty-six and
two-thirds percent (66 2/3%) vote shall not be required for, any amendment,
repeal or adoption recommended by a majority of the Board of Directors prior
to the date on which the Continuing Directors comprise less than a majority
of the Board of Directors.
THIRTEENTH.
The business and affairs of the Corporation shall be managed under the
direction of a Board of Directors consisting of not less than three nor more
than twenty-one directors, the exact number of directors shall be fixed by
the By-laws. The directors shall be divided into three classes, designated
Class I, Class II and Class III. Each class shall consist, as nearly as may
be possible, of one-third of the total number of directors constituting the
entire Board of Directors. At each annual meeting of shareowners, beginning
in 1997, successors to the class of directors whose term expires at that
annual meeting shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly
equal as possible, and any additional director of any class elected to fill a
vacancy resulting from an increase in such class shall hold office for the
remainder of the term of the Class to which such director was appointed and
until his successor has been elected and qualified, but in no case will a
decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the year
in which his term expires and until his successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Any vacancy on the Board of
Directors that results from an increase in the number of directors may be
filled by a majority of the Board of Directors then in office, provided that
a quorum is present, and any other vacancy occurring in the Board of
Directors may be filled by a majority of the directors then in office, even
if less than a quorum, or by a sole remaining director. A director or the
entire Board of Directors may be removed only for cause.
Notwithstanding the foregoing, whenever the owners of any class or
series of stock (other than Common Stock) issued by the Corporation shall
have the right, voting separately by class or series, to elect directors at
an annual or special meeting of shareowners, the election, term of office,
filling of vacancies and other features of such directorships shall be
governed by the terms of this Certificate of Incorporation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Article THIRTEENTH unless expressly provided by such terms.
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FOURTEENTH.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors, by vote of two-thirds of the entire Board of
Directors, is expressly authorized to adopt, repeal, alter, amend or rescind
the By-Laws of the Corporation at any meeting of the Board of Directors,
provided that the substance of the proposed amendment or addition or the
subject matter thereof shall have been submitted in writing at a preceding
meeting of the Board of Directors or notice thereof shall have been given to
the directors; waiver of notice by any director being deemed equivalent to
such notice to him.
The By-Laws may also be amended at any general or special meeting of
shareowners, provided notice of the proposed amendment shall have been given
in the call for such meeting.
FIFTEENTH.
The Corporation reserves the right to repeal, alter, amend or rescind
any provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred on
shareowners herein are granted subject to this reservation.
5. This restatement of the Certificate of Incorporation of The
May Department Stores Company was adopted in accordance with
Sections 242 and 245 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, The May Department Stores Company has caused its
corporate seal to be affixed and this Amended and Restated Certificate of
Incorporation to be signed by -------------------------, its -----------------,
this ---- day of ------------, 1996.
THE MAY DEPARTMENT STORES COMPANY
----------------------------------
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Appendix C
BY-LAWS
OF
THE MAY DEPARTMENT STORES COMPANY
(a Delaware Corporation)
------------------
ARTICLE I.
MEETINGS OF SHAREOWNERS
Section 1. The annual meeting of shareowners shall be held on such
date (not more than thirteen months after the most recent annual meeting) and
at such place and time as may be fixed by the board and stated in the notice
thereof, for the purpose of the election of directors and for the transaction
of only such other business as is properly brought before the meeting in
accordance with these By-laws. The annual meeting may be adjourned from day
to day until its business is completed.
Section 2. Written notice of the date, time and place of each
annual meeting of the shareowners shall be mailed not less than ten nor more
than sixty days previous to the date of such meeting, postage prepaid, to
each shareowner of record in the Company entitled to vote thereat, at such
address as shall appear on the books of the Company.
Section 3. The business transacted at any special meeting of
shareowners shall be confined to the object or objects specified in the
notice therefor, and matters germane thereto.
Section 4. Written notice of every special meeting of shareowners
stating the date, time, place and object thereof, shall be mailed, postage
prepaid, not less than ten nor more than sixty days before the date specified
for such meeting to each shareowner of record in the Company entitled to vote
thereat, at such address as shall appear on the books of the Company.
Section 5. Except as otherwise provided in the Certificate of
Incorporation, and subject to the provisions and limitations therein
contained, at all meetings of shareowners each shareowner of record shall be
entitled to cast one vote for each share appearing on the stock book of the
Company as standing in his name, which vote may be cast either in person or
by proxy, or power of attorney, but no proxy shall be voted on after three
years from its date.
Section 6. Whenever a shareowner shall vote by proxy, the
authority or proxy shall be in writing, subscribed by the shareowner in whose
name the said stock shall stand on the books of the Company, and shall, if
requested by any shareowner, or proxy, be exhibited at the time of such
meeting to the presiding officer and filed by him with the secretary of the
Company.
Section 7. No shareowner who is in default in the payment of any
part of his subscription for any stock of the Company or who is disqualified
by law, shall be entitled to vote at any meeting of shareowners.
Section 8. Every pledgor of stock standing in his name on the
books of the Company shall be deemed the owner thereof.
Section 9. Except as otherwise provided by law, the Certificate of
Incorporation or these By-laws, the owners of not less than a majority of the
shares issued and outstanding, entitled to vote thereat, present in person or
by proxy or power of attorney, are requisite for and shall constitute a
quorum at all meetings of shareowners for the transaction of business,
including the election of directors. The owners of a majority of the shares
present in person or by proxy or power of attorney at any meeting, whether or
not constituting a quorum, shall have power to adjourn the meeting from time
to time (provided that each adjournment shall be for a period not exceeding
twenty days), without notice other than announcement at the meeting, and at
any adjourned meeting, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 10. The board of directors, in advance of the meeting of
shareowners, shall appoint not less than two persons who are not directors to
serve as inspectors of election. It shall be their duty to receive and
canvass the votes for election of directors and on any proposal voted on by
ballot and to certify the results to the chairman. In all cases where the
right to vote upon any share of the Company shall be questioned, it shall be
the duty of the inspectors to examine the stock ledger of the Company as
evidence of the shares held, and all shares that appear standing thereon in
the name of any person or persons may be voted upon by such person or
persons.
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Each inspector of election before entering upon the duties of such office
shall take and subscribe the following oath before an officer authorized by
law to administer oaths: "I do solemnly swear that I will execute the duties
of an inspector of the election now to be held with strict impartiality and
according to the best of my ability."
Section 11. To be properly brought before the annual or any special
shareowners' meeting, business must be either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the
board, (b) otherwise properly brought before the meeting by or at the
direction of the board or (c) otherwise properly brought before the meeting
by a shareowner. In addition to any other applicable requirements, for
business to be properly brought before the annual or any special shareowners'
meeting by a shareowner, the shareowner must have given timely notice thereof
in writing to the secretary of the Company. To be timely, a shareowner's
notice must be delivered to or mailed and received at the principal executive
offices of the Company not less than 75 days nor more than 90 days prior to
the meeting; provided, however, that in the event that less than 90 days'
notice or prior public disclosure of the date of the meeting is given or made
to shareowners, notice by the shareowner to be timely must be so received not
later than the close of business on the 15th day following the day on which
such notice of the date of the meeting was mailed or such public disclosure
was made, whichever first occurs. Such shareowner's notice to the secretary
shall set forth as to each matter the shareowner proposes to bring before the
meeting (i) a brief description of the business desired to be brought before
the meeting and the reasons for conducting such business at the meeting, (ii)
the name and record address of the shareowner proposing such business, (iii)
the class and number of shares of common stock of the Company which are
beneficially owned by the shareowner and (iv) any material interest of the
shareowner in such business.
Notwithstanding anything in the By-laws to the contrary, no business
shall be conducted at the annual or any special meeting except in accordance
with the procedures set forth in this Section 11, provided, however, that
nothing in this Section 11 shall be deemed to preclude discussion by any
shareowner of any business properly brought before the meeting.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 11, and if he
should so determine and declare, any such business not properly brought
before the meeting shall not be transacted.
Section 12. Except as provided in Section 1 of Article II, only
persons who are nominated in accordance with the following procedures shall
be eligible for election as directors. Nominations of persons for election
to the board of directors of the Company at the annual meeting may be made at
that meeting by or at the direction of the board of directors, by any
nominating committee or person appointed by the board of directors or by any
shareowner of the Company entitled to vote for the election of directors at
the meeting who complies with the notice procedures set forth in this Section
12. Such nominations, other than those made by or at the direction of the
board of directors, shall be made pursuant to timely notice in writing to the
secretary of the Company. To be timely, a shareowner's notice must be
delivered to or mailed and received at the principal executive offices of the
Company not less than 75 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 90 days' notice or prior
public disclosure of the date of the meeting is given or made to shareowners,
notice by the shareowner to be timely must be so received not later than the
close of business on the 15th day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was made,
whichever first occurs. Such shareowner's notice to the secretary shall set
forth (a) as to each person whom the shareowner proposes to nominate for
election or re-election as a director, (i) the name, age, business address
and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares of common
stock of the Company which are beneficially owned by the person, and (iv) any
other information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Section 14 of
the Securities Exchange Act of 1934, as amended; and (b) as to the shareowner
giving the notice (i) the name and record address of the shareowner and (ii)
the class and number of shares of common stock of the Company which are
beneficially owned by the shareowner. Such notice shall be accompanied by
the executed consent of each nominee to serve as a director if so elected.
The Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as a director of the Company.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine and declare, the defective
nomination shall be disregarded.
ARTICLE II.
THE BOARD OF DIRECTORS
Section 1. The business and affairs of the Company shall be
managed and conducted by or under the direction of a board of fourteen
directors.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board of directors for any reason
may be filled by vote of a majority of the directors then in office, although
less than a quorum or by the sole remaining
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director. A director elected to fill a newly created directorship, and a
director elected to fill a vacancy, shall hold office for the remainder of
the term of the Class to which such director was elected and until his
successor shall be chosen and qualified in his stead.
Section 2. The directors shall prescribe rules and regulations for
voting at all elections and shall cause the result of each such election to
be filed with the minutes of the proceedings of the board of directors, or of
any committee of the board of directors appointed in accordance with Section
12 of this Article II.
Section 3. The board of directors at its first meeting after each
annual meeting of shareowners, or at any subsequent meeting at which such
action may be appropriate, shall elect a chairman of the executive committee,
a chairman of the board, a president, a vice chairman of the board, one or
more vice presidents, a secretary, a controller, and a treasurer, and such
other officers as it may determine. The board of directors shall by
resolution provide for the authority and duties of any and all such officers
in the management of the Company to the extent not so provided in these
By-laws.
The dates of the commencement and expiration of the term of office of
any such officer may be fixed by the board of directors at the time of his
election; but unless so fixed, such officer shall hold office from the date
of his election until the first meeting of the board of directors following
the next ensuing annual meeting of shareowners, or until his successor is
elected.
The chairman of the executive committee, the chairman of the board, the
president and the vice chairman of the board shall be members of the board of
directors. No other officers need be members of the board of directors.
Any two offices, except the offices of president and secretary, may be
held by the same person.
Section 4. If for any reason the election of officers shall not be
held on or as of the date fixed therefor, the board of directors shall
designate another day for such election.
Section 5. The board of directors may also appoint such additional
officers and agents, including additional vice presidents, one or more
assistant treasurers, one or more assistant secretaries and one or more
assistant controllers, as it may from time to time deem advisable, and may
remove any of the persons so appointed at its pleasure, and may, in its
discretion, contract for a definite period of employment for any officer or
agent upon such terms as it may deem advisable. The board of directors may
by resolution provide for the powers and duties of any and all such
additional officers and agents so appointed.
Section 6. Except as may be otherwise specifically provided by
law, the Certificate of Incorporation or these By-laws, at all meetings of
the board of directors, a majority of the entire board of directors shall
constitute a quorum for the transaction of business and the act of a majority
of the directors present at any meeting at which there is a quorum shall be
the act of the board of directors. If a quorum shall not be present at any
meeting of the board of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
All matters coming before the board of directors shall, except as
otherwise provided by the General Corporation Law of the State of Delaware
("GCL") or by these By-laws, be determined by a majority vote of the members
present, provided that a quorum shall be present.
Any one or more members of the board of directors or of any committee
thereof may participate in any meeting of such board or of such committee
thereof by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each
other at the same time. Participation by such means shall constitute
presence in person at any such meeting.
Section 7. The directors may hold their meetings and cause the
books of the Company (except the Stock and Transfer Books) to be kept within
or without the State of Delaware, at such place or places as they may from
time to time determine.
Section 8. Subject to Section 15 of this Article II, there shall
be an annual meeting of the board of directors on the day of the annual
meeting of shareowners in each year or as soon thereafter as convenient, such
annual meeting to be at such place and time (and, if applicable, on such
date) as the chairman of the board shall designate by written notice to the
directors, and regular meetings shall be held on such dates and at such times
and places either as the directors shall by resolution provide or as the
chairman of the board shall designate by written notice to the directors.
Except as above provided, no notice of said annual meeting or such regular
meetings of the board of directors need be given.
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Section 9. Special meetings of the board of directors may be
called by the chairman of the executive committee, the chairman of the board,
the president, the vice chairman of the board, or the secretary or the
treasurer. Notice thereof stating the place, date and hour of the meeting
shall be given to each director either by mail not less than forty-eight (48)
hours before the date of the meeting, by telephone or facsimile transmission
not later than the day preceding the date of such meeting, or on such shorter
notice as the person or persons calling such meeting may deem necessary or
appropriate in the circumstance. Special meetings shall be called by one of
the foregoing officers in like manner on the written request of five directors,
specifying the object or objects of such special meeting. In the event that
one of the foregoing officers shall fail to call a meeting within two days
after receipt of such request, such meeting may be called in like manner by the
directors making such request.
Section 10. If any vacancy shall occur in the board of directors by
reason of death, removal, resignation or otherwise, such vacancy may be
filled by the vote of a majority of the remaining directors then in office,
although less than a quorum, or by a sole remaining director.
Section 11. Any director may resign his office at any time, such
resignation to be made in writing and delivered to the chairman of the
executive committee, the chairman of the board, the president, the vice
chairman of the board, or the secretary.
Section 12. The board of directors shall by a majority vote of its
entire number appoint an executive committee, including the chairman thereof,
such executive committee to consist of such chairman, who shall be a director,
and such additional number of directors, not less than two, as the board of
directors shall from time to time determine, and may from time to time
designate the number of such executive committee that shall constitute a quorum
and may provide for the holding of regular meetings thereof. In the absence of
any such designation, a majority of the members of the executive committee
shall constitute a quorum. To the extent permitted by law and by the
Certificate of Incorporation, the executive committee shall have and may
exercise all the powers vested in the board of directors during the intervals
between the meetings of the board of directors. The affirmative vote of a
majority of those present at a meeting of the executive committee, at which a
quorum is present, shall be necessary for the adoption of any resolution.
The executive committee shall, whenever called upon, report to the board of
directors, and be subject to its direction, and the board of directors may
remove members and appoint new members thereof to fill vacancies therein, and
may increase or decrease the membership thereof. The executive committee
shall designate from among its members a secretary and may designate from
among its members an acting chairman to serve in the absence of the chairman
of the executive committee. Meetings of the executive committee shall be
called by the chairman of the executive committee or, upon the request of not
less than two members, by the secretary thereof by notice deposited in the
mail, sent by telegram or delivered by hand not less than two days prior to
the date of such meeting. Waiver of notice by any member of the executive
committee, whether before or after the meeting to which such waiver relates,
shall be equivalent to notice.
The board of directors may, by a majority vote of its entire number,
appoint such other committees, each consisting of three or more directors, as
the board of directors may at any time and from time to time deem
appropriate; subject to the limitations contained in Section 141(c) of the
GCL, the board of directors from time to time may by resolution prescribe for
each such committee such duties, powers and authority as the board of
directors shall deem appropriate.
Section 13. In addition to the powers by these By-laws expressly
conferred upon them, the board of directors may exercise such powers and do
such lawful acts and things as are not prohibited by law or required by the
Certificate of Incorporation or by these By-laws to be exercised and done by
the shareowners.
Section 14. Directors as such may be paid such compensation as the
board of directors may from time to time determine. Nothing herein contained
shall be construed to preclude any director from serving the Company in any
other capacity and receiving compensation therefor.
Section 15. Anything in this Article II to the contrary
notwithstanding, any action required or permitted to be taken by the board of
directors at any regular, annual or special meeting thereof, or by any
committee thereof, may be taken without a meeting if all members of the board
of directors or such committee consent in writing to the adoption of a
resolution authorizing the action. The resolution and the written consents
thereto by the members of the board of directors or such committee shall be
filed with the minutes of the proceedings of the board of directors or such
committee.
Section 16. No contract or transaction between the Company and one
or more of its directors or officers, or between the Company and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the board of directors or committee thereof which authorizes the
contract or transaction, or solely because his or their votes are counted for
such purpose if (i) the material facts as to his or their relationship or
interest and as to the contract or transaction are disclosed or are known to
the board of directors or the committee, and the board of directors or
committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though
the disin-
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terested directors be less than a quorum; or (ii) the material facts as to his
or their relationship or interest and as to the contract or transaction are
disclosed or are known to the shareowners entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareowners; or (iii) the contract or transaction is fair as to the Company as
of the time it is authorized, approved or ratified, by the board of directors,
a committee thereof or the shareowners. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the board of
directors or of a committee which authorizes the contract or transaction.
ARTICLE III.
ELECTED OFFICERS
The elected officers of the Company shall be the chairman of the
executive committee, the chairman of the board, the president, the vice
chairman of the board, the secretary, the treasurer, the controller, and such
other officers of the Company as shall be elected by the board of directors.
ARTICLE IV.
AUTHORITY AND DUTIES OF OFFICERS
Each officer of the Company shall be subject to the control of the
board of directors and shall have such duties in the management of the
Company as may be provided by appropriate resolution of the board of
directors and/or provided in these By-laws.
ARTICLE V.
DUTIES OF OFFICERS MAY BE DELEGATED
In the case of the absence of any officer of the Company, or for any
other reason that the board of directors may deem sufficient, the board of
directors may delegate the powers or duties of such officer to any other
officer or to any other director, or to any other person for the time being.
ARTICLE VI.
INDEMNIFICATION
Section 1. The Company shall indemnify to the fullest extent
authorized or permitted by law (as now or hereafter in effect) any person
made, or threatened to be made a party to or otherwise involved in any action
or proceeding (whether civil or criminal or otherwise) by reason of the fact
that he, his testator or intestate, is or was a director or officer of the
Company or by reason of the fact that such director or officer, at the request
of the Company, is or was serving any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, in any capacity.
Nothing contained herein shall affect any rights to indemnification to which
employees other than directors and officers may be entitled by law. No
amendment or repeal of this Section 1 shall apply to or have any effect on
any right to indemnification provided hereunder with respect to any acts or
omissions occurring prior to such amendment or repeal.
Section 2. The Company may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Company or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Company would have the
power to indemnify him against such liability under the provisions of the
law. The Company may create a trust fund, grant a security interest and/or
use other means (including, without limitation, letters of credit, surety
bonds and/or other similar arrangements), as well as enter into contracts
providing for indemnification to the fullest extent authorized or permitted
by law and including as part thereof any or all of the foregoing, to ensure
the payment of such sums as may become necessary to effect full
indemnification.
Section 3. The rights to indemnification conferred in this Article
VI shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, the Certificate of Incorporation of the
Company, these By-laws or any agreement, vote of stockholders or directors or
otherwise.
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ARTICLE VII.
POWER OF OFFICERS TO CONTRACT, ETC.
Section 1. All contracts and agreements, purporting to be the act
of this Company shall be signed by such officer(s) of the Company or other
person(s) as may be designated by resolution of the board of directors, in
order that the same shall be binding upon the Company.
Section 2. The board of directors may, from time to time,
authorize any officer or officers of the Company, or any other person or
persons, to sign, countersign and endorse bills of exchange, checks, notes,
leases, deeds and other instruments, agreements and documents in behalf of
the Company.
ARTICLE VIII.
ORDER OF BUSINESS
Section 1. The order of business at all meetings of the
shareowners shall be as follows:
1. The election of directors.
2. Other matters to be acted upon.
3. The reports of officers.
4. Election of inspectors of election.
The order of business at any meeting may be changed by a vote of the
owners of a majority of the shares represented at such meeting.
Section 2. The order of business at meetings of the board of
directors shall be as the directors may determine.
ARTICLE IX.
SHARES OF STOCK
Section 1. The interest of each shareowner shall be evidenced by a
certificate or certificates for shares of stock of the Company in such form
as the board of directors may from time to time prescribe. The certificates
of stock shall be signed by the chairman of the executive committee, the
chairman of the board, the president, the vice chairman of the board, or a
vice president and the treasurer or an assistant treasurer or the secretary
or an assistant secretary and sealed with the seal of the Company, and shall
be countersigned and registered in such manner, if any, as the board of
directors may by resolution prescribe; provided that, in case such
certificates are required by such resolution to be signed by a transfer agent
or transfer clerk and by a registrar, the signatures of the above designated
officers and the seal of the Company upon such certificates may be
facsimiles, engraved or printed. In case any such officer who has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such before such certificate is issued, it may be issued with
the same effect as if such officer had not ceased to be such at the date of
its issue.
Section 2. Shares of stock of the Company shall be transferred
only on the books of the Company, by the holder thereof in person or by his
attorney, upon surrender for cancellation of certificates for the same number
of shares, with an assignment and power of transfer endorsed thereon or
attached thereto, duly executed, with such proof of the authenticity of the
signature as the Company or its agents may reasonably require.
Section 3. The board of directors may direct a new certificate or
certificates of stock to be issued in the place of any certificate or
certificates theretofore issued and alleged to have been lost, stolen or
destroyed; but the board of directors, when authorizing the issue of such new
certificate or certificates, may in its discretion require the owner of the
stock represented by the certificate so lost, stolen or destroyed, or his
legal representatives, to execute and deliver to the Company a bond with one
or more sureties, in such sum as it may direct, indemnifying the Company and
its agents against any claim that may be made against it by reason of the
issue of such new certificate. The board of directors, however, may refuse
to authorize any such new certificate except upon the order of a court having
jurisdiction in such matter.
34
<PAGE> 37
Section 4. The board of directors may from time to time appoint
such transfer agents and registrars of shares as it may deem advisable and
may define their powers and duties.
ARTICLE X.
DIVIDENDS
Subject to the limitations and provisions set forth in the Certificate
of Incorporation of the Company, dividends on the stock of the Company shall
be paid at such times and in such amounts as the board of directors shall,
from time to time, determine.
ARTICLE XI.
CORPORATE SEAL
The corporate seal shall consist of the words "THE MAY DEPARTMENT
STORES COMPANY" arranged in a circular around the words and figures
"Corporate Seal -- Delaware" and shall be kept by the secretary in the office
of the Company. The impression of the seal may be made and attested upon
contracts, certificates of stock and other papers requiring the seal of the
Company, when authorized by resolution of the board of directors, by the
secretary, or by an assistant secretary or by any other officer of the
Company, and the board of directors may authorize the use of a duplicate
corporate seal by any assistant secretary or other officer of the Company
ARTICLE XII.
FISCAL YEAR
The fiscal year of the Company shall end on the Saturday closest to the
31st day of January in each year.
ARTICLE XIII.
AMENDMENTS
In furtherance and not in limitation of the powers conferred by
statute, the board of directors, by vote of two-thirds of the entire board of
directors of the Company, is expressly authorized to adopt, repeal, alter,
amend or rescind the foregoing By-laws at any meeting of the board of
directors, provided that the substance of the proposed amendment or addition
or the subject matter thereof shall have been submitted in writing at a
preceding meeting of the board of directors or notice thereof shall have been
given to the directors; waiver of notice by any director being deemed
equivalent to such notice to him.
The By-laws may also be amended at any general or special meeting of
shareowners, provided notice of the proposed amendment shall have been given
in the call for such meeting.
ARTICLE XIV.
WAIVER OF NOTICE
Any notice required to be given by law or by the Certificate of
Incorporation or by these By-laws may be waived in writing, and such waiver
may be made either before or after the act or event to which the same
relates.
35
<PAGE> 38
Appendix D
623 PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR
SHARES.--(a) A shareholder intending to enforce his right under a section
of this chapter to receive payment for his shares if the proposed corporate
action referred to therein is taken shall file with the corporation, before
the meeting of shareholders at which the action is submitted to a vote, or at
such meeting but before the vote, written objection to the action. The
objection shall include a notice of his election to dissent, his name and
residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares if the action is
taken. Such objection is not required from any shareholder to whom the
corporation did not give notice of such meeting in accordance with this
chapter or where the proposed action is authorized by written consent of
shareholders without a meeting.
(b) Within ten days after the shareholders' authorization date,
which term as used in this section means the date on which the shareholders'
vote authorizing such action was taken, or the date on which such consent
without a meeting was obtained from the requisite shareholders, the
corporation shall give written notice of such authorization or consent by
registered mail to each shareholder who filed written objection or from whom
written objection was not required, excepting any shareholder who voted for
or consented in writing to the proposed action and who thereby is deemed to
have elected not to enforce his right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any
shareholder from whom written objection was not required and who elects to
dissent shall file with the corporation a written notice of such election,
stating his name and residence address, the number and classes of shares as
to which he dissents and a demand for payment of the fair value of his
shares. Any shareholder who elects to dissent from a merger under section
905 (Merger of subsidiary corporation) or paragraph (c) of section 907
(Merger or consolidation of domestic and foreign corporations) or from a
share exchange under paragraph (g) of section 913 (Share exchanges) shall
file a written notice of such election to dissent within twenty days after
the giving to him of a copy of the plan of merger or exchange or an outline
of the material features thereof under section 905 or 913.
(d) A shareholder may not dissent as to less than all of the
shares, as to which he has a right to dissent, held by him of record, that he
owns beneficially. A nominee or fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner, as to which
such nominee or fiduciary has a right to dissent, held of record by such
nominee or fiduciary.
(e) Upon consummation of the corporate action, the shareholder
shall cease to have any of the rights of a shareholder except the right to be
paid the fair value of his shares and any other rights under this section. A
notice of election may be withdrawn by the shareholder at any time prior to
his acceptance in writing of an offer made by the corporation, as provided in
paragraph (g), but in no case later than sixty days from the date of
consummation of the corporate action except that if the corporation fails to
make a timely offer, as provided in paragraph (g), the time for withdrawing a
notice of election shall be extended until sixty days from the date an offer
is made. Upon expiration of such time, withdrawal of a notice of election
shall require the written consent of the corporation. In order to be
effective, withdrawal of a notice of election must be accompanied by the
return to the corporation of any advance payment made to the shareholder as
provided in paragraph (g). If a notice of election is withdrawn, or the
corporate action is rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have
the right to receive payment for his shares and he shall be reinstated to all
his rights as a shareholder as of the consummation of the corporate action,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have
expired or any such dividend or distribution other than in cash has been
completed, in lieu thereof, at the election of the corporation, the fair
value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim.
(f) At the time of filing the notice of election to dissent or
within one month thereafter the shareholder of shares represented by
certificates shall submit the certificates representing this shares to the
corporation, or to its transfer agent, which shall forthwith note
conspicuously thereon that a notice of election has been filed and shall
return the certificates to the shareholder or other person who submitted them
on his behalf. Any shareholder of shares represented by certificates who
fails to submit his certificates for such notation as herein specified shall,
at the option of the corporation exercised by written notice to him within
forty-five days from the date of filing of such notice of election to
dissent, lose his dissenter's rights unless a court, for good cause shown,
shall otherwise direct. Upon transfer of a certificate bearing such
notation, each new certificate issued therefor shall bear a similar notation
together with the name of the original dissenting holder of the shares and a
transferee shall acquire no rights in the corporation except those which the
original dissenting shareholder had at the time of the transfer.
(g) Within fifteen days after the expiration of the period within
which shareholders may file their notices of election to dissent, or within
fifteen days after the proposed corporate action is consummated, whichever is
later (but in no case later than ninety days from the shareholders'
authorization date), the corporation or, in the case of a merger or
consolidation, the surviving or new corporation, shall make a written offer
by registered mail to each shareholder who has filed such notice of election
to pay for his shares at a specified price which the corporation considers to
be their fair value. Such offer shall be accompanied by a statement setting
forth
36
<PAGE> 39
the aggregate number of shares with respect to which notices of election to
dissent have been received and the aggregate number of holders of such shares.
If the corporate action has been consummated, such offer shall also be
accompanied by (1) advance payment to each such shareholder who has submitted
the certificates representing his shares to the corporation, as provided in
paragraph (f), of an amount equal to eighty percent of the amount of such
offer, or (2) as to each shareholder who has not yet submitted his certificates
a statement that advance payment to him of an amount equal to eighty percent of
the amount of such offer will be made by the corporation promptly upon
submission of his certificates. If the corporate action has not been
consummated at the time of the making of the offer, such advance payment or
statement as to advance payment shall be sent to each shareholder entitled
thereto forthwith upon consummation of the corporate action. Every advance
payment or statement as to advance payment shall include advice to the
shareholder to the effect that acceptance of such payment does to constitute a
waiver of any dissenters' rights. If the corporate action has not been
consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the
making of such offer, and a profit and loss statement or statements for not
less than a twelve month period ended on the date of such balance sheet or,
if the corporation was not in existence throughout such twelve month period,
for the portion thereof during which it was in existence. Notwithstanding
the foregoing, the corporation shall not be required to furnish a balance
sheet or profit and loss statement or statements to any shareholder to whom
balance sheet or profit and loss statement or statements were previously
furnished, nor if in connection with obtaining the shareholders'
authorization for or consent to the proposed corporate action the
shareholders were furnished with a proxy or information statement, which
included financial statements, pursuant to Regulation 14A or Regulation 14C
of the United States Securities and Exchange Commission. If within thirty
days after the making of such offer, the corporation making the offer and any
shareholder agree upon the price to be paid for his shares, payment therefor
shall be made within sixty days after the making of such offer or the
consummation of the proposed corporate action, whichever is later, upon the
surrender of the certificates for any such shares represented by
certificates.
(h) The following procedure shall apply if the corporation fails to
make such offer within such period of fifteen days, or if it makes the offer
and any dissenting shareholder or shareholders fail to agree with it within
the period of thirty days thereafter upon the price to be paid for their
shares:
(1) The corporation shall, within twenty days after the
expiration of whichever is applicable of the two periods last mentioned,
institute a special proceeding in the supreme court in the judicial district
in which the office of the corporation is located to determine the rights of
dissenting shareholders and to fix the fair value of their shares. If, in
the case of merger or consolidation, the surviving or new corporation is a
foreign corporation without an office in this state, such proceeding shall be
brought in the county where the office of the domestic corporation, whose
shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding
within such period of twenty days, any dissenting shareholder may institute
such proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as
provided in paragraph (g), have agreed with the corporation upon the price to
be paid for their shares, shall be made parties to such proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided
by law for the service of a summons, and upon each nonresident dissenting
shareholder either by registered mail and publication, or in such other
manner as is permitted by law. The jurisdiction of the court shall be
plenary and exclusive.
(4) The court shall determine whether each dissenting
shareholder, as to whom the corporation requests the court to make such
determination, is entitled to receive payment for his shares. If the
corporation does not request any such determination or if the court finds
that any dissenting shareholder is so entitled, it shall proceed to fix the
value of the shares, which, for the purposes of this section, shall be the
fair value as of the close of business on the day prior to the shareholders'
authorization date. In fixing the fair value of the shares, the court shall
consider the nature of the transaction giving rise to the shareholder's right
to receive payment for shares and its effects on the corporation and its
shareholders, the concepts and methods then customary in the relevant
securities and financial markets for determining fair value of shares of a
corporation engaging in a similar transaction under comparable circumstances
and all other relevant factors. The court shall determine the fair value of
the shares without a jury and without referral to an appraiser or referee.
Upon application by the corporation or by any shareholder who is a party to
the proceeding, the court may, in its discretion, permit pretrial disclosure,
including, but not limited to, disclosure of any expert's reports relating to
the fair value of the shares whether or not intended for use at the trial in
the proceeding and notwithstanding subdivision (d) of section 3101 of the
civil practice law and rules.
37
<PAGE> 40
(5) The final order in the proceeding shall be entered
against the corporation in favor of each dissenting shareholder who is a
party to the proceeding and is entitled thereto for the value of his shares
so determined.
(6) The final order shall include an allowance for interest
at such rate as the court finds to be equitable, from the date the corporate
action was consummated to the date of payment. In determining the rate of
interest, the court shall consider all relevant factors, including the rate
of interest which the corporation would have had to pay to borrow money
during the pendency of the proceeding. If the court finds that the refusal
of any shareholder to accept the corporate offer of payment for his shares
was arbitrary, vexatious or otherwise not in good faith, no interest shall be
allowed to him.
(7) Each party to such proceeding shall bear its own costs
and expenses, including the fees and expenses of its counsel and of any
experts employed by it. Notwithstanding the foregoing, the court may, in its
discretion, apportion and assess all or any part of the costs, expenses and
fees incurred by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any who have
withdrawn their notices of election as provided in paragraph (e), if the
court finds that their refusal to accept the corporate offer was arbitrary,
vexatious or otherwise not in good faith. The court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees incurred
by any or all of the dissenting shareholders who are parties to the
proceeding against the corporation if the court finds any of the following:
(A) that the fair value of the shares as determined materially exceeds the
amount which the corporation offered to pay; (B) that no offer or required
advance payment was made by the corporation; (C) that the corporation failed
to institute the special proceeding within the period specified therefor; or
(D) that the action of the corporation in complying with its obligations as
provided in this section was arbitrary, vexatious or otherwise not in good
faith. In making any determination as provided in clause (A), the court may
consider the dollar amount or the percentage, or both, by which the fair
value of the shares as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the
proceeding, the corporation shall pay to each dissenting shareholder the
amount found to be due him, upon surrender of the certificate for any such
shares represented by certificates.
(i) Shares acquired by the corporation upon the payment of the
agreed value therefor or of the amount due under the final order, as provided
in this section, shall become treasury shares or be cancelled as provided in
section 515 (Reacquired shares), except that, in the case of a merger or
consolidation, they may be held and disposed of as the plan of merger or
consolidation may otherwise provide.
(j) No payment shall be made to a dissenting shareholder under this
section at a time when the corporation is insolvent or when such payment
would make it insolvent. In such event, the dissenting shareholder shall, at
his option:
(1) Withdraw his notice of election, which shall in such
event be deemed withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation
and, if it is liquidated, be subordinated to the rights of creditors of the
corporation, but have rights superior to the non-dissenting shareholders, and
if it is not liquidated, retain his right to be paid for his shares, which
right the corporation shall be obliged to satisfy when the restrictions of
this paragraph do not apply.
(3) The dissenting shareholder shall exercise such option
under subparagraph (1) or (2) by written notice filed with the corporation
within thirty days after the corporation has given him written notice that
payment for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting shareholder fails to exercise such option as
provided, the corporation shall exercise the option by written notice given
to him within twenty days after the expiration of such period of thirty days.
(k) The enforcement by a shareholder of his right to receive
payment for his shares in the manner provided herein shall exclude the
enforcement by such shareholder of any other right to which he might
otherwise be entitled by virtue of share ownership, except as provided in
paragraph (e), and except that this section shall not exclude the right of
such shareholder to bring or maintain an appropriate action to obtain relief
on the ground that such corporate action will be or is unlawful or fraudulent
as to him.
(l) Except as otherwise expressly provided in this section, any
notice to be given by a corporation to a shareholder under this section shall
be given in the manner provided in section 605 (Notice of meetings of
shareholders).
(m) This section shall not apply to foreign corporations except as
provided in subparagraph (e)(2) of section 907 (Merger or consolidation of
domestic and foreign corporations). (Last amended by Ch.117, L. `86, eff.
9-1-86.).
38
<PAGE> 41
Directions to Cervantes Convention Center
Washington at Eighth Street
St. Louis, Missouri
The Cervantes Convention Center [MAP]
is located on Washington Avenue
at 8th Street, 2 blocks north of
Famous-Barr. Please enter the
convention center through the
Convention Plaza entrance on the
east side of the building. The
meeting will be held in the
Lecture Hall on the first floor.
Parking has been reserved for
you in the parking garage
adjacent to the convention
center. From the garage, you may
enter the convention center two
ways. You may take the stairs
which connect the second level of
the parking garage with the
second level of the convention
center, and take the escalator
down to the first floor. Or, you
may take a garage elevator to the
street level and walk outside to
the Convention Plaza entrance
next to the garage. The meeting
room is on the first level,
immediately to your left as you
enter the convention center.
<PAGE> 42
MAY
The May Department Stores Company
611 Olive Street
St. Louis, MO 63101-1799
To Shareowners of The May Department Stores Company:
The annual meeting of May shareowners will be held at the Cervantes Convention
Center, Washington at Eighth Street, St. Louis, Missouri, on Friday, May 24,
1996, at 10:00 a.m. Central Daylight Time. The enclosed proxy statement
provides you with information regarding the meeting.
It is important that your shares be represented at this meeting. Even if you
plan to attend, please promptly sign, date and return your proxy in the
enclosed postage-paid envelope.
ADMISSION TICKET
(Please detach the proxy card below and return it in the enclosed envelope.
If you are planning to attend the annual meeting, please save this
Admission Ticket and bring it to the meeting for admission.)
Detach Proxy Card Here
- -------------------------------------------------------------------------------
/ /
To vote your shares for all listed nominees, please mark the FOR box in item
(a). To withhold voting for all nominees, please mark the WITHHOLD box. If
you do not wish your shares voted FOR a particular nominee, please mark the
EXCEPTION box and enter the name of the exception(s) in the space provided.
Management recommends a vote FOR Items (a), (b) and (c).
- -------------------------------------------------------------------------------
For Withhold Exception
(a) Election of Directors
Exception(s):----------------------
-----------------------------------
For Withhold Exception
(b) Ratification of the appointment of
independent auditors
(c) Proposal to approve a change in
the state of incorporation from
New York to Delaware
Management recommends a vote AGAINST Item (d).
- -------------------------------------------------------------------------------
(d) Proposal by a shareowner concerning
a classified board
For Withhold Exception
If you plan to attend the annual
meeting, please mark here.
Address change and/or comments,
please mark here
Please sign name(s) exactly as shown on this card.
Date:--------------------------, 1996
- -------------------------------------
- -------------------------------------
Signature(s)
Votes MUST be indicated
(x) in Black or Blue ink.
<PAGE> 43
Directions to Cervantes Convention
Washington at Eighth Street
St. Louis, Missouri
[MAP]
The Cervantes Convention Center
is located on Washington Avenue
at 8th Street, 2 blocks north of
Famous-Barr. Please enter the
convention center through the
Convention Plaza entrance on the
east side of the building. The
meeting will be held in the
Lecture Hall on the first floor.
Parking has been reserved for
you in the parking garage
adjacent to the convention
center. From the garage, you may
enter the convention center two
ways. You may take the stairs
which connect the second level of
the parking garage with the
second level of the convention
center, and take the escalator
down to the first floor. Or, you
may take a garage elevator to the
street level and walk outside to
the Convention Plaza entrance
next to the garage. The meeting
room is on the first level,
immediately to your left as you
enter the convention center.
- ------------------------------------------------------------------------------
MAY PROXY
THE MAY DEPARTMENT STORES COMPANY
This proxy is solicited on behalf of the board of directors for the annual
meeting on May 24, 1996.
By signing this card, the undersigned appoints each of David C. Farrell, Louis
J. Garr, Jr. and Richard A. Brickson, as proxy, with full power of
substitution, to vote all common shares of the undersigned in The May
Department Stores Company at the May 24, 1996 annual meeting of shareowners,
and at any adjournment of the meeting, on all subjects that may properly come
before the meeting, subject to the directions on the other side of this card.
This card is also the undersigned's voting instruction for any and all shares
held of record by The Bank of New York for the undersigned's account in the
Company's Dividend Reinvestment Plan.
The board of directors recommends a vote FOR election of all listed director
nominees, FOR proposals (b) and (c) and AGAINST proposal (d) listed on the
other side of this card. If no directions are given, and this signed card is
returned, the undersigned understands that the proxies will vote in accordance
with recommendations of the board of directors and in each proxy's discretion
on any other matter that may properly come before the meeting.
The nominees for the board of directors are Richard L. Battram, David C.
Farrell, Eugene S. Kahn, Andrall E. Pearson, Robert D. Storey, Anthony J.
Torcasio and Edward E. Whitacre, Jr.
Please sign the other side of this card and
return this card promptly to the address shown on
the right in the enclosed return envelope.
THE MAY DEPARTMENT STORES COMPANY
P.O. Box 11002
NEW YORK, N.Y. 10203-002
<PAGE> 44
Payless ShoeSource
3231 East Sixth Street
Topeka, Kansas 66607
April 22, 1996
Dear Fellow Member of the Payless ShoeSource, Inc. Profit Sharing Plan:
The Payless ShoeSource, Inc. Profit Sharing Plan is up and running. You have
shares of The May Department Stores Company common stock in the May Common
Stock Fund, one of the investment funds under the Payless Profit Sharing Plan.
You have the opportunity to direct the trustee on how to vote these shares at
May's 1996 Annual Meeting.
Enclosed please find May's 1995 Annual Report to Shareowners, which summarizes
May's performance for the year. Also enclosed are the proxy statement for
May's 1996 Annual Meeting, a confidential voting instruction card and a return
envelope. The recommendations of May's management on each issue and the
reasons for the recommendations are described in the proxy statement. We
encourage you to read it carefully.
Please complete, sign and return the confidential voting instruction card; the
Profit Sharing Plan trustee (The Bank of New York) will follow your voting
instructions. These instructions cannot be disclosed by the trustee.
Very truly yours,
Steven J. Douglass Richard A. Jolosky
Chairman and President
Chief Executive Officer
Detach Voting Instruction Card Here
- -------------------------------------------------------------------------------
/ /
To vote your shares for all listed nominees, please mark the FOR box in item
(a). To withhold voting for all nominees, please mark the WITHHOLD box. If
you do not wish your shares voted FOR a particular nominee, please mark the
EXCEPTION box and enter the name of the exception(s) in the space provided.
Management recommends a vote FOR Items (a), (b) and (c).
- --------------------------------------------------------------------------------
For Withhold Exception
(a) Election of Directors
Exception(s):----------------------
----------------------------------
For Withhold Exception
(b) Ratification of the appointment of
independent auditors
(c) Proposal to approve a change in
the state of incorporation from
New York to Delaware
Management recommends a vote AGAINST Item (d).
- -------------------------------------------------------------------------------
(d) Proposal by a shareowner concerning
a classified board
For Withhold Exception
Address change and/or comments,
please mark here
Please sign name(s) exactly as shown on this card.
Date:--------------------------, 1996
- -------------------------------------
- -------------------------------------
Signature(s)
Votes MUST be indicated
(x) in Black or Blue ink.
<PAGE> 45
- -------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS TO
THE BANK OF NEW YORK AS TRUSTEE UNDER
THE PAYLESS SHOESOURCE, INC. PROFIT SHARING PLAN
By signing this card, I appoint the Trustee to vote all shares of
common stock of The May Department Stores Company credited to my
account in the May Common Stock Fund of the Payless ShoeSource,
Inc. Profit Sharing Plan at the May 24, 1996 annual meeting of
shareowners, and at any adjournment of the meeting, on all
subjects that may properly come before the meeting, subject to the
directions on the other side of this card, on the basis of my
interests in the May Common Stock Fund and in the ESOP Preference
Fund in the May Profit Sharing Plan, all as of January 31, 1996
(the latest practicable Valuation Date).
The board of directors recommends a vote FOR election of all
listed director nominees, FOR proposals (b) and (c) and AGAINST
proposal (d) listed on the other side of this card. If no
directions are given, and this signed card is returned, I
understand that the Trustee will vote in accordance with
recommendations of the board of directors and in its discretion on
any other matter that may properly come before the meeting. If
this card is not received by the Trustee on or before May 17,
1996, the Trustee will vote my shares in the same proportion as
the other shares held by the Trustee are voted pursuant to
instructions received from other participants in the Payless
ShoeSource, Inc. Profit Sharing Plan.
The nominees for the board of directors are Richard L. Battram,
David C. Farrell, Eugene S. Kahn, Andrall E. Pearson, Robert D.
Storey, Anthony J. Torcasio and Edward E. Whitacre, Jr.
Please sign the other side of this card and
return this card promptly to the address shown on
the right in the enclosed return envelope
to:
THE MAY DEPARTMENT STORES COMPANY
P.O. BOX 11002
NEW YORK, N.Y. 10203-0002
<PAGE> 46
MAY
The May Department Stores Company
611 Olive Street
St. Louis, MO 63101-1799
To Members of the Profit Sharing Plan:
Enclosed please find the Company's 1995 Annual Report to
Shareowners and the proxy statement for the 1996 Annual Meeting, a
confidential voting instruction card and a return envelope. It is
important that you vote. Management's recommendations on each
issue and the reasons for the recommendations are described in the
proxy statement.
Please complete, sign and return the confidential voting
instruction card; the Profit Sharing Plan trustee (The Bank of New
York) will follow your voting instructions. These instructions
cannot be disclosed by the trustee.
Detach Voting Instruction Card Here
- -------------------------------------------------------------------------------
/ /
To vote your shares for all listed nominees, please mark the FOR
box, in Item (a). To withhold voting for all nominees, please
mark the WITHHOLD box. If you do not wish your shares voted FOR a
particular nominee, please mark the EXCEPTION box and enter the
name of the exception(s) in the space provided.
Management recommends a vote FOR Items (a), (b) and (c).
- -------------------------------------------------------------------------------
For Withhold Exception
(a) Election of Directors
Exception(s):----------------------
----------------------------------
For Withhold Exception
(b) Ratification of the appointment of
independent auditors
(c) Proposal to approve a change in
the state of incorporation from
New York to Delaware
Management recommends a vote AGAINST Item (d).
- -------------------------------------------------------------------------------
(d) Proposal by a shareowner concerning
a classified board
For Withhold Exception
Address change and/or comments,
please mark here
Please sign name(s) exactly as shown on this card.
Date:--------------------------, 1996
- -------------------------------------
- -------------------------------------
Signature(s)
Votes MUST be indicated
(x) in Black or Blue ink.
<PAGE> 47
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MAY CONFIDENTIAL VOTING INSTRUCTIONS TO
THE BANK OF NEW YORK AS TRUSTEE UNDER
THE MAY DEPARTMENT STORES COMPANY PROFIT SHARING PLAN
By signing this card, I appoint the Trustee to vote all shares of
common stock of The May Department Stores Company represented by
units credited to my account in the May Common Stock Fund on the
Profit Sharing Plan and all shares of ESOP Preference Shares of
the Company credited to my account in the ESOP Preference Fund of
the Profit Sharing Plan, all as of January 31, 1996 (the latest
practicable Valuation Date), at the May 24, 1996 annual meeting of
shareowners, and at any adjournment of the meeting, on all
subjects that may properly come before the meeting, subject to the
directions on the other side of this card.
The board of directors recommends a vote FOR election of all
listed director nominees, FOR proposals (b) and (c) and AGAINST
proposal (d) listed on the other side of this card. If no
directions are given, and this signed card is returned, I
understand that the Trustee will vote in accordance with
recommendations of the board of directors and in its discretion on
any other matter that may properly come before the meeting. If
this card is not received by the Trustee on or before May 17,
1996, the Trustee will vote my shares in the same proportion as
the other shares held by the Trustee are voted pursuant to
instructions received from other participants in the Profit
Sharing Plan.
The nominees for the board of directors are Richard L. Battram,
David C. Farrell, Eugene S. Kahn, Andrall E. Pearson, Robert D.
Storey, Anthony J. Torcasio and Edward E. Whitacre, Jr.
Please sign the other side of this card and
return this card promptly to the address shown on
the right in the enclosed return envelope to:
THE MAY DEPARTMENT STORES COMPANY
P.O. Box 11002
NEW YORK, N.Y. 10203-0002
<PAGE> 48
MAY
The May Department Stores Company
611 Olive Street
St. Louis, Missouri 63101-1799
April 22, 1996
Dear Fellow Member of the Profit Sharing Plan:
Enclosed please find the Company's 1995 Annual Report
to Shareowners, which summarizes May's performance for the year.
Also enclosed are the proxy statement for the 1996 Annual Meeting,
a confidential voting instruction card and a return envelope. It
is important that you vote. Management's recommendations on each
issue and the reasons for the recommendations are described in the
proxy statement. We encourage you to read it carefully.
In 1995, we achieved our 21st consecutive year of
record sales and earnings per share from continuing operations in
spite of a difficult retail environment. During 1995 we continued
to focus our efforts on delivering more value to our customers, by
broadening our assortments of higher-quality prestige merchandise,
introducing exciting new merchandise, speeding the delivery of
merchandise to the selling floor, and becoming a more powerful
holiday and gift store. We continue to target significant growth
from new stores, acquisitions, and expansions and remain dedicated
to developing the best talent in retailing.
In this year's annual report we salute our sales
associates and their commitment to treating the customer right.
In addition, we salute all of you. Your dedication to our
customers and to May's success have helped deliver another record
year.
Thomas A. Hays, deputy chairman, will retire on April
30th. In his 27 years with May, 13 as director, he has
contributed significantly to the success of the Company. We are
deeply indebted to him and most appreciative of all that he has
done. We will miss him both personally and professionally.
Please complete, sign and return the confidential
voting instruction card; the Profit Sharing Plan trustee (The Bank
of New York) will follow your voting instructions. These
instructions cannot be disclosed by the trustee.
Again, we thank you for your accomplishments.
Very truly yours,
David C. Farrell Jerome T. Loeb
Chairman of the Board and President
Chief Executive Officer
<PAGE> 49
APPENDIX
1. Pages two and three of the printed proxy statement contain a photo
of each director.
2. Page eight of the printed proxy statements contains a stock performance
graph. The data contained in that graph is depicted in the table that
immediately follows the graph.
