SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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 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)(2) 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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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 28, 1997, at
11:00 A.M., for the following purposes, as described in the
accompanying proxy statement:
1. To elect three directors of the Company to serve for a term
of three years;
2. To approve Arthur Andersen LLP as independent auditors of
the Company; and
3. 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 11, 1997 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 29, 1997 William A. Carr,
Secretary
____________________________________
A proxy card and the annual report of the Company for the fiscal
year ended February 1, 1997 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.
<PAGE>
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 28, 1997, 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 29, 1997.
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 MacKenzie Partners, Inc. 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 11, 1997, 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 three 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.
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 the approval of the
independent auditors, but will not be counted as a vote in favor
of the matter. Accordingly, an abstention from voting on the
approval of the independent auditors 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 the
approval of the independent auditors.
<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 II Directors expires with this annual meeting.
The terms of the Class I and Class III Directors will expire at
subsequent annual meetings. The number of directors of the Company
to be elected at the Annual Meeting is three. 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.
<PAGE>
<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
<S> <C> <C>
Class II - Nominees to be elected for term expiring in 2000
H. KEITH H.
BRODIE, M.D. President Emeritus of Duke University; member of the Audit, 1987
57 Compensation and Nominating Committees; director of Milliken
& Company, manufacturer of textile products.
MINOT K. Director Emeritus of Milliken & Company, manufacturer of 1943
MILLIKEN textile products; member of the Compensation Committee;
81 director of Minot Mercantile Corporation and Woodbank Mills,
Inc. (see note 1 to "Stock Ownership of Management").
ROGER K. Product Line Marketing Manager, Analog Devices, Inc., 1991
SMITH manufacturer of semiconductors; member of the Nominating
37 Committee.
Class III - Directors continuing in office until 1998
JOHN A. Attorney at Law; member of the Audit Committee; Chairman 1980
HERDEG of the Board of Christiana Bank & Trust Company.
59
THOMAS J. President, Chief Operating Officer and director of Milliken 1989
MALONE & Company, manufacturer of textile products; member of the
58 Audit Committee.
ROGER Chairman and Chief Executive Officer of Milliken & 1939
MILLIKEN Company, manufacturer of textile products; member of the
81 Audit, Compensation and Nominating Committees; director
of Minot Mercantile Corporation and Woodbank Mills, Inc.
(see note 1 to "Stock Ownership of Management").
FRANCIS G. Author and lecturer; former Vice President-Marketing, 1987
RODGERS International Business Machines Corporation; member of
70 the Compensation Committee; director of Milliken &
Company, manufacturer of textile products; director of
Bergen Brunswig Corporation and Dialogic Corp.
Class I - Directors continuing in office until 1999
GERRISH H. Director Emeritus of Milliken & Company, manufacturer 1951
MILLIKEN of textile products; director of Minot Mercantile
79 Corporation and Woodbank Mills, Inc. (see note 1 to
"Stock Ownership of Management").
DAVID L. Chairman of the Board and Chief Executive Officer of 1992
NICHOLS the Company; former Executive Vice President, Treasurer
55 and Chief Financial Officer of the Company (1989-1992);
director of The Andersons, Inc., a diversified agribusiness
and retailing company, and the Federal Reserve Bank of
Cleveland.
LAWRENCE R. Chairman of VF Corporation; apparel manufacturer and 1996
PUGH marketer; former Chief Executive Officer of VF Corporation;
64 member of the Compensation Committee; director of Milliken
& Company, manufacturer of textile products, The Black &
Decker Corporation and UNUM Corporation.
</TABLE>
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of March 31, 1997,
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:
Amount of Common Stock
Beneficially Owned Percent
of
Name Directly Indirectly Class
H. KEITH H. BRODIE, M.D. 1,000 none *
JOHN A. HERDEG 2,125 none *
THOMAS J. MALONE 600 none *
GERRISH H. MILLIKEN 378,153 (see notes 1, 2 and 6) 1.30
(see note 2)
101,063
(life interest in trusts)
MINOT K. MILLIKEN 400,119 (see notes 1, 3 and 6) 2.32
(see note 3)
454,536
(life interest in trusts)
ROGER MILLIKEN 4,221,764 (see notes 1, 4 and 6) 11.79
(see note 4)
121,560
(life interest in trusts)
DAVID L. NICHOLS 2,812 4,479 *
LAWRENCE R. PUGH 500 none *
FRANCIS G. RODGERS 2,750 none *
ROGER K. SMITH 73,572 none *
(see note 5)
RANDOLPH L. BURNETTE none 5,090 *
JAMES D. CAIN 25 11,677 *
WILLIAM A. CARR 1,962 1,075 *
JAMES M. McVICKER 3,407 1,566 *
All Directors and
Executive Officers 4,490,079 10,562,287 40.85
* - Less than one percent.
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 each director's and executive officer's account
in the Savings, Profit Sharing and Supplemental Retirement Plan
and those held in the name of his or her 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 or her 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 (28.46%) 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 378,153 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 400,119 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 4,221,764 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 63,895 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 14,898,031 shares (40.44%) 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:
Name and Address of Amount of Common Stock and
Beneficial Owner Nature of Beneficial Ownership % of Class
Minot Mercantile Corporation 10,484,875 28.46
1209 Orange Street Direct
Wilmington, Delaware 19801
Minot Mercantile Corporation 14,898,031 (b) 40.44
and others joint disclosure(a) Direct and Indirect
c/o 1209 Orange Street
Wilmington, Delaware 19801
Wellington Management Company, LLP 2,179,850 (c) 5.92
75 State Street
Boston, MA 02109
(a) 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.
(b) These shares include the shares reported directly above by Minot
Mercantile Corporation.
(c) Based upon information as of December 31, 1996 set forth in a
Schedule 13G filing dated January 24, 1997. According to its filing,
Wellington Management Company, LLP, a registered investment adviser,
has shared voting power with respect to 1,443,050 of such shares and
shared dispositive power with respect to all of such shares, which are
held of record by its clients.
BOARD COMMITTEES
The Company's Board of Directors held six regularly scheduled meetings during
the last fiscal year. Each director attended at least 75% of the Board meet-
ings and the meetings of any committee of which he was a member, with the
exception of Thomas J. Malone, who was unable to attend two board meetings
due to illness. The Company has standing Audit, Compensation and Nominating
Committees of the Board of Directors.
The members of the Audit Committee are H. Keith H. Brodie, M.D., John A. Herdeg,
Thomas J. Malone and Roger Milliken. The members of the Audit Committee met
three times during the last fiscal year. The Audit Committee is responsible
for engaging and discharging auditors; reviewing with the auditors and manage-
ment 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 members of the Compensation Committee are H. Keith H. Brodie, M.D., Minot
K. Milliken, Roger Milliken, Lawrence R. Pugh and Francis G. Rodgers. The
Compensation Committee, which met seven 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 members of the Nominating Committee are H. Keith H. Brodie, M.D., Roger
Milliken and Roger K. Smith. The Nominating Committee met two times during
the last fiscal year. The Nominating Committee establishes procedures for
identifying potential candidates for appointment or election as directors,
reviews and makes recommendations regarding the criteria for Board membership,
and proposes nominees for election at the annual meeting and candidates to
fill board vacancies. The Nominating Committee will consider recommendations
from any stockholder who is entitled to vote for the election of directors.
Stockholders should send recommendations of candidates for nomination, in
writing, no later than December 31, 1997, to the Company's Secretary, 1100
North Market Street, Wilmington, Delaware 19801. Recommendations must be
accompanied by the consent of the individual being recommended to be nominated,
to be elected and to serve. The submission also should include a statement of
the candidate's business experience and other business affiliations.
<PAGE>
OTHER EXECUTIVE OFFICERS
In addition to the Chief Executive Officer, the Company's other executive
officers include: James M. McVicker, 50, 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; Randolph L. Burnette, 55, who was
elected Senior Vice President of Real Estate in April 1997 (Vice President
of Real Estate in January 1995 and Vice President of Planning in March 1994)
and prior to that time was Director of Merchandise Planning from August 1992;
William A. Carr, 58, who was elected Secretary in June 1996 and Treasurer in
March 1994 and prior to that time was Controller; Louis L. Ripley, 45, who was
elected Vice President of Human Resources in February 1996 and prior to that
time was Director of Human Resources and Management Development from February
1994 and previously was Director of Human Resources; Kathryn M. Muldowney, 38,
who was elected Vice President and Chief Information Officer in December 1996
and prior to that time was Controller from March 1994 and previously was
Director of Strategic Planning from March 1993; and Donald L. Radcliff, 42,
who was elected Controller in December 1996 and prior to that time was Director
of Accounting Operations from March 1994 and previously was Manager of
Accounting Operations.
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 February
1, 1997:
Summary Compensation Table:
Annual Compensation
<TABLE>
<CAPTION>
Fiscal
Name and Principal Year Other Annual All Other
Position Ended Salary Bonus Compensation Compensation(a)
<S> <C> <C> <C> <C> <C>
David L. Nichols 2/01/97 $799,615 $520,749 $0 $67,788
Chairman of the Board 2/03/96 $725,385 $394,311 $0 $58,925
and Chief Executive Officer 1/28/95 $646,500 $352,525 $0 $50,234
James M. McVicker 2/01/97 $409,769 $242,622 $0 $23,084
Senior Vice President and 2/03/96 $361,038 $219,655 $0 $19,833
Chief Financial Officer 1/28/95 $278,519 $202,668 $0 $ 9,511
Randolph L. Burnette 2/01/97 $296,53 $177,528 $0 $16,571
Senior Vice President of 2/03/96 $274,231 $155,306 $0 $13,672
Real Estate 1/28/95 $231,131 $114,353 $0 $ 7,752
James D. Cain(c) 2/01/97 $301,154 $167,764 $0 $17,323
Vice President of 2/03/96 $307,692 $127,562 $0 $16,450
Administration 1/28/95 $275,000 $159,858 $0 $10,622
William A. Carr 2/01/97 $255,000 $135,809 $0 $12,067
Treasurer and Secretary 2/03/96 $263,269 $ 74,025 $0 $11,275
1/28/95 $245,000 $ 57,191 $0 $ 7,582
</TABLE>
(a) All Other Compensation is comprised of the Company's matching contribu-
tions 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 $24,000, $21,000, and
$27,000, paid to Mr. Nichols for Board of Directors' meetings during the
fiscal years ended February 1, 1997, February 3, 1996, and January 28,
1995, respectively.
(b) Includes a special bonus for the years ended February 3, 1996 and January
28, 1995 in the amount of $25,000 for each year for additional services
recognized by the Board of Directors.
(c) Effective February 1, 1997, Mr. Cain retired.
<PAGE>
Report of the Compensation Committee
General.
The Compensation Committee of the Board of Directors (the
"Committee") is composed of five outside directors. The current
members of the Committee are H. Keith H. Brodie, M.D., Minot K.
Milliken, Roger Milliken, Lawrence R. Pugh 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. The Committee
recognizes that compensation in excess of $1 million paid to the
Company's Chief Executive Officer does not presently qualify for
deduction by the Company for federal income tax purposes under
Section 162(m) of the Internal Revenue Code, but feels that the
non-deductible portion is not material. Moreover, the Committee
believes that it is important to maintain the flexibility to
compensate executive officers in a manner consistent with the
stated philosophy of performance-linked and competitive compensation
designed to maximize stockholder value, portion of such
compensation may not be deductible by the Company.
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 the
achievement of pre-defined Company and business unit performance
measurements as determined by the Board. For 1996, with respect
to each executive officer named in the Summary Compensation Table,
bonuses were based on a weighted average performance barometer
which included pre-tax store profits, total sales, gross margin
return on investment and operating expense ratios. The bonuses
reported in the Summary Compensation Table reflect the fact that
the weighted average Company performance targets for 1996 were
103.67% achieved.
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, who does not have an employment contract, received a
salary increase in 1996 of approximately 10.2% 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 1996 was based
upon the performance of the Company. As a participant in the Pay-
for-Performance year-end bonus program, Mr. Nichols received a
bonus for 1996 of $521,000, based on the achievement of 103.67% of
the weighted average Company performance targets.
1996 Stock Option Plan.
In 1996 the Board of Directors of the Company adopted the Mercantile
Stores Company, Inc. 1996 Stock Option Plan (the "Stock Plan").
The Stock Plan is intended to enhance the Company's ability to
attract and retain employees with valuable ability and experience
and to furnish such personnel with incentives to improve operations
and increase profits of the Company. In addition, the options will
align the interests of executives with those of the stockholders,
and thus will provide the executives with additional incentive to
maximize stockholder value.
Options under the Stock Plan will be granted at a price equal to
the fair market value of the Company's common stock on the date of
grant, and, in general, will be exercisable in four equal increments
over the four year period following the date of grant. The Company
is authorized to purchase 1,500,000 shares of its common stock for
issuance upon exercise of options granted under the Stock Plan.
The Company may commence making grants under the Stock Plan in 1997.
H. Keith H. Brodie, M.D. Minot K. Milliken Roger Milliken
Lawrence R. Pugh Francis G. Rodgers
Performance Graph (Table)
Set forth below is a table 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, 1992 Through February 1, 1997
Mercantile S & P Retail Department S & P 500
Stock Store Composite Index Composite Index
1992 $100.00 $100.00 $100.00
1993 98.03 110.78 110.57
1994 114.39 121.81 124.74
1995 130.81 111.96 125.42
1996 143.35 133.27 173.79
1997 152.05 141.81 219.37
* Total return assumes re-investment of dividends.
Assumes $100 invested on February 1, 1992 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) 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 5 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 February 3, 1996 was determined based on the addition of .875%
of each year's compensation up to the year's Taxable Wage Base (as
defined) and 1.375% of compensation above such base up to, since
1989, the maximum annual limitation on compensation.
The Plan was amended effective February 4, 1996 to provide pension
benefits which are more commensurate with those prevalent in the
competitive retail industry. The amendment adjusted the calculation
formula for benefits earned after February 3, 1996. The new formula
includes a 2-tier service breakpoint for calculation purposes.
Under the amended Plan, benefits for associates with up to 20 years
of enrollment (as defined) are based on (i) .875% of annual compen-
sation up to the year's Taxable Wage Base, plus (ii) 1.875% of
compensation above such base up to a compensation level of twice
the Taxable Wage Base, plus (iii) 3.0% of compensation above such
doubled Taxable Wage Base up to the maximum annual limitation on
compensation ($150,000 during 1996). For associates with more than
20 years of enrollment, benefits are based on (i) 1.0% of annual
compensation up to the year's Taxable Wage Base, plus (ii) 2.5% of
compensation above such base up to a compensation level of twice
the Taxable Wage Base, plus (iii) 4.0% of compensation above such
doubled Taxable Wage Base up to the maximum annual limitation on
compensation.
Benefits payable under the noncontributory Pension Plan are subject
to maximum limitations under the Internal Revenue Code of 1986, as
amended (the "Code"). Payments to each employee, upon retirement,
are made from a Trust Fund maintained by the trustee. The estimated
annual benefits payable on normal retirement (without regard to
maximum limitations under the Code) to the named executive officers,
except James D. Cain, are as follows: David L. Nichols, $689,122;
James M. McVicker, $482,959; Randolph L. Burnette, $242,053; and
William A. Carr, $142,728. The annual benefit payable to Mr. Cain,
who retired effective February 1, 1997, is $71,246.
The Company also maintains a 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 February 1, 1997, there
were charges against the earnings of the Company with respect to such
plan for the named executive officers in the aggregate amount of
$284,374.
Severance Protection Agreements
The Company has entered into severance protection agreements with
each of James M. McVicker and Randolph L. Burnette (the "Executives")
and David L. Nichols (the "CEO"). The agreements are designed to
encourage each such executive to carry out his duties with the
Company in the event of a potential change in control of the
Company.
The agreements for the Executives provide that if within 24 months
following a change in control (as defined in the agreements) of the
Company, the Executive's employment is terminated either (i) by the
Company for other than cause or disability or, (ii) by the Executive,
for good reason, then such Executive will receive, in addition to
base salary and bonus accrued through the date of termination, the
greater of: (a) 2.99 times his annual salary and bonus at the highest
rate in effect during the one year period prior to the change in
control less the cash compensation paid the Executive for services
rendered from the date of change in control to the termination date,
or (b) two weeks' compensation for every year of service with the
Company at a level equal to salary and bonus at the highest rate in
effect during the one year period prior to the change in control.
The agreement with the CEO provides that if within 24 months follow-
ing a change in control of the Company, the CEO's employment is
terminated either (i) by the Company for other than cause or
disability, or (ii) by the CEO for any reason whatsoever, then the
CEO will receive in addition to base salary and bonus accrued through
the date of termination, the greater of: (a) $2,997,075, or (b)
2.99 times his annual salary and bonus at the highest rate in effect
during the one year period prior to the change in control. In
addition, each Executive and the CEO is entitled to: (i) receive
all employment benefits for the remainder of, in the case of the
Executives, the 24 month period, and in the case of the CEO, the
36 month period, following the change in control; (ii) a lump sum
payment equal to the present value of the amount by which retirement
benefits would have been larger had, in the case of the Executives,
an additional two years, and in the case of the CEO, an additional
three years, of credited service been completed; and (iii) legal
fees and expenses reasonably incurred in enforcing the agreements.
The Code imposes certain excise taxes on, and limits the deducti-
bility of, certain compensatory payments made by a corporation to
or for the benefit of certain individuals if such payments are
contingent upon certain changes in the ownership or effective control
of the corporation or the ownership of a substantial portion of the
assets of the corporation provided that such payments to the
individual have an aggregate present value in excess of three times
the individual's annualized includible compensation for the base
period, as defined in the Code. The agreements for the Executives
provide that such severance payments shall be reduced to the extent
necessary so that no such payments are subject to the excise tax.
The CEO's agreement entitles him to receive an amount sufficient to
offset any excise tax payable by the CEO pursuant to the provisions
of the Code.
Directors' Compensation
Directors who are not also officers of the Company receive as yearly
compensation $16,000. All directors receive a standard fee of $3,000
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.
Section 16(a) Beneficial Ownership Reporting Compliance
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 1996
fiscal year, all required Section 16(a) filings were timely made.
APPROVAL OF AUDITORS
The auditors selected by the Board of Directors and being recommended
to the stockholders for approval for the fiscal year ending January
31, 1998, 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 28, 1997, 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 January 31, 1998 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 and Chief
Executive Officer, Thomas J. Malone is President, Chief Operating
Officer and a director, Minot K. Milliken and Gerrish H. Milliken
are directors emeriti, and H. Keith H. Brodie, M.D., Lawrence R.
Pugh and Francis G. Rodgers are directors, is one of the Company's
suppliers of some types of merchandise. VF Corporation, of which
Lawrence R. Pugh is Chairman of the Board and was formerly the Chief
Executive Officer, also supplies the Company with some types of
merchandise. Such purchases for resale and use by the Company and
its subsidiaries are in the ordinary course of business at competi-
tive prices and amounted to approximately $1,330,000 in the case of
Milliken & Company and $55,823,000 in the case of VF Corporation
during the last fiscal year.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals for inclusion in Proxy materials for the 1998
Annual Meeting should be addressed to the Company's Secretary,
1100 North Market Street, Wilmington, Delaware 19801, and must be
received before December 31, 1997.
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 29, 1997.
By Order of the Board of Directors,
William A. Carr, Secretary
MERCANTILE STORES COMPANY, INC.
Proxy Solicited by the Board of Directors for Annual Meeting, May 28, 1997
The undersigned hereby appoints David L. Nichols, James M. McVicker and
William A. Carr 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 28, 1997, 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 instructions 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:___________________,1997
__________________
__________________
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.
(PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INN ONLY)
The Board of Directors Recommends a Vote FOR Proposals 1 and 2
1. Election of Directors. For All Withheld For All Except
For All Nominee(s)
Written Below:
The nominees are:
H. Keith H. Brodie, M.D.;
Minot K. Milliken;
Roger K. Smith __________ __________ _____________
_____________________________________________
_____________________________________________
2. Proposal to approve the
appointment of Arthur
Andersen LLP as indepen-
dent auditors. __________ __________ ____________
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.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
