<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 Section 240.14a-11(c) or Section 240.14a-12
THE LIMITED, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
THE LIMITED, INC.
-----------------
Three Limited Parkway
Columbus, Ohio 43230
(614) 415,7000
April 14, 2000
Dear Stockholder:
You are cordially invited to attend our 2000 annual meeting of stockholders
to be held at 9:00 a.m., Eastern Daylight Time, on May 15, 2000, at our
offices located at Three Limited Parkway, Columbus, Ohio. Our Investor
Relations telephone number is (614) 415-7076 should you require assistance in
finding the location of the meeting. The formal Notice of Annual Meeting of
Stockholders and Proxy Statement are attached. I hope that you will be able to
attend and participate in the meeting, at which time I will have the
opportunity to review the business and operations of The Limited.
The matters to be acted upon by our stockholders are discussed in the Notice
of Annual Meeting of Stockholders. It is important that your shares be
represented and voted at the meeting. Accordingly, after reading the attached
Proxy Statement, would you kindly sign, date and return the enclosed proxy
card or vote by telephone or by Internet as described on the enclosed proxy
card. Your vote is important regardless of the number of shares you own.
Sincerely yours,
/s/ Leslie H. Wexner
Leslie H. Wexner
Chairman of the Board
<PAGE>
THE LIMITED, INC.
-----------------
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 15, 2000
April 14, 2000
To our Stockholders:
We are pleased to invite you to attend our 2000 annual meeting of
stockholders to:
. Elect four directors to serve for terms of three years.
. Transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on March 24, 2000 may vote
at the meeting.
Your vote is important. Stockholders of record can give proxies by calling a
toll-free telephone number, by using the Internet or by mailing their signed
proxy cards. Whether or not you plan to attend the meeting, please vote by
telephone or Internet or sign, date and return the enclosed proxy card in the
envelope provided. Instructions are included on your proxy card. You may
change your vote by submitting a later dated proxy (including a proxy via
telephone or the Internet) or by attending the meeting and voting in person.
By Order of the Board of Directors
/s/ Leslie H. Wexner
Leslie H. Wexner
Chairman of the Board
<PAGE>
PROXY STATEMENT TABLE OF CONTENTS
<TABLE>
<S> <C>
Information About the Annual Meeting and Voting............................. 2
Election of Directors....................................................... 4
Nominees and directors...................................................... 4
Information concerning the Board of Directors............................... 7
Committees of the Board of Directors........................................ 7
Security ownership of directors and management.............................. 8
Certain relationships and related transactions.............................. 9
Executive Compensation...................................................... 10
Summary compensation table.................................................. 10
Long-term incentive plan awards............................................. 12
Stock options............................................................... 12
Compensation of directors................................................... 13
Employment agreements with certain executive officers....................... 14
Section 16(a) beneficial ownership reporting compliance..................... 15
Report of the Compensation Committee........................................ 16
Compensation philosophy..................................................... 16
Principal compensation elements............................................. 16
CEO compensation............................................................ 18
Stockholder Return Graph.................................................... 20
Share Ownership of Principal Stockholders................................... 21
Independent Public Accountants.............................................. 21
Other Matters............................................................... 22
Stockholder Proposals....................................................... 22
Solicitation Expenses....................................................... 22
</TABLE>
1
<PAGE>
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
The Board of Directors of The Limited, Inc. is soliciting your proxy to vote
at our 2000 annual meeting of stockholders (or at any adjournment of the
meeting). This proxy statement summarizes the information you need to know to
vote at the meeting. "We", "our", "The Limited", and the "Company" refer to
The Limited, Inc.
We began mailing this proxy statement and the enclosed proxy card on or
about April 14, 2000 to all stockholders entitled to vote. The Limited's 1999
Annual Report, which includes our financial statements, is being sent with
this proxy statement.
Date, time and place of meeting
Date:May 15, 2000
Time:9:00 a.m., Eastern Daylight Time
Place:Three Limited Parkway
Columbus, Ohio
Shares entitled to vote
Stockholders entitled to vote are those who owned The Limited common stock
(which we refer to throughout this proxy statement as "Common Stock") at the
close of business on the record date, March 24, 2000. As of the record date,
there were 215,184,743 shares of Common Stock outstanding. Each share of
Common Stock that you own entitles you to one vote.
Voting your proxy
Whether or not you plan to attend the annual meeting, we urge you to vote.
Stockholders of record can give proxies by calling a toll-free telephone
number, by using the Internet or by mailing their signed proxy cards. The
telephone and Internet voting procedures are designed to authenticate
stockholders' identities, to allow stockholders to give their voting
instructions and to confirm that stockholders' instructions have been recorded
properly. If you are voting by mail, please complete, sign and date the
enclosed proxy card and return it promptly in the envelope provided. If you
are voting by telephone or the Internet, please use the telephone or Internet
voting procedures set forth on the enclosed proxy card. Returning the proxy
card or voting via telephone or the Internet will not affect your right to
attend the meeting and vote.
The enclosed proxy card indicates the number of shares that you own.
Voting instructions are included on your proxy card. If you properly fill in
your proxy card and send it to us or vote via telephone or the Internet in
time to vote, one of the individuals named on your proxy card (your "proxy")
will vote your shares as you have directed. If you sign the proxy card or vote
via telephone or the Internet but do not make specific choices, your proxy
will follow the Board's recommendations and vote your shares:
. "FOR" the election of all four nominees for director (as described on
pages 4 and 5).
If any other matter is presented at the meeting, your proxy will vote in
accordance with his or her best judgment. At the time this proxy statement
went to press, we knew of no other matters to be acted on at the meeting.
2
<PAGE>
Revoking your proxy
You may revoke your proxy by:
. submitting a later dated proxy (including a proxy via telephone or the
Internet),
. notifying our Secretary in writing before the meeting that you have
revoked your proxy, or
. voting in person at the meeting.
Voting in person
If you plan to attend the meeting and vote in person, a ballot will be
available when you arrive. However, if your shares are held in the name of
your broker, bank or other nominee, you must bring an account statement or
letter from the nominee indicating that you were the beneficial owner of the
shares on March 24, 2000, the record date for voting.
Appointing your own proxy
If you want to give your proxy to someone other than the individuals named
as proxies on the proxy card, you may cross out the names of those individuals
and insert the name of the individual you are authorizing to vote. Either you
or that authorized individual must present the proxy card at the meeting.
Quorum requirement
A quorum of stockholders is necessary to hold a valid meeting. The presence
in person or by proxy at the meeting of holders of shares representing one-
third of the votes of the Common Stock entitled to vote constitutes a quorum.
Abstentions and broker "non-votes" are counted as present for establishing a
quorum. A broker non-vote occurs on an item when a broker is not permitted to
vote on that item absent instruction from the beneficial owner of the shares
and no instruction is given.
Vote necessary to elect directors
<TABLE>
<CAPTION>
Item Vote Necessary*
---- ---------------
<C> <S>
Election of directors Directors are elected by a plurality of the votes
represented by the shares of Common Stock present at the
meeting in person or by proxy. This means that the
director nominee with the most affirmative votes for a
particular slot is elected for that slot.
</TABLE>
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* Under New York Stock Exchange rules, if your broker holds your shares in
its name, your broker is permitted to vote your shares on this item even if
it does not receive voting instructions from you.
3
<PAGE>
ELECTION OF DIRECTORS
Our Board of Directors has nominated four directors for election at the
annual meeting. If you elect the four nominees, they will hold office for a
three-year term expiring at the 2003 annual meeting or until their successors
have been elected.
Three of the four nominees are currently serving on our Board of Directors.
Alex Shumate, who has served for the past four years as a director of our
subsidiary, Intimate Brands, Inc. ("Intimate Brands"), has agreed to stand for
election as a director of The Limited. If elected, Mr. Shumate will fill the
vacancy created as a result of the decision by Claudine B. Malone not to stand
for re-election as a director. In connection with his nomination for election
as a director of The Limited, Mr. Shumate will cease service as a director of
Intimate Brands effective May 15, 2000.
Your proxy will vote for each of the nominees unless you specifically
withhold authority to vote for a particular nominee. If any nominee is unable
to serve, your proxy may vote for another nominee proposed by the Board. We do
not know of any nominee of the Board who would be unable to serve as a
director if elected.
Stockholders wishing to nominate directors for election may do so by
delivering to the Secretary of the Company, no later than fourteen days before
the annual meeting, a notice stating (a) the name, age, business address and,
if known, residence address of each nominee proposed in the notice, (b) the
principal occupation or employment of each nominee and (c) the number of
shares of Common Stock of the Company beneficially owned by each nominee. No
person may be elected as a director unless he or she has been nominated by a
stockholder in this manner or by the Board of Directors.
The Board of Directors recommends the ELECTION of all of the following
nominees of the Board of Directors:
Nominees and directors
Nominees of the Board of Directors for election at the 2000 annual meeting.
E. Gordon Gee Director since 1991 Age 56
Dr. Gee will become Chancellor of Vanderbilt University effective August 1,
2000. Dr. Gee was the President of Brown University from 1998 to 2000. Dr. Gee
was also President of The Ohio State University from 1990 to 1997. Dr. Gee is
a director of Allmerica Financial, ASARCO, Inc., Glimcher Realty Trust and
Intimate Brands.
Alex Shumate Age 49
Mr. Shumate has been the Managing Partner of the Columbus, Ohio office of
the law firm of Squire, Sanders & Dempsey L.L.P. since 1991. Mr. Shumate was a
director of Intimate Brands from 1996 to 2000. Mr. Shumate is also a director
of Bank One Corporation and Wm. Wrigley, Jr. Company.
4
<PAGE>
Allan R. Tessler Director since 1987 Age 63
Mr. Tessler has been Chairman of the Board and Chief Executive Officer of
International Financial Group, Inc., a merchant banking concern, for more than
five years. He is also the Chairman of the Board and Chief Executive Officer
of J Net Enterprises, Inc. Mr. Tessler was Co-Chairman and Chief Executive
Officer of Data Broadcasting Corporation ("Data Broadcasting"), a data
broadcasting network, from 1992 to February 2000. Mr. Tessler was Chairman of
the Board and Chief Executive Officer of Ameriscribe Corporation, a provider
of reprographic and related facilities management services, from 1988 through
1993. Mr. Tessler is also the Chairman of the Board of Directors of Enhance
Financial Services Group, Inc. Mr. Tessler is a director of Allis-Chalmers
Corporation, Data Broadcasting and Marketwatch.com.
Abigail S. Wexner Director since 1997 Age 38
Mrs. Wexner was an attorney with the law firm of Davis Polk & Wardwell from
1987 until 1992, where she specialized in mergers and acquisitions. By
appointment of the President of the United States, Mrs. Wexner served as a
member of the United States Holocaust Memorial Council from 1994 to 1999. She
is a director of the Children's Defense Fund and is Chairman of the Governing
Committee of The Columbus Foundation and a member of the Boards of Trustees of
Children's Hospital, Inc. and The Columbus Academy in Columbus, Ohio. Mrs.
Wexner is the wife of Leslie H. Wexner.
Directors whose terms continue until the 2001 annual meeting.
Eugene M. Freedman Director since 1995 Age 68
Mr. Freedman has been Senior Advisor and Director of Monitor Clipper
Partners, Inc. ("Monitor Clipper"), a private equity firm, since January 2000
and a director and chairman of the finance committee of Monitor Company, Inc.,
an international business strategy and consulting firm, since January 1995. He
was Managing Director of Monitor Clipper from 1997 to 1999. Until October
1994, and for more than five years prior thereto, Mr. Freedman was a partner
of Coopers & Lybrand, where he served as Chairman and Chief Executive Officer
of Coopers & Lybrand LLP, U.S. ("C & L, U.S.") since October 1991 and as
Chairman of Coopers & Lybrand, International ("C & L, Int.") since 1992.
During The Limited's 1999 fiscal year, the successor of C & L, U.S.,
PricewaterhouseCoopers LLP ("PWC"), served as The Limited's independent public
accountants. The amount of compensation paid by The Limited to PWC for such
services was less than 1% of The Limited's and PWC's consolidated gross
revenues for their 1999 fiscal years. Mr. Freedman is also a director of
Bernard Technologies, Inc.
Kenneth B. Gilman Director since 1990 Age 53
Mr. Gilman has been Vice Chairman and Chief Administrative Officer of The
Limited since June 1997. He was also Vice Chairman and Chief Financial Officer
of The Limited from June 1993 to June 1997. For more than five years prior
thereto, Mr. Gilman was Executive Vice President and Chief Financial Officer
of The Limited. Mr. Gilman has also been Vice Chairman of the Board of
Intimate Brands since 1995.
5
<PAGE>
David T. Kollat Director since 1976 Age 61
Dr. Kollat has been Chairman of 22, Inc., a management consulting firm,
since 1987. He is also a director of Audio Environments, Inc., Cheryl & Co.,
Inc., Christy Partners, Cone Mills, Inc., Consolidated Stores Corporation,
Cooker Restaurant Corporation, Resource Marketing, Inc., SBC Advertising,
Select Comfort, Inc., Starpower Inc. and Wolverine World Wide, Inc.
Leslie H. Wexner Director since 1963 Age 62
Mr. Wexner has been Chief Executive Officer since he founded The Limited in
1963, and Chairman of the Board for more than five years. Mr. Wexner has also
been the Chairman of the Board and Chief Executive Officer of Intimate Brands
since 1995. Mr. Wexner is also a director of Hollinger International, Inc. and
Hollinger International Publishing, Inc. Mr. Wexner is the husband of Abigail
S. Wexner.
Directors whose terms continue until the 2002 annual meeting.
Leonard A. Schlesinger Director since 1996 Age 47
Dr. Schlesinger has been Executive Vice President, Organization, Leadership
and Human Resources of The Limited since October 1999. Dr. Schlesinger was a
Professor of Sociology and Public Policy and Senior Vice President for
Development at Brown University from 1998 to 1999. He also was the George F.
Baker, Jr. Professor of Business Administration at Harvard Business School
("Harvard") from 1988 to 1998 and served as the Senior Associate Dean and
Director of External Relations at Harvard from July 1994 until October 1995.
Dr. Schlesinger is a director of Pegasystems, Inc.
Donald B. Shackelford Director since 1975 Age 67
Mr. Shackelford has been Chairman of the Board of Fifth Third Bank, Central
Ohio, a banking business, since 1998. Mr. Shackelford was Chairman of the
Board and Chief Executive Officer of State Savings Bank from 1972 to 1998. He
was Chairman of the Board and Chief Executive Officer of State Savings Co. for
five years ending in 1997. Mr. Shackelford is also a director of Fifth Third
Bancorp., Intimate Brands and Progressive Corporation.
Martin Trust Director since 1978 Age 65
Mr. Trust has been President and Chief Executive Officer of Mast Industries,
Inc., a wholly-owned subsidiary of The Limited, for more than five years. He
is also a director of Staples, Inc.
Raymond Zimmerman Director since 1984 Age 66
Mr. Zimmerman has been Non-Executive Chairman of the Board of Service
Merchandise Company, Inc. ("Service Merchandise"), a retail catalogue
merchandising business, since 1999. Mr. Zimmerman has also been Chairman of
the Board of 99c Stuff.com since July 1999. He was Chairman of the Board of
Service Merchandise from 1997 to 1999 and was Chairman of the Board and Chief
Executive Officer of Service Merchandise from 1981 to 1997. In March 1999,
Service Merchandise filed a reorganization petition under Chapter 11 of the
United States Bankruptcy Code.
6
<PAGE>
Information concerning the Board of Directors
Our Board of Directors held eight meetings and executed one consent in lieu
of meeting in fiscal year 1999. During fiscal year 1999, all of the directors,
except for Mr. Freedman, attended 75% or more of the total number of meetings
of the Board and of committees of the Board on which they served.
Committees of the Board of Directors
Audit Committee.
The Audit Committee of the Board recommends the firm to be employed as our
independent public accountants and reviews the scope of the audit and audit
fees. In addition, the Audit Committee consults with the independent auditors
about the plan of audit, the resulting audit report and the accompanying
management letter. The Audit Committee also confers with the independent
auditors about the adequacy of internal accounting controls, as appropriate,
outside of the presence of management. The members of the Audit Committee
during fiscal year 1999 were Ms. Claudine B. Malone (Chair) and Messrs.
Shackelford, Tessler and Zimmerman. The Audit Committee held eight meetings in
fiscal year 1999.
Compensation Committee.
The Compensation Committee of the Board reviews executive compensation and
administers our stock option and performance incentive plans. Its members are
Mr. Shackelford (Chair) and Dr. Gee. Members of the Compensation Committee
held seven meetings in fiscal year 1999 and took action in writing without a
meeting on twenty occasions.
Executive Committee.
The Executive Committee of the Board may exercise, to the fullest extent
permitted by law, all of the powers and authority granted to the Board. The
Executive Committee may also declare dividends, authorize the issuance of
stock and authorize the seal of The Limited to be affixed to papers that
require it. Its members are Messrs. Wexner (Chair) and Shackelford. The
Executive Committee took action in writing without a meeting on five occasions
in fiscal year 1999.
Finance Committee.
The Finance Committee of the Board periodically reviews our financial
position and financial arrangements with banks and other financial
institutions. The Finance Committee also makes recommendations on financial
matters that it believes are necessary, advisable or appropriate. Its members
during fiscal year 1999 were Mses. Malone and Wexner and Messrs. Tessler
(Chair), Freedman, Shackelford and Zimmerman. The Finance Committee held six
meetings in fiscal year 1999.
Nominating Committee.
The Nominating Committee of the Board nominates, on behalf of the Board,
suitable persons for election as directors of The Limited. Its members are
Messrs. Tessler (Chair) and Wexner. Stockholders are permitted to nominate
directly directors for election (see "ELECTION OF DIRECTORS" above);
therefore, no formal procedures exist for stockholders to make nominee
recommendations to the Nominating Committee. The Nominating Committee took
action in writing without a meeting on one occasion in fiscal year 1999.
7
<PAGE>
Security ownership of directors and management
The following table shows certain information about the securities ownership
of all directors of The Limited, the executive officers of The Limited named
in the Summary Compensation Table below and all directors and executive
officers of The Limited as a group.
<TABLE>
<CAPTION>
Number of Shares Number of Shares of
of Common Stock Percent Intimate Brands, Inc. Percent of Intimate
Beneficially of Class A Common Stock Brands Inc. Class A
Name Owned(a)(b) Class Beneficially Owned(a)(b) Common Stock
- ---- ---------------- ------- ------------------------ -------------------
<S> <C> <C> <C> <C>
Eugene M. Freedman...... 7,815 (c) * 0 **
E. Gordon Gee........... 4,876 (c) * 5,867 (d) *
Kenneth B. Gilman....... 514,533 (c)(e)(f) * 51,006 (d)(g) *
V. Ann Hailey........... 77,374 (c) * 0 **
David T. Kollat......... 173,876 (c) * 0 **
Leonard A. Schlesinger.. 4,814 (c) * 500 *
Donald B. Shackelford... 74,418 (c)(f) * 9,347 (d) *
Alex Shumate............ 100 * 3,656 (d) *
Allan R. Tessler........ 24,078 (c)(f) * 0 **
Martin Trust............ 2,602,475 (c)(e)(f) 1.2% 9,264 (h) *
Abigail S. Wexner....... 201,801 (c)(i) * 0 **
Leslie H. Wexner........ 47,206,488 (c)(e)(j) 22.0% 144,079 (d) *
Raymond Zimmerman....... 10,076 (c)(k) * 1,690 *
All directors and
executive
officers as a group.... 50,902,724 (c)(e)(l) 23.7% 225,409 (d)(m) *
</TABLE>
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* Less than 1%.
** Not applicable.
(a) Unless otherwise indicated, each named person has voting and investment
power over the listed shares and such voting and investment power is
exercised solely by the named person or shared with a spouse.
(b) Reflects ownership as of February 29, 2000.
(c) Includes the following number of shares issuable within 60 days upon the
exercise of outstanding stock options: Mr. Freedman, 2,409; Dr. Gee,
2,409; Mr. Gilman, 308,748; Ms. Hailey, 56,378; Dr. Kollat, 2,409; Dr.
Schlesinger, 2,409; Mr. Shackelford 2,409; Mr. Tessler, 2,409; Mr. Trust,
186,726; Mrs. Wexner, 799; Mr. Wexner, 708,777; Mr. Zimmerman, 2,409; and
all directors and executive officers as a group, 1,278,291.
(d) Includes the following number of shares issuable within 60 days upon the
exercise of outstanding stock options: Dr. Gee, 3,673; Mr. Gilman,
39,375; Mr. Shackelford, 3,673; Mr. Shumate, 1,835; Mr. Wexner, 78,750;
and all directors and executive officers as a group, 127,306.
(e) Includes the following number of shares held in an employee benefit plan,
over which the participant has the power to dispose or withdraw shares:
Mr. Gilman, 34,160; Mr. Trust, 28,984; Mr. Wexner, 537,726; and all
directors and executive officers as a group, 600,870.
(f) Includes the following number of shares owned by family members, as to
which beneficial ownership is disclaimed: Mr. Gilman, 1,117; Mr.
Shackelford, 19,168; Mr. Tessler, 202; and Mr. Trust, 207,706.
(g) Includes 1,050 shares owned by family members, as to which Mr. Gilman
disclaims beneficial ownership.
8
<PAGE>
(h) Includes 3,088 shares, as to which Mr. Trust disclaims beneficial
ownership.
(i) Includes 200,000 shares held by a trust of which Mrs. Wexner is the
beneficiary. Mrs. Wexner disclaims beneficial ownership of these shares.
Excludes the 47,206,488 shares owned by Mr. Wexner as to which Mrs.
Wexner disclaims beneficial ownership.
(j) Includes 350,000 shares held by Health and Science Interests II, 708,317
shares held by The Wexner Foundation, 3,639,697 shares held by the Harry,
Hannah, David & Sarah Wexner Trust, and 18,750,000 shares held by The
Wexner Children's Trust. Mr. Wexner disclaims beneficial ownership of the
shares held by Health and Science Interests II and The Wexner Foundation.
Mr. Wexner shares investment and voting power with others with respect to
shares held by The Wexner Foundation. Excludes the 201,801 shares owned
by Mrs. Wexner as to which Mr. Wexner disclaims beneficial ownership.
(k) Includes 1,200 shares which are Mr. Zimmerman's pro rata share of 3,600
shares owned by a corporation of which Mr. Zimmerman is president and a
33% shareholder plus 2,000 shares held by a partnership which is 45%
owned by Mr. Zimmerman and 45% owned by his wife.
(l) Includes 1,486,510 shares as to which beneficial ownership is disclaimed.
(m) Includes 4,138 shares as to which beneficial ownership is disclaimed.
Certain relationships and related transactions
On May 3, 1999, The Limited, Leslie H. Wexner, our Chairman, Chief Executive
Officer and President, and The Wexner Children's Trust (the "Trust") entered
into an agreement (the "Rescission Agreement") rescinding the Contingent Stock
Redemption Agreement dated as of January 26, 1996, as amended (the "Contingent
Redemption Agreement"), among The Limited, Mr. Wexner and the Trust. Pursuant
to the Rescission Agreement all of the rights and obligations of The Limited,
Mr. Wexner and the Trust under the Contingent Redemption Agreement were
rescinded. This enabled The Limited to utilize the approximately $352 million
of cash held by a subsidiary of The Limited for the purpose of satisfying The
Limited's obligations under the Contingent Redemption Agreement to purchase
shares in our issuer tender offer that expired on June 1, 1999. In addition,
in accordance with the terms of the Rescission Agreement, Mr. Wexner,
affiliated entities and members of his immediate family did not tender any
shares of Common Stock in that issuer tender offer. The Rescission Agreement
was filed with the Securities and Exchange Commission (the "Commission") as an
exhibit to The Limited's Schedule 13E-4 filed in connection with that issuer
tender offer. That exhibit is available for inspection at the Commission.
During fiscal year 1999 and prior to assuming his current position as our
Executive Vice President, Organization, Leadership and Human Resources,
Leonard A. Schlesinger, a member of the Board of Directors, provided
consulting services to The Limited. The fees for such services were
approximately $79,000.
9
<PAGE>
EXECUTIVE COMPENSATION
Summary compensation table
The following table (the "Summary Compensation Table") shows the
compensation paid by The Limited to each of the named executive officers of
The Limited for each of our last three fiscal years.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------- --------------------------
Other Securities
Annual Restricted Underlying All Other
Fiscal Compen- Stock Options Compen-
Name and Principal Position(1) Year Salary($) Bonus($)(2) sation($) Awards($)(4) Awarded(#)(5) sation($)(6)
- ------------------------------ ------ ---------- ----------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner......... 1999 $1,185,577 $3,331,968 -- $2,353,431 -- $262,914
Chairman of the Board, 1998 1,046,154 1,519,392 -- 29,316 214,782 154,706
Chief Executive Officer 1997 1,000,000 1,861,560 -- -- 1,718,257 135,296
and President
Kenneth B. Gilman........ 1999 958,077 1,999,181 $14,762(3) 2,353,431 -- 337,363
Vice Chairman and 1998 936,923 935,150 14,955 158,304 -- 277,290
Chief Administrative 1997 900,000 1,228,630 -- 6,220,313 536,955 195,094
Officer
Martin Trust............. 1999 757,115 892,696 81,412(3) -- -- 357,197
President and Chief 1998 727,692 1,460,000 85,966 137,899 -- 336,771
Executive Officer of 1997 700,000 868,980 -- 3,900,000 322,173 216,212
Mast Industries, Inc.
V. Ann Hailey............ 1999 592,788 937,116 -- -- 50,000 79,969
Executive Vice
President, 1998 517,307 332,367 -- 2,791,669 214,782 14,215
Chief Financial Officer 1997 204,327 258,825 32,984 990,625 26,848 276,099
Leonard A. Schlesinger... 1999 187,981 376,499 -- 1,915,625 251,055 --
Executive Vice
President,
Organization, Leadership
and Human Resources
</TABLE>
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(1) Mr. Schlesinger joined The Limited on October 1, 1999 as Executive Vice
President, Organization, Leadership and Human Resources and Ms. Hailey
joined The Limited on August 11, 1997 as Executive Vice President, Chief
Financial Officer; therefore, amounts disclosed for Mr. Schlesinger for
1999 and Ms. Hailey for 1997 are for partial year.
(2) Represents for each fiscal year, the aggregate of the performance-based
incentive compensation for the Spring and Fall selling seasons.
(3) Represents for the 1999 fiscal year, reimbursement of taxes on life
insurance premiums paid on behalf of executive officers Gilman and Trust.
(4) Represents for each executive officer, the restricted stock awards for
the specified fiscal year under The Limited's 1993 Stock Option and
Performance Incentive Plan. Information set forth above is based on the
closing price of The Limited's Common Stock on the date on which the
awards were made.
On October 1, 1999, 50,000 restricted shares of The Limited's Common Stock
were granted to Mr. Schlesinger. The per share value of The Limited's
Common Stock on such date was $38.3125. This award
10
<PAGE>
is earned subject to pre-established financial performance measures and
once earned, vests 10%, 10%, 10%, 15%, 20% and 35% on the first through
sixth anniversaries of the grant date, respectively, subject to continued
employment with The Limited.
On May 18, 1999, 50,885 restricted shares of The Limited's Common Stock
were granted to each of executive officers Wexner and Gilman. The per share
value of the Common Stock on such date was $46.25. This award was earned in
accordance with pre-established financial performance measures and vested
100% at the end of the 1999 fiscal year.
On June 1, 1998, 885, 4,779, 4,163, and 2,390 restricted shares of The
Limited's Common Stock were granted to executive officers Wexner, Gilman,
Trust and Hailey, respectively. The per share value of the Common Stock on
such date was $33.125. These awards were made in connection with the
distribution in 1998 of Abercrombie & Fitch shares to The Limited's
stockholders. The vesting of these awards is the same as the vesting of the
previously granted restricted stock awards to which these adjustment grants
relate.
On February 2, 1998, 100,000 restricted shares of The Limited's Common
Stock were granted to Ms. Hailey. The per share value of The Limited's
Common Stock on such date was $27.125. This award has been earned in
accordance with pre-established financial performance measures and vests
10%, 10%, 10%, 15%, 20% and 35% on the first through sixth anniversaries of
the grant date, respectively, subject to continued employment with The
Limited.
On February 1, 1998, 7,500 restricted shares of The Limited's Common Stock
were granted to Ms. Hailey based on business performance for the fiscal
1997 year. The per share value of the Common Stock on the most recent prior
date on which there were sales (January 30, 1998) was $26.50. This award
vests 10% on the grant date and 20%, 30% and 40% on the first through third
anniversaries of the grant date, respectively, subject to continued
employment with The Limited.
On August 11, 1997, 35,000 restricted shares of The Limited's Common Stock
were granted to Ms. Hailey. The per share value of the Common Stock on such
date was $22.625. This award has been earned in accordance with pre-
established financial performance measures and vests 100% five years from
the date of grant, subject to continued employment with The Limited.
On May 20, 1997, 300,000 and 200,000 restricted shares of The Limited's
Common Stock were granted to executive officers Gilman and Trust,
respectively. The per share value of the Common Stock on such date was
$19.50. These awards have been earned in accordance with pre-established
financial performance measures and vest 10%, 10%, 10%, 15%, 20% and 35% on
the first through sixth anniversaries of the grant date, respectively,
subject, in each case, to the holder's continued employment with The
Limited.
On March 25, 1997, 19,750 restricted shares of The Limited's Common Stock
were granted to Mr. Gilman. The per share value of the Common Stock on such
date was $18.75. This award vested 100% one year from the date of grant.
Restricted shares of The Limited's Common Stock granted prior to August 23,
1999 were subsequently adjusted to reflect the spin-off of Limited Too.
Dividends will not be paid or accrue with respect to shares of restricted
stock until such shares vest.
As of January 29, 2000, the aggregate restricted stock holdings and the
value of such holdings for each of the named executive officers were: Mr.
Gilman, 257,739 shares, $7,861,040; Mr. Trust, 181,152 shares, $5,525,136;
Ms. Hailey, 139,779 shares, $4,263,260; and Mr. Schlesinger, 50,000 shares,
$1,525,000 (based on the $30.50 fair market value of a share of Common
Stock as of Friday, January 28, 2000).
11
<PAGE>
(5) Options have been adjusted to reflect the spin-off of Limited Too in
August 1999.
(6) Includes employer matching and supplemental contributions allocated to
each executive officer's account under certain of The Limited's qualified
and non-qualified defined contribution plans during the year in the
amount of $262,914, $321,238, $260,977, and $79,969 for executive
officers Wexner, Gilman, Trust and Hailey, respectively.
Includes term life insurance premiums in the amount of $16,125 and $96,220
paid on behalf of executive officers Gilman and Trust, respectively.
Long-term incentive plan awards
The Limited did not grant any awards for the 1999 fiscal year to the
executive officers named in the Summary Compensation Table.
Stock options
The following table shows certain information regarding stock options
granted to the executive officers named in the Summary Compensation Table
during our 1999 fiscal year.
Option Grants in Fiscal Year 1999
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants(1) for Option Term(2)
----------------------------------------------------- --------------------------
Approximate %
Securities of Total Options
Underlying Granted to
Options Associates in Exercise Price Expiration
Name Granted(#) Fiscal Year Per Share($) Date 5%($) 10%($)
- ---- ---------- ---------------- -------------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner........ -- -- -- -- -- --
Kenneth B. Gilman....... -- -- -- -- -- --
Martin Trust............ -- -- -- -- -- --
V. Ann Hailey........... 50,000 1.23% $41.8125 10/15/09 $ 1,314,783 $ 3,331,918
Leonard A. Schlesinger.. 250,000 6.15% 38.3125 10/01/09 6,023,631 15,265,065
1,055 0.03% 32.4573 02/01/09 21,535 54,574
</TABLE>
- --------
(1) On October 15, 1999, options were granted to Ms. Hailey and on October 1,
1999, options were granted to Mr. Schlesinger pursuant to The Limited's
1993 Stock Option and Performance Incentive Plan (1998 Restatement). Such
options vest 10%, 10%, 10%, 15%, 20% and 35% on the first through sixth
anniversaries of the grant date, respectively, in each case subject to
the holder's continued employment with the Company.
On February 1, 1999, options were granted to Mr. Schlesinger pursuant to
The Limited's 1996 Stock Plan for Non-Associate Directors in connection
with his service on the Board of Directors prior to joining The Limited as
an executive officer. Such options vest in four equal installments
beginning on the first anniversary of the grant date, subject to continued
service as a Director.
Options have been adjusted to reflect the spin-off of Limited Too in August
1999.
(2) The assumed rates of growth were selected by the Commission for
illustrative purposes only and are not intended to predict or forecast
future stock prices.
12
<PAGE>
The following table sets forth certain information regarding stock options
exercised by the executive officers named in the Summary Compensation Table
during The Limited's 1999 fiscal year and the year-end values of unexercised
options held by those executive officers.
Aggregated Option Exercises in 1999 Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year-End(#) at Fiscal Year-End($)
Acquired on Value --------------------------- ----------------------------
Name Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner........ -- -- 687,299 (2) 1,621,609 (2) $7,629,449 (2) $14,734,755 (2)
78,750 (3) 26,250 (3) 807,424 (3) 269,141 (3)
Kenneth B. Gilman....... 25,000 $601,756 295,325 (2) 456,410 (2) 3,404,292 (2) 5,704,887 (2)
26,250 (3) 26,250 (3) 455,703 (3) 455,703 (3)
Martin Trust............ 36,645 765,731 170,617 (2) 289,958 (2) 2,134,612 (2) 3,664,918 (2)
V. Ann Hailey........... -- -- 34,900 (2) 256,732 (2) 239,183 (2) 1,139,930 (2)
Leonard A. Schlesinger.. -- -- 1,609 (2) 252,668 (2) 17,829 (2) 14,936 (2)
</TABLE>
- --------
(1) Calculated on the basis of the number of shares exercised, multiplied by
the excess of the fair market value of a share of Common Stock on the
date of exercise over the exercise price of such option.
(2) Denominated in shares of The Limited's Common Stock. Value is calculated
on the basis of the number of shares subject to each such option,
multiplied by the excess of the fair market value of a share of Common
Stock at fiscal year-end ($30.50) over the exercise price of such option.
Options have been adjusted to reflect the spin-off of Limited Too in August
1999.
(3) Denominated in shares of Intimate Brands' Class A Common Stock. Value is
calculated on the basis of the number of shares subject to each such
option, multiplied by the excess of the fair market value of a share of
Common Stock at fiscal year-end ($30.8125) over the exercise price of
such option.
Options have been adjusted to reflect Intimate Brands' 5% stock dividend in
July 1999.
Compensation of directors
Associates and officers who are directors receive no additional compensation
for their service as directors. We provide the following compensation to our
directors who are not associates of The Limited for their services as
directors:
. an annual retainer of $20,000 per year (increased by $4,000 for each
committee chair held), plus
. a fee of $3,500 for each Board meeting attended ($1,000 for a telephonic
meeting) and, as committee members, a fee of $1,500 per committee
meeting attended ($500 for a telephonic meeting), and
. a fee of $500 for each action in writing taken by the Board or any
committee.
Under The Limited's 1996 Stock Plan for Non-Associate Directors, each
director who is not an associate of The Limited receives (i) annual grants of
options to purchase 1,000 shares of The Limited's Common Stock at a
13
<PAGE>
price equal to the fair market value of such shares at the date of grant and
(ii) 50% of the annual retainer in shares of The Limited's Common Stock.
Employment agreements with certain executive officers
In 1999 the Company entered into an employment agreement with Mr.
Schlesinger under which he will serve as the Company's Executive Vice
President for Organization, Leadership and Human Resources. The initial term
of Mr. Schlesinger's agreement is six years, with automatic one-year
extensions thereafter unless either party gives written notice to the
contrary. Mr. Schlesinger's agreement provides for an initial base salary of
$575,000, the grant of options to purchase 250,000 shares of The Limited's
Common Stock, rights to receive, based on Company performance and continued
employment, 50,000 shares of The Limited's Common Stock, incentive plan
participation as determined by the Board, life insurance coverage of $5 million
and disability benefits in addition to the benefits available under
the Company's disability plans. Mr. Schlesinger's agreement also provides
that, if the Company fails to extend the agreement or terminates Mr.
Schlesinger's employment without cause, or if he terminates his employment for
good reason, he will continue to receive his base salary for one year after
the termination date. In the event any "parachute" excise tax is imposed on
Mr. Schlesinger, he will be entitled to tax reimbursement payments.
In 1998 the Company entered into an employment agreement with Ms. Hailey
under which she will continue to serve as the Company's Executive Vice
President and Chief Financial Officer. The initial term of Ms. Hailey's
agreement is six years, with automatic one-year extensions thereafter unless
either party gives written notice to the contrary. Ms. Hailey's agreement
provides for an initial base salary of $525,000, an initial grant of options
to purchase 200,000 shares of The Limited's Common Stock, an initial grant of
rights to receive, based on Company performance and continued employment,
100,000 shares of The Limited's Common Stock, incentive plan participation as
determined by the Board, life insurance coverage of $5 million and disability
benefits in addition to the benefits available under the Company's disability
plans. Ms. Hailey's agreement also provides that, if the Company fails to
extend the agreement or terminates Ms. Hailey's employment without cause, or
if she terminates her employment for good reason, she will continue to receive
her base salary for one year after the termination date. In the event any
"parachute" excise tax is imposed on Ms. Hailey, she will be entitled to tax
reimbursement payments.
In 1997 the Company entered into individual employment agreements with
Messrs. Gilman and Trust. Under these agreements, Mr. Gilman will continue to
serve as the Company's Vice Chairman and Chief Administrative Officer and Mr.
Trust will continue to serve as President and Chief Executive Officer of Mast
Industries, Inc. The initial term of each agreement is six years, with
automatic one-year extensions thereafter unless either party gives written
notice to the contrary. Mr. Gilman's agreement provides for an initial base
salary of $900,000 and the initial grant of options to purchase 500,000 shares
of The Limited's Common Stock and an initial grant of rights to receive, based
on Company performance and continued employment, 300,000 shares of The
Limited's Common Stock. Mr. Trust's agreement provides for an initial base
salary of $700,000 and the initial grant of options to purchase 300,000 shares
of The Limited's Common Stock and an initial grant of rights to receive, based
on Company performance and continued employment, 200,000 shares of The
Limited's Common Stock. Each agreement also provides for incentive plan
participation as determined by the Board and life insurance coverage of
$5 million. Each agreement provides that, if the Company fails to extend the
agreement or terminates the executive's employment without cause, or if the
executive terminates his employment for good reason, the executive will
continue to receive his base salary for one year after the termination date.
Each executive's agreement provides for disability benefits in addition to the
benefits available under the Company's disability plans. In the event any
"parachute" excise tax is imposed on an executive, he will be entitled to tax
reimbursement payments.
14
<PAGE>
Section 16(a) beneficial ownership reporting compliance
The Limited's officers and directors, and persons who own more than ten
percent of a registered class of The Limited's equity securities, must file
reports of ownership and changes in ownership of The Limited's equity
securities with the Commission and the New York Stock Exchange. Copies of
those reports must also be furnished to The Limited.
Based solely on a review of the copies of reports furnished to The Limited
and written representations that no other reports were required, we believe
that during fiscal 1999 our officers, directors and greater than ten-percent
beneficial owners complied with these filing requirements.
15
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") reviews and approves The
Limited's compensation philosophy and policies and the application of such
policies to the compensation of Mr. Wexner and other executive officers. The
Limited has retained independent compensation consultants to assist in
developing, and periodically assessing the effectiveness and reasonableness
of, The Limited's executive officer compensation program. The Committee meets
independently on a periodic basis with these consultants to review the
Company's programs.
Compensation philosophy
The Limited attempts to apply a consistent philosophy to compensation for
all leadership associates, including senior executives. The primary goal of
the compensation program is to link total executive compensation to
performance that enhances stockholder value. Accordingly, The Limited has
structured total compensation for leadership individuals so that a lower
proportion is fixed compensation and a much higher variable proportion is
keyed to business and stock performance.
The Limited's philosophy is based on the following basic principles:
To Pay for Outstanding Performance.
The Limited believes in paying for results. Individuals in leadership roles
are compensated based on a combination of total company, business unit and
individual performance factors. Total company and business unit performance
are evaluated primarily on the degree by which financial targets are met.
Individual performance is evaluated based upon several leadership factors,
including building brand identity, attainment of specific merchandise and
financial objectives, building and developing a strong leadership team,
developing an infrastructure to support future business growth and controlling
expenses. In addition, a significant portion of total compensation is in the
form of equity-based award opportunities to directly tie any increased
compensation to increased stockholder value.
To Pay Competitively.
The Limited is committed to providing a total compensation program designed
to attract the best senior leaders to the business and to retain the best,
consistently highest performers. To achieve this goal, The Limited annually
compares its pay practices and overall pay levels with other leading retail,
and where appropriate, non-retail companies and sets pay guidelines based on
this review.
To Pay Equitably.
The Limited believes that it is important to apply generally consistent
guidelines for all leadership compensation programs across business units,
considering the size, complexity, stage of development and performance of
business, and the performance of each individual executive.
Principal compensation elements
The principal elements of executive compensation at The Limited are base
salary, short-term performance-based cash incentive compensation and long-term
equity-based incentive programs. In determining guidelines for each
compensation element, The Limited participates in compensation surveys which
include approximately
16
<PAGE>
75 national and regional specialty and department store retail businesses,
chosen because of their general similarity to The Limited in business and
merchandise focus. In addition, The Limited participates in special surveys
focusing on specific segments of the business, such as merchandise design and
the personal care products business. With the help of The Limited's
compensation consultants, The Limited analyzes executive compensation levels
and practices relative to the performance of these competitor companies and,
from this information, develops pay guidelines that generally target The
Limited's executive pay well above the industry survey median for those
executives with exceptional performance. The competitor group that is surveyed
is subject to periodic review and is modified from time to time to reflect new
businesses, mergers, acquisitions and changes in business focus. The
competitor group that The Limited uses for this purpose contains approximately
50% of the companies in the S&P Retail Stores Composite Index represented in
the Stockholder Return Graph below. Subject to The Limited's needs, The
Limited generally attempts to design all incentive and equity-based
compensation programs to meet the requirements of deductibility under the
Internal Revenue Code of 1986, as amended.
Base salary.
The Committee annually reviews and approves the base salary of each
executive officer and business president. In determining salary adjustments,
the Committee considers the size and responsibility of the individual's
position, the business unit's overall performance, the individual's overall
performance and future potential and the base salaries paid by competitors to
employees in comparable positions. Individual performance is measured against
the following factors: seasonal and annual business goals, brand strategy
execution and business growth goals, and the recruitment and development of
leadership talent. These factors are considered subjectively in the aggregate,
and none of these factors is accorded a formula weight.
In 1999, the base salaries of Ms. Hailey and Messrs. Gilman, Trust and
Wexner were adjusted based on both performance and market comparisons, with
continued emphasis placed on performance-based cash and equity incentive
compensation. Mr. Schlesinger commenced employment in October and at that time
entered into the six-year employment agreement described above.
Performance-based cash incentive compensation.
The Limited has implemented a short-term performance-based cash incentive
compensation program for specified key leadership positions that provides for
incentive payments for each six-month operating season. These incentive
payments are based on the attainment of pre-established objective financial
goals.
For most businesses, the goals under this program are based on operating
income. However, goals also may be based on other objectives or criteria,
depending on the business unit and its strategy. The Limited sets these goals
at the beginning of each six-month season, and bases them on an analysis of
historical performance, growth and income improvement expectations for that
business, financial results of other comparable businesses both inside and
outside The Limited, and progress toward achieving the strategic plan for that
business. Annually, The Limited establishes target cash incentive compensation
opportunities for eligible executives stated as a specific percent of base
salary. The amount of performance-based incentive compensation earned by
participating executives can range from zero to double their incentive target,
based upon the extent to which the pre-established financial goals are
achieved.
Equity-based incentive programs.
The Committee believes that continued emphasis on equity-based compensation
opportunities encourages performance that enhances stockholder value, thereby
further linking leadership and shareholder objectives. In
17
<PAGE>
1999, the Committee awarded equity-based incentives, granting stock options
and restricted stock, which are earned based on attainment of specified
financial performance objectives. The Committee also believes that stock
awards, the vesting of which is subject to continued employment, help us to
retain key high performing executives.
Award opportunities for each eligible participant are based on guidelines,
which include size of the executive's business unit, the individual's
responsibility level within that business, competitive practice and the market
price of The Limited's Common Stock. In determining the awards for an
executive officer, the Committee evaluated competitive practice and the
executive officer's performance and importance to the business.
Stock options.
In 1999, stock options were awarded to Ms. Hailey in the amount set forth in
the Option Grants in Fiscal Year 1999 table above. Mr. Schlesinger also
received stock options in conjunction with his employment with the Company.
The options granted to both Ms. Hailey and Mr. Schlesinger vest, subject to
continued employment, on a graduated basis over a period of six years. The
exercise price for Ms. Hailey's and Mr. Schlesinger's options is equal to the
fair market value of the underlying Common Stock on the date of grant.
Performance-based restricted stock.
In 1999, the Committee awarded Messrs. Wexner and Gilman restricted stock
based on the achievement of pre-established financial goals. Those financial
goals were met, and the shares vested on the last day of fiscal 1999. Mr.
Schlesinger was also granted restricted shares in 1999 as part of his
employment agreement with The Limited. Mr. Schlesinger's restricted shares
vest on a graduated basis over a six-year period.
CEO compensation
Mr. Wexner has been Chief Executive Officer since founding The Limited in
1963. The Limited conducts the same type of competitive review and analysis to
determine base salary and incentive guidelines for Mr. Wexner's position as it
does for the other executive positions.
In 1999, as in prior years, in establishing Mr. Wexner's compensation
package the Committee considered competitive practices, the extent to which
The Limited achieved operating income and sales objectives, progress regarding
brand strategy, and the continued recruitment and development of leadership
talent for the business. These factors are considered subjectively in the
aggregate and none of these factors is accorded specific weight.
As described earlier, while the Committee and The Limited continue to
emphasize variable, performance-based compensation components for all
executives, including Mr. Wexner, the Committee determined that Mr. Wexner's
base salary in recent years has been low relative to the market data provided
by compensation consultants. Accordingly, Mr. Wexner's base salary was
adjusted by 14% from $1,050,000 to $1,200,000 while his incentive compensation
target remained at 160%. In addition, Mr. Wexner was granted 50,000 shares of
restricted stock (53,696 as adjusted) with vesting based on attainment of
specific financial goals. In establishing these compensation elements, the
Committee favorably viewed Mr. Wexner's significant achievements in recruiting
and developing senior leadership talent; refocusing the Company on the core
business units, including the successful spin-off of the Limited Too business
and the sale of a controlling interest in the Galyan's business; improving
financial results and shareholder value; and making significant progress on
the brand development strategy of the business units.
18
<PAGE>
In fiscal 1999, The Limited posted net sales of $9.50 billion, an increase
of 7.8% compared to fiscal 1998 net sales, excluding Limited Too sales in both
years and Abercrombie & Fitch sales through May 1998. Additionally, 1999
adjusted net income was $445.5 million, which was 40% above comparable
adjusted net income for fiscal 1998, and adjusted earnings per share were
$1.93 per share, which was a 43% increase over 1998 adjusted earnings per
share. These annual results were significantly above targeted performance
objectives established by the Committee, and as a result, the annual cash
incentive payment earned by Mr. Wexner was above target, but below the maximum
payout level, according to The Limited's incentive compensation plan.
Compensation Committee
Donald B. Shackelford, Chair
E. Gordon Gee
19
<PAGE>
STOCKHOLDER RETURN GRAPH
The following graph shows the changes, over the past five-year period, in
the value of $100 invested in Common Stock of The Limited, the Standard &
Poor's 500 Composite Stock Price Index and the Standard & Poor's Retail Stores
Composite Index. The plotted points represent the closing price on the last
day of the fiscal year indicated.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG THE LIMITED, INC., THE S&P 500 INDEX
AND THE S&P RETAIL COMPOSITE INDEX
[GRAPH APPEARS HERE]
S&P
RETAIL S&P
LTD COMPOSITE 500
1/31/95 100 100 100
1/31/96 101 107 135
1/31/97 106 124 167
1/30/98 167 185 208
1/29/99 220 294 272
1/28/00 212 316 296
* $100 INVESTED IN STOCK OR IN INDEX AT THE CLOSING PRICE ON 1/31/95--
INCLUDING REINVESTMENT OF DIVIDENDS.
20
<PAGE>
SHARE OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table sets forth the names of all persons who, on February 29,
2000, were known by The Limited to be the beneficial owners (as defined in the
rules of the Commission) of more than 5% of the shares of Common Stock of The
Limited:
<TABLE>
<CAPTION>
Amount
Beneficially Percent
Name and Address of Beneficial Owner Owned of Class
- ------------------------------------ ------------ --------
<S> <C> <C>
Leslie H. Wexner(1)....................................... 47,206,488 22.0%
Three Limited Parkway
P.O. Box 16000
Columbus, Ohio 43216
FMR Corp.(2).............................................. 24,188,518 11.2%
c/o Michele L. Ferrie
82 Devonshire Street
Boston, Massachusetts 02109-3614
Capital Research and Management Company(3)................ 25,246,500 11.7%
333 South Hope Street
Los Angeles, California 90071
</TABLE>
- --------
(1) Includes 1,058,317 shares as to which Mr. Wexner disclaims beneficial
ownership. Excludes 201,801 shares owned by Mrs. Wexner as to which Mr.
Wexner disclaims beneficial ownership.
(2) FMR Corp., Edward C. Johnson 3d, Abigail P. Johnson and certain
subsidiaries of FMR Corp. may be deemed to be members of a "group" as
such term is defined in the rules promulgated by the Commission. FMR
Corp. is the beneficial holder of The Limited's Common Stock as a result
of the investment-related activities of certain subsidiaries of FMR Corp.
Members of the Edward C. Johnson 3d family and trusts for their benefit
are the predominant owners of Class B shares of common stock of FMR
Corp., representing approximately 49% of its voting power. Mr. Johnson
3d, the chairman of FMR Corp., owns 12% of the aggregate outstanding
voting stock of FMR Corp. and Ms. Johnson, a director of FMR Corp., owns
24.5% of the aggregate outstanding voting stock of FMR Corp.
(3) Capital Research and Management Company, an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, is deemed to be
the beneficial owner of 25,246,500 shares of The Limited's Common Stock
as a result of acting as investment adviser to various investment
companies registered under Section 8 of the Investment Company Act of
1940.
INDEPENDENT PUBLIC ACCOUNTANTS
During our 1999 fiscal year, PricewaterhouseCoopers LLP served as our
independent public accountants and in that capacity rendered an opinion on our
consolidated financial statements as of and for the fiscal year ended January
29, 2000. We annually review the selection of our independent public
accountants, but we have not yet selected independent public accountants for
the current fiscal year.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the annual meeting. They will be available to respond to appropriate questions
and may make a statement if they so desire.
21
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
annual meeting. However, if other matters should come before the meeting, each
of the persons named in the proxy intends to vote in accordance with his
judgment on such matters.
STOCKHOLDER PROPOSALS
We may omit from the Proxy Statement and form of proxy relating to the next
annual meeting of stockholders any proposals of stockholders which are
intended to be presented at that meeting which are not received by the
Secretary of The Limited at our principal executive offices on or before
December 15, 2000.
SOLICITATION EXPENSES
We will pay the expense of preparing, assembling, printing and mailing the
proxy form and the form of material used in solicitation of proxies. Our
employees may solicit proxies by telephone, mailgram, facsimile, telegraph,
cable and personal interview, in addition to the use of the mails. We have
retained Georgeson Shareholder Communications Inc., New York, New York, to
help us solicit proxies relating to shares held by brokerage houses,
custodians, fiduciaries and other nominees for a fee of approximately $10,000,
plus expenses. We do not expect to pay any other compensation for the
solicitation of proxies.
By Order of the Board of Directors
/s/ Leslie H. Wexner
Leslie H. Wexner
Chairman of the Board
22
<PAGE>
- --------------------------------------------------------------------------------
PROXY
THE LIMITED, INC.
This Proxy is Solicited by the Board of Directors
Annual Meeting of Stockholders
May 15, 2000
The Board of Directors recommends a vote "FOR" each of the named
nominees. If no specification is indicated, the shares represented
by this proxy will be voted as recommended by the Board.
Election of Directors, Nominees:
E. Gordon Gee, Alex Shumate, Allan R. Tessler, Abigail S. Wexner
1. Election of Directors
FOR WITHHELD
[_] [_]
For, except vote withheld from following nominee(s):
------------------------------------------------------------------------
(Continued and to be signed on the reverse side)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
The undersigned hereby appoints Leslie H. Wexner and Kenneth B. Gilman, and
each of them, proxies, with full power of substitution, to vote for the
undersigned all shares of Common Stock of The Limited, Inc. which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders to be held on May 15, 2000 at 9:00 a.m., Eastern
Daylight Time, and at any adjournments thereof, upon the matters described in
the accompanying Proxy Statement and upon any other business that may properly
come before the meeting or any adjournments thereof.
The undersigned acknowledges receipt with this Proxy of a copy of the Notice
of Annual Meeting of Stockholders and Proxy Statement dated April 14, 2000.
SIGNATURE(S) ________________ DATE _____
IMPORTANT: Please date this Proxy and
sign exactly as your name or names
appear hereon. If stock is held
jointly, signature should include both
names. Executors, Administrators,
Trustees, Guardians and others signing
in a representative capacity should
indicate full titles.
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<PAGE>
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P R O X Y
THE LIMITED, INC.
This Proxy is Solicited by the Board of Directors
Annual Meeting of Stockholders
May 15, 2000
The undersigned hereby appoints Leslie H. Wexner and Kenneth B. Gilman, and
each of them, proxies, with full power of substitution, to vote for the
undersigned all shares of Common Stock of The Limited, Inc. which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders to be held on May 15, 2000 at 9:00 a.m., Eastern
Daylight Time, and at any adjournments thereof, upon the matters described in
the accompanying Proxy Statement and upon any other business that may properly
come before the meeting or any adjournments thereof.
Election of Directors, Nominees:
01. E. Gordon Gee, 02. Alex Shumate, 03. Allan R. Tessler,
04. Abigail S. Wexner
SAID PROXIES ARE DIRECTED TO VOTE AS MARKED ON THE REVERSE SIDE AND IN THEIR
DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENTS THEREOF.
(Continued and to be signed on the reverse side)
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FOLD AND DETACH HERE
<PAGE>
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[X] Please mark your 9788
votes as in this
example.
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The Board of Directors recommends a vote "FOR" each of the named
nominees. If no specification is indicated, the shares represented
by this proxy will be voted as recommended by the Board.
1. Election of FOR WITHHELD
Directors (see reverse) [_] [_]
For, except vote withheld from following nominee(s):
----------------------------------------------------
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The undersigned acknowledges receipt with this Proxy of a copy of the Notice of
Annual Meeting of Stockholders and Proxy Statement dated April 14, 2000.
IMPORTANT: Please date this Proxy and sign exactly as your name or names appear
hereon. If stock is held jointly, signature should include both names. Execu-
tors, Administrators, Trustees, Guardians and others signing in a representa-
tive capacity should indicate full titles.
SIGNATURE(S) ____________________________________________ DATE ___________
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FOLD AND DETACH HERE
<PAGE>
The Limited, Inc.
Dear Stockholder:
The Limited, Inc. encourages you to take advantage of new and convenient ways
by which you can vote your shares. You can vote your shares electronically
through the Internet or by telephone. This eliminates the need to return your
proxy card.
To vote your shares electronically, you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear
in the box above must be used to access the system.
1. To vote over the Internet:
. Log on to the Internet and go to the web site
http://www.eproxyvote.com/ltd
2. To vote by telephone:
. On a touch-tone telephone, call 1-877-779-8683 24 hours a day, 7 days
a week.
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need to mail
back your proxy card.
Your vote is important. Thank you for voting.
