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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
/ / Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to
240.14a-11(c) or 240.14a-12
THE MAY DEPARTMENT STORES COMPANY
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(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
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(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
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(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
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(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
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(5) TOTAL FEE PAID:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
<PAGE>
MAY
The May Department Stores Company
611 Olive Street
St. Louis, Missouri 63101-1799
April 16, 1999
Dear Fellow Shareowner:
It is our privilege to invite you to May's 1999 annual
meeting of shareowners. The meeting will take place on Friday, May 21,
1999, at 10:00 a.m. Central Daylight Time, at the America's Center,
Washington at Eighth Street, St. Louis, Missouri.
In addition to the formal items of business for the meeting
described in the accompanying proxy statement, we plan to review the
major developments of 1998. These include the achievement of our 24th
consecutive year of record sales and earnings per share, our acquisition
of 13 stores including seven in the Kansas City area, and our tests of
open selling environments in both fragrances and cosmetics. We will
also discuss our plans for 1999 and answer any questions you may have.
We would like to tell you about some recent and some
upcoming changes to our board of directors:
* David C. Farrell retired from May and from the board
of directors on April 30, 1998. In his 42 years with
May - 19 as chief executive officer and 24 as a
director - Mr. Farrell made a profound contribution to
the company's success. Under his leadership, May grew
from $1.7 billion with earnings of $47 million and 103
department stores to a $12.5 billion company earning
in excess of $770 million and operating 369 department
stores. We miss his expertise and leadership.
* During 1998, the board elected Marsha Johnson
Evans, national executive director of the Girl
Scouts of the U.S.A., James M. Kilts, president
and chief executive officer of Nabisco, Inc., and
William D. Perez, president and chief executive
officer of S.C. Johnson and Son, Inc. to the
board. We are excited about the knowledge and
talent they bring to the company. All three are
standing for election at the annual meeting.
* On May 21st, two long-term directors will retire
from the board. Edward H. Meyer, chairman of
the board, president and chief executive officer
of Grey Advertising Inc., and Murray L. Weidenbaum,
chairman of the Center for the Study of American
Business at Washington University, are retiring,
each after 20 years of board service. They have
provided outstanding advice and counsel.
We appreciate your continued confidence in May and look
forward to seeing you on May 21st. Even if you cannot attend the
meeting, your vote is very important to our company. Please return
a signed proxy card so that your shares are properly voted.
Very truly yours,
/s/ Eugene S. Kahn /s/ Jerome T. Loeb
Eugene S. Kahn Jerome T. Loeb
President and Chairman of the Board
Chief Executive Officer
<PAGE>
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
The shareowners of The May Department Stores Company, a Delaware
corporation, will hold their annual meeting on Friday, May 21, 1999, at
10:00 a.m. Central Daylight Time. The meeting will be in St. Louis,
Missouri at the America's Center, Washington at Eighth Street.
The proposals for the meeting are:
(a) the election of six directors;
(b) the ratification of the appointment of independent auditors;
(c) the amendment of the certificate of incorporation to increase
the number of authorized shares of common stock; and
(d) a shareowner proposal concerning a classified board.
We may take action on additional business at the meeting if it is
properly raised. The proxy statement discusses these proposals and
contains other information about May. It also explains how you may vote
at the annual meeting in person or by proxy.
The record date for the meeting is April 1, 1999. This means that
you must be a shareowner of record or the owner of May's Employee Stock
Ownership Plan preference stock ("ESOP stock") at the close of business
on that date to vote at the annual meeting.
PROXY STATEMENT
We are providing this proxy statement to shareowners of May common stock
and ESOP stock in connection with the board of directors' solicitation
of proxies for use at the annual shareowners meeting and when the
meeting reconvenes if it is adjourned or postponed. We began mailing
the proxy statement and the enclosed form of proxy on April 16, 1999.
Voting Procedures. You are entitled to one vote for each share of
common stock you own. On the record date, the company's voting
securities carried xxx,xxx,xxx votes and consisted of:
* xxx,xxx,xxx shares of common stock, excluding xx,xxx,xxx
shares of treasury stock; and
* xxx,xxx shares of ESOP stock which carry xx,xxx,xxx votes.
The owners of these shares of common stock and ESOP stock vote together
as a single class. All share numbers in this proxy statement are
adjusted to reflect our March, 1999 three-for-two stock split.
Proxies. If you own common stock in your own name, you are an "owner of
record." This means that you may use the enclosed proxy card to tell
the persons named as proxies how to vote your shares. Be sure to sign,
date and mail the card in the postage-paid envelope which we have
provided. If you fail to return your proxy card the proxies cannot vote
your shares.
If a broker, bank or other nominee holds your common stock for
your benefit but not in your own name, your shares are in "street name."
In that case, your bank, broker or other nominee will send you a voting
instruction form to use in voting your shares.
If you participate in May's profit sharing plan, you will receive
a proxy card that serves as a voting instruction card for the common
stock and ESOP stock allocated to your account in that plan. By
signing, dating and mailing the voting instruction card, you tell the plan
trustee how to vote your shares. The trustee will vote your shares in
accordance with your instructions and the terms of the plan. If you
fail to return the card, the trustee will vote your shares in the same
proportion as it votes the shares for which it receives instructions
from other plan participants.
If you do not mark your proxy card to tell the proxies how to vote
your shares on each proposal, the proxies will vote the way the board of
directors recommends in this proxy statement. If action is taken at the
meeting on matters that are not described in this proxy statement, the
proxies will use their own judgment to determine how to vote your
shares. The board of directors recommends a vote
* FOR the election of all director nominees;
* FOR the ratification of the appointment of independent auditors;
* FOR the amendment of the certificate of incorporation;
and
* AGAINST the shareowner proposal.
<PAGE>
If the annual meeting is interrupted before we have completed our
business or adjourned to another date, the proxies will still vote your
shares when the meeting resumes, unless you revoke your instructions in
the meantime. You may revoke your proxy at any time before its exercise
by
* sending a written revocation to May's secretary;
* signing another proxy card bearing a later date; or
* attending the meeting and voting in person.
Vote Required. The presence, in person or by proxy, of the owners of a
majority of the votes entitled to be cast by the shareowners entitled to
vote generally at the annual meeting constitutes a quorum. Abstentions
and broker nonvotes are counted as present and entitled to vote for
quorum purposes. Generally, a nominee may only vote the common stock
that it holds for you in accordance with your instructions. However,
if it has not received your instructions within 10 days of the meeting,
the nominee may vote on matters which the New York Stock Exchange
determines are routine. If a nominee cannot vote on a particular matter
because it has not received your instructions and because the matter is
not routine, this is a "broker nonvote" on that matter.
The vote required to approve each proposal at the meeting is:
* The election of directors requires the affirmative vote of a
plurality of the votes cast at the meeting. This means that
1
<PAGE>
<PAGE>
the nominees receiving the greatest number of votes will be elected.
Abstentions and broker nonvotes are not counted for purposes of
the election of directors.
* Approval of the proposed amendment to our certificate of
incorporation to increase the number of authorized shares of
common stock requires the affirmative vote of the owners of a
majority of the outstanding common stock and ESOP shares, voting
as a class. Both abstentions and broker nonvotes have the effect
of votes against the proposal.
* Approval of each other item requires the affirmative vote of the
owners of a majority of the shares present in person or
represented by proxy and entitled to vote. An abstention has the
effect of a vote against the proposals. A broker nonvote is not
counted for purposes of approving these proposals.
Other Matters. We know of no other matters to be presented at the annual
meeting. However, if anyone properly presents other matters for a vote at
the meeting, including, among other things, a motion to adjourn the
meeting to another time or place, the proxies will vote the shares
represented by properly executed proxy cards according to their judgment
on those matters.
Solicitation of Proxies. The accompanying proxy is solicited by the
board of directors for use at the May 21, 1999, annual meeting and for
use when the meeting reconvenes if it is adjourned or postponed. We
will bear the expenses of soliciting proxies. Directors, officers and
regular employees of May may solicit proxies personally, from and
through registered owners, nominees and others acting as principals and
as intermediaries. They may solicit proxies by any means, including by
mail, telephone, telex, facsimile or electronic means.
We have retained D.F. King & Co., Inc. to assist in soliciting
proxies for a fee of $18,500, plus out-of-pocket expenses. We will,
upon request, reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation materials to the beneficial owners
of our common stock.
Beneficial Owners. We are aware of two shareowners that beneficially
own more than 5% of our voting securities:
* The Oppenheimer Group, Oppenheimer Tower, World Financial Center,
New York, New York, has filed a Form 13G indicating that it owned
22,180,342 shares of common stock as of December 31, 1998,
representing 6.4% of the outstanding common stock on that date.
* Our profit sharing plan beneficially owned xx,xxx,xxx shares of
common stock (x.x% of the outstanding common stock) and 100% of
the outstanding shares of ESOP stock on the record date.
Together, these shares represent xx.x% of the votes which can be
cast at the annual meeting.
THE ELECTION OF DIRECTORS
Proposal (a) on the accompanying proxy card.
Nominees. The board of directors proposes the election of six
directors. These six directors, together with the eight directors
whose terms continue beyond the annual meeting, will make up the board
of directors.
Unless you indicate otherwise on your proxy card, the proxies will
vote your shares FOR the following persons for terms expiring at the
annual meeting in the years indicated and until their successors are
elected and qualified:
2001 2002
- ---- ----
James M. Kilts Marsha Johnson Evans
William D. Perez Robert D. Storey
Anthony J. Torcasio
Edward E. Whitacre, Jr.
Each nominee consents to being nominated and agrees to serve if
elected. They will join the following directors who you elected
previously for terms ending at the annual meeting in the years
indicated. These directors are not standing for election at this
meeting:
2000 2001
- ---- ----
John L. Dunham Eugene S. Kahn
Jerome T. Loeb Helene L. Kaplan
Russell E. Palmer R. Dean Wolfe
Michael R. Quinlan
William P. Stiritz
If a nominee becomes unavailable before the meeting, the proxies
may vote your shares for any substitute nominee proposed by the board
of directors, or the board may reduce the number of directors to be
elected.
<PAGE>
Information About Directors. Biographies of the directors appear on the
following pages, showing
* principal occupations during the last five years;
* ages as of May 21, 1999;
* the number of shares of May common stock over which each
director had sole or shared voting and investment power as
of March 22, 1999; and
* the stock units held in each director's deferred
compensation plan account as of March 22, 1999.
For the directors who are also May employees, the common stock ownership
numbers also reflect interests in shares owned by our profit sharing
plan. No director beneficially owns any preferred stock of May other
than ESOP stock owned by the profit sharing plan.
May's 23 executive officers and directors as a group,
* had sole voting and investment power as of March 22, 1999,
over 1,427,391 shares of May common stock, less than 1% of
the outstanding shares, and disclaim beneficial ownership as
to 6,576 of these shares;
* had 197,231 stock units in deferred compensation plan
accounts as of March 22, 1999; and
* have the right to acquire sole or shared voting and
investment power over 962,537 shares of May common stock on
or before May 21, 1999.
These numbers include the shares reported in the biographies that
follow.
2
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<PAGE>
[PHOTO]
Eugene S. Kahn, director since 1996, age 49
Mr. Kahn, president and chief executive officer, joined May in 1990. He
served as president and chief executive officer of Filene's from 1992 to
March 1996, as vice chairman of May from March 1996 to June 1997and as
executive vice chairman from June 1997 to May 1998, when he assumed his
current position. Mr. Kahn beneficially owns 313,735 shares of common
stock and 58,833 deferred stock units and has the right to acquire an
additional 237,048 shares of common stock on or before May 21, 1999.
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[PHOTO]
John L. Dunham, director since 1997, age 52
Mr. Dunham, executive vice president and chief financial officer, joined
May in 1976. He served as chairman of G. Fox from 1989 to 1993 and as
chairman of May Merchandising Company from 1993 to 1996, when he assumed
his current position. Mr. Dunham beneficially owns 72,564 shares of
common stock and 43,720 deferred stock units and has the right to
acquire an additional 87,200 shares of common stock on or before May 21,
1999.
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[PHOTO]
Marsha Johnson Evans, became a director in 1998, age 51 (standing for
election at this meeting)
Mrs. Evans is the national executive director of Girl Scouts of the
U.S.A. She served with the United States Navy for 29 years, attaining
the designation of Rear Admiral before retiring in 1997. Mrs. Evans
assumed her present position in 1998. Mrs. Evans beneficially owns
3,000 shares of common stock and 1,046 deferred stock units.
- --------------------------------------------------------------------------
[PHOTO]
Helene L. Kaplan, director since 1985, age 65
Mrs. Kaplan is of counsel to the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP since 1990. She is a director of Bell Atlantic
Corporation, Chase Manhattan Corporation, Metropolitan Life Insurance
Company, and Mobil Corporation. Mrs. Kaplan also serves as a trustee or
director of many nonprofit cultural, educational and scientific
organizations. Mrs. Kaplan beneficially owns 13,365 shares of common
stock and 7,841 deferred stock units.
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[PHOTO]
James M. Kilts, became a director in 1998, age 51 (standing for election
at this meeting)
Mr. Kilts is the president and chief executive officer of Nabisco, Inc.
Prior to assuming his present position in 1998, he held several
positions with Philip Morris Companies, Inc., including president of
Kraft Foods U.S.A. from 1989 to 1994 and executive vice president from
1994 to 1997. Mr. Kilts serves on the boards of Knox College and the
Grocery Manufacturers of America. Mr. Kilts beneficially owns 4,515
shares of common stock and 600 deferred stock units.
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[PHOTO]
Jerome T. Loeb, director since 1984, age 58
Mr. Loeb, chairman of the board, joined May in 1964. He served as
president from 1993 to May 1998, when he assumed his current position.
Mr. Loeb also served as chief financial officer from 1981 to May 1996.
Mr. Loeb beneficially owns 467,589 shares of common stock (and disclaims
beneficial interest in 6,576 of those shares) and has the right to
acquire an additional 169,116 shares on or before May 21, 1999.
- --------------------------------------------------------------------------
<PAGE>
[PHOTO]
Russell E. Palmer, director since 1984, age 64
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,
Freddie Mac, GTE Corporation, and Safeguard Scientifics, Inc. Mr. Palmer
beneficially owns 8,265 shares of common stock and 4,503 deferred stock
units.
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3
<PAGE>
<PAGE>
[PHOTO]
William D. Perez, became a director in 1998, age 51 (standing for
election at this meeting)
Mr. Perez is the president and chief executive officer of S.C. Johnson
and Son, Inc. He joined S.C. Johnson and Son in 1970 and served as
president and chief operating officer of its worldwide consumer products
division from 1993 to 1997, when he assumed his present position. Mr.
Perez is also a director of S.C. Johnson and Son, Inc., Hallmark Cards
and the Grocery Manufacturers of America. Mr. Perez beneficially owns
3,514 shares of common stock.
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[PHOTO]
Michael R. Quinlan, director since 1993, age 54
Mr. Quinlan is chairman of McDonald's Corporation. He joined McDonald's
in 1963 and served as chief executive officer from 1987 to 1998. He
became chairman in 1990. Mr. Quinlan is also a director of Dun &
Bradstreet Corporation and Catalyst, a nonprofit organization, and a
member of the board of trustees of Ronald McDonald Children's Charities
and Loyola University of Chicago. Mr. Quinlan beneficially owns 5,715
shares of common stock and 3,147 deferred stock units.
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[PHOTO]
William P. Stiritz, director since 1983, age 64
Mr. Stiritz is chairman of the board, chief executive officer and
president of Agribrands International, Inc. He served as chief executive
officer of Ralston Purina Company until 1997, and continues to serve as
chairman of its board of directors. Mr. Stiritz is also a director of
Angelica Corporation, Ball Corporation, Ralcorp Holdings, Inc.,
Reinsurance Group of America, Inc., and Vail Resorts, Inc. Mr. Stiritz
beneficially owns 8,265 shares of common stock and 27,051 deferred stock
units.
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[PHOTO]
Robert D. Storey, director since 1989, age 63 (standing for election at
this meeting)
Mr. Storey is a partner in the law firm of Thompson, Hine & Flory LLP,
in Cleveland, Ohio since 1993. Mr. Storey is also a director of Bank
One, Cleveland, GTE Corporation, and The Procter & Gamble Company, and a
trustee of the Kresge Foundation, the George Gund Foundation, Case
Western Reserve University, and Spelman College. Mr. Storey
beneficially owns 9,713 shares of common stock and 2,753 deferred stock
units.
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[PHOTO]
Anthony J. Torcasio, director since 1996, age 53 (standing for election
at this meeting)
Mr. Torcasio, vice chairman of May and chief executive officer of May
Merchandising Company, joined May in 1969. He served as president of
May Merchandising Company from 1993 to 1998 and has served as chief
executive officer of May Merchandising Company since 1993. He became
vice chairman of May in 1997. Mr. Torcasio beneficially owns 159,781
shares of common stock and has the right to acquire an additional 215,517
shares of common stock on or before May 21, 1999.
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[PHOTO]
Edward E. Whitacre, Jr., director since 1989, age 57 (standing for
election at this meeting)
Mr. Whitacre is chairman of the board and chief executive officer of SBC
Communications, Inc., 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 8,265 shares of common stock and 4,656 deferred stock
units.
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<PAGE>
[PHOTO]
R. Dean Wolfe, director since 1997, age 55
Mr. Wolfe, executive vice president of acquisitions and real estate,
joined May in 1972. He served as executive vice president of real estate
from 1986 to 1996, when he was appointed to his current position. Mr.
Wolfe beneficially owns 187,190 shares of common stock and has the right
to acquire an additional 158,257 shares of common stock on or before May
21, 1999.
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4
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<PAGE>
EXECUTIVE COMPENSATION
Performance Based Bonus Plans. We have three performance based bonus
plans that cover approximately 3,300 associates. Each plan links a
major portion of the associates' potential total pay to the associates'
performance and to May's performance.
The plan for corporate executives applies to the six executive officers
named in the summary compensation table. The plan for company principals
applies to the 21 presidents, chairmen, and vice chairmen of our operating
divisions. Participants in each plan 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 on
* attaining earnings per share and return on net assets
performance standards relating to May as a whole in the case
of the corporate executives' plan, or to the participants'
respective divisions in the case of the principals' plan;
and
* May's common stock price performance over the long-term
performance periods.
The performance incentive plan applies to approximately 3,260
associates. Participants may receive annual cash awards based upon
attaining certain performance measures tailored to the participant's
job.
Participants in the three plans earned approximately $47.4 million
for the performance periods ending in fiscal 1998. Amounts awarded
under these plans to the named executive officers are reflected in the
summary compensation table.
During fiscal 1998, each of the named executive officers became
eligible to receive a potential long-term cash award for the three
fiscal years ending in 2000. The table below shows the maximum long-term
cash awards payable to each for that 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>
Eugene S. Kahn Earned over $782,250
Jerome T. Loeb three fiscal $607,181
Anthony J. Torcasio years (1998-2000) $395,925
R. Dean Wolfe ending 1/27/01 $317,325
John L. Dunham $288,625
David C. Farrell N/A
- ---------------------------------------------------------------------------------------
<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>
Profit Sharing Plan. Associates over age 21, with one year of service
and at least 1,000 hours of paid employment, may participate in our
profit sharing plan. During 1998, 56,000 associates invested $82.4
million in the plan. Of this amount, $47.1 million was invested in May
common stock. In addition, we added $57.4 million of May common stock
and ESOP stock to associates' accounts as a result of the plan's
matching formula.
The plan links its benefits to our performance each year and to
the value of the common stock. Generally, we match up to the first 5% of
pay each pay period that an associate invests in the plan. In 1998, our
associates made $50.9 million of "matchable" contributions to the plan.
The effective matching rate for 1998 was 113%, the highest match in the
history of the plan. The effective matching rate has averaged 93% over
the last five years.
Retirement Plans. We have two noncontributory retirement plans that cover
associates over age 21 who are paid for 1,000 or more hours per year.
<PAGE>
In addition, we have a supplementary retirement plan that covers
associates who, at one time, had compensation in a calendar year equal
to twice the amount of "wages" then subject to the payment of old age,
survivor, and disability insurance Social Security taxes. Participants
become entitled to a single life annuity retirement benefit equal to
* 2% of the average of the participant's highest three out of
five fiscal years of final annual salary and bonus
multiplied by their years of service, up to a maximum of 25
years, reduced by
* primary Social Security benefits, company-provided benefits
under our retirement, profit sharing and disability plans,
and, if appropriate, amounts to reflect early retirement.
The minimum benefit under the plan is the amount of company-
provided benefits that would be payable under our retirement and
profit sharing plans determined without regard to any statutory limits,
less the amount of these benefits actually payable under those
plans. If there is a change in control, as defined in the plan, the
supplementary retirement plan provides that vesting would be accelerated
in limited circumstances and benefits would not be forfeitable.
The following table shows the estimated aggregate annual benefits
payable under these retirement plans to eligible associates in specified
compensation and years of service classifications, assuming normal
retirement at age 65 in 1998. The named executive officers had, as of
December 31, 1998, the following years of service: Eugene S. Kahn, 8
years; Jerome T. Loeb, 34 years; Anthony J. Torcasio, 27 years; R. Dean
Wolfe, 26 years; and John L. Dunham, 22 years. Mr. Farrell retired on
April 30, 1998 with 42 years of service.
The expense for our retirement plans for fiscal 1998 for all
associates aggregated $42.0 million.
<TABLE>
Pension Plan Table
<CAPTION>
- -------------------------------------------------------------------------------------
Average Years of Service
Annual --------------------------------------------------------------------
Earnings 10 20 25 30 35
- -------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$ 800,000 $120,272 $181,696 $215,474 $249,253 $ 283,030
1,000,000 158,051 232,455 274,907 317,361 359,814
1,300,000 214,719 308,588 364,054 419,520 474,986
1,600,000 271,387 384,723 453,201 521,680 590,158
1,900,000 328,054 460,860 542,351 623,842 705,333
2,200,000 384,722 536,995 631,498 726,002 820,506
2,500,000 441,390 613,128 720,644 828,161 935,677
2,800,000 498,058 689.265 809,793 930,323 1,050,852
- -------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<PAGE>
Employment Contracts, Termination of Employment and Change in Control
Arrangements. We have severance agreements with each of the named
executive officers, other than Mr. Farrell. These agreements provide
that the executive is entitled to benefits if a change in control, as
defined in the agreement, occurs, and during the 180 days following the
change in control, the executive determines in good faith that as a result
of that event he cannot execute his duties effectively.
Following the 180 day period, the executive is entitled to
benefits only if his employment is actually or constructively terminated
other than for cause or disability during the remaining term of the
agreement.
Benefits under the severance agreements include (1) a lump sum payment
equal to three times the sum of base salary at termination or, if greater,
base salary immediately prior to the change in control, plus target bonus
with maximum share price adjustment for the year in which the change in
control occurs; (2) continued medical and life insurance benefits for 36
months; and (3) eligibility for post-retirement life and medical insurance
benefits if the executive is within five years of his eligibility date for
those benefits.
Executives who are subject to the insider trading rules of Section
16(b) of the Securities Exchange Act of 1934 also receive a cash payment
in cancellation of their stock options. Mr. Kahn's agreement provides
for a tax gross-up payment to ensure that his severance benefits are
not subject to net reduction because of excise taxes which are payable
under Section 4999 of the Internal Revenue Code. Mr. Loeb's agreement
provides for a 50% tax gross-up payment.
If a change in control is imminent, we have a trust that we will
fund to provide these severance benefits. The trust becomes irrevocable
when the change in control occurs.
The named executive officers, other than Mr. Farrell, have
individual written employment contracts. These contracts expire at
various dates on or before April 30, 2003.
Executive Stock Ownership. We encourage all associates to align their
interests with yours by making a personal investment in May common
stock. We adopted the minimum stock ownership guidelines in 1994 for
our top management group. Associates can satisfy these minimum
guidelines through direct stock ownership, profit sharing plan share
equivalents and deferred compensation plan stock units. We expect
associates to meet these minimum guidelines within five years of when
the guidelines first apply to them.
Executive Stock Ownership Guidelines
<TABLE>
<CAPTION>
Ownership Guideline
Executive Level (Multiple of Base Salary)
- -------------------------------------------------------------------
<S> <C>
Chief Executive Officer 5.0 times
Corporate Senior Management
Committee<Fa> 3.5 times
Presidents, Chairmen and Vice 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. Kahn (whose guideline is the CEO guideline
above) and three other executive officers.
</TABLE>
Stock Price Performance. The graph below compares our cumulative total
shareowner return on an $100 investment in May common stock at the close
of the market on January 29, 1994 (the end of fiscal 1993) against the
returns of the S&P 500 stock index and the S&P Retail Department Stores
Index.
<PAGE>
Comparison of Five-year Cumulative Return
May, S&P 500 Index
and S&P Retail Department Stores Index
[GRAPH]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
May $100 $ 91 $119 $134 $162 $190
S&P 500 $100 $101 $139 $176 $224 $296
S&P-Dept. Stores $100 $ 89 $106 $114 $149 $148
</TABLE>
The companies included in the S&P Retail Department Stores Index are
Dillard's, Federated, J.C. Penney, May, Mercantile and Nordstrom.
Named Executive Officer Compensation. Current proxy rules require us to
disclose the compensation of certain executive officers in each of the
last three fiscal years. The following summary compensation table shows
the compensation of those executive officers.
6
<PAGE>
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
Annual
Compensation<F2> Long-Term Compensation
----------------------------------------------------------------------------
Awards Payouts
--------------------------------------------
Restricted Long-Term All Other
Name and Stock Stock Incentive Compen-
Principal Position Year Salary<F1><F3> Bonus<F1><F4> Awards<F5> Options<F6> Payouts<F1><F7> sation<F8>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Eugene S. Kahn 1998 $1,200,000 $675,000 $5,343,750 225,000 $584,408 $9,024
President and Chief Executive 1997 $756,250 $301,037 $0 33,750 $206,022 $8,348
Officer (since 5/1/98)<F9> 1996 $666,667 $230,090 $0 37,293 $174,279 $7,710
Jerome T. Loeb 1998 $1,000,000 $562,500 $0 75,000 $470,975 $9,024
Chairman of the Board<F9> 1997 $976,250 $370,652 $0 45,000 $284,304 $8,348
1996 $925,000 $323,832 $2,378,125 91,160 $254,277 $7,710
Anthony J. Torcasio 1998 $825,000 $382,500 $1,858,125 41,250 $282,463 $9,024
Vice Chairman<F9> 1997 $712,500 $282,222 $540,000 33,750 $201,965 $8,348
1996 $637,500 $221,569 $0 78,729 $176,085 $7,710
R. Dean Wolfe 1998 $672,500 $306,000 $0 22,500 $376,295 $9,024
Executive Vice President - 1997 $643,750 $244,593 $1,083,750 55,500 $230,758 $8,348
Acquisitions and Real Estate 1996 $618,750 $213,047 $0 19,890 $160,953 $7,710
John L. Dunham 1998 $597,500 $274,500 $0 22,500 $204,651 $9,024
Executive Vice President and 1997 $509,583 $210,726 $1,014,375 55,500 $141,851 $8,348
Chief Financial Officer 1996 $468,750 $161,916 $0 61,326 $119,812 $7,710
David C. Farrell 1998 $416,667 $329,166 $0 0 $647,438 $542,986
Chairman of the Board and Chief 1997 $1,237,500 $940,742 $0 75,000 $748,304 $8,348
Executive Officer (to 4/30/98) 1996 $1,200,000 $818,000 $3,022,500 331,493 $684,640 $7,710
- ---------------------------------------------------------------------------------------------------------------------------------
<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. Kahn Mr. Loeb Mr. Torcasio Mr. Wolfe Mr. Dunham Mr. Farrell
<S> <C> <C> <C> <C> <C> <C>
1998 $2,459,408 $2,033,475 $1,489,963 $1,354,795 $1,076,651 $1,393,271
1997 $1,263,309 $1,631,206 $1,196,687 $1,119,101 $862,160 $2,926,546
1996 $1,071,036 $1,503,109 $1,035,154 $992,750 $750,478 $2,702,740
<F2> The table does not reflect certain non-cash compensation made
available to the named executive officers during the respective
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 normally occur on May 1
of each year.
<F4> "Bonus" reflects the annual portion of the bonus payable under our
executive incentive compensation plan for corporate executives
described on page 9. The bonuses were paid or were deferred under
our deferred compensation plan. All deferrals would be
distributed to participants in lump sum cash payments immediately
following a change in control, as defined in the plan.
<F5> "Restricted Stock" is valued at the average price of the May
common stock on the grant date. 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 $41.1892 per share) was
$7,722,975 for Mr. Kahn (187,500 shares), $4,633,785 for Mr. Loeb
(112,500 shares), $4,324,866 for Mr. Torcasio (105,000 shares),
$2,162,433 for Mr. Wolfe (52,500 shares), and $1,482,811 for Mr.
Dunham (36,000 shares). We pay dividends on these shares
quarterly. The common stock ownership numbers on pages 1 through
3 include shares of restricted stock. Under some circumstances,
restricted shares continue to be forfeitable for up to 10 years
from the grant date. Our restricted stock plan and our 1994 Stock
Incentive Plan provide that restricted stock grants become fully
vested and all restrictions are waived when a change in control,
as defined in the plans, occurs.
<F6> "Stock Options" represent non-qualified 10-year options under our
1976 and 1987 stock option plans and the 1994 Stock Incentive
Plan. The plans provide that all outstanding options become fully
exercisable upon the occurrence of a change in control, as defined
in the plans. Option numbers for 1996 are adjusted to reflect our
May 4, 1996 spin-off of Payless ShoeSource, Inc.
<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 deferred
under our deferred compensation plan. For Mr. Wolfe, the amounts
also include installments of a long-term bonus arrangement entered
into in 1995.
<PAGE>
<F8> "All Other Compensation" represents our effective matching
allocation to the named individual's accounts in the profit
sharing plan. For Mr. Farrell, the 1998 amount also includes
payout of bonus amounts for long-term bonus periods that would
otherwise end following his retirement.
<F9> Mr. Kahn served as executive vice chairman through April 30, 1998.
Mr. Loeb served as president through April 30, 1998. Mr. Torcasio
also serves as chief executive officer of May Merchandising
Company.
</TABLE>
7
<PAGE>
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
STOCK OPTION GRANTS IN FISCAL 1998
<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>
Eugene S. Kahn 225,000 5.3% $35.625 2/2/2008 $2,596,500
Jerome T. Loeb 75,000 1.8% $35.625 2/2/2008 $865,500
Anthony J. Torcasio 41,250 1.0% $43.4375 5/13/2008 $615,175
R. Dean Wolfe 22,500 0.5% $43.4375 5/13/2008 $335,550
John L. Dunham 22,500 0.5% $43.4375 5/13/2008 $335,550
David C. Farrell n/a n/a n/a n/a n/a
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Generally, one-fourth of the options become exercisable on each of
the first through fourth anniversaries of the grant date.
<F2> The exercise price is the market price on the option grant date.
<F3> We determined the Grant Date Present Values 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 we have no way to determine
whether the Black-Scholes model can properly determine the value
of an option. We cannot assure that the value that may be
realized by the option holder will be at nor 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 our 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 based on daily stock
price changes during the year prior to the grant date; and (d)
dividends at the rate of $.80 per share for the February 2, 1998
grants and $.84 2/3 per share for the May 13, 1998 grants, in each
case the annual dividend rate with respect to a share of stock on
the grant date.
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
AGGREGATED STOCK OPTION EXERCISES IN FISCAL 1998
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>
Eugene S. Kahn 0 $ 0 137,139 315,577 $2,180,894 $2,402,329
Jerome T. Loeb 52,501 $929,542 65,151 205,505 $ 786,623 $2,184,294
Anthony J. Torcasio 0 $ 0 169,833 113,180 $2,982,717 $ 817,893
R. Dean Wolfe 0 $ 0 127,621 89,609 $2,194,930 $ 635,580
John L. Dunham 6,000 $107,862 58,843 97,689 $ 692,995 $ 666,713
David C. Farrell 29,006 $567,130 246,649 159,843 $2,651,512 $1,672,811
- --------------------------------------------------------------------------------------------------------------------------------
<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 May common
stock at the end of the last fiscal year ($41.1892 per share)
exceeded the exercise price of the options.
</TABLE>
Executive Compensation and Development Committee Report. Each member of
the executive compensation and development committee is an independent,
nonmanagement director. The committee reviews and approves, among other
things, the compensation payable to each of the executive officers named
in the summary compensation table.
<PAGE>
Compensation Philosophy. Our basic compensation philosophy is that
May's compensation program should:
* attract, retain and motivate highly qualified executives;
* be competitive;
* align the executive's compensation with the company's
objectives; and
* relate meaningfully to the value created for shareowners.
Compensation for senior executives is composed of a base salary,
bonus opportunities (a significant portion of the total compensation)
and long term stock related incentives. We review compensation based
on our compensation philosophy, on company performance and on
competitive practices. As part of our review of competitive pay levels,
we look at the base salary levels, annual bonus levels and long-term
related incentives at a broad group of companies, including other
retail companies and companies in other industries of similar size
and complexity to May. We did not target a specific compensation
percentage level within the group, but, as discussed under the
"Additional Information" heading below, we determined that May's
current overall compensation program is consistent with and furthers
our compensation philosophy.
Base Salary. We review base salaries annually. They may be
increased after our review based on
* the individual's contribution to the company, including
changes in responsibilities;
* competitive pay levels; and
* management's recommendations.
As a result of this overall review, including a review of changes in
their responsibilities, we recommended increases in 1998 in
8
<PAGE>
<PAGE>
the annual base salary rates for the named executive officers other
than Mr. Kahn of an average of 6.6%. In connection with Mr. Kahn's
promotion to the president and chief executive officer positions, we
recommended that his base salary increase by 50%. The percentages in
this paragraph exclude Mr. Farrell, who retired as an executive officer
and a director in April 1998.
Bonus Opportunities. May has three performance based bonus plans
covering approximately 3,300 associates. Each plan links a major
portion of the associates' potential pay to the associates' performance
and to May's performance. The bonus opportunities for the most senior
executives and executive officers include both annual and long-term
opportunities. Each named executive officer participates in the bonus
plan for corporate executives.
Annual Bonus. For 1998, the named executive officers became
eligible for annual bonuses of up to 45% (56.3% for Messrs. Kahn and
Loeb and 90% for Mr. Farrell) of base salary. We determined their
bonuses based on whether May achieved certain predetermined performance
levels (threshold, target or maximum) for (i) earnings per share (EPS)
and (ii) return on net assets (RONA) over the year.
The annual bonus may be adjusted in two ways:
* downward, in our discretion; and
* upward or downward, automatically, based on May's
performance relative to the EPS and RONA performance of a
predetermined group of competitors consisting of Dayton
Hudson, Dillard's, Federated Department Stores, Kohl's,
Nordstrom, J.C. Penney and Sears.
While return on equity is the company's principal measure in evaluating
its performance for shareowners and its ability to invest shareowners'
funds profitably, the bonus plans use RONA in evaluating this element of
bonus opportunity to facilitate industry comparisons without having to
make adjustments for financial leverage among the competitor group.
In 1998,
* May exceeded the maximum performance level we set for EPS;
* May exceeded the maximum performance level we set for RONA;
and
* no adjustment was made based on May's relative rank in the
competitor group.
Based on these results, the annual bonus represented 56.3% of base
salary for Messrs. Kahn and Loeb and 45% of base salary for each of the
other named executive officers. Mr. Farrell's annual bonus was
proportionately adjusted to reflect his retirement.
Long-Term Bonus. For the three-fiscal-year period that ended in
1998, the named executive officers became eligible for long-term bonuses
of up to 45% (56.3% for Messrs. Kahn and Loeb and 90% for Mr. Farrell)
of average base salary. We determined their bonuses based on (a) whether
May achieved certain predetermined performance levels (threshold, target
or maximum) for (i) compound growth rate for EPS and (ii) average RONA
over the three-fiscal-year period and (b) the change in stock price over
the three-fiscal-year period.
The long-term bonus may be adjusted in two ways:
* downward, in our discretion; and
* upward or downward, automatically, based on
- predetermined levels of changes in May's common stock
price over the period, and
- May's performance compared to the EPS and RONA
performances of the competitor group. May's rank
relative to the competitor group is based on data
provided to us by May's independent public
accountants.
For the three-year period that ended with fiscal 1998,
* May's performance was slightly below the maximum performance
level set for compound growth for EPS;
* May's performance was between the target and maximum
performance levels set for average RONA;
* no adjustment was made based on May's relative rank in the
competitor group; and
* May's common stock price increased by 45%, resulting in a
45% increase in bonus.
<PAGE>
Based on these results, the long-term bonuses awarded for the three-year
period that ended with fiscal 1998 represented 48.7% of average base
salary for Messrs. Kahn and Loeb and 39.0% of average base salary for
each of the other named executive officers. Mr. Farrell's long-term
bonus was proportionately adjusted to reflect his retirement.
Long-Term Stock-Related Incentives. May provides long-term stock-
related incentives through stock options and restricted stock. These
incentives are designed to attract, retain and motivate management
associates, and relate their compensation directly to May's stock
performance. We grant stock options at fair market value on the grant
date. They have value to the executive only if May's stock price
increases. We establish guidelines for the grant of options for all
executives and we specifically approve any grants to the executive
officers. We base the guidelines for annual grants on competitive
practices and position levels. We approve restricted stock grants in
special circumstances.
The named executive officers, other than Messrs. Kahn and Loeb,
received annual stock option grants in 1998 consistent with the normal
annual grant levels previously established for them. In February, we
awarded special option grants to Messrs. Kahn and Loeb, in lieu of their
regular annual option grants, in connection with their changes in
responsibilities. In addition, we awarded special restricted stock
grants to Mr. Kahn in connection with his promotion to the president and
chief executive officer positions, and to Mr. Torcasio in connection with
his increased responsibilities. We made no other special grants to the
named executive officers in 1998.
Additional Information. During 1998, we selected and retained an
independent compensation consulting firm to study the compensation of
the executive group in May's operating
9
<PAGE>
<PAGE>
divisions and of the senior management committee in the corporate
office. The consultants reviewed May's base salary levels, annual and
long-term bonus levels, and long-term incentives compared with the
compensation packages of a broad group of companies, including the
competitor group, other retail companies, and companies in other
industries similar in size and complexity to May. Based on the
consultants' review, we have determined that May's current compensation
program, taking into account base compensation, bonus opportunities, and
long-term incentive opportunities, is consistent with and furthers our
compensation philosophy.
Tax laws and IRS regulations limit the tax deductibility of
executive compensation in excess of $1 million. Certain exceptions
permit tax deductions on this compensation, including exceptions for
performance based compensation. Our policy continues to be that May
should attempt, wherever reasonably possible, to qualify future
compensation to be tax deductible.
Executive Compensation and Development Committee:
Edward H. Meyer, Chairman
Russell E. Palmer
Michael R. Quinlan
Edward E. Whitacre, Jr.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The board of directors held six meetings during 1998. Each incumbent
director attended at least 75% of the aggregate of the total number of
* board meetings held during the period for which the director held
office; and
* meetings held by all board committees on which the director served
during the periods that the director served.
Overall, the directors' attendance averaged 98%.
Director Compensation. Management directors receive no compensation or
fees for serving as a director or for attending board or committee
meetings. Nonmanagement directors receive both cash compensation and
stock compensation.
Cash compensation includes
* a $30,000 annual fee, plus an additional $5,000 fee if the
director is a committee chairperson;
* $2,000 for each board meeting attended; and
* $1,000 for each committee meeting attended.
Directors may defer all or any portion of their cash compensation under
a deferred compensation plan that is substantially similar to our
deferred compensation plan for management associates.
Stock compensation includes
* a one-time grant of 3,000 shares of restricted common stock when a
director is first elected to the board, that are subject to
forfeiture for five years and to restrictions on transferability
while the director serves on the board; and
* an annual grant of the equivalent of $50,000 of restricted common
stock, which is not transferable while the director serves on the
board. Instead of shares of restricted stock, a director may elect
to have $50,000 of deferred stock units credited to his or her
account under the deferred compensation plan.
Committees. 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 committee is
described below.
* The Audit Committee is composed of Mrs. Evans and Mrs. Kaplan and
Messrs. Kilts, Meyer, Palmer (chairman), Quinlan, Stiritz, Storey,
and Weidenbaum. It met three times during fiscal 1998. The
committee's responsibilities are included in its charter on page
13. With respect to fiscal 1998, the committee believes that it
satisfied its responsibilities in compliance with its charter.
* The Executive Committee is composed of Mrs. Kaplan and Messrs.
Kahn (chairman), Loeb, Meyer, Palmer, and Stiritz. It did not meet
in fiscal 1998. Subject to the direction of the full board of
directors, the executive committee exercises all of the board of
directors' powers, with certain specified exceptions required by
law, on a "standby" or "emergency" basis between board meetings.
<PAGE>
* The Executive Compensation and Development Committee is composed
of Messrs. Meyer (chairman), Palmer, Quinlan, and Whitacre. It met
four times in fiscal 1998. The committee
- considers and recommends to the board May's overall
compensation programs;
- reviews and approves the compensation payable to all senior
management personnel;
- reviews the compensation payable to store company
principals;
- reviews and approves new compensation programs that involve
May stock or affect compensation to senior management
personnel and store company principals;
- advises management on all other executive compensation
matters;
- reviews and monitors management development efforts to
ensure development of a group of executives that would
provide for adequate and orderly management succession; and
- administers, directly, by delegation or by establishing
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.
10
<PAGE>
<PAGE>
* The Finance Committee is composed of Mrs. Evans and Mrs. Kaplan
(chairman) and Messrs. Dunham, Loeb, Quinlan, Stiritz, Storey,
Weidenbaum, and Whitacre. It met two times in fiscal 1998. The
finance committee
- reviews our financial policies, plans, and structure; and
- reviews and recommends to the board our long-range financial
plans, our 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.
* The Nominating Committee is composed of Mrs. Kaplan and Messrs.
Perez, Stiritz (chairman), Storey, and Whitacre. It met three
times in fiscal 1998. The nominating committee
- recommends nominees to the board for directors, for the
successor to the chief executive officer when a vacancy in
that office occurs, and for chairpersons and members of
board committees;
- advises the board with respect to criteria relating to
director tenure and nonmanagement director compensation; and
- considers suggestions as to nominees for directors from any
source, including shareowners.
Shareowners wishing to submit nominations should do so in writing
to our secretary, 611 Olive Street, St. Louis, Missouri 63101-1799.
The nominations must comply with the advance notice provisions in our
by-laws. You may obtain a copy of the notice procedures from the secretary.
THE RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
Proposal (b) on the accompanying proxy card.
Upon the 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
January 29, 2000. This appointment is subject to ratification by you at
the annual meeting. A representative of Arthur Andersen LLP will attend
the meeting to respond to appropriate questions and to make a statement
if he so desires. In fiscal 1998, we paid fees to Arthur Andersen LLP in
the aggregate amount of $2.8 million. The board of directors unanimously
recommends a vote FOR Proposal (b), and your proxy will be so voted unless
you specify otherwise.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK
Proposal (c) on the accompanying proxy card.
The board of directors unanimously approved and proposes and recommends
adoption of an amendment to May's certificate of incorporation to increase
the number of authorized shares of common stock from 700 million shares to
1.0 billion shares. The board does not propose an increase in the number of
preference shares that are currently authorized.
We propose to amend the first paragraph of the fourth article of
the certificate of incorporation to read as follows:
FOURTH.
The total number of shares of stock which the Corporation shall
have authority to issue is 1,025,000,000 consisting of
1,000,000,000 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").
At the beginning of fiscal 1999, we had 313,636,996 shares of
common stock outstanding. Recently, the board of directors declared a
three-for-two stock split, payable to shareowners of record on March 22,
1999. After the stock split, we have 470,455,494 shares outstanding.
Since we currently have 700 million authorized shares, this makes further
stock splits unlikely without an increase in the number of authorized shares.
To have a sufficient number of shares of common stock available for issuance
in connection with subsequent stock splits, acquisitions, financings,
compensation and benefit plans and other proper corporate purposes, the board
of directors recommends increasing the number of authorized shares. Although
we have no current specific plans at this time for the use of the additional
shares, having such additional authorized shares available for issuance in the
future would give us greater flexibility and would allow the shares to be issued
without the expense and delay of a special shareowners' meeting.
<PAGE>
The additional common stock would be identical to the May common
stock currently authorized. Owners of common stock do not have
preemptive rights to subscribe to additional securities which we may
issue. Although the board of directors does not presently intend to do
so, the additional shares of common stock could be used to make it more
difficult to effect a change in control of the company. We have other
defenses available against coercive or unfair acts of third parties that
are designed to effect a change in control. Presently, we have no
knowledge of any attempt to obtain control of the company.
The board of directors unanimously recommends a vote FOR Proposal (c),
and your proxy will be so voted unless you specify otherwise.
11
<PAGE>
<PAGE>
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. 20037, who is the owner of 300 shares of
May common stock, has advised us 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.
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 ensures 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 76,828,030 shares, representing
approximately 40.19% 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. Our board of
directors is divided into three classes, serving staggered terms. We
believe that a classified board where only a portion of the board is
elected each year is in your best interests. In fact, over 62% of the
companies included in the S&P 500 index currently have classified
boards. Our classified board structure has been in place continuously
since 1985, and for 72 of our 89 years of existence.
We believe that a classified board reduces our vulnerability to
certain potentially abusive takeover tactics. It encourages potential
acquirers to initiate takeover actions through arm's length negotiations
with management and the board of directors. The classified board does
not preclude unsolicited acquisition proposals, but by eliminating the
threat of imminent removal, positions the incumbent board to act to
maximize the value to you of a potential acquisition.
We also believe that the classified board structure facilitates
continuity and stability of leadership and policy, since a majority of
the directors at any given time will have prior experience as directors
and will be familiar with our business strategies and operations. We
firmly believe that directors elected for staggered terms are just as
accountable to you as they would be if elected annually.
For all of the reasons described above, the board of directors
continues to believe that the classified system is advantageous to
May and to you. The board of directors unanimously recommends a
vote AGAINST Proposal (d), and your proxy will be so voted unless you
specify otherwise.
GENERAL
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a)
of the Securities Exchange Act of 1934 requires executive officers and
directors to file reports of holdings and transactions in May common
stock with the SEC. Based on a review of copies of reports provided to
us, we believe that our executive officers and directors satisfied all
reporting requirements for fiscal 1998.
2000 Shareowner Proposals. If you wish to submit a proposal to include
in the proxy statement for the annual shareowners' meeting in 2000, we
must receive it on or before December 18, 1999. You should follow the
procedures described in Rule 14a-8 of the Securities Exchange Act and
send the proposal to our principal executive offices, 611 Olive Street,
St. Louis, Missouri 63101-1799, Attention: Secretary.
If you wish to bring matters before shareowners at the 2000 annual
meeting other than pursuant to the procedures in Rule 14a-8, you must
satisfy the following requirements under our by-laws,
* you must notify the secretary in writing between February 6,
2000 and February 21, 2000; and
* your notice must contain the specific information required
in our by-laws.
We retain discretion to vote proxies on a proposal filed within
these deadlines provided (1) we include in the proxy statement advice on
the nature of the proposal and how we intend to exercise our voting
discretion and (2) the proponent does not issue a proxy statement.
For a copy of our by-laws, please write our secretary at the
address given above.
<PAGE>
Whether or not you plan to attend the annual meeting, please complete,
sign, and return your proxy card in the enclosed envelope, which requires
no postage if mailed in the United States. We appreciate your
cooperation in giving this matter your immediate attention.
By order of the board of directors.
12
<PAGE>
<PAGE>
APPENDIX A
AUDIT COMMITTEE CHARTER
The audit committee shall aid the board in undertaking and
fulfilling its responsibilities for conservative, credible and accurate
financial reporting to the public, shall provide support for
management's efforts to enhance the quality of the Corporation's
controls and shall work to provide appropriate avenues of communication
between the board of directors and the Corporation's independent public
accountants and internal auditors.
Composition and Term. The committee shall be a committee of the board
and shall consist exclusively of non-management directors (not less than
three). The definition of independent directors will be based on New
York Stock Exchange rules for audit committees, as amended.
The committee members shall be appointed for one year terms at the
annual meeting of the board, upon the recommendation of the nominating
committee. The chairman shall be designated by the board.
Administrative Matters. The committee shall meet at such times and from
time to time as it deems to be appropriate, but not less than three
times each year. The committee shall report to the full board of
directors at the first board meeting following each such committee
meeting.
The Corporation's independent public accountants and internal
auditors shall attend at least two of the committee's meetings each
year. The committee may request members of management or others to
attend meetings and provide pertinent information as necessary. The
committee shall provide management, the independent public accountants
and internal auditors with appropriate opportunities to meet privately
with the committee.
Duties and Responsibilities. The duties of the committee shall include
the following:
* Make recommendations to the board of directors as to:
- the selection of the firm of independent public accountants
to examine the books and accounts of the Corporation and its
subsidiaries for each fiscal year (including a review of the
independence of the independent public accountants);
- the proposed arrangement for the independent public
accountants for each fiscal year, including their risk
assessment process in establishing the scope of the
examination, the proposed fees and the reports to be
rendered; and
- the advisability of having the independent public
accountants make specified studies and reports as to
auditing matters, accounting procedures, tax or other
matters;
* Review the results of the quarterly reviews and the yearend audit
of the Corporation, including:
- the audit report, the published financial statements, the
management representation letter, the "Memorandum Regarding
Accounting Procedures and Internal Control" prepared by the
independent public accountants, any other pertinent reports
and management's responses concerning that memorandum;
- any material accounting issues among management, the
Corporation's internal audit staff and the independent
public accountants; and
- other matters required to be communicated to the committee
under generally accepted auditing standards, as amended, by
the independent public accountants.
With respect to interim financial information, the committee's
chairman will meet with management and the independent public
accountants to discuss the quarterly review results and required
communications prior to any interim filings with the SEC;
* Review with management and the independent public accountants such
accounting policies (and changes therein) of the Corporation,
including any financial reporting issues which could have a
material impact on the Company's financial statements as are
deemed appropriate for review by the committee prior to any
interim or year-end filings with the SEC or other regulators;
* Review the coordination between the independent public accountants
and internal auditors and review the risk assessment process,
scopes and procedures of the Corporation's internal audit work and
whether such risk assessment process, scopes and procedures are
adequate to attain the internal audit objectives, as determined by
the Corporation's management and approved by the committee; review
the significant findings of the internal auditors for each fiscal
year; review the quality and composition of the Corporation's
internal audit staff; and review and approve the internal audit
charter on a periodic basis;
<PAGE>
* Review annually the distribution and acknowledgment process
related to the Policy on Business Conduct and review the results
of the Corporation's internal audit work of this process,
including the types of exceptions reported by associates;
* Review annually the Corporation's policies and procedures with
respect to officers' travel and entertainment expenses and
corporate jet usage and consider the results and recommendations
of any audit work in these areas performed by the independent
public accountants and internal auditors;
* Meet annually with general counsel, and outside counsel when
appropriate, to review legal and regulatory matters, if any, that
may have a material impact on the financial statements; and
* Make a periodic self-assessment of the committee, including a
review of the charter, using assessment tools available through
third parties or developed internally.
The committee shall also undertake such additional activities
within the scope of its primary function as the committee may from time
to time determine. The committee may retain independent counsel,
accountants or others to assist it in the conduct of any investigation.
13
<PAGE>
<PAGE>
Directions to America's Center
Washington at Eighth Street
St. Louis, Missouri
The America's Center is located on Washington Avenue at Eighth 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 a garage elevator to the street level and walk
outside to the Convention Plaza entrance next to the garage or, you may
take the stairs that 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. The meeting room is on the first level of the
convention center, immediately to your left as you enter the building.
[MAP]<PAGE>
<PAGE>
MAY
The May Department Stores Company
611 Olive Street
St. Louis, MO 63101-1799
To Shareowners of The May Department Stores Company:
[to come]
Very truly yours,
/s/ Eugene S. Kahn /s/ Jerome T. Loeb
Eugene S. Kahn Jerome T. Loeb
President and Chairman of the Board
Chief Executive Officer
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(s),
please mark the EXCEPTION box and enter the name(s) 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 Against Abstain
(b) Ratification of the appointment
of independent auditors
For Against Abstain
(c) Amendment of the certificate of
incorporation to increase the
number of authorized shares of
common stock
Management recommends a vote AGAINST Item (d).
_____________________________________________________________________
For Against Abstain
(d) Proposal by a shareowner
concerning a classified board
Address change and/or comments,
please mark here.
If you plan to attend the annual
meeting, please mark here.
Please sign name(s) exactly as shown on this card.
Date: ________________________________, 1999
____________________________________________
____________________________________________
Signature(s)
Please mark boxes in
blue or black ink as in the example.
<PAGE>
<PAGE>
Directions to America's Center
Washington at Eighth Street
St. Louis, Missouri
[MAP]
The America's Center is located
on Washington Avenue at Eighth
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 a
garage elevator to the street level
and walk outside to the Convention
Plaza entrance next to the garage or,
you may take the stairs that 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. The meeting room is
on the first level of the convention
center, immediately to your left as
you enter the building.
Detach Proxy Card Here
_____________________________________________________________________
MAY PROXY
THE MAY DEPARTMENT STORES COMPANY
This proxy is solicited on behalf of the board of directors for the
annual meeting on May 21, 1999.
By signing this card, the undersigned appoints each of Eugene S. Kahn,
Alan E. Charlson 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 21, 1999 annual meeting of
shareowners, or when the meeting reconvenes if it is adjourned or
postponed, 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 our
Dividend Reinvestment Plan.
The board of directors recommends a vote FOR election of all listed
director nominees, FOR proposal (b), FOR proposal (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 matters
that are properly raised at the meeting or when the meeting reconvenes
if it is adjourned or postponed. See "Proxy Statement - Other Matters"
in the Company's proxy statement for the 1999 annual meeting.
The nominees for the board of directors are Marsha Johnson Evans, James
M. Kilts, William D. Perez, Robert D. Storey, Anthony J. Torcasio and
Edward E. Whitacre, Jr.
Please sign the other side of this card and
return this card promptly in the enclosed return envelope
to the address shown on the right:
THE MAY DEPARTMENT STORES COMPANY
P.O. BOX 11002
NEW YORK, NY 10203-0002
<PAGE>
<PAGE>
MAY
The May Department Stores Company
611 Olive Street
St. Louis, MO 63101-1799
Dear Fellow Member of the Profit Sharing Plan:
[to come]
Very truly yours,
/s/ Eugene S. Kahn /s/ Jerome T. Loeb
Eugene S. Kahn Jerome T. Loeb
President and Chairman of the Board
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(s),
please mark the EXCEPTION box and enter the name(s) 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 Against Abstain
(b) Ratification of the appointment
of independent auditors
For Against Abstain
(c) Amendment of the certificate of
incorporation to increase the
number of authorized shares of
common stock
Management recommends a vote AGAINST Item (d).
_____________________________________________________________________
For Against Abstain
(d) Proposal by a shareowner
concerning a classified board
Address change and/or comments,
please mark here.
Please sign name(s) exactly as shown on this card.
Date: ________________________________, 1999
____________________________________________
____________________________________________
Signature(s)
Please mark boxes in
blue or black ink as in the example.
<PAGE>
<PAGE>
Detach Voting Instruction Card Here
_____________________________________________________________________
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 of 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, 1999 (the latest practicable Valuation Date), at the May
21, 1999 annual meeting of shareowners, or when the meeting reconvenes
if it is adjourned or postponed, 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 proposal (b), FOR proposal (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 matters that are properly
raised at the meeting or when the meeting reconvenes if it is adjourned
or postponed. See "Proxy Statement - Other Matters" in the Company's
proxy statement for the 1999 annual meeting. If this card is not
received by the Trustee on or before May 14, 1999, 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 Marsha Johnson Evans, James
M. Kilts, William D. Perez, Robert D. Storey, Anthony J. Torcasio and
Edward E. Whitacre, Jr.
Please sign the other side of this card and
return this card promptly in the enclosed envelope
to the address shown on the right:
THE MAY DEPARTMENT STORES COMPANY
P.O. BOX 11002
NEW YORK, NY 10203-0002
<PAGE>
<PAGE>
APPENDIX
Page 6 of the printed Proxy contains a Comparison Graph. The information
contained in the graph appears in the table immediately following the graph.
