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 ss. 240.14a-11(c) or ss. 240.14a-12
STAGE STORES, INC.
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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STAGE STORES INC.
BEALLS o PALAIS ROYAL o STAGE
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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Notice is hereby given that the Annual Meeting of Stockholders of Stage
Stores, Inc., a Delaware corporation ("Stage Stores" or the "Company") will be
held at the offices of the Company, 10201 Main Street, Houston, Texas 77025 on
Thursday May 15, 1997, at 12:00 P.M., Houston time, for the following purposes:
1. To elect eight Directors for the ensuing year and until their
successors are elected;
2. To elect the Company's independent auditors for the ensuing year; the
Board of Directors has recommended Price Waterhouse LLP, the present
auditors, for election as auditors; and
3. To consider and transact such other business as may properly come
before the meeting, and any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 28, 1997 will
be entitled to notice of, and to vote at the meeting, and at any adjournment or
adjournments thereof.
By order of the Board of Directors,
STAGE STORES, INC.
James Marcum
Executive Vice President and Chief Financial Officer
Dated: April 16, 1997
<PAGE>
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PROXY STATEMENT
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GENERAL
This Proxy is solicited by the Board of Directors of the Company for use at
the Annual Meeting of Stockholders which will be held at the offices of the
Company, 10201 Main Street, Houston, Texas 77025 on Thursday May 15, 1997, at
12:00 P.M., Houston time.
References to a particular year are to the Company's fiscal year which is the
52 or 53 week period ending on the Saturday closest to January 31 of the
following calendar year (e.g., a reference to "1996" is a reference to the
fiscal year ended February 1, 1997).
VOTING MATTERS
The Company's authorized common equity securities consist of par value $0.01
per share common stock ("Common Stock") and par value $0.01 per share Class B
common stock ("Class B Common Stock"). Except as otherwise described herein, all
shares of Common Stock and Class B Common Stock are identical and entitle the
holders thereof to the same rights and privileges (except with respect to voting
privileges). Holders of Class B Common Stock may elect at any time to convert
any or all of such shares into Common Stock, on a share-for-share basis, to the
extent the holder thereof is not prohibited from owning additional voting
securities by virtue of regulatory restrictions. The holders of Common Stock are
entitled to one vote per share on all matters to be voted upon by the
stockholders. Except as required by law, holders of Class B Common Stock do not
have the right to vote on any matters to be voted upon by the stockholders.
The representation in person or by proxy of a majority of the outstanding
shares of Common Stock entitled to a vote at the meeting is necessary to provide
a quorum for the transaction of business at the meeting. Shares can only be
voted if the stockholder is present in person or is represented by a properly
signed proxy. Each stockholder's vote is very important. Whether or not you plan
to attend the meeting in person, please sign and promptly return the enclosed
proxy card. All signed and returned proxies will be counted towards establishing
a quorum for the meeting, regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted FOR the Board of Director's proposals, and as
the individuals named as proxy deem advisable on all other matters as may
properly come before the meeting.
For all matters to be voted upon at the meeting, the affirmative vote of a
majority of shares present in person or represented by proxy, and entitled to
vote on the matter, is necessary for approval. Withholding authority to vote or
an instruction to abstain from voting on a proposal will be treated as shares
present and entitled to vote and, for purposes of determining the outcome of the
vote, will have the same effect as a vote against the proposal. A broker
"non-vote" occurs when a nominee holding shares for a beneficial holder does not
have discretionary voting power and does not receive voting instructions from
the beneficial owner. Broker "non-votes" will not be treated as shares present
and entitled to vote on a voting matter and will have no effect on the outcome
of the vote.
Any stockholder giving the enclosed Proxy has the power to revoke such proxy
prior to exercise either by voting by ballot at the meeting, by executing a
later-dated proxy or by delivering a signed written notice of the revocation to
the office of the Secretary of the Company before the meeting begins. The Proxy
will be voted at the meeting if the signer of the Proxy was a stockholder of
record on March 28, 1997 (the "Record Date").
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On the Record Date, there were 22,044,459 shares of Common Stock outstanding
and entitled to vote at the meeting. Each outstanding share of Common Stock is
entitled to one vote. On the Record Date, there were 1,250,584 shares of Class B
Common Stock outstanding. Class B Common Stock is not entitled to vote. This
Proxy Statement is first being sent to the stockholders on or about April 16,
1997. A list of the stockholders entitled to vote at the meeting will be
available for inspection at the meeting for purposes relating to the meeting.
SOLICITATION OF PROXIES
Solicitation of Proxies may be made through officers and regular employees of
the Company by mail, telephone or oral communications with some stockholders
following the original solicitation period. No additional compensation will be
paid to such officers and regular employees for proxy solicitation. Expenses
incurred in the solicitation of Proxies will be borne by the Company, including
the charges and expenses of brokerage firms and others of forwarding
solicitation material to beneficial owners of Common Stock.
MATTERS TO BE ACTED UPON
1. ELECTION OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR each nominee
for Director set forth below. Eight Directors are to be elected at the meeting,
each to hold office until the following Annual Meeting of Stockholders when a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal.
Each nominee listed below is currently a Director. The following information
pertains to each nominees' (i) age as of April 1, 1997, (ii) principal
occupations for at least the past five years and (iii) certain other
directorships:
NAME AGE POSITIONS CURRENTLY HELD
- ----------------- --- ---------------------------------------------------
Carl Tooker 49 Chairman, President and Chief Executive Officer of
Stage Stores
Joshua Beckenstein 38 Managing Director of Bain Capital, Inc. and Director
of Waters Corporation
Harold Compton 49 Executive Vice President and Chief Operating Officer
of CompUSA, Inc. and Director of Jumbo Sports, Inc.
Robert Huth 51 President, Chief Operating Officer and Director of
David's Bridal, Inc.
Richard Jolosky 62 President of Payless ShoeSource, Inc.
Adam Kirsch 35 Managing Director of Bain Capital, Inc.; Director
of: (i) Brookstone, Inc., (ii) Duane Reade Holding
Corp., (iii) Diagnostics Holdings Inc. and (iv)
Wesley-Jessen Corporation.
Peter Mulvihill 38 Managing Director of Oak Hill Partners, Inc.,
Director of Harvest Foods, Inc.
Mark Shulman 48 Executive Vice President and Chief Merchandising
Officer of Stage Stores
Mr. Tooker was elected Chairman during January 1997. Mr. Tooker succeeds Mr.
Bernard Fuchs, age 70, who retired. Mr. Tooker joined the Company as Director,
President and Chief Operating Officer during July 1993, and in July 1994, Mr.
Tooker was appointed Chief Executive Officer. In 1990, Mr. Tooker joined Rich's,
a division of Federated Department Stores, Inc., as President and Chief
Operating Officer, and in 1991, Mr. Tooker was promoted to Chief Executive
Officer of Rich's where he served until joining the Company in 1993. Mr. Tooker
has over 25 years of experience in the retail industry, 18 of which were spent
with the May Company.
3
<PAGE>
Mr. Bekenstein has been a Director since December 1988 and was Vice Chairman
of the Board of Directors and Chief Financial Officer of the Company from May
1992 until June 1995. Mr. Bekenstein has been a Managing Director of Bain
Capital, Inc. since May 1993 and a General Partner of Bain Venture Capital since
its inception in 1987.
Mr. Compton has been a Director since March 1997. Mr. Compton has served as
Executive Vice President and Chief Operating Officer of CompUSA, Inc. since
January 1995. Previously, he served as Executive Vice President-Operations from
August 1994 to January 1995. Prior to joining CompUSA, Inc., Mr. Compton served
as President and Chief Operating Officer of Central Electric Inc. from 1993 to
1994 and as Executive Vice President-Operations & Human Resources of HomeBase,
Inc. from 1989 to 1993.
Mr. Huth has been a Director since March 1997. Mr. Huth has served as
President, Chief Operating Officer and Director of David's Bridal since July
1995. Prior to joining David's Bridal, Mr. Huth was employed by Melville
Corporation from April 1987 to March 1995, where he served as Director,
Executive Vice President and Chief Financial Officer.
Mr. Jolosky has been a Director since March 1997. Mr. Jolosky has served as
President of Payless ShoeSource, Inc. since 1996. Mr. Jolosky previously served
as President and Chief Executive Officer of Silverman Jewelry Company from 1995
to 1996 and as Chief Executive Officer of the Richard Allen Company from 1992 to
1995.
Mr. Kirsch has been a Director since June 1992. Mr. Kirsch has been a
Managing Director of Bain Capital, Inc. since May 1993 and a General Partner of
Bain Venture Capital since 1990.
Mr. Mulvihill has been a Director since December 1988. Mr. Mulvihill has
served as a Managing Director of Oak Hill Partners, Inc. ("Oak Hill") since
1993. From June 1987 to 1993, Mr. Mulvihill worked for and was associated with
Rosecliff, Inc. ("Rosecliff", the predecessor of Oak Hill).
Mr. Shulman has been a Director since December 1996. Mr. Shulman joined the
Company in January 1994 as Executive Vice President and Chief Merchandising
Officer with 24 years of retailing experience. Most recently, Mr. Shulman served
as President of Leslie Fay Dress Division from 1992 to 1994 and President and
Chief Operating Officer of Bonjour, Inc. from 1990 to 1992.
2. ELECTION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors recommends that the
stockholders vote FOR the election of the firm of Price Waterhouse LLP as the
auditors to audit the consolidated financial statements of the Company and the
financial statements of certain of its subsidiaries for the fiscal year ending
January 31, 1998. It is intended that the Proxies in the form enclosed with this
Proxy Statement will be voted for such firm unless stockholders specify to the
contrary in their Proxies or specifically abstain from voting on this matter.
Representatives of Price Waterhouse LLP are expected to be present at the
Annual Meeting of Stockholders. They will have the opportunity to make
statements if they desire to do so and will be available to respond to
appropriate questions.
3. OTHER BUSINESS
The Board of Directors does not know of any other business to be presented at
the Annual Meeting of Stockholders. If any other matters come before the
meeting, however, it is intended that the persons named in the enclosed form of
Proxy will vote said Proxy in accordance with their best judgment.
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<PAGE>
DIRECTORS MEETINGS, COMMITTEE MEETINGS AND COMPENSATION
DIRECTORS MEETINGS
The Board of Directors held six meetings during 1996. All of the Company's
Directors participated in excess of 75% of the meetings during the period of
time they were Directors.
COMMITTEE MEETINGS
The Executive Committee currently consists of Messrs. Tooker, Bekenstein and
Mulvihill. The Executive Committee is responsible for identifying strategic
growth and financing opportunities consistent with the Company's expansion
program.
The Audit Committee, which currently consists of Messrs. Huth, Kirsch and
Mulvihill, recommends the engagement of the Company's independent auditors and
oversees actions taken by the auditors.
The Compensation Committee, which currently consists of Messrs. Bekenstein,
Compton and Jolosky, approves the compensation of executives of the Company,
makes recommendations to the Board of Directors with respect to standards for
setting compensation levels and administers the Company's incentive plans. The
Compensation Committee met twice during 1996.
The Nominating Committee consists of Messrs. Tooker and Bekenstein. The
Nominating Committee is responsible for the identification, recruitment and
engagement of potential directors.
During 1996, issues which would traditionally be resolved in Executive,
Audit, or Nominating Committee meetings were addressed by the full Board of
Directors, and as such, there were no Executive, Audit, or Nominating Committee
meetings.
COMPENSATION OF DIRECTORS
Directors who are full-time employees of the Company receive no additional
compensation for serving on the Board of Directors. During 1996, Lasker Meyer
received cash compensation of $25,000 for services rendered as a Director. No
other outside Director received compensation during 1996. Mr. Meyer, age 70,
retired during 1997. During 1997, each Director who is not a full-time employee
or affiliate of the Company (Messrs. Compton, Huth and Jolosky) will receive (i)
annual cash compensation of $20,000 for services rendered as Directors, (ii) a
$1,000 fee for each committee meeting attended and (iii) options to purchase
5,000 shares of the Company's Common Stock which vest evenly over four years.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summarizes, for the fiscal years indicated, the principal
components of compensation for the Company's Chief Executive Officer (the "CEO")
and the four highest compensated executive officers (collectively, the "named
executive officers"). Sections omitted are not applicable.
<TABLE>
<CAPTION>
LONG-TERM
COMPEN-
SATION
-----------
ANNUAL COMPENSATION AWARDS
---------------------------------------- -----------
OTHER
ANNUAL SECURITIES ALL
COMPEN- UNDERLYING OTHER
FISCAL SALARY BONUS SATION OPTIONS/ COMP.
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($) SARs(#) (2)
- ----------------------------------------------------- ------- ---------- ---------- ------------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Carl Tooker, ........................................ 1996 600,000 300,000 1,010,426(3) 213,136 1,273
Chairman, President and Chief .................... 1995 580,083 43,305 67,600(4) -- 87
Executive Officer ................................ 1994 468,750 56,128 67,600(4) 47,363 174
Mark Shulman, ....................................... 1996 350,000 140,000 358,445(5) 71,046 2,752
Director, Executive Vice President ............... 1995 302,082 75,000 9,600(6) 14,208 783
and Chief Merchandising Officer .................. 1994 276,614 41,250 393,984(7) 94,727 160
James Marcum, ....................................... 1996 295,833 120,000 173,415(8) 71,046 952
Executive Vice President and ..................... 1995 183,333 55,000 184,722(9) 94,727 173
Chief Financial Officer .......................... 1994 -- -- -- -- --
Stephen Lovell, ..................................... 1996 295,833 120,000 133,069(10) 71,046 865
Executive Vice President and ..................... 1995 183,333 55,000 173,535(11) 71,045 268
Director of Stores ............................... 1994 -- -- -- -- --
Ron Lucas, .......................................... 1996 187,500 76,000 49,516(12) 33,154 174
Senior Vice President, ........................... 1995 126,426 35,000 71,235(13) 37,891 268
Human Resources .................................. 1994 -- -- -- -- --
</TABLE>
- -----------------------------------
(1) Amounts reflect bonuses earned during the fiscal year covered (and paid
during the subsequent fiscal year).
(2) Amounts reflect premiums paid for life insurance coverage.
(3) Amount shown reflects the value realized upon the exercise of options for
common stock of $895,000 during 1996. Value realized is based upon the
fair value of the stock at the exercise date minus the exercise price.
Amount shown also reflects imputed interest on executive loans of $44,946,
a distribution related to options vested of $38,000, housing and
automobile allowances of $30,600 and health insurance benefits of $1,880
paid to Mr. Tooker during 1996.
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(4) Amount shown reflects a distribution related to options vested of $38,000
and housing and automobile allowances of $29,600 paid to Mr. Tooker during
1995 and 1994.
(5) Amount shown reflects the value realized upon the exercise of options for
common stock of $335,360 during 1996. Value realized is based upon the
fair value of the stock at the exercise date minus the exercise price.
Amount shown also reflects imputed interest on executive loans of $10,602
housing and automobile allowances of $10,600 and health insurance benefits
of $1,883 paid to Mr. Shulman during 1996.
(6) Amount shown reflects housing and automobile allowances paid to Mr.
Shulman during 1995.
(7) Amount shown reflects moving expenses of $385,184 and housing and
automobile allowances of $8,800 paid to Mr. Shulman during 1994.
(8) Amount shown reflects the value realized upon the exercise of options for
common stock of $142,400 during 1996. Value realized is based upon the
fair value of the stock at the exercise date minus the exercise price.
Amount shown also reflects moving expenses of $15,256, imputed interest on
executive loans of $8,877, housing and automobile allowances of $5,000 and
health insurance benefits of $1,882 paid to Mr. Marcum during 1996.
(9) Amount shown reflects moving expenses paid to Mr. Marcum during 1995.
(10) Amount shown reflects the value realized upon the exercise of options for
common stock of $106,800 during 1996. Value realized is based upon the
fair value of the stock at the exercise date minus the exercise price.
Amount shown also reflects imputed interest on executive loans of $13,788,
housing and automobile allowances of $10,600, and health insurance
benefits of $1,881 paid to Mr. Lovell during 1996.
(11) Amount shown reflects moving expenses of $167,935 and housing and
automobile allowances of $5,600 paid to Mr. Lovell during 1995.
(12) Amount shown reflects moving expenses of $43,062, housing and automobile
allowances of $5,000 and health insurance benefits of $1,454 paid to Mr.
Lucas during 1996.
(13) Amount shown reflects moving expenses paid to Mr. Lucas during 1995.
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OPTION/SAR GRANTS DURING 1996
The following discloses options granted during 1996 to the named executive
officers.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term
----------------------------------------------- ---------------------------
Number of % of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise
SAR's Employees or Base 5% 10%
Granted (#) in Fiscal Price Expiration Annual Growth Annual Growth
Name (1) Year (%) ($) Date Rate ($) Rate ($)
- ---------------- ----------- ---------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl Tooker..... 118,409 15.1 5.28 2/4/06 393,118 997,004
94,727 12.1 21.11 6/12/06 -- 596,780
Mark Shulman.... 23,682 3.0 5.28 4/1/06 78,624 199,402
47,364 6.0 21.11 6/12/06 -- 298,393
James Marcum.... 23,682 3.0 5.28 4/1/06 78,624 199,402
47,364 6.0 21.11 6/12/06 -- 298,393
Steve Lovell.... 23,682 3.0 5.28 4/1/06 78,624 199,402
47,364 6.0 21.11 6/12/06 -- 298,393
Ron Lucas....... 14,209 1.8 5.28 4/1/06 47,174 119,640
18,945 2.4 21.11 6/12/06 -- 119,354
</TABLE>
- --------------------
(1) All of such options were granted under the 1993 Option Plan (as defined).
The options granted under the Stock Option Plan are subject to vesting and
repurchase provisions upon termination of employment.
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<PAGE>
AGGREGATED OPTION/SAR EXERCISES DURING 1996 AND 1996 YEAR-END OPTION/SAR VALUES
The following summarizes exercises of stock options (granted in prior
years) by the named executive officers during 1996, as well as the number and
value of all unexercised options held by the named executive officers at the end
of 1996.
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
Options/SARs at FY-End
Shares at FY-End (#) ($)(2)
Acquired on Value --------------- ----------------
Exercise Realized Exercisable/ Exercisable/
Name (#) ($)(1) Unexercisable Unexercisable
- -------------- ----------- ------------ --------------- ----------------
Carl Tooker ..... 132,619 895,000 -- /317,336 -- /3,169,787
Mark Shulman .... 40,733 335,360 18,945/120,304 286,164/1,021,724
James Marcum .... 18,945 142,400 -- /146,828 -- /1,372,769
Stephen Lovell .. 14,209 106,800 -- /127,882 -- /1,101,178
Ron Lucas ....... -- -- 7,578 / 63,467 108,631/ 606,395
- --------------------
(1) Value realized is based upon the fair market value of the stock at the
exercise date minus the exercise price. Prior to the initial public
offering, fair market value was determined in good faith by the Board of
Directors and was based upon the historical and projected financial
performance of the Company.
(2) Value is based upon the closing price of the Common Stock on January 31,
1997, minus the exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Messrs. Bekenstein,
Compton and Jolosky. Messrs. Bekenstein and Fuchs (who subsequently retired)
served in such capacities during 1996. Mr. Bekenstein is a Managing Director of
Bain Capital, an affiliate of a principal stockholder. See "Certain
Relationships and Related Transactions" contained elsewhere herein for a
description of certain transactions between Mr. Fuchs and the Company and Bain
Capital and the Company.
MANAGEMENT AND EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with the named executive
officers which provide for their initial base salaries as well as annual
incentive bonuses as agreed to with the Compensation Committee. The employment
agreements also provide for annual performance reviews, salary increases at the
discretion of the Compensation Committee and participation in all other bonus
and benefit plans available to executive officers of the Company.
If the Company terminates any of the named executive officers, other than for
good cause (as defined in the respective employment agreements), the terminated
individual would be entitled to one year's base salary (except for the CEO who
would receive one and one-half year's base salary) any accrued or unpaid bonus,
salary and deferred compensation, any expense allowances and any earned but
unpaid benefits under the Company's benefit
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plans. In the event any of the named executive officers are terminated following
a change in control (as defined in the respective agreements), the employment
agreements provide that the respective individual would be entitled to two
years' base salary (as opposed to one, except for the CEO who would receive
three years' base salary, as opposed to one and one-half year's base salary)
plus the amounts referred to above. In the event of a change of control of the
Company in which the Company does not survive, all unvested options for the
purchase of Common Stock held by the aforementioned individuals would vest
immediately. The employment agreements also contain certain non-compete and
confidentiality provisions. Each of the employment agreements renews annually in
accordance with its terms unless terminated by either party.
COMPANY RETIREMENT PLANS
RETIREMENT PLAN
The Specialty Retailers, Inc. Restated Retirement Plan (the "Retirement
Plan") is a qualified defined benefit plan. Benefits under the Retirement Plan
are administered through a trust arrangement providing benefits in the form of
monthly payments or a single lump sum payment. The Retirement Plan covers
substantially all employees who have completed one year of service with 1,000
hours of service. The Retirement Plan is administered by the retirement plan
committee (the "Retirement Committee"), and the Company appoints its three to
five members. All determinations of the Retirement Committee are made in
accordance with the provisions of the Retirement Plan in a uniform and
nondiscriminatory manner.
Generally, a participant is eligible for a benefit on his/her normal
retirement date, which is the later of age 65 or the fifth anniversary of the
date of hire. A participant may elect an early retirement benefit if he/she is
at least 55 years old, has 10 Years of Service (as defined below) and retires
from active employment with the Company. Early retirement benefits are reduced
according to a formula established in the Retirement Plan based upon each full
month that the participant's age is less than 65 on the date the payments
commence. If a participant who is vested terminates employment, he/she is
entitled to a deferred benefit payable at his/her normal retirement date or an
earlier date, if requested, but not before age 55.
The amount of a participant's retirement benefit is based on each Year of
Credited Service (as defined below) and on his/her earnings for that year. The
individual yearly benefits are then totaled to determine the annual benefit at
age 65. A participant's accrued benefits in the superseded plan are determined
in accordance with the terms of those plans except as modified by the terms of
the Retirement Plan. The annual amount of the participant's normal retirement
benefit is derived, subject to certain limitations, by adding (i) 1% of earnings
up to $30,600 plus 1-1/2% of the excess of such earnings over $30,600 for each
Year of Credited Service earned on or after July 1, 1989 through December 31,
1991, (ii) 1% of earnings up to $31,800 plus 1-1/2% of the excess of such
earnings over $31,800 for each Year of Credited Service earned after December
31, 1991, (iii) 1% of earnings up to $42,500 plus 1-1/2% of the excess of such
earnings over $42,500 for each Year of Credited Service earned after December
31, 1994 and (iv) accrued benefits determined in accordance with the terms of
the Retirement Plan under any superseded plan. The normal retirement benefit
formula produces an annual benefit, which is paid to the participant in equal
monthly installments. The standard form of payment for a single participant is a
monthly benefit payable for the participant's life only. The standard form of
payment for a married participant is a 50% joint and survivor benefit, which
provides a reduced monthly benefit to the participant during his/her lifetime,
and 50% of that benefit to the participant's spouse for his/her lifetime in the
event of the participant's death. Other forms of the payment are also provided
including lump sum payouts, but they require participant election. In addition,
the Retirement Committee may elect to pay the benefit equivalent of a benefit
payable at normal retirement date in the form of a lump sum payment, if the lump
sum payment does not exceed $3,500.
Any participant who is credited with 1,000 or more hours of service in a
calendar year receives a "Year of Service", while any participant who is
credited with 1,284 or more hours of service in a calendar year receives a "Year
of Credited Service". Years of Service determine a participant's eligibility for
benefits under the Retirement Plan, and the percentage vested in those benefits.
After five Years of Service, a participant is 100% vested. Participants in any
superseded plan earn Years of Service and Years of Credited Service pursuant to
slightly different criteria for plan years beginning prior to January 1, 1990.
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The Retirement Plan is funded entirely by Company contributions that are held
by a trustee for the exclusive benefit of the participants. The Company
voluntarily agreed to contribute the amounts necessary to provide the assets
required to meet the future benefits payable to Retirement Plan participants.
Under the Retirement Plan, contributions are not specifically allocated to
individual participants. Although the Company intends to continue the Retirement
Plan indefinitely, it can terminate the plan at any time, upon which all
participants will become 100% vested in any benefit accrued to the extent funds
are available in trust. In this event, assets will be allocated to benefit
categories in the order specified in the Retirement Plan.
THE BENEFIT EQUALIZATION PLAN
The Specialty Retailers, Inc. Benefit Equalization Plan (the "Equalization
Plan") is a non-qualified defined benefit plan which is intended to replace the
benefits that cannot be provided under the terms of the Retirement Plan on
account of certain limitations imposed under the Internal Revenue Code (for
example, the Retirement Plan cannot consider compensation for a participant
which is in excess of $150,000 when determining the participant's benefit). The
Equalization Plan is unfunded. However, upon a change of control as defined in
the Equalization Plan, the Company is required to deposit into a rabbi trust
sufficient funds to cover all obligations then accrued under the Equalization
Plan.
COMPANY DEFERRED COMPENSATION PLAN
On February 26, 1996 and effective April 1, 1996, the Company adopted the
Specialty Retailers, Inc. Deferred Compensation Plan (the "Deferred Compensation
Plan") that provides officers of the Company with the opportunity to participate
in an unfunded, deferred compensation program that is not qualified under the
Code. Generally, the Code and the Employee Retirement Income Security Act of
1974, as amended, restrict contributions to a 401(k) plan by highly compensated
employees. The Deferred Compensation Plan is intended to allow officers to defer
income at the same rates as those employees not restricted by such regulations.
Under the Deferred Compensation Plan, participants may defer up to 15% of their
salary and bonus (not otherwise covered by the Company's 401(k) plan) and earn a
rate of return based on select indices chosen by each participant. The Company
may, but is not obligated to, establish a grantor trust for the purposes of
holding assets to provide benefits to the participants. The Company will match
25% of the first 6% of each participant's contributions to the Deferred
Compensation Plan not otherwise covered by the Company's 401(k) plan. Company
contributions vest over five years of service.
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
In 1996, the Company adopted the Specialty Retailers, Inc. Supplemental
Employee Retirement Plan (the "SERP"). The SERP provides for supplemental
retirement benefits for certain key executives of the Company upon retirement at
or after age 65 with at least 15 years of credited service with the Company. The
SERP provides for annual retirement compensation of 50% of the retiree's average
annual base salary for the three years preceding retirement, less amounts
received under the Company's defined benefit retirement plans. Participants in
the SERP may elect to receive reduced early retirement benefits at or after age
55 with at least 15 years of credited service. Upon a change in control as
defined in the SERP, the Company is required to deposit into a rabbi trust,
sufficient funds to cover all obligations then accrued under the SERP. If a
participant's employment is terminated after a change in control by the Company
without cause or by the participant for good reason, the participant will be
fully vested in the benefit that would have been payable at age 55. This amount
will be paid to the participant in a lump sum upon termination of employment.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is responsible for
administering the compensation of senior executives of the Company. During 1996,
the Compensation Committee consisted of Messrs. Bekenstein and Fuchs (who
subsequently retired during January 1997). Current members of the Compensation
Committee include Messrs. Bekenstein, Compton and Jolosky.
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The Company's executive compensation programs are designed to align the
interests of senior management with those of the Company's stockholders. There
are three key components of executive compensation: base salary, pay for
performance (bonus plan), and long-term performance incentive. It is the intent
of these programs to attract, motivate and retain senior executives. It is the
philosophy of the Compensation Committee to allocate a significant portion of
cash compensation to variable performance-based compensation in order to reward
executives for high achievement.
In the judgment of the Compensation Committee, the performance of the Company
during 1996 confirms that the compensation program is achieving its main
objectives. Accordingly, the Compensation Committee made no fundamental changes
in the basic compensation program during 1996.
BASE SALARY
The salaries for senior executives are based upon a combination of factors
including past individual performance, competitive salary levels, and an
individual's potential for making significant contributions to future Company
performance.
BONUS PLAN
Each of the named executive officers and certain other key personnel of the
Company participate in an executive/management bonus plan (the "Bonus Plan").
The Bonus Plan provides for annual bonus awards based upon operating results
compared to a projected operating budget prepared at the beginning of each
fiscal year. Bonus payments are subject to modification at the discretion of the
Compensation Committee.
STOCK OPTIONS
Stock options are an important component of senior executive compensation.
The 1993 Stock Option Plan and the 1996 Equity Incentive Plan were designed to
motivate senior executives and other key employees to contribute to the
long-term growth of stockholder value. Generally, options granted under such
plans have been, and are expected to be, granted with a price equal to the
market price of the Common Stock on the date of the grant and vest over five
years. This approach is designed to encourage the creation of long-term
stockholder value since the full benefit of such options cannot be realized
unless the stock price exceeds the exercise price. The Compensation Committee
authorizes awards under the plan based upon recommendations from Mr. Tooker.
CHIEF EXECUTIVE OFFICER
The compensation policies described above apply as well to the compensation
of Mr. Tooker. The Compensation Committee is directly responsible for
determining Mr. Tooker's salary level and for all awards and grants to Mr.
Tooker under incentive components of the compensation program. The overall
compensation package of Mr. Tooker is designed to recognize that he bears
primary responsibility for increasing the value of stockholders' investments.
Accordingly, a substantial portion of Mr. Tooker's compensation is
incentive-based, providing greater compensation as direct and indirect financial
measures of stockholder value increase. Mr. Tooker's compensation is thus
structured and administered to motivate and reward the successful exercise of
these qualities.
Mr. Tooker's compensation for 1996 was directly related to the overall
performance of the Company as measured by financial and other criteria such as
(i) the strong financial performance of the Company, (ii) the continued strong
performance of the senior management team, (iii) the successful negotiation and
consummation of the acquisition of Uhlmans Inc. (iv) the successful completion
of an initial public offering of Common Stock and (v) other related qualitative
factors.
CONCLUSION
Through the programs described above, a significant portion of the Company's
executive compensation is linked directly to corporate performance and stock
price appreciation. The Compensation Committee believes that
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<PAGE>
existing compensation policies and programs are competitive and effectively
align executive compensation with the Company's goal of maximizing the return to
stockholders.
The Compensation Committee has determined that it is unlikely that the
Company would pay amounts during 1997 that would result in the loss of a federal
income tax deduction under Section 162(m) of the Code, and accordingly, had not
recommended that any special actions be taken or that any plans or programs be
revised at this time in light of such provision.
Mr. Fuchs, who was a member of the Compensation Committee during 1996,
retired from the Board of Directors during 1997, and accordingly, is not a
signatory to this report.
Joshua Bekenstein
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PERFORMANCE GRAPH
The following graph compares the cumulative total return on $100.00 invested
on October 25, 1996 (the first day of public trading at the initial public
offering price of $16.50 per share) through January 31, 1997 (the last day of
public trading in fiscal 1996 at the closing price on the Nasdaq National
Market, (the "NNM") in the Common Stock, the S&P 500 and the S&P 500 Retail. The
return of the indices is calculated assuming reinvestment of dividends during
the period presented. The Company has not paid any dividends since its initial
public offering. The stock price performance shown on the graph below is not
necessarily indicative of future price performance. The closing price of the
Common Stock on the Record Date on the NNM was $21.875.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG STAGE STORES, INC.,
S&P 500 RETAIL AND S&P 500
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
- -------------------------------------------------------------------
Stage Stores,
Date Inc. S&P 500 Retail S&P 500
- -------------------------------------------------------------------
n l s
- -------------------------------------------------------------------
11/25/96 $100.00 $100.00 $100.00
- -------------------------------------------------------------------
1/31/97 $105.30 $ 94.86 $112.16
- -------------------------------------------------------------------
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information regarding ownership of Common
Stock as of the Record Date assuming exercise of options exercisable within
sixty days of such date by (i) each person or entity who owns of record or
beneficially 5% or more of the Common Stock, (ii) each director and named
executive officer and (iii) all executive officers and directors as a group.
Each of such stockholders is assumed to have sole voting and investment power as
to the shares shown. Known exceptions are noted. As of the Record Date,
1,250,584 shares of Class B Common Stock were outstanding, all of which is owned
by Court Square Capital Limited.
PERCENTAGE OF
NUMBER OF SHARES
SHARES OF OF COMMON
NAME COMMON STOCK STOCK
- ---------------------------------------------------- ------------- ----------
5% STOCKHOLDERS
Bain Capital Funds (1)........................ 3,517,829 15.8%
Acadia (2).................................... 2,836,693 12.7
Court Square (3).............................. 1,620,653 6.9
DIRECTORS AND EXECUTIVE OFFICERS
Joshua Bekenstein (4)......................... 3,588,392 16.1
Adam Kirsch (4)............................... 3,550,249 15.9
Carl Tooker................................... 165,580 *
Mark Shulman.................................. 64,412 *
Steve Lovell.................................. 18,945 *
James Marcum.................................. 23,681 *
Ron Lucas..................................... 10,418 *
Peter Mulvihill (5)........................... -- *
Harold Compton................................ -- *
Robert Huth................................... 2,000 *
Richard Jolosky............................... -- *
All executive officers and directors as a group
(11 persons) (6).......................... 3,903,848 17.5
- ------------------------------
* Less than 1%.
(1) Amounts shown include 2,772,741 shares of Common Stock held by Tyler
Capital Fund, L.P.; 568,116 shares of Common Stock held by Tyler
Massachusetts, L.P.; 166,185 shares of Common Stock held by Tyler
International; 10,587 shares of Common Stock held by BCIP Associates
("BCIP Associates"); and 200 shares of Common Stock held by BCIP Trust
Associates, L.P. ("BCIP Trust" and, collectively with BCIP Associates and
the Tyler entities, the "Bain Capital Funds"). The address of the Bain
Capital Funds is c/o Bain Venture Capital, Two Copley Place, Boston,
Massachusetts 02116.
15
<PAGE>
(2) Amounts shown represent shares held by the nominee of Acadia and shares
held by FWHY-Coinvestment I Partners L.P. ("FCP") and Rosecliff-Specialty
Retailing 1989 Partners, L.P. ("Rosecliff"), both affiliates of Acadia
Partners, L.P. ("Acadia"). The address of Acadia and FCP is 201 Main
Street, Fort Worth, Texas 76102. The address of Rosecliff is 65 East 55th
Street, New York, New York 10022.
(3) Court Square is a subsidiary of Citicorp, a Delaware corporation. Amount
and percentage shown as owned include 1,250,584 shares of non-voting Class
B Common Stock owned by Court Square. Each share of non-voting Class B
Common Stock is convertible, subject to certain restrictions, into one
share of Common Stock. The address of Court Square is 399 Park Avenue, 6th
Floor, New York, New York 10043.
(4) Amounts shown include shares beneficially owned by the Bain Capital Funds.
Mr. Bekenstein and Mr. Kirsch may be deemed to share voting and
dispositive power as to all shares owned by the Bain Capital Funds.
(5) Mr. Mulvihill is a Director and a Managing Director of the investment
adviser to Acadia. In addition, Mr. Mulvihill holds indirectly a limited
interest in Acadia and holds directly a limited interest in Rosecliff.
However, he does not hold or share voting or dispositive power as to
shares beneficially owned by Acadia or Rosecliff.
(6) Amount shown includes 86,192 shares of Common Stock that such persons or
group could acquire upon the exercise of options exercisable within 60
days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
LEASES
The Company's corporate headquarters in Houston and the land and buildings
upon which six Palais stores are located are leased from PR Investments, a
partnership in which Mr. Fuchs, his wife and certain former owners of Palais are
general partners. The lease relating to the Company's corporate headquarters is
for a term of 50 years expiring in 2032 and includes an established minimum
annual rent adjusted periodically for changes in the Consumer Price Index
("CPI"). Three of the Palais store leases with PR Investments are for terms of
20 years expiring in the years 1999, 1999 and 2000, respectively. The remaining
three Palais store leases with PR Investments are for 25-year terms expiring in
the years 2005, 2010 and 2010, respectively. All of the Palais store leases with
PR Investments provide Palais with the option to extend the term of the lease
for two consecutive five-year terms. One of the Palais leases with PR
Investments provides Palais with the option to extend the term of the lease for
an additional 20 years. In addition to an established minimum annual rent
adjusted annually for changes in the CPI, the above described store leases
include additional rent calculated at 4% of gross sales exceeding established
levels per store. During 1996, the Company paid PR Investments an aggregate of
$2.0 million under the leases described above.
LOANS TO EXECUTIVE OFFICERS
The Company has made loans, in an aggregate principal amount of $1,469,700,
to certain executive officers of the Company. Such loans provide for interest
ranging from 5.7% to 7.25% and mature no later that June 1, 2000. All loans are
secured by Common Stock or certain real estate.
TRANSACTIONS WITH STOCKHOLDERS
PROFESSIONAL SERVICE AGREEMENT
Pursuant to a professional service agreement, Bain Capital received fees from
the Company for professional services rendered and expense reimbursements in the
aggregate amount of $0.6 million in 1994 and $0.8 million in
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<PAGE>
1995. Upon consummation of the initial public offering, Bain Capital received a
fee of $2.0 million to terminate this agreement.
REGISTRATION RIGHTS AGREEMENT
The Company is party to a Registration Agreement (the "Registration
Agreement") with Bain, Acadia and Court Square pursuant to which such
stockholders have the right to cause the Company to register shares of Common
Stock (the "registrable securities") under the Securities Act. As of the Record
Date, 8,963,611 outstanding shares of Common Stock constitute registrable
securities and therefore will be eligible for registration pursuant to the
Registration Agreement. Under the terms of the Registration Agreement, (i) the
holders of at least a majority of the registrable securities can require the
Company, subject to certain limitations, to file up to three "long-form"
registration statements under the Securities Act covering all or part of the
registrable securities, and, subject to certain limitations, to file an
unlimited number of "short-form" registration statements under the Securities
Act covering all or part of the registrable securities and (ii) Acadia can
require the Company, subject to certain limitations, to file a "long-form"
registration statement on Form S-1 covering all or part of the registrable
securities held by Acadia (each, a "demand registration"). The Company is
obligated to pay all registration expenses (other than underwriting discounts
and commissions and subject to certain limitations) incurred in connection with
the demand registrations. In addition, the Registration Statement provides the
Bain Capital Funds, Acadia and Court Square with "piggyback" registration
rights, subject to certain limitations, whenever the Company files a
registration statement on a registration form that can be used to register
registrable securities.
DIRECTOR AND OFFICER AND TEN PERCENT STOCKHOLDER SECURITIES REPORTS
Federal securities laws require the Company's directors and officers, and
persons who own more than ten percent of the Company's Common Stock, to file
with the Securities and Exchange Commission, the Nasdaq Stock Exchange and the
Secretary of the Company initial reports of ownership and reports of changes in
ownership of the Common Stock of the Company.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports are required, during 1996, all of the Company's officers, directors and
greater-than-ten-percent beneficial owners made all required filings.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be presented at the next Annual Meeting of
Stockholders must be received by the Secretary of the Company by December 19,
1997 to be considered for inclusion in the Company's Proxy Statement and form of
proxy relating to that meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not know
of any business to come before the Annual Meeting other than the matter
described in the notice. If other business is properly presented for
consideration at the Annual Meeting, the enclosed Proxy authorizes the persons
named therein to vote the shares in their discretion.
17
<PAGE>
STAGE STORES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 1997
THIS PROXY IS SOLICITED ON BEHALF OF STAGE STORES, INC.'S BOARD OF DIRECTORS
P The undersigned hreby appoints Carl E. Tooker and James A
Marcum, and each of them, as proxies for the undersigned with full power
R of substitution to vote all shares of Stage Stores, Inc.'s Common Stock
which the undersigned may be entitled to vote at the Annual Meeting of
O Shareholders of Stage Stores, Inc. Huston, Texas on Thursday, May 15,
1997 at 12:00 P.M., or at any adjournment thereof, upon the matters set
x forth on the reverse side and described in the accompanying Proxy
Statement and upon such other business as may properly come before the
Y meeting or any adjournment thereof.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE
ON ANY ITEM. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE, NO BOXES NEED
TO BE CHECKED.
COMMENTS/ADDRESS CHANGE:
Please mark comments/address box on reverse side
(Continued and to be signed on the other side)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2 Please [X]
mark your
vote as
indicated
in this
example
WITHHELD
FOR FOR ALL
ITEM 1 - ELECTION OF DIRECTORS [ ] [ ]
Carl Tooker, Joshua Bekenstein, Harold
Compton, Robert Hulh, Richard Jolosky, Adam
Kirsh, Peter Mulvihill, Mark Shulman
WITHHELD FOR (Write the nominee's name
in the space provided)
_____________________________________________
FOR AGAINST ABSTAIN
ITEM 2 - Ratification of the appointment of [ ] [ ] [ ]
Price Waterhouse LLP as the company's auditors
for 1997.
ITEM 3 - To transact such other business as
may properly come before the meeting.
I PLAN TO ATTEND THE MEETING [ ]
COMMENTS/ADDRESS CHANGE [ ]
PLEASE MARK THIS BOX IF YOU HAVE WRITTEN
COMMENTS/ADDRESS CHANGE ON THE REVERSE SIDE
RECEIPT IS HEREBY ACKNOWLEDGED OF THE STAGE [ ]
STORES, INC. NOTICE OF MEETING AND PROXY
STATEMENT
Signature__________________________
Signature__________________________ Date___________
