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
Mercantile Stores Company, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $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: N/A
2) Aggregate number of securities to which transaction
applies: N/A
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
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: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
Mercantile Stores Company, Inc.
1100 North Market Street
Wilmington, Delaware 19801
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
To the Stockholders:
NOTICE is hereby given that the annual stockholders' meeting of
Mercantile Stores Company, Inc., a Delaware corporation, will be held
at 1100 North Market Street, Wilmington Trust Center, Wilmington,
Delaware 19801, on Wednesday, May 24, 1995, at 11:00 A.M., for the
following purposes, as described in the accompanying proxy
statement:
1. To elect four directors of the Company to
serve for a term of three years;
2. To approve Arthur Andersen LLP as independent
auditors of the Company;
3. To act upon a stockholder proposal to
declassify the Board of Directors; and
4. To transact such other business as may
properly come before the meeting.
In lieu of closing the transfer books the Board of
Directors has fixed April 13, 1995 as the record date for
the determination of the stockholders entitled to notice of
and to vote at said meeting or at any adjournment or
adjournments thereof.
Dated: April 24, 1995
Dennis F.Murphy,
Secretary
A proxy card and the annual report of the Company for the fiscal year
ended January 28, 1995 are enclosed.
YOUR VOTE IS IMPORTANT
Each stockholder who does not expect to be present at the
meeting is urged to execute the enclosed proxy and mail it
promptly in the enclosed envelope which requires no postage.
PROXY STATEMENT
General
This statement is furnished in connection with the
solicitation of proxies by the Board of Directors of
Mercantile Stores Company, Inc. (hereinafter called the
Company), to be used at the Annual Meeting of the
Stockholders of the Company to be held at 1100 North Market
Street, Wilmington Trust Center, Wilmington, Delaware 19801,
on Wednesday, May 24, 1995, at 11:00 A.M., for the purposes
set forth in the Notice of Meeting. The approximate mailing
date of this Proxy Statement and the accompanying proxy is
April 24, 1995.
The accompanying proxy, which is revocable, is
solicited by and on behalf of the Board of Directors of the
Company. The Company will pay all expenses in connection
with preparing, assembling and mailing the proxies and it
will reimburse agents or nominees of stockholders for
reasonable out-of-pocket and clerical expenses incurred in
seeking proxies or authorizations to execute proxies from
their principals. In addition to solicitation by mail, the
Company has retained Georgeson & Company to assist in the
solicitation of proxies from beneficial owners of shares
held of record by brokerage houses, banks and other
custodians, nominees or fiduciaries, at a cost not to exceed
$6,000 plus reasonable out-of-pocket expenses.
The enclosed proxy card also serves as a voting
instruction to the trustee of the Company's Savings, Profit
Sharing and Supplemental Retirement Plan with respect to
shares held by the trustee for Plan participants.
Participants in the Plan who are also holders of additional
shares of common stock will receive one proxy card for all
holdings registered in a similar manner. Participants in
the Plan will receive a separate proxy card for their
individual and Plan holdings if their accounts are not
registered in a similar manner. Unvoted shares of the Plan
will be voted by the trustee in its discretion.
Voting Rights and Votes Required
The outstanding voting securities of the Company
consist of common shares with a par value of $.14 2/3 per
share. There are authorized and issued 36,887,475 shares,
of which 43,425 shares are held in the Company's treasury.
Only stockholders of record at the close of business on
April 13, 1995, are entitled to vote at the meeting and each
share of stock is entitled to one vote on all matters.
Under the Company's By-laws, a quorum will be present if a
majority of the Company's outstanding shares is represented
in person or by proxy. Shares of common stock present in
person or represented by proxy (including shares which
abstain or do not vote with respect to one or more of the
matters presented for stockholder approval) will be counted
for purposes of determining whether a quorum exists at the
meeting.
Directors will be elected by a plurality of the votes
cast. Only votes cast for a nominee will be counted, except
that the accompanying proxy will be voted for the four
nominees in the absence of instructions to the contrary.
Abstentions, broker non-votes, and instructions on the
accompanying proxy card to withhold authority to vote for
one or more of the nominees will result in the respective
nominees receiving fewer votes. The affirmative vote of the
holders of a majority of the shares of common stock present
or represented at the meeting and entitled to vote is
required for the approval of the independent auditors and
for the approval of the stockholder proposal. Abstentions
will be treated as shares that are present and entitled to
vote for purposes of determining the number of shares
present and entitled to vote with respect to these matters,
but will not be counted as a vote in favor of the matter.
Accordingly, an abstention from voting on any of these
matters will have the same legal effect as a vote against
the matter. Broker non-votes will not be considered as
present and entitled to vote with respect to these matters.
<PAGE>
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation of the
Company divides the Board of Directors into three Classes
with the terms of office of the Directors of each Class
ending in different years. The term of the Class III
Directors expires with this annual meeting. The terms of
the Class I and Class II Directors will expire at subsequent
annual meetings. The number of directors of the Company to
be elected at the Annual Meeting is four. The shares
represented by the proxy will be voted by the persons named
in the proxy for the election as directors of the nominees
named herein to serve until their successors are elected and
qualified. In the event that any of the nominees named
below should become unavailable, for any reason, it is
intended that the persons named in the proxy will vote for
a substitute, who will be designated by the Board of
Directors. The Board of Directors has no reason to believe
that it will be necessary to designate a substitute nominee.
<TABLE>
<CAPTION>
Business Experience and Principal Occupation or Year in which
Employment during past 5 years; he first became
Name and Age Positions held with Company; and other Directorships a director
Class III - Nominees to be elected for term expiring in 1998
<S> <C> <C>
JOHN A. HERDEG Attorney at Law; member of Audit Committee; Chairman of 1980
57 the Board of Christana Bank & Trust Company.
THOMAS J. MALONE President, Chief Operating Officer and director of 1989
56 Milliken & Company, manufacturer of textile products;
member of the Audit Committee.
ROGER MILLIKEN Chairman, Chief Exceutive Officer and Director of 1939
79 Milliken & Company, manufacturer of textile products;
member of the Audit and Compensation Committees;
director of W. R. Grace & Company.
FRANCIS G. RODGERS Author and lecturer; former Vice-President, 1987
68 International Business Machines Corp; member of the
Compensation Committee; director of Milliken & Company,
manufacturer of textile products; director of Bersen
Brunswig Coproration and Dialogic Corp.
Class I - Directors continuing in office until 1996
GERRISH H. MILLIKEN Director of Milliken & Company, manufacturer of 1951
77 textile products.
GEORGE S. MOORE International financial consultant; member 1957
90 of the Audit and Compensation Committees and
honorary director of W.R. Grace & Company.
DAVID L. NICHOLS Chairman of the Board and Chief Executive 1992
53 Officer of the Company; former Executive
Vice President, Treasurer and Chief
Financial Officer of the Company (1989-1992);
former President of the Lion Dry Goods Division
(a division of the Company).
Class II - Directors continuing in office until 1997
H. KEITH H. BRODIE, M.D. President Emeritus of Duke Univeristy; 1987
55 member of the Audit and Compensation
Committees; director of Milliken & Company,
manufacturer of textile products.
RENE C. McPHERSON Corporate director; former Chairman and Chief 1984
70 Executive Officer of Dana Corporation; former
Dean of the Stanford University Graduate School
of Business; member of the Compensation Committee
and consultant of the Company; director of
Milliken & Company, manufacturer of textile
products; director of Dow Jones & Company,
Westinghouse Electric Corporation, Banc One Corp.
and The Andersons.
MINOT K. MILLIKEN Vice-President and director of Milliken & Company, 1943
79 manufacturer of textile products; member of the
Compensation Committee.
ROGER K. SMITH Strategic Marketing Manager, Analog Devices, Inc., 1991
35 manufacturer of semiconductors.
</TABLE>
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of March 31, 1995,
concerning the beneficial ownership of Company common stock by the Company's
directors, the executive officers named in the Summary Compensation Table
below, and by all directors and executive officers as a group:
<TABLE>
<CAPTION>
Amount of Common Stock
Beneficially Owned
<S> <C> <C> <C>
Name Directly Indirectly Percent of Class
H. KEITH H. BRODIE, M.D. none none *
JOHN A. HERDEG 2,125 none *
RENE C. McPHERSON 7,450 none *
THOMAS J. MALONE 300 none *
GERRISH H. MILLIKEN 379,290 (see notes
(see note 2) 1, 2 and 6) 1.32
107,624
(life interest
in trusts)
MINOT K. MILLIKEN 406,680 (see notes
(see note 3) 1, 3 and 6) 2.37
469,712
(life interest
in trusts)
ROGER MILLIKEN 4,244,638 (see notes
(see note 4) 1, 4 and 6) 11.84
121,560
(life interest
in trusts)
GEORGE S. MOORE 2,125 none *
DAVID L. NICHOLS 1,452 4,077 *
FRANCIS G. RODGERS 2,750 none *
ROGER K. SMITH 70,643 none *
(see note 5)
RANDOLPH L. BURNETTE none 4,661 *
JAMES D. CAIN 25 10,959 *
PAUL E. McLYNCH 807 6,235 *
JAMES M. McVICKER 2,407 1,291 *
All Directors and
Executive Officers 4,500,675 10,541,746 40.78
<FN>
*Less than one percent.
</TABLE>
There is included in the above figures, with respect to each director
and executive officer listed (and all directors and executive officers as a
group) the number of shares, if any, credited to his account in the Savings,
Profit Sharing and Supplemental Retirement Plan and those held in the name
of his spouse and their minor children. Each director and executive officer,
however, disclaims any admission of beneficial ownership of any securities
included herein held in the name of his spouse or their minor children.
Notes: 1. Minot K. Milliken is the cousin of Roger Milliken and
Gerrish H. Milliken, who are brothers. Minot Mercantile
Corporation owned 10,484,875 shares (28.42%) of the common
stock of the Company; Woodbank Mills, Inc. owned 27,413 shares
(0.07%) of such stock. Woodbank Mills, Inc. also owned 49.6%
of the common stock of Minot Mercantile Corporation
(representing 49.6% of the latter's voting securities).
2. Gerrish H. Milliken is the beneficial owner of 379,290 shares
of the common stock of the Company as a trustee of certain
trusts. Gerrish H. Milliken may be deemed to be a controlling
person of each of Minot Mercantile Corporation and Woodbank
Mills, Inc., and therefore may be deemed to be the beneficial
owner of, and to share the power to direct the voting and/or
the disposition of, common stock of the Company held by such
corporations.
3. Minot K. Milliken is the beneficial owner of 406,680 shares of
the common stock of the Company as a trustee and an advisor of
certain trusts. Minot K. Milliken may be deemed to be a
controlling person of each of Minot Mercantile Corporation
and Woodbank Mills, Inc., and therefore may be deemed to be
the beneficial owner of, and to share the power to direct the
voting and/or the disposition of, common stock of the Company
held by such corporations.
4. Roger Milliken is the beneficial owner of 4,244,638 shares of
the common stock of the Company as a trustee and an advisor
of certain trusts. Roger Milliken may be deemed to be a
controlling person of each of Minot Mercantile Corporation
and Woodbank Mills, Inc., and therefore may be deemed to be
the beneficial owner of, and to share the power to direct
the voting and/or the disposition of, common stock of the
Company held by such corporations.
5. Roger K. Smith is the beneficial owner of 60,966 shares of
the common stock of the Company as a trustee of certain trusts.
6. Gerrish H. Milliken, Minot K. Milliken and Roger Milliken
and their respective associates, as that term is defined by
the rules of the Securities and Exchange Commission, owned
beneficially a maximum of 14,920,905 shares (40.45%) of the
common stock of the Company. The shares listed as beneficially
owned by each of Gerrish H. Milliken, Minot K. Milliken and
Roger Milliken include shares listed as beneficially owned by
one or both of the other two. The overall figures for all
officers and directors as a group and the figures included
in this note eliminate the duplication of numbers and
percentages of shares.
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information concerning beneficial
owners of more than 5% of the Company's common stock, as reported by
such beneficial owners:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address of Amount of Common Stock and
Beneficial Owner Nature of Beneficial Ownership Percent of Clas
Minot Mercantile Corporation 10,484,875 28.42
1209 Orange Street Direct
Wilmington, Delaware 19801
Minot Mercantile Corporation 14,920,905** 40.45
and others joint disclosure* Direct and Indirect
c/o 1209 Orange Street
Wilmington, Delaware 19801
<FN>
*Please see the notes following the Stock Ownership of
Management Table for an explanation of this stock ownership.
By definition of the Securities and Exchange Commission, the
persons involved in this joint disclosure may be deemed to be
"beneficial owners" of substantial quantities of this stock.
Except as otherwise set forth in this proxy statement, such persons
disclaim admission of beneficial ownership of these securities.
**These shares include the shares reported directly above by
Minot Mercantile Corporation.
</TABLE>
<PAGE>
BOARD COMMITTEES
The Company has a standing Audit Committee of the Board of Directors
the members of which are Messrs. H. Keith H. Brodie, M.D., John A. Herdeg,
Thomas J. Malone, Roger Milliken and George S. Moore. The members of the
Audit Committee met twice during the last fiscal year. The Audit Committee
is responsible for engaging and discharging auditors; reviewing with the
auditors and management the Company's policies and procedures with respect
to internal auditing, accounting and financial controls; reviewing with
the independent auditors, upon completion of their audit, their report or
opinion and any recommendations they may have for improving internal
accounting controls, choice of accounting principles or management systems;
and meeting with the Company's financial staff at least two times a year
to discuss internal accounting and auditing procedures. The Company also
has a standing Compensation Committee of the Board of Directors the members
of which are Messrs. H. Keith H. Brodie, M.D., Rene C. McPherson,
Minot K. Milliken, Roger Milliken, George S. Moore and Francis G. Rodgers.
The Compensation Committee, which met twelve times during the last fiscal
year, is responsible for reviewing the compensation of the Company's
executive officers and recommending changes in such compensation.
The Company does not have a standing Nominating Committee of the Board of
Directors. The Company's Board of Directors held six regularly scheduled
meetings and eight special meetings during the last fiscal year.
OTHER EXECUTIVE OFFICERS
The Company's other executive officers include: James M. McVicker, 48,
who was elected Senior Vice President and Chief Financial Officer in
December 1994 (Vice President and Chief Financial Officer in May 1993)
and prior to that time was Treasurer or Assistant Treasurer from January
1990 (and Director of Strategic Planning from October 1990); Paul E.
McLynch, 53, who was elected Vice President of Merchandising in April 1994
and prior to that time was president of the Gayfers/J.B. White division
from March 1993 and previously was president of the Jones Store Co.
subsidiary (from March 1992) and president of the McAlpin's/Lexington
division; James D. Cain, 59, who was elected Vice President of
Administration in April 1994 and prior to that time was Vice President of
Merchandising from June 1992 and previously was Director of Merchandising
(from October 1991) and president of The McAlpin Company subsidiary;
Randolph L. Burnette, 53, who was elected Vice President of Real Estate in
January 1995 (Vice President of Planning in March 1994) and prior to
that time was Director of Merchandise Planning from August 1992 and
previously was president of J.B. White & Company subsidiaries; William A.
Carr, 56, who was elected Treasurer in March 1994 and prior to that time
was Controller; Dennis F. Murphy, 58, who has been Secretary since 1974;
and Kathryn M. Muldowney, 36, who was elected Controller in March 1994
and prior to that time was Director of Strategic Planning from March 1993
and previously was Director of Systems Development (from February 1990)
and a Company analyst.
MANAGEMENT REMUNERATION
The Summary Compensation Table below shows compensation
earned by or paid to the named executive officers (the Chief Executive
Officer and the other four most highly compensated executive officers)
for the three years ended January 28, 1995:
<TABLE>
<CAPTION>
Summary Compensation Table:
Annual Compensation
<S> <C> <C> <C> <C> <C>
Fiscal
Name and Principal Year Other Annual All Other
Position Ended Salary Bonus Compensation Compensation(a)
David L. Nichols 1/28/95 $646,500 $352,525 $0 $50,234
Chairman of the Board 1/29/94 $512,462 $165,529 $0 $56,898
and Chief Executive Officer 1/31/93 $480,000 $160,000 $0 $28,397
James M. McVicker 1/28/95 $278,519 $202,668 $0 $ 9,511
Senior Vice President 1/29/94 $216,539 $ 53,882 $0 $ 6,470
and Chief Financial Officer 1/31/93 $167,115 $ 65,000 $0 $ 4,496
Paul E. McLynch(c) 1/28/95 $297,856 $178,307 $0 $ 9,706
Vice President of 1/29/94 - - - -
Merchandising 1/31/93 - - - -
James D. Cain 1/28/95 $275,000 $159,858 $0 $10,622
Vice President of 1/29/94 $270,846 $ 96,234 $0 $ 9,101
Administration 1/31/93 $248,000 $ 90,000 $0 $ 6,548
Randolph L. Burnette(d) 1/28/95 $231,131 $114,353 $0 $ 7,752
Vice President of 1/29/94 - - - -
Real Estate 1/31/93 - - - -
</TABLE>
(a)All Other Compensation is comprised of the Company's matching contributions
under the Company's Savings, Profit Sharing and Supplemental Retirement Plan
and the Company's Non-Qualified Savings, Profit Sharing and Supplemental
Retirement Plan. Also includes $27,000, $40,000 and $16,000 paid to
Mr. Nichols for Board of Directors' meetings during the fiscal years
ended January 28, 1995, January 29, 1994 and January 31,1993, respectively.
(b)Includes a special bonus for the year ended January 28, 1995 in the
amount of $25,000 for Mr. McVicker for additional services recognized by
the Board of Directors. Includes a special bonus for the year ended
January 29, 1994 for additional services recognized by the Board of
Directors, in the amount of $30,000 for Mr. Nichols and $20,000 for each
of Messrs. McVicker and Cain. Also includes a special bonus for the year
ended January 31, 1993 in the amount of $25,000 for Mr. McVicker, in
connection with the acquisition of Maison Blanche.
(c)Mr. McLynch was elected Vice President of Merchandising in April 1994
and previously was not an executive officer. Therefore, information is not
provided for the fiscal years ended prior thereto.
(d)Mr. Burnette was elected Vice President of Planning in March 1994 and
previously was not an executive officer. Therefore, information is not
provided for the fiscal years ended prior thereto.
<PAGE>
Report of the Compensation Committee
General.
The Compensation Committee of the Board of Directors
(the "Committee") is composed of six outside directors.
The current members of the Committee are H. Keith H. Brodie,
M.D., Rene C. McPherson, Minot K. Milliken, Roger Milliken,
George S. Moore and Francis G. Rodgers. As part of its
duties, the Committee reviews and recommends to the Board of
Directors compensation levels for the Company's executive
officers.
The Company's compensation program reflects the
philosophy that executive compensation levels should be
linked to Company performance and also be competitive within
the retail industry. Historically, the Company has
structured compensation principally through base annual
salary and year-end bonuses. Compensation to be paid to the
executive officers for 1995 is expected to qualify for
deductibility for federal income tax purposes under Section
162(m) of the Internal Revenue Code.
Base Salaries.
Base salaries for the Company's executives are determined by
evaluating the responsibilities of the position and the experience
of the individual, and by reference to the competitive marketplace.
The Company seeks to target base salaries within the median salary
level for comparable executive positions.
Annual Bonuses.
The Company has a Pay-for-Performance year-end bonus program designed
to reward management and other key executives for Company performance.
Under the program, bonuses are awarded based upon Company and business
unit performance (pre-tax store profits) as determined by the Board.
For 1994, each executive named in the Summary Compensation Table received
a bonus which reflected that the Company's performance targets were
exceeded. In addition, a discretionary bonus was paid to each named
executive based on an evaluation of personal and operational performance
as follows: David L. Nichols - $175,000, James M. McVicker -
$100,000, Paul E. McLynch - $100,000, James D. Cain -
$60,000, and Randolph L. Burnette - $50,000. Also, Mr.
McVicker received $25,000 for additional services recognized
by the Board of Directors.
Compensation of the Chief Executive Officer.
The compensation of David L. Nichols, Chairman of the Board and
Chief Executive Officer of the Company, is determined in
accordance with the criteria set forth above. Mr. Nichols received
a salary increase in 1994 of approximately 26% to keep his salary
within the median marketplace salary level for comparable executive
positions and based on an evaluation of the other criteria set forth
above under "Base Salaries."
Mr. Nichols' bonus for 1994 was based upon
the performance of the Company. Pre-tax store profits
exceeded target levels by 2.5%, and Mr. Nichols continued
the successful implementation of various strategic goals,
including the consolidation of certain division operations,
improved expense ratios, and other cost saving measures.
Based upon these factors, the Committee recommended and the
Board approved a bonus of $177,525 for Mr. Nichols, which
was approximately 31% greater than the bonus awarded for
fiscal 1993.
H. Keith H. Brodie, M.D. Rene C. McPherson Minot K. Milliken
Roger Milliken George S. Moore Francis G. Rodgers
Compensation Committee Interlocks and Insider
Participation Mr. Rene C. McPherson, a member of the
Compensation Committee, was paid $160,000 in consideration
of consulting services rendered to the Company during the
last fiscal year. Mr. McPherson will continue to provide
ongoing consulting services relating to strategic planning
and management development through July 31, 1995.
Performance Graph Set forth below is a table chart
comparing, over the last five fiscal years, the Company's
cumulative total return to shareholders with (i) the
Standard & Poor's 500 Composite Stock Price Index and (ii)
the Standard & Poor's Retail Department Stores Composite
Index:
Mercantile Stores Company, Inc.
Comparison of Five Year Cumulative Total Return*
February 1, 1990 Through January 28, 1995
S&P Retail Department
Year S&P Composite Mercantile Stock Store Composite Index
1989 $100.00 $100.00 $100.00
1990 $108.46 $ 99.24 $107.64
1991 $133.03 $108.56 $131.82
1992 $147.08 $106.44 $146.03
1993 $164.93 $122.62 $160.58
1994 $166.84 $142.44 $147.59
*Total return assumes re-investment of Assumes $100 invested on
dividends February 1, 1990 in Mercantile
common stock,S&P 500 Index and
S&P Retail Department Stores
Composite Index.
Pension Plans
The Company has maintained a Noncontributory Pension
Plan since 1945 which has been amended from time to time.
The Plan is funded by means of contributions by the Company
to the Plan trustee. All employees, including officers
employed by the Company, with one year of employment during
which at least 1,000 hours were worked and who meet certain
age requirements, are participants. Normal retirement
eligibility occurs at age 65 for participants in the Plan;
however, early retirement at a reduced monthly benefit is
available to employees who have reached the age of 60 and
have at least 10 years of service (as defined). The
retirement benefit is in the form of a level monthly payment
for life. The benefit for service from February 1, 1976 to
January 31, 1989 was determined based on the addition of
7/8% of each year's compensation up to the year's Taxable
Wage Base (as defined) and 13/8% of compensation above such
base. The Plan was amended effective February 1, 1989 to
comply with the Social Security integration and compensation
limit requirements of The Tax Reform Act of 1986. The
amendment provides for benefits based on 7/8% of annual
compensation up to the year's Taxable Wage Base and 13/8% of
compensation above such base up to the maximum annual
limitation on compensation ($235,840 in 1993), which was
reduced by statute to $150,000 effective January 1, 1994,
subject to cost of living adjustments. Benefits payable are
subject to maximum limitations under the Internal Revenue
Code. Payments to each employee upon retirement are made
from a trust fund maintained by the trustee with Company
contributions. The estimated annual benefits payable on
normal retirement (without regard to maximum limitations
under the Internal Revenue Code) to the named executive
officers are as follows: David L. Nichols, $221,999; James
M. McVicker, $117,885; Paul E. McLynch, $103,685; James D.
Cain, $79,089; and Randolph L. Burnette, $90,789.
<PAGE>
The Company also maintains the Mercantile Stores Nonqualified
Salaried Pension Plan to provide benefits to employees in an
amount equal to the amount by which an employee's benefits
under the Pension Plan were reduced because of limitations
imposed on tax exempt plans by the Internal Revenue Code.
For the fiscal year ended January 28, 1995, there were
charges against the earnings of the Company with respect to
such plan for the named executive officers in the aggregate
amount of $61,411.
Directors' Compensation
Directors who are not also officers of the
Company receive as yearly compensation $16,000. All
directors receive a standard fee of $2,000 for each board
meeting attended and $1,000 for each committee meeting
attended plus the payment of expenses incurred in connection
therewith. In addition, all members of each committee
receive as yearly compensation $3,000. Rene C. McPherson
was paid $160,000 in consideration of consulting services
rendered to the Company during the last fiscal year. Mr.
McPherson will continue to provide ongoing consulting
services relating to strategic planning and management
development through July 31, 1995.
Litigation
On September 28, 1994, an action was filed against the
Company in the Chancery Court of Delaware captioned Francis
Bodkin and Irene Bodkin v. Mercantile Stores Company, Inc.,
et. al. (the "Complaint"). The Complaint purports to be
brought individually, on plaintiffs' own behalf, and as a
class action, on behalf of all the holders of shares of
common stock. The Complaint alleges that the Company and/or
its directors breached their fiduciary duties in allegedly
rejecting an offer by The May Department Stores Company to
acquire the Company during August and September, 1994. As
part of their demand for relief, plaintiffs seek unspecified
compensatory damages. The defendants filed a motion to
dismiss and a motion to stay discovery on December 5, 1994.
The motions will be briefed and argued in due course. The
Company believes that the Complaint is without merit and
intends to vigorously defend the action.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934,as
amended, requires the Company's directors and executive officers,
and persons owning more than ten percent of a registered class
of the Company's equity securities, to file with the Securities
and Exchange Commission reports of ownership and changes in ownership
of equity securities of the Company. Such persons are also required
to furnish the Company with copies of all such forms.
Based solely upon a review of the copies of such
forms furnished to the Company and, in certain cases,
written representations that no Form 5 (Annual Statement
of Changes in Beneficial Ownership) filings were required,
the Company believes that, with respect to the 1994 fiscal
year, all required Section 16(a) filings were made, except
that Mr. Francis G. Rodgers, a director of the Company,
failed to file on time two Form 4's (Statement of Changes
in Beneficial Ownership) relating to the acquisition of an
aggregate of 1,500 shares of common stock.
APPROVAL OF AUDITORS
The auditors selected by the Board of Directors and
being recommended to the stockholders for approval for the
fiscal year ending February 3, 1996, are Arthur Andersen LLP
who were likewise selected and approved for the previous
fiscal year.
Representatives of Arthur Andersen LLP are expected to be
present at the stockholders' meeting on May 24, 1995, with the
opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
The following resolution concerning the appointment of
independent auditors will be offered at the meeting:
"RESOLVED, that the appointment by
the Board of Directors of Arthur Andersen LLP to audit the
accounts of the Company and its subsidiaries for the fiscal
year ending February 3, 1996 is approved."
Arthur Andersen LLP have been auditing the accounts of
the Company and its subsidiaries for many years and are certified
public accountants of the highest standing. That firm has no
financial interest, direct or indirect, in the Company or
any subsidiary and has had no connection with the Company or
any subsidiary during the past three years, except the usual
professional relationship between auditor and client.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Milliken & Company, of which Roger Milliken is Chairman,
Chief Executive Officer and a director, Thomas J. Malone is President,
Chief Operating Officer and a director, Minot K. Milliken is Vice-President
and a director and H. Keith H. Brodie, M.D., Gerrish H. Milliken,
Rene C. McPherson and Francis G. Rodgers are directors, is one of
the Company's suppliers of some types of merchandise. Such purchases
for resale and use by the Company and its subsidiaries were in the ordinary
course of business at competitive prices and amounted to
approximately $930,500 during the past fiscal year.
<PAGE>
STOCKHOLDER PROPOSAL
The Company has been notified by Amalgamated Bank of New York
LongView Collective Investment Fund, 11-15 Union Square, New York,
New York 10003, the beneficial owner of 3,000 shares of Company
common stock, that it intends to propose the following resolution at the
Annual Meeting:
"RESOLVED: The stockholders of Mercantile
Mercantile Stores Company, Inc. ("Company-"or "Mercantile")
request that the Board of Directors take the necessary steps
in accordance with Delaware state law, to declassify the
Board of Directors so that all directors are elected
annually, such declassification to be effected in a manner
that does not affect the unexpired terms of directors
previously elected."
The following is the statement submitted in support of this proposal:
"The election of directors is the primary avenue for stockholders
to influence corporate governance policies and to hold
management accountable for its implementation of those
policies. We believe that the classification of the Board
of Directors, which results in only a portion of the Board
being elected annually, is not in the best interests of our
Company and its stockholders.
The Board of Directors of Mercantile is divided
into three classes serving staggered three-year terms.
We believe that the Company's classified Board of Directors
maintains the incumbency of the Board and current management,
which in turn limits the Board's accountability to stockholders.
The elimination of Mercantile'ss classified board would
require each director to stand for election annually and
allow stockholders an opportunity to register their views
on the performance of the board collectively and each director
individually. We believe this is one of the best methods available
to stockholders to insure that the Company will be managed in
the best interests of stockholders.
We believe that concerns expressed by companies with classified
boards that the annual election of all directors could leave
companies without experienced directors in the event that all
incumbents are voted out by stockholders, are unfounded. In
our view, in the unlikely event that stockholders vote to
replace all directors, this decision would express
stockholder dissatisfaction with the incumbent directors and
reflect the need for change.
At the 1994 Annual Meeting of Stockholders, a similar stockholder
proposal was approved by over 25% of the voting shares. We
therefore resubmit this stockholder proposal based on our belief
that the classification of Mercantile's Board of Directors is not
in the best interests of stockholders and that the
elimination of the classified Board remains an important
concern among a significant number of the Company's
stockholders. WE URGE YOU TO VOTE FOR THIS RESOLUTION!"
The Board of Directors recommends a vote AGAINST the
foregoing proposal for the following reasons:
In 1983, the Company's stockholders considered an amendment to the
Company's Certificate of Incorporation to provide for the classification
of the Board of Directors into three equal or nearly equal classes, each
to serve for a term of three years, with one class being elected each year.
This amendment was approved by the holders of 77.9% of the total
outstanding shares of the Company.
The Board of Directors believes that the classification gives
the Board of Directors a greater continuity of experience since a
majority of directors at any given time will have experience
with the business affairs and operations of the Company.
This permits more effective long-term strategic planning in
use of Company resources. Continuity and quality of
leadership that results from the classified Board creates
long-term value for the stockholders.
A classified Board reduces the possibility of a sudden and
surprise change in majority control of the Board. It also has
the effect of impeding disruptive and inequitable tactics that
have become relatively common corporate take-over practices.
In the event of a hostile take-over attempt, the fact that
approximately two-thirds of the Board members have tenure
for more than a year would encourage a person seeking to
gain control of the Company to initiate arms-length
discussions with the management and the Board, who are in a
position to negotiate a transaction that is most favorable
to the Company and the stockholders.
For these reasons, the Board continues to believe that the
Company's classified Board promotes the best interests of the stockholders.
If approved, this proposal would serve as a recommendation to
the Board of Directors to take the necessary steps to
eliminate the classified Board. Such steps would include
the repeal of the classified Board provision in the
Company's Certificate of Incorporation which, in accordance
with the terms approved by the Company's stockholders in
1983, requires the favorable vote at a stockholders' meeting
of the holders of at least 75% of the then outstanding
shares of voting stock of the Company. Gerrish H. Milliken,
Minot K. Milliken and Roger Milliken and their respective
associates own beneficially approximately 40% of the
outstanding shares of the Company, and therefore would have
the ability to block such action.
The Board of Directors recommends a vote AGAINST this proposal.
If not otherwise specified, properly executed proxies will be voted against
the proposal.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Stockholder proposals for inclusion in Proxy materials
for the 1996 Annual Meeting should be addressed to the
Company's Secretary, 1100 North Market Street, Wilmington,
Delaware 19801 and must be received before December 31,
1995.
___________________________________
The Board of Directors knows of no matters other than the
foregoing to come before the annual meeting. If any other matters or
motions properly come before the meeting, it is the
intention of the persons named in the accompanying form of
proxy to vote the proxy in accordance with their judgment on
such matters or motions, including any matters dealing with
the conduct of the meeting.
Dated: Wilmington,
Delaware, April 24, 1995. By Order of the Board
of Directors,
Dennis F. Murphy,
Secretary.
<PAGE>
Mercantile Stores Company, Inc.
Proxy Solicited by the Board of Directors for Annual
Meeting, May 24, 1995
The undersigned hereby appoints David L. Nichols, James M. McVicker
and James D. Cain the proxies (each with power to act alone and with
power of substitution) of the undersigned to vote at the Annual Meeting
of Stockholders of Mercantile Stores Company, Inc. to be held on
May 24, 1995, and any adjournment, the shares of stock which the
undersigned would be entitled to vote thereat upon all matters
properly brought before the meeting. This card also provides voting
instrucitons to the trustee of the Company's Savings, Profit Sharing
and Supplemental Retirement Plan with respect to shares held by the
trustee for Plan participants.
Dated: , 1995
Signature of Stockholder
This Proxy Must be Signed Exactly
as Name Appears Hereon
Executors, administrators, trustees, etc.
should give full title as such. For joint
accounts, each owner should sign. If the
signer is a corporation, please sign full
corporate name by duly authorized officer.
(over)
<PAGE>
Please mark vote in oval in the following manner using dark ink only.
The Board of Directors Recommends a Vote FOR Proposals 1 and 2
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For Withheld For all except Nominee(s)
All For All Written Below:
1. Election of Directors.
The nominees are: John A. Herdeg; Thomas J. Malone;
Roger Milliken; Francis G. Rodgers [ ] [ ] [ ]
2. Proposal to approve the appointment of Arthur Andersen
LLP as independent auditors. [ ] [ ] [ ]
The Board of Directors Recommends a Vote AGAINST Proposal 3
3. Stockholder Proposal to declassify the Board of
Directors. [ ] [ ] [ ]
</TABLE>
The proxies are authorized to vote in their discretion upon such other
matters as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the stockholder. If no direction is made, this proxy will be voted
FOR Proposals 1 and 2 and AGAINST Proposal 3.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
