<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
WILLIAMS-SONOMA, 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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/X/ 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:
----------------------------------------------------------------------
<PAGE> 2
WILLIAMS-SONOMA, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Williams-Sonoma, Inc., a
California corporation (the "Company"), will be held at the Company's offices,
3250 Van Ness Avenue, San Francisco, California 94109, Wednesday, May 24, 1995,
commencing at 10:00 a.m. (Pacific Daylight Time) for the following purposes:
(1) To elect ten directors to serve until the next annual meeting
of shareholders or until their respective successors shall be
elected and qualified.
(2) To act on a proposal to amend the Company's Articles of
Incorporation to add a par value of $.01 per share of common
stock and preferred stock.
(3) To act on a proposal to amend the Company's 1993 Stock Option
Plan to increase the size of the stock options awarded
annually to nonemployee directors upon their reelection from
2,250 shares of Common Stock to 5,250 shares of Common Stock.
(4) To ratify the selection of Deloitte & Touche as independent
accountants for the fiscal year ending January 28, 1996.
(5) To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 31,
1995, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting or any adjournment or postponement
thereof.
Financial and other information concerning the Company is contained in
the enclosed Annual Report for the fiscal year ended January 29, 1995.
By Order of the Board of Directors,
Russell Solt, Secretary
San Francisco, California
April 18, 1995
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE DATE AND SIGN
THE ENCLOSED PROXY CARD AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
STAMPED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY ORALLY REVOKE THE PROXY
AND VOTE IN PERSON EVEN THOUGH YOU HAVE RETURNED YOUR PROXY.
<PAGE> 3
PROXY STATEMENT
Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, California 94109
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 24, 1995
This proxy statement (the "Proxy Statement") and the enclosed proxy
are furnished in connection with the solicitation of proxies by the Board of
Directors of Williams-Sonoma, Inc., a California corporation (the "Company"),
for use at the Annual Meeting of Shareholders of the Company (the "Annual
Meeting"), to be held on Wednesday, May 24, 1995, and any adjournment or
postponement thereof. The Annual Report to the shareholders of the Company for
the fiscal year ended January 29, 1995, including the financial statements of,
and other information concerning the Company, is also enclosed. The Company
anticipates that this Proxy Statement and accompanying form of proxy will first
be mailed or given to its shareholders on or about April 18, 1995.
A proxy may be revoked by filing with the Secretary of the Company a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person. Attendance in person at
the Annual Meeting does not itself revoke an otherwise valid proxy; however,
any shareholder who attends such meeting may orally revoke his proxy at the
Annual Meeting and vote in person. If a shareholder specifies a choice on any
matter to be acted upon by means of the accompanying proxy, and the proxy is
properly executed and received prior to the Annual Meeting, the proxy will be
voted in accordance with the specifications made. If an executed proxy is
returned without any specifications as to how shares should be voted, votes
will be cast for the election of the directors named in this Proxy Statement,
for the approval of the amendment to the Company's Articles of Incorporation,
for the approval of the amendment to the Company's 1993 Stock Option Plan, and
in favor of the ratification of the selection of Deloitte & Touche as the
Company's independent accountants. In addition, the proxyholders will vote in
their sole discretion upon such other business as may properly come before the
meeting and any adjournments or postponements thereof.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the material enclosed will be paid by the Company. Copies
of solicitation material will be furnished to brokers and others holding common
stock of the Company to forward to their principals, and the Company will
reimburse them for reasonable expenses in doing so. The Company expects that
some of its officers or employees (none of whom will receive special
compensation) will solicit proxies personally and by telephone or other means.
In addition, the Company has retained the services of Skinner & Company to
assist in the solicitation of proxies at an estimated cost of $3,500.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Only shareholders of record at the close of business on March 31,
1995, will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 31, 1995, there
<PAGE> 4
were 25,342,577 outstanding shares of the Company's common stock (the "Common
Stock"), the only class of stock outstanding.
Each share of Common Stock is entitled to one vote, except that
shareholders may cumulate their votes for the election of directors. Under
California law, no shareholder may cumulate votes unless the candidate's name
has been placed in nomination prior to the voting and at least one shareholder
at the meeting has given notice of the intention to cumulate votes prior to the
voting. If such notice is given, every shareholder present, in person or by
proxy, at the meeting may cumulate votes. The accompanying proxy grants
authority to the proxyholders to cumulate votes and allocate them in the
proxyholders' discretion to one or more nominees, if the proxyholders believe
that such action will maximize the number of nominees who will be elected. The
proxyholders do not, at this time, intend to give such notice nor to cumulate
the votes they may hold pursuant to the proxies solicited in this Proxy
Statement unless the required notice by a shareholder is given at the meeting,
in which instance such proxyholders intend to vote cumulatively all the proxies
held by them in favor of some or all of the nominees for office set forth in
this Proxy Statement. If cumulative voting is utilized at the Annual Meeting,
each shareholder voting at the election of directors may cumulate their votes
and cast a number of votes equal to the number of directors to be elected
multiplied by the number of shares held. All such votes may be cast for a
single candidate or may be distributed among any or all of the candidates.
The following table sets forth information as to the beneficial
ownership of the Common Stock, as of March 31, 1995, by (a) persons known to
the Company to be beneficial owners of more than 5% of the Common Stock, (b)
executive officers named in the "Summary Compensation Table" below, and (c)
executive officers and directors as a group. Unless otherwise noted, the
persons listed below have sole voting and investment power.
<TABLE>
<CAPTION>
Percent
Number of Shares of
Name and Address of Beneficial Owner Beneficially Owned Class
- ------------------------------------ ------------------ -------
<S> <C> <C>
W. Howard Lester . . . . . . . . . . . . . . . 2,909,972(1) 11.5%
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
James A. McMahan . . . . . . . . . . . . . . . 3,402,175(2) 13.4%
2237 Colby Avenue
Los Angeles, CA 90064
FMR Corp. . . . . . . . . . . . . . . . . . . 1,522,375(3) 6.00%
82 Devonshire Street
Boston, MA 02109-3614
Gary G. Friedman . . . . . . . . . . . . . . . 141,657(4) *
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
Patrick J. Connolly . . . . . . . . . . . . . 525,822(5) 2.1%
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
Robert K. Earley . . . . . . . . . . . . . . . 124,578(6) *
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
</TABLE>
3
<PAGE> 5
<TABLE>
<S> <C> <C>
Nicholas Applegate Capital Management. . . . . . . 1,483,699(7) 5.85%
600 West Broadway, 29th Floor.
San Francisco, CA 92101
James E. Riley 19,571(8) *
c/o Williams-Sonoma, Inc. . . . . . . . . . . .
3250 Van Ness Avenue
San Francisco, CA 94109
Charles Williams . . . . . . . . . . . . . . . . . 282,178(9) 1.1%
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
Provident Investment Counsel . . . . . . . . . . . 1,716,900(10) 6.8%
300 North Lake Avenue
Pasadena, CA 91101-4022
All Executive Officers and Directors as a Group. . 7,575,987(11) 29.9%
(14 persons)
</TABLE>
4
<PAGE> 6
* Less than 1%.
(1) Includes 32,400 and 39,000 shares subject to nonqualified stock
options granted under the Company's 1976 Stock Option Plan (the "1976
Plan") and the 1993 Stock Option Plan (the "1993 Plan"), respectively,
which are currently exercisable or exercisable within 60 days.
Includes 6,027 shares in the Company's Employee Profit Sharing and
Stock Incentive plan (the "Profit Sharing Plan") that are allocable to
Mr. Lester and fully vested. Does not include 1,743 and 607,773
shares owned by Mr. Lester's wife and by trusts established by Mr.
Lester for the benefit of his children, respectively, in which shares
Mr. Lester disclaims any beneficial interest.
(2) Includes 6,750 and 4,500 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, which are
currently exercisable or exercisable within 60 days.
(3) The information above and in this footnote is based on the Schedule
13G of FMR Corp. dated February 14, 1995. Fidelity Management &
Research Company, a wholly-owned subsidiary of FMR Corp. and a
registered investment advisor, has sole dispositive power (but no
voting power) over 1,507,525 shares of Common Stock as a result of its
acting as the investment advisor to several registered investment
companies. Fidelity Management Trust Company, another wholly-owned
subsidiary of FMR Corp. and a bank as defined in Section 3(a)(6) of
the Securities Exchange Act of 1934, has sole voting and dispositive
power over 14,850 shares of Common Stock as a result of its serving as
the investment manager for several institutional accounts. Edward C.
Johnson is the Chairman of FMR Corp., and Mr. Johnson and certain
Johnson family members, through their ownership of voting common
stock and the execution of a family shareholders' voting agreement,
form a controlling group with respect to FMR Corp.
(4) Includes 37,775 and 48,000 shares subject to nonqualified stock
options granted under the 1976 Plan and the 1993 Plan, respectively
and, 50,625 shares subject to incentive stock option granted under the
1983 Incentive Stock Option Plan (the "1983 Plan") which are currently
exercisable or exercisable within 60 days. Also includes 5,257 shares
in the Profit Sharing Plan that are allocable to Mr. Friedman and
fully vested.
(5) Includes 59,625 and 14,250 shares subject to nonqualified stock
options granted under the 1976 Plan and the 1993 Plan, respectively,
which are currently exercisable or exercisable within 60 days. Also
includes 4,052 shares in the Profit Sharing Plan that are allocable to
Mr. Connolly and fully vested. Does not include 2,619 shares owned by
a trust established for the benefit of Mr. Connolly's children, in
which shares Mr. Connolly disclaims any beneficial interest.
(6) Includes 61,875 and 10,800 shares subject to nonqualified stock
options granted under the 1976 Plan and the 1993 Plan, respectively,
which are currently exercisable or exercisable within 60 days. Also
includes 5,328 shares in the Profit Sharing Plan that are allocable to
Mr. Earley and fully vested.
(7) The information above and in this footnote is based on the Schedule
13G of Nicholas Applegate Capital Management dated February 14, 1995.
Nicholas Applegate Capital Management, a registered investment
adviser, has sole voting and dispositive power over 1,022,649 shares
of Common Stock and sole dispositive power (but no voting power) over
461,050 shares of Common Stock.
(8) Includes 4,500 and 4,500 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, which are
currently exercisable or exercisable within 60 days. Also includes
5,171 shares in the Profit Sharing Plan that are allocable to Mr.
Riley and fully vested.
(9) Includes 178 shares in Profit Sharing Plan that are allocable to Mr.
Williams and fully vested.
(10) The information above and in this footnote is based on the Schedule
13G of Provident Investment Counsel dated February 7, 1995. Provident
Investment Counsel, a registered investment adviser, has shared voting
and dispositive power over 1,072,200 shares of Common Stock and shared
dispositive power (but no voting power) over 644,700 shares of Common
Stock. Robert M. Kommerstad controls Provident Investment Counsel by
virtue of his position as the sole voting trustee of a voting trust
which holds all of the outstanding securities of Provident Investment
Counsel.
(11) Includes 227,855 and 145,350 shares subject to nonqualified stock
options granted under the 1976 Plan and the 1993 Plan respectively,
and 50,625 shares subject to incentive stock options granted under the
1983 Plan, which are currently exercisable or exercisable within 60
days. Also includes 23,690 shares in the Profit Sharing Plan that are
allocable to the executive officers and fully vested.
5
<PAGE> 7
The closing sales price for the Common Stock on March 31, 1995, as
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) National Market System, was $25.00 per share. Pursuant to Section
16(a) of the Securities Exchange Act of 1934 and the rules promulgated
thereunder, directors and certain officers of the Company and persons who
beneficially own more than 10% of a registered class of the Company's equity
securities are required to file with the Securities and Exchange Commission and
the NASDAQ Stock Market and furnish to the Company reports of ownership and
changes in ownership of all classes of the Company's equity securities. Based
solely on its review of the copies of such reports received by it during or
with respect to the fiscal year ended January 29, 1995, and/or written
representations from such reporting persons, the Company believes that, except
as described below, all reports required to be filed by such reporting persons
during or with respect to the fiscal year ended January 29, 1995 were filed on
a timely basis. James E. Riley inadvertently filed late one Form 4 reporting a
single stock option grant covering 9,000 shares of Common Stock, and H. Peter
Young inadvertently filed late his Form 3 initially reporting his beneficial
ownership of Common Stock. Claudia Abrams inadvertently filed late her Forms 4
reporting six transactions involving less than 10,000 shares of Common Stock in
the aggregate.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, ten directors are to be elected to serve until
the next annual meeting of shareholders or until the election and qualification
of their successors. The Company's Bylaws provide for not less than six nor
more than eleven directors, the exact number having been fixed by the Board of
Directors at ten. Under California law, the ten nominees receiving the highest
number of affirmative votes of the shares entitled to vote shall be elected
directors. Abstentions and broker non-votes will have no effect on the outcome
of the vote. Unless otherwise instructed, the proxyholders will vote the
proxies received by them for the ten nominees named below, all of whom are
currently directors of the Company. If any of the listed nominees is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for such person or persons as the proxyholders may designate.
The Board of Directors has no reason to believe that any of the nominees will
be unable or decline to serve as a director.
The following table sets forth information as of March 31, 1995 with
respect to each person nominated for election as a director which has been
furnished to the Company by the nominees. All nominees were elected directors
at the Annual Meeting of Shareholders held on May 25, 1994.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Nominee Age Principal Occupation Director Since Ownership of Class
------- --- -------------------- --------------- ---------- --------
<S> <C> <C> <C> <C> <C>
Charles E. Williams 79 Founder of the Company and its Vice 1973 282,178(1) 1.1%
Chairman since 1986.
W. Howard Lester 59 Chairman of the Company since 1986 1979 2,909,972(2) 11.5%
and Chief Executive Officer since
1979. Director of The Good Guys,
Inc., and Conner Peripherals Inc.
James M. Berry 64 Vice Chairman of NationsBank from 1987 13,275(3) *
1988 to 1990. Corporate Executive
</TABLE>
6
<PAGE> 8
<TABLE>
<S> <C> <C> <C> <C> <C>
Vice President of NationsBank from
1985 to 1990. Director of NCNB
Texas and HCC Insurance Holdings,
Inc.
Nathan Bessin 69 Managing Partner of J. Arthur 1983 18,075(3) *
Greenfield & Co., Certified Public
Accountants, since 1978. Director
of Mercury General Corp.
Patrick J. Connolly 48 Senior Vice President of Mail Order 1983 525,822(4) 2.1%
and Assistant Secretary of the
Company since 1991 and 1983,
respectively; Vice President of
Mail Order from 1979 to 1990.
Millard S. Drexler 50 President and Director of The Gap, 1990 13,500(3) *
Inc. since 1987 and 1983,
respectively.
Gary G. Friedman 37 Executive Vice President since 1993 141,657(5) *
1993; Senior Vice President of
Stores from 1991 to 1992; and Vice
President of Stores from 1988 to
1990. Regional Manager of The Gap,
Inc. from 1985 to 1988.
F. Warren Hellman 60 General Partner of Hellman & 1987 101,595(3)(6) *
Friedman, investment bankers, since
1984. Partner of Matrix Partners
(venture capital) since 1982.
Partner of other venture capital
and risk arbitrage firms.
Director of American President
Companies, Ltd., Eagle Industries,
Inc., Franklin Resources, Inc.,
Great American Management &
Investment Inc. and Levi Strauss
Associates.
John E. Martin 49 President and Chief Executive 1994 33,750(7) *
Officer of Taco Bell, a wholly-
owned subsidiary of PepsiCo, since
1983. Director of The Good Guys,
Inc.
James A. McMahan 72 President and Chief Executive 1979 3,402,175(3) 13.4%
Officer of McMahan Furniture Stores
since 1947.
</TABLE>
- -------------
* Less than 1%.
(1) Includes 178 shares in the Profit Sharing Plan that are allocable to
Mr. Williams and fully vested.
(2) Includes 32,400 and 39,000 shares subject to nonqualified stock
options granted under the Company's 1976 Stock Option Plan (the "1976
Plan") and the 1993 Stock Option Plan (the "1993 Plan"), respectively,
which are currently exercisable or exercisable within 60 days.
Includes 6,027 shares in the Company's Employee Profit Sharing and
Stock Incentive plan (the "Profit Sharing Plan") that are allocable to
Mr. Lester and fully vested. Does not include 1,743 and 607,773
shares owned by Mr. Lester's wife and by trusts established by Mr.
Lester for the benefit of his children, respectively, in which shares
Mr. Lester disclaims any beneficial interest.
(3) Includes 6,750 and 4,500 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, which are
currently exercisable or exercisable within 60 days.
(4) Includes 59,625 and 14,250 shares subject to nonqualified stock
options granted under the 1976 Plan and the 1993 Plan, respectively,
which are currently exercisable or exercisable within 60 days. Also
includes 4,052 shares in the Profit Sharing Plan that are allocable to
Mr. Connolly and fully vested. Does not include 2,619 shares owned by
a trust established for the benefit of Mr. Connolly's children, in
which shares Mr. Connolly disclaims any beneficial interest.
(5) Includes 37,775 and 48,000 shares subject to nonqualified stock
options granted under the 1976 Plan and the 1993 Plan respectively,
and 50,625 shares subject to incentive stock options granted under the
1983 Incentive Stock Option Plan (the "1983 Plan"),
7
<PAGE> 9
which are currently exercisable or exercisable within 60 days. Also
includes 5,257 shares in the Profit Sharing Plan that are allocable to
Mr. Friedman and fully vested.
(6) Shares listed are owned by Hellman Family Revocable Trust of which Mr.
Hellman is a co-trustee.
(7) Includes 6,750 shares subject to nonqualified stock options granted
under the 1993 Plan.
COMPENSATION OF DIRECTORS
Directors who are not officers of the Company are entitled to be paid,
in addition to their expenses incurred in connection with such meeting, $1,000
for each Board Meeting and for each meeting of a committee attended which does
not occur on the same day as a Board Meeting. If Proposal 3 is approved at
the Annual Meeting, the Company will eliminate the $1,000 per meeting
attendance fee.
Under the 1993 Stock Option Plan (the "1993 Plan"), each nonemployee
director who is elected to the Company's Board of Directors for the first time
is granted a nonqualified stock option to purchase 6,750 shares of Common
Stock, which shall be exercisable in full beginning six months after the date
of grant. Nonemployee directors who are re-elected to the Board of Directors
(i) at the Annual Meeting or (ii) on the date of each subsequent Annual Meeting
of Shareholders, will each receive a nonqualified stock option to purchase an
additional 2,250 shares of Common Stock, which option shall be exercisable in
full beginning six months after the date of grant of such option. The price of
each option granted to a nonemployee director shall be equal to the fair market
value of the Common Stock on the date of grant of such option. The term of
each option granted to a nonemployee director shall be ten years from the date
of grant of such option. Nonemployee directors are only eligible for grants of
options under the 1993 Plan in accordance with the preceding formula. The 1993
Plan replaced the 1976 Stock Option Plan (the "1976 Plan"), which had provided
for option grants to nonemployee directors under a formula substantially
similar to the one in the 1993 Plan described above. Messrs. Berry, Bessin,
Drexler, Hellman and McMahan were each granted nonqualified stock options to
purchase 6,750 shares of Common Stock at the 1992 Annual Meeting under the 1976
Plan and nonqualified options to purchase 2,250 shares of Common Stock at the
1993 and 1994 Annual Meetings under the 1993 Plan. Mr. Martin was granted
non-qualified stock options to purchase 6,750 shares of Common Stock at the
1994 Annual Meeting under the 1993 Plan.
INDEMNIFICATION
Under the Company's Restated Articles of Incorporation, as amended
(the "Articles"), a director is not liable to the Company or its shareholders
for monetary damages for breach of fiduciary duty as a director. However, the
Articles do not eliminate a director's liability for breach of duty of loyalty,
acts or omissions not in good faith, certain payments not permitted under
California General Corporation Law (the "Law"), or transactions in which the
director derives an improper personal benefit. The Articles also provide that
the Company has the authority to indemnify its directors, officers, employees
and agents beyond the circumstances permitted under Section 317 of the Law.
8
<PAGE> 10
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of 7 meetings
during the fiscal year ended January 29, 1995. The Board of Directors has two
standing Committees: Audit and Compensation. There is no nominating committee
or any other committee performing those functions.
During the last fiscal year, the Audit Committee of the Board of
Directors met once. The Audit Committee is currently comprised of Messrs.
Bessin (Chairman) and Berry. This Committee is primarily responsible for
reviewing the services performed by the Company's independent accountants and
evaluating the Company's accounting principles and its system of internal
accounting controls.
During the last fiscal year, the Compensation Committee of the Board
of Directors (the "Compensation Committee") met twice. The Compensation
Committee is currently comprised of Messrs. McMahan (Chairman), Drexler,
Hellman and Martin. This Committee is primarily responsible for officers'
compensation matters and for administering the Company's stock option plans.
No director attended fewer than 75% of all meetings of the Board of
Directors and the committees upon which such director served during the fiscal
year ended January 29, 1995, except directors Hellman who attended 67% of
all such meetings, Martin who attended 57% of all such meetings and Drexler who
attended 56% of all such meetings.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE-NAMED
NOMINEES.
CERTAIN TRANSACTIONS
The Company leases its distribution center in Memphis, Tennessee, from
two partnerships whose partners include directors, executive officers and/or
significant shareholders of the Company. See "Executive Compensation--
Compensation Committee Interlocks and Insider Participation."
9
<PAGE> 11
INFORMATION CONCERNING EXECUTIVE OFFICERS
Executive officers of the Company are elected by the Board of
Directors and serve at the pleasure of the Board. Certain information
concerning such executive officers is set forth below:
<TABLE>
<CAPTION>
Name Age Present Position with the Company and Business Experience
---- --- ---------------------------------------------------------
<S> <C> <C>
Charles E. Williams. . . . . . . 79 Founder of the Company and Vice Chairman since 1986.
W. Howard Lester . . . . . . . . 59 Chairman since 1986 and Chief Executive Officer since
1979.
Gary G. Friedman . . . . . . . . 37 Executive Vice President since 1993; Senior Vice
President-Stores, 1991-1992; and Vice President-Stores,
1988-1990.
Patrick J. Connolly. . . . . . . 48 Senior Vice President-Mail Order since 1991; Vice
President-Mail Order, 1979-1990; and Assistant Secretary
since 1983.
Robert K. Earley . . . . . . . . 48 Senior Vice President-Distribution since 1991; and Vice
President, Distribution 1983-1990.
Russell Solt . . . . . . . . . . 47 Senior Vice President-Finance and Administration, Chief
Financial Officer and Secretary, since 1994.
H. Peter Young. . . . . . . . . . 48 Senior Vice President-Logistics since 1994.
Claudia Abrams. . . . . . . . . . 50 Vice President-Human Resources since 1985.
</TABLE>
10
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation
of the Company's Chief Executive Officer and its four other most highly
compensated executive officers who served as executive officers during the
fiscal year ended January 29, 1995 whose total annual salaries and bonuses
exceeded $100,000 for such fiscal year.
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION (3) COMPENSATION
---------------------- -------------
AWARDS
------
Name and Securities All Other
Principal Underlying Compensation
Position(1) Year(2) Salary($) Bonus($) Options(#)(4) ($)
- ----------- ------- --------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
W. Howard Lester.............. 1994 386,538 0 37,500 10,066(5)
Chief Executive Officer, 1993 350,000 125,000 78,750 11,554
Chairman and Director 1992 350,000 0 81,000 0
Gary G. Friedman.............. 1994 323,076 0 15,000 5,163(6)
Executive Vice President 1993 250,000 100,000 337,500 6,071
and Director 1992 163,442 50,000 30,375 0
Patrick J. Connolly........... 1994 200,615 0 15,000 8,769(7)
Senior Vice President- 1993 180,808 100,000 28,125 7,003
Mail Order, Assistant 1992 177,700 0 22,500 0
Secretary and Director
Robert K. Earley.............. 1994 187,308 0 9,000 7,084(8)
Senior Vice President- 1993 178,270 50,000 22,500 10,043
Distribution 1992 172,845 0 28,125 0
Charles Williams.............. 1994 125,000 0 0 10,770(9)
Founder and Vice Chairman 1993 125,000 25,000 0 3,897
of the Board of the 1992 125,000 0 0 0
Company
James E. Riley(10)............ 1994 175,000 0 0 7,241(11)
Former Senior Vice President 1993 171,539 50,000 45,000 9,900
Finance and Administration, 1992 165,000 0 0 0
Chief Financial Officer
and Secretary
</TABLE>
11
<PAGE> 13
(1) None of the executives named in this table held any shares of
restricted stock of the Company as of January 29, 1995.
(2) Rows specified "1994," "1993" and "1992" represent fiscal years ended
January 29, 1995, January 30, 1994, and January 31, 1993,
respectively.
(3) While the named executive officers enjoy certain perquisites, the
aggregate value of such perquisites for each of the fiscal years shown
did not exceed the lesser of $50,000 or 10% of such officer's salary
and bonus for the applicable year.
(4) Figures have been adjusted to reflect the 3-for-2 stock split in
September 1994 (the "Stock Split").
(5) Comprised of the Company's matching contributions under the Profit
Sharing Plan, the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life
insurance for the benefit of the named officer, and benefits received
under the Company's executive supplemental medical plan of $3,000,
$1,500, $3,029, and $2,537, respectively.
(6) Comprised of the Company's matching contributions under the Profit
Sharing Plan, the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life
insurance and benefits received under the Company's executive
supplemental medical plan of $3,000, $1,500, $444, and $219,
respectively.
(7) Comprised of the Company's matching contributions under the Profit
Sharing Plan, the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life
insurance and benefits received under the Company's executive
supplemental medical plan of $3,000, $1,500, $1,171, and $3,098,
respectively.
(8) Comprised of the Company's matching contributions under the Profit
Sharing Plan, the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life
insurance and benefits received under the Company's executive
supplemental medical plan of $3,000, $1,500, $1,104, and $1,480,
respectively.
(9) Comprised of the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life
insurance for the benefit of the named officer, and benefits received
under the Company's executive supplemental medical plan of $1,250,
$8,677, and $843, respectively
(10) On November 11, 1994, Mr. Riley changed his employment status to
part-time and concurrently relinquished his position as an officer of
the Company. Mr. Riley is included in this table because he would
have been among the four other most highly compensated executive
officers had he been an executive officer on January 29, 1995.
(11) Comprised of the Company's matching contributions under the Profit
Sharing Plan, the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life
insurance and benefits received under the Company's executive
supplemental medical plan, of $3,000, $1,500, $1,142, and $1,599,
respectively.
12
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
The 1993 Plan, which was approved by the shareholders of the Company
at the 1993 Annual Meeting, is currently the only stock option plan under which
the Company may grant options. The following table sets forth the information
noted for all grants of stock options made to the Chief Executive Officer and
each of the other executive officers named in the Summary Compensation Table
during the fiscal year ended January 29, 1995:
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants(1) Appreciation for Option Term
- --------------------------------------------------------------------------- -----------------------------------
Percentage of
Number of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#) Fiscal Year(%) ($/Sh) Date 5% ($) 10% ($)
- ------------------------ ----------- -------------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
W. Howard Lester 37,500 13.2% $22.00 3/16/2004 $518,838 $1,314,838
Chief Executive
Officer, Chairman and
Director
Charles Williams 0 0.0 0 0
Founder
Vice Chairman
Gary G. Friedman 15,000 5.3 22.00 3/16/2004 207,535 525,935
Executive Vice
President and Director
Patrick J. Connolly 15,000 5.3 22.00 3/16/2004 207,535 525,935
Senior Vice President-
Mail Order, Assistant
Secretary and Director
Robert K. Earley 9,000 3.2 22.00 3/16/2004 124,521 315,561
Senior Vice President-
Distribution
</TABLE>
(1) Figures have been adjusted to reflect the Stock Split.
13
<PAGE> 15
AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUE
The following table sets forth the fiscal year-end value of
unexercised options held by the Chief Executive Officer and each of the other
executive officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
Fiscal Year-End (#)(1) at Fiscal Year-End ($)
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. Howard Lester 48,150 149,100 $ 869,025 $2,029,168
Chief Executive Officer,
Chairman and Director
Charles Williams 0 0 0 0
Founder, Vice Chairman
Gary G. Friedman 70,000 2,039,896 110,900 303,225 1,725,236 3,782,416
Executive Vice President
Patrick J. Connolly 65,250 51,000 1,104,553 402,994
Senior Vice President-Mail
Order, Assistant Secretary
and Director
Robert K. Early 66,375 43,875 1,296,166 632,562
Senior Vice President-
Distribution
James E. Riley (2) 87,750 2,489,964 0 36,000 0 634,230
Senior Vice President-
Finance and
Administration, Chief
Financial Officer and
Secretary
</TABLE>
(1) Figures have been adjusted to reflect the Stock Split.
(2) On November 11, 1994, Mr. Riley changed his employment status to
part-time and concurrently relinquished his position as an officer of
the Company. Mr. Riley is included in this table because he would have
been among the four other most highly compensated executive officers
had he been an executive officer on January 29, 1995.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting executive
compensation policy and determining the compensation paid to executive officers
of the Company. The Compensation Committee is currently comprised of the
directors named below, all of whom are nonemployee directors.
14
<PAGE> 16
In 1992, with the assistance of an independent executive compensation
advisor, the Compensation Committee conducted a major review of its executive
compensation programs and philosophies. As a result of this review the
Committee established its current approach to executive compensation at the
Company with one exception. During its review of executive pay practices in
1994, the Committee decided to reinstate the annual cash incentive plan. The
Committee determined that it was necessary to combine the three elements of
compensation -- base salary, annual cash incentive and stock options -- to
achieve its objectives.
The Company's executive compensation programs are designed to enable
it to attract, retain, motivate and reward highly qualified executives while
maintaining strong and direct links among executive pay, individual
performance, the Company's financial performance and shareholder returns. The
Compensation Committee believes that officers and other key employees should
have a significant stake in the Company's stock price performance under
programs which link executive compensation to shareholder return. Notably the
Chief Executive Officer, Mr. Lester, beneficially owned 2,909,972 shares,
(including options which are currently exercisable or exercisable within 60
days) representing 11.5% of the shares of Common Stock as of March 31, l995.
Mr. Lester (together with the undersigned Mr. McMahan) purchased the Company
from its founder Charles E. Williams in 1979. The Company first offered stock
to the public in 1983.
The Company competes with a number of different companies both within
and outside the retail industry for talented executives. Accordingly, when
assessing the competitiveness of the Company's compensation programs, the
Committee considers both pay practices of retailers of comparable size who are
part of the Center of Research in Security Prices ("CRSP" Index for NASDAQ
Retail Trade Stock), one of the Indices used in the Performance Graph, and pay
practices of other companies considered comparable based on the industry,
revenues and other factors (together the " Comparable Companies"). The
Committee consults with an independent executive compensation advisor for
information on competitive compensation levels of Comparable Companies.
Base salaries are targeted at average competitive levels of
Comparable Companies, with actual base salaries determined based on an
assessment of individual performance and contributions. In May of 1994 the
Committee reviewed executive officer salaries and increased the Chief
Executive's salary 14%. Prior to this increase, his salary had not been
increased since August 1991. In determining the Chief Executive's 1994 salary,
the Committee reviewed the company's 1993 performance. Specifically, the
Committee noted the increases in revenues, comparable store sales, mail order
sales and 536% increase in pre-tax earnings. The Committee also noted that
shareholder value significantly increased during Fiscal 1993 with the stock
price of the company increasing 194% as compared to increases of 13.7% and 6.6%
in the CRSP Index for NASDAQ Stock Market (U.S. Companies) and the CRSP Index
for NASDAQ Retail Trade Stock, respectively. Gary Friedman's salary was
increased 40% based on his key leadership role in merchandising which
contributed to the Company's turnaround. Other executive officers received
increases averaging 6.5%, based on the Committee's assessment of their
individual contributions.
As mentioned above, the annual cash incentive plan was reinstated for
the l994 fiscal year. It was designed to reward for extraordinary results,
linking annual cash incentives to specific corporate and/or divisional
financial goals. Specific pre-tax earnings goals and payout levels were
established
15
<PAGE> 17
to reflect the Company's objectives. These goals and the potential incentive
awards for executive officers were reviewed and approved by the Committee.
While the Company had record earnings this year, none of the executive
officers named in the Summary Compensation Table were awarded bonuses under the
annual cash incentive plan because the Company's overall results did not meet
the agreed upon goals. However, various divisional officers did receive cash
bonuses due to the fact that their respective divisions met or exceeded pre-tax
earnings goals set for their individual divisions. The Committee believes it
is important to link annual cash bonuses for the executive officers and
divisional officers to the annual performance of the company or a
division, respectively.
Stock ownership and the link to shareholder value is an integral part
of the Company's executive compensation program. Accordingly, the number of
stock options granted to the Chief Executive Officer and other executive
officers reflect competitive practices for Comparable Companies and the
assessment of their individual contributions. The Chief Executive Officer was
granted an option for 37,500 shares. Grants to other executive officers
averaged 10,500 shares. All stock options were granted with an exercise price
equal to the fair market value of a share of Common Stock on the date of
grant.
The Omnibus Budget and Reconciliation Act of 1993 amended Section
162(m) of the Internal Revenue Code and could, depending on future compensation
levels, result in limits on the Company's ability to deduct compensation in
excess of $1,000,000 paid to certain executive officers. Exceptions to this
deductibility limit may be made for various forms of performance-based
compensation. Based on 1994 compensation levels, no such limits on the
deductibility of compensation applied for any officer of the Company. While
the Company has not adopted a policy specifically prohibiting compensation at a
level that would limit deductions, the Committee does not currently anticipate
any restrictions on the future deductibility of compensation for the Company's
officers. While the Committee cannot predict with certainty how the
deductibility limit may impact the Company's compensation program in future
years, the Committee intends to maintain an approach to executive compensation
which strongly links pay to performance. This approach should preserve the
deductibility of the Company's executive compensation while maintaining highly
motivational compensation programs which support the Company business
objectives and strategies and reinforce the creation of shareholder value.
Respectfully submitted,
James A. McMahan
Millard Drexler
F. Warren Hellman
John E. Martin
Members of the Compensation Committee
16
<PAGE> 18
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS OF THE COMPANY,
CRSP* INDEX FOR THE NASDAQ STOCK MARKET (U.S. COMPANIES), AND
CRSP INDEX FOR NASDAQ RETAIL TRADE STOCKS
[Performance Graph for Williams-Sonoma, Inc.]
<TABLE>
<CAPTION>
1/29/90 1/29/91 1/29/92 1/29/93 1/28/94 1/27/95
<S> <C> <C> <C> <C> <C> <C>
Williams-Sonoma 100.0 115.9 91.4 72.3 212.7 292.2
NASDAQ Stock Market 100.0 99.3 156.1 177.5 201.8 194.6
NASDAQ Retail Trade 100.0 114.9 204.5 186.5 198.9 178.4
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization
on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 1/29/90.
*Center for Research in Security Prices, The University of Chicago, Graduate
School of Business.
17
<PAGE> 19
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's warehouse and distribution center is located in Memphis,
Tennessee and leased from two partnerships whose partners include directors,
executive officers and/or significant shareholders of the Company. The
distribution center consists of two separate facilities - one for mail order
operations and one for retail store operations.
Mail Order Facility
In July 1983, the Company entered into an agreement to lease a 243,000
square-foot distribution center from a partnership (the lessor). The lessor is
a partnership comprised of W. Howard Lester, Chairman, Chief Executive Officer
and significant shareholder of the Company, and James A. McMahan, a director
and significant shareholder of the Company and member of the Compensation
Committee. The partnership financed the construction through the sale of
$6,300,000 principal amount of industrial development bonds due June 2008. The
lease had an initial, non-cancelable term of ten years expiring on June 30,
1994, with two optional fire-year renewals by the Company. In December 1985,
the partnership financed the construction of an additional 190,000 square feet
of space through the sale of $2,900,000 principal amount of industrial
development bonds due 2010. The Company's lease with the partnership was
amended to include additional rent plus interest on the new bonds for the same
lease term as the original lease. In December 1993, the Company exercised the
two five-year renewal options and is now obligated to lease the space until
June 30, 2004. Effective July 1, 1994, the fixed basic monthly rent is
$51,500. Rental payments consist of basic monthly rent, plus interest on the
bonds (a floating rate equal to 55% of the prime rate of a designated bank),
applicable taxes, insurance and maintenance expenses. In connection with the
December 1993 transaction, both the partnership and the Company provided to an
unaffiliated bank an indemnity against certain environmental liabilities.
Retail Store Facility
In August 1990, the Company entered into a separate agreement to lease
a second distribution center, consisting of approximately 307,000 square feet,
adjacent to the existing distribution center in Memphis, Tennessee. The lessor
is a partnership comprised of Messrs. Lester, McMahan, Robert K. Earley,
Senior Vice President of Distribution, and Gary H. Hewson. The partnership
financed the construction of the distribution center through the sale of
$10,550,000, 10.36% principal amount of individual development bonds due in
August 2015.
In September 1994, this lease was amended to include an approximately
306,000 square-foot expansion of the facility. The expansion is currently
under construction and expected to be completed in July 1995. The lessor is
financing the construction of the expansion through a $500,000 capital
contribution from its partners and the sale of $12,500,000, 9.01% principal
amount of industrial development bonds due in August 2015. The amended lease
has an initial, non-cancelable term of 15 years beginning August 1991 and
ending in July 2006, with three optional five-year renewals. Rentals
(including interest on the bonds, sinking fund payments, and fees) for the
primary term are payable at an average rate of $623,895 per quarter plus
applicable taxes, insurance and maintenance expenses.
18
<PAGE> 20
Both facilities (including the 1994 expansion) are constructed to the
Company's specifications. After the option periods, the Company is obligated
to renew each lease annually so long as the bonds which financed the specific
projects remain outstanding. The Company accounts for the facility leases as
operating leases. The Company believes that the facility leases are on terms
no less favorable than the Company could have obtained from third parties in
arm's-length transactions.
19
<PAGE> 21
PROPOSAL 2
AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION TO ADD A
PAR VALUE OF $.01 PER SHARE OF COMMON STOCK AND PREFERRED STOCK
The Board of Directors of the Company has unanimously adopted a resolution
to amend Article III(a) of the Company's Articles of Incorporation to add a par
value of $.01 per share of common and preferred stock. If the amendment is
approved, Article III(a) of the Company's Articles of Incorporation will read
as follows:
This corporation is authorized to issue two classes of shares:
Common and Preferred. The number of Preferred shares
authorized to be issued is 7,500,000, with a par value of one
cent ($.01) per share, and the number of Common shares
authorized to be issued is 126,562,500, with a par value of
one cent ($.01) per share.
Like most California corporations, the Company's Articles of Incorporation
do not specify a par value for any of its authorized shares of stock because a
par value is not required for a legal purpose under the California General
Corporation Law. In those instances where a par value is required for purposes
of the laws of other states, Section 205 of the General Corporation Law
provides, in part:
Solely for the purpose of any statute or regulation imposing
any tax or fee based upon the capitalization of a corporation,
all authorized shares of a corporation organized under this
division shall be deemed to have a nominal or par value of one
dollar ($1) per share.
However, in at least one instance, a state taxing authority has declined
to apply Section 205 for the purpose of calculating a license fee based upon
the Company's capitalization. As a result, the Company was assessed (and paid)
a significantly higher license fee than would have been assessed had the
Company's shares been deemed to have the par value specified in Section 205.
Accordingly, the Company proposes to amend its Articles of Incorporation
to add a par value of $.01 per share of common and preferred stock. Although
the Company believes this amendment will significantly reduce the
aforementioned license fee, there can be no assurance that the applicable
taxing authority will not assert a contrary position.
Under California law, the adoption of an amendment to the Company's
Articles of Incorporation requires the affirmative vote of a majority of the
outstanding shares entitled to vote thereon. Thus, abstentions and broker
non-votes will have the same effect as a vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT OF THE
COMPANY'S ARTICLES OF INCORPORATION.
20
<PAGE> 22
PROPOSAL 3
AMENDMENT OF THE 1993 STOCK OPTION PLAN
The Company believes that, over the years, its stock option plans have
made a significant contribution to the ability of the Company to attract and
retain highly competent individuals on whose judgment, initiative, leadership
and continued efforts the growth and profitability of the Company depend.
Consistent with that view, the Company's 1993 Stock Option Plan (the "1993
Plan") currently awards nonemployee directors nonqualified stock options to
purchase 6,750 shares of Common Stock on the date of the annual meeting at
which they are first elected and 2,250 shares of Common Stock on the date of
each annual meeting at which they are re-elected. For the reasons discussed
below, the Company proposes to amend the 1993 Plan to increase the size of the
stock options awarded annually to nonemployee directors upon their reelection
from 2,250 shares of Common Stock to 5,250 shares of Common Stock (the
"Amendment").
The Company believes that the compensation currently paid to its
nonemployee directors is significantly less than amounts paid by Comparable
Companies. In addition to expense reimbursements and the annual stock options
currently awarded under the 1993 Plan, the Company pays each nonemployee
director $1,000 for each Board Meeting attended and for each committee meeting
attended which does not occur on the same day as a Board Meeting. The Company
does not pay its nonemployee directors the customary annual retainer paid by
many comparable companies.
In lieu of paying an annual cash retainer, the Company proposes to
increase the size of the stock options awarded annually to nonemployee
directors upon their reelection by 3,000 shares of Common Stock. The Company
believes that the amount of the increase is reasonable in light of the director
compensation paid by comparable companies. Furthermore, if this proposal is
approved at the Annual Meeting, the Company will eliminate the $1,000 per
meeting attendance fee.
The Company believes that an increase in the compensation of
nonemployee directors is advisable to maintain a competitive compensation
package for these individuals. By awarding the increase in the form of stock
options rather than cash, the Company believes that it can enhance the
nonemployee directors' interest in the success of the Company and further align
their interests with those of the Company's shareholders. The Company would
also avoid expending additional cash resources on director compensation.
DESCRIPTION OF THE 1993 PLAN
The following is a brief description of the material features of the
1993 Plan in its present form and is qualified in its entirety by reference to
the full text of the 1993 Plan as set forth in Exhibit A to this Proxy
Statement. (The following description and Exhibit A include all adjustments
required under the 1993 Plan to reflect the Company's two stock splits since
the original adoption of the 1993 Plan.)
Shares Subject to the 1993 Plan. Under the 1993 Plan, up to an
aggregate of 2,250,000 shares of the Common Stock may be awarded or issued upon
the exercise of all options under the 1993
21
<PAGE> 23
Plan. As of March 20, 1995, the aggregate market value of 2,250,000 shares of
Common Stock was $51,750,000. If any option granted under the 1993 Plan shall
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject to such option may thereafter be available for
future grants under the 1993 Plan. The Plan provides for appropriate
adjustment of shares available under the 1993 Plan in the event of any change
in the number of outstanding shares of Common Stock of the Company resulting
from reorganizations, recapitalizations, reclassifications, stock dividends,
stock splits or other similar events.
Types of Awards. Two types of options may be awarded under the 1993
Plan: (i) options intended to qualify as incentive stock options under Section
422A of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii)
nonqualified stock options.
Administration. The 1993 Plan is administered by the Compensation
Committee, which is composed of two or more disinterested directors appointed
by the Company's Board of Directors. Except for options granted to nonemployee
directors (which are described under "Grants to Nonemployee Directors" below),
the Compensation Committee has the authority (i) to construe and interpret the
Plan, (ii) to define the terms used herein, (iii) to prescribe, amend and
rescind rules and regulations relating to the Plan, (iv) to determine the
individuals to whom and the time or times at which options shall be granted,
whether such options will be incentive stock options or nonqualified stock
options, the number of shares to be subject to each option, the option price,
the number of installments, if any, in which each option may be exercised, and
the duration of each option, (v) to approve and determine the duration of
leaves of absence which may be granted to participants without constituting a
termination of their employment for the purposes of the Plan, (vi) to amend the
terms of any outstanding option, with consent of the option holder, and (vii)
to make all other determinations necessary or advisable for the administration
of the Plan.
Eligibility and Participation. All directors, executives and other
key employees of the Company or any of its Affiliates (as defined in the 1993
Plan) are eligible for selection to participate in the 1993 Plan.
Approximately 875 full-time employees and 6 nonemployee directors are currently
eligible to participate under the 1993 Plan. Nonemployee directors are only
eligible to participate in the 1993 Plan under the formula described below in
"Grants to Nonemployee Directors." Incentive stock options may only be granted
to employees of the Company or its Affiliates. An individual who has been
granted an option may, if such individual is otherwise eligible, be granted an
additional option or options if the Compensation Committee shall so determine,
subject to the other provisions of the 1993 Plan.
Duration of Options. Except for options granted to nonemployee
directors, each option is of a duration specified in the option agreement by
the Compensation Committee, but no option has an expiration date later than the
tenth (10th) anniversary of the date of its grant and no incentive stock option
granted to an employee who owns more than 10% of the voting stock of the
Company may be exercised after the five-year period following the date of the
grant. Nonqualified stock options granted to nonemployee directors may be
exercised for a period of ten years after the date of grant.
Duration and Amendment of the 1993 Plan. The 1993 Plan shall remain
in effect until terminated by the Compensation Committee or until all stock
subject to it shall have been issued pursuant to options granted under the 1993
Plan; provided that no options may be granted after March 17,
22
<PAGE> 24
2003. Subject to certain restrictions with respect to nonqualified stock
options granted to nonemployee directors described below, the Compensation
Committee may amend or suspend the 1993 Plan at any time; provided that
amendments which (i) increase the maximum shares available for grant under the
1993 Plan, (ii) change the minimum exercise price of an incentive stock
option, (iii) permit the grant of options to persons other than employees or
directors, or (iv) materially increase the benefits accruing to participants
under the 1993 Plan must be subject to shareholder approval.
Exercise Price. In the case of incentive stock options, the exercise
price must be at least equal to the fair market value of the stock on the date
the option is granted. In addition, grants of incentive stock options to
employees owning over 10% of the voting stock of the Company must be at an
exercise price of not less than 110% of the fair market value on the date of
the grant. The exercise price of a nonqualified option must be at least equal
to 75% of the fair market value of the stock on the date the option is granted.
Upon the exercise of any option, the purchase price must be paid in full either
in cash or in the Company's Common Stock valued at market value (unless the
Compensation Committee permits exercise with a secured note or a "cashless
exercise"). The aggregate fair market value (determined at the time the
options are granted) of the shares covered by incentive stock options granted
to any one employee under the 1993 Plan (or any other incentive stock option
plan of the Company) which may become exercisable for the first time in any one
calendar year may not exceed $100,000.
Basic Terms. Options granted under the 1993 Plan may only be
exercised by the optionee and are nontransferable, except by will or the laws
of descent and distribution or, in the case of nonqualified stock options,
pursuant to a qualified domestic relations order. Except for nonqualified
stock options granted to nonemployee directors as described below, options may
be exercisable in such installments as may be determined by the Compensation
Committee, but not within six months of the date of grant, except in cases of
death or disability of the optionee or dissolution, liquidation,
reorganization, merger or consolidation of the Company. To the extent that an
option is not exercised when it becomes exercisable, the option shall continue
to be exercisable until the option terminates or expires. No incentive stock
option is exercisable for more than three months after termination of the
employment of the optionee except that, if such termination is due to death or
disability of the employee, then it is exercisable for no more than one year
after such employee's death or disability. Except for options granted to the
nonemployee directors, nonqualified stock options terminate in accordance with
the terms of the relevant stock option agreement, as determined by the
Compensation Committee.
Grants to Nonemployee Directors. Nonemployee directors are eligible
for grants of options under the 1993 Plan only in accordance with the following
formula. Nonemployee directors who are elected to the Board of Directors for
the first time at any special or annual meeting of shareholders will each
receive, on such date, an option to purchase 6,750 shares of Common Stock,
which shall be exercisable in full beginning six months after the date of
grant. In addition, each nonemployee director presently receives an option to
purchase an additional 2,250 shares of Common Stock each time such director is
reelected to the Board of Directors at any annual meeting of shareholders. If
the Amendment is approved, the size of these annual option awards will be
increased to 5,250 shares of Common Stock. All options granted to nonemployee
directors are exercisable in full beginning six months after the date of grant.
The price of each option granted to a nonemployee director shall be equal to
the fair market value of the Common Stock on the date
23
<PAGE> 25
of grant. The term of each option granted to a nonemployee director shall be
ten years from the date of grant. Pursuant to Rule 16b-3 promulgated under
Section 16(b) of the Securities Exchange Act of 1934, as amended, the
provisions of the 1993 Plan with respect to the preceding formula may not be
amended more than once every six months, other than to comport with changes
under the Code or ERISA, or the rules thereunder.
PROPOSED AMENDMENT
If this proposal is approved, the second paragraph of Section 5 of the
1993 Plan would be amended to read in its entirety as follows:
During the term of the Plan, a Non-Employee Director shall
also be granted a nonqualified stock option to purchase 5,250
shares of Common Stock, subject to adjustment pursuant to
Section 16, on the date of each annual meeting of the
Company's shareholders, at which such Non-Employee Director is
re-elected to continue to serve on the Company's Board of
Directors.
PLAN BENEFITS
If the proposed Amendment is approved, Messrs. Berry, Bessin, Drexler,
Hellman, Martin and McMahan, the incumbent nonemployee directors, will each
receive a nonqualified stock option to purchase 5,250 shares of Common Stock on
the date of each Annual Meeting of the Company's shareholders, including this
year's Annual Meeting, at which he is reelected as a nonemployee director.
FEDERAL INCOME TAX CONSEQUENCES.
Nonqualified Stock Options. Under current federal income tax law, the
grant of a nonqualified stock option has no tax effect on the Company or the
optionee to whom it is granted. If the shares received on exercise of an option
are not subject to restrictions on transfer or risk of forfeiture imposed by
the Compensation Committee, the exercise of a nonqualified stock option will
result in ordinary income to the optionee equal to the excess of the fair
market value of the shares at the time of exercise over the option price. The
amount taxed to the optionee as ordinary income is treated as earned income.
The optionee's tax basis in the shares will be equal to the aggregate exercise
price paid by the optionee plus the amount of taxable income recognized upon
the exercise of the option. Upon any subsequent disposition of the shares, any
further gain or loss recognized by the optionee will be treated as capital gain
or loss and will be long-term capital gain or loss if the shares are held for
more than one year after exercise. The Company will normally be allowed, at
the time of recognition of ordinary income by the optionee upon exercise, to
take a deduction for federal income tax purposes in an amount equal to such
recognized income.
Incentive Stock Options. The federal income tax consequences
associated with incentive stock options are generally more favorable to the
optionee and less favorable to the employer than those associated with stock
options which are not incentive stock options. Under current federal income
tax law, the grant of an incentive stock option does not result in income to
the optionee or in a deduction for the Company at the time of the grant. The
exercise of an incentive stock option will
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not result in income for the optionee if the optionee (a) does not dispose of
the shares within two years after the date of grant nor within one year after
exercise, and (b) is an employee of the Company or any of its Affiliates from
the date of grant until three months before the exercise date. If these
requirements are met, the basis of the shares upon later disposition would be
the option price. Any gain will be taxed to the optionee as long-term capital
gain and the Company will not be entitled to a deduction. The excess of the
market value on the exercise date over the option price is an item of tax
preference, potentially subject to the alternative minimum tax. If the
optionee disposes of the shares prior to the expiration of either of the
holding periods described above, the optionee would have compensation taxable
as ordinary income, and the Company would be entitled to a deduction equal to
the lesser of the fair market value of the shares on the exercise date minus
the option price or the amount realized on disposition minus the option price.
If the price realized in any such premature sale of the shares exceeds the fair
market value of the shares on the exercise date, the excess will be treated as
long-term or short-term capital gain depending on the optionee's holding period
for the shares.
VOTE REQUIRED FOR APPROVAL OF THE 1993 PLAN
The affirmative vote of shareholders holding a majority of outstanding
shares present, or represented, and entitled to vote at the Annual Meeting is
required under the terms of the 1993 Plan and for the 1993 Plan to qualify for
the Rule 16b-3 exemption promulgated under Section 16(b) of the 1934 Act,
relating to the disgorgement of short-swing profits realized by officers,
directors or beneficial owners of 10% of the Common Stock of the Company. For
this purpose, abstentions and broker non-votes would have the effect of a vote
against the proposal. Furthermore, because certain directors benefit from the
proposed 1993 Plan, under Section 310 of the California General Corporation
Law, the person asserting the validity of the grant of an option under the 1993
Plan to a director would have the burden of proving that such grant was just
and reasonable as to the Company at the time that the grant was authorized,
approved or ratified, unless the amendment is approved by the shareholders
holding (a) a majority of shares present, or represented, and voting at the
Annual Meeting, with the shares owned by the directors not being entitled to
vote thereon, and (b) a majority of the required quorum, which, in this case,
is the majority of outstanding shares other than the shares owned by the
directors. For this purpose, abstentions and broker non-votes will have no
effect on the outcome of the vote, unless such shares are necessary to satisfy
the quorum requirement, in which case such abstentions and broker non-votes
will have the effect of a vote against the proposal. Under the California
General Corporation Law, a majority of the shares entitled to vote, represented
in person or by proxy, shall constitute a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT OF THE
1993 PLAN. Unless otherwise instructed, the proxyholders will vote the proxies
received by them for this proposal.
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PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
As recommended by its Audit Committee, the Board of Directors has
selected Deloitte & Touche as independent accountants for the fiscal year
ending January 28, 1996, subject to ratification by the shareholders.
Deloitte & Touche, formerly known as Touche Ross & Co., has audited
the Company's financial statements since the fiscal year ended March 31, 1980.
It is expected that their representative will be present at the Annual Meeting
and will have the opportunity to make a statement if he or she desires to do
so. The representative will be available to respond to appropriate questions.
In the event that the selection of Deloitte & Touche as independent
accountants for the fiscal year ending January 28, 1996, is not ratified by the
shareholders, the Board of Directors will select other independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THIS
REAPPOINTMENT.
OTHER MATTERS
The Company knows of no other matters to be acted upon at the meeting
other than those referred to in the accompanying notice of the Annual Meeting.
However, if any other matter should properly come before the Annual Meeting,
holders of the proxies solicited hereby will vote thereon in their discretion.
PROPOSALS OF SHAREHOLDERS
Proposals intended to be presented by shareholders at the 1996 Annual
Meeting of Shareholders and included in the Company's proxy statement for such
meeting must be received by the Secretary of the Company at 3250 Van Ness
Avenue, San Francisco, California 94109, on or before December 20, 1995.
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AVAILABILITY OF REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR
1994 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE UPON
WRITTEN REQUEST AND WITHOUT CHARGE TO ANY SHAREHOLDER BY WRITING TO:
Secretary
Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
By Order of the Board of Directors
Russell Solt, Secretary
San Francisco, California
April 18, 1995
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EXHIBIT A
WILLIAMS-SONOMA, INC.
1993 STOCK OPTION PLAN
1. Purpose.
The purpose of this 1993 Stock Option Plan (the "Plan") of
WILLIAMS-SONOMA, INC., a California corporation (the "Company"), is to secure
for the Company and its shareholders the benefits arising from stock ownership
by selected key employees and directors of the Company or any of its Affiliates
(as defined below). The Plan will provide a means whereby such employees and
directors may purchase shares of the common stock of the Company (or any class
of stock into which such common stock is converted or reclassified as provided
in Section 16) (the "Common Stock") pursuant to (i) options which will qualify
as "incentive stock options" under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and (ii) "non-incentive" or "nonqualified" stock
options ("nonqualified stock options"). From and after the date this Plan is
approved by the shareholders of the Company pursuant to Section 18, the Company
shall cease to grant new options to purchase Common Stock of the Company under
the 1976 Stock Option Plan of the Company.
2. Administration.
The Plan shall be administered by a committee (the "Committee")
appointed by the Board of Directors of the Company consisting of two or more
directors of the Company, all of whom shall be "disinterested persons" within
the meaning of Rule 16b-3 ("Rule 16b-3") promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"). No member of the Committee,
during the one year prior to service as a member of the Committee, shall have
received, or during such service shall receive, any equity securities of the
Company pursuant to this Plan or any other plan of the Company or any
Affiliate, except if such receipt would not disqualify such director as a
"disinterested person" under Rule 16b-3. Committee members may be granted
options pursuant to the formula set forth in Section 5, which formula is
intended to satisfy the requirements of Rule 16b-3(c)(2)(ii). Any action of
the Committee with respect to administration of the Plan shall be taken by a
majority vote or unanimous written consent of its members.
Subject to the provisions of the Plan, the Committee shall have the
authority (i) to construe and interpret the Plan, (ii) to define the terms used
herein, (iii) to prescribe, amend and rescind rules and regulations relating to
the Plan, (iv) to determine the individuals to whom and the time or times at
which options shall be granted, whether such options will be incentive stock
options or non-qualified stock options, the number of shares to be subject to
each option, the option price, the number of installments, if any, in which
each option may be exercised, and the duration of each option, (v) to approve
and determine the duration of leaves of absence which may be granted to
participants without constituting a termination of their employment for the
purposes of the Plan, (vi) to amend the terms of any outstanding option, with
consent of the option holder, and (vii) to
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make all other determinations necessary or advisable for the administration of
the Plan. All determinations and interpretations made by the Committee shall
be binding and conclusive on all participants in the Plan and their legal
representatives and beneficiaries.
3. Shares Subject to the Plan.
Subject to adjustment as provided in Section 16, the shares to be
offered under the Plan shall consist of the Company's authorized but unissued
Common Stock, and the aggregate amount of such stock which may be issued upon
exercise of all options under the Plan shall not exceed two million two hundred
fifty thousand (2,250,000) shares. If any option granted under the Plan shall
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for options to be
granted under the Plan.
4. Eligibility and Participation.
Subject to Section 5, all key employees and directors of the Company
or any Affiliate shall be eligible for selection to participate in the Plan.
An "Affiliate" shall mean any parent or subsidiary of the Company as defined in
Section 424(e) and (f) of the Code. An individual who has been granted an
option may, if such individual is otherwise eligible, be granted an additional
option or options if the Committee shall so determine, subject to the other
provisions of the Plan. No incentive stock option may be granted to any person
who, at the time the incentive stock option is granted, is not an employee of
the Company. Subject to Section 5, nonqualified stock options may be granted
to persons who have agreed in writing to become officers or key employees of
the Company or any Affiliate at the time of the grant and who become officers
or key employees of the Company or any Affiliate within 120 days thereafter.
Spouses to whom a nonqualified stock option is transferred pursuant to a
qualified domestic relations order pursuant to Section 11 shall also be
eligible to participate in the Plan with regard to such option, but only to the
extent the original option holder would have been able to participate had such
original option holder continued to hold the option, and to the extent
permitted by the Committee or by the terms of the option agreement.
The aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options (whenever
granted) are exercisable for the first time by an option holder during any
calendar year (under all incentive stock option plans of the Company and its
Affiliates) shall not exceed $100,000.
All incentive stock options granted under the Plan shall be granted
within ten years from the date of adoption of this Plan.
5. Formula Awards to Non-Employee Directors
Any person who is or becomes a director and who is not an employee of
the Company is referred to herein as a "Non-Employee Director." During the term
of the Plan, each Non-Employee Director who becomes for the first time a
director of the Company on or after the 1993 Annual Meeting of Shareholders
shall automatically be granted, on the date he or she first becomes a
Non-Employee Director, a nonqualified stock option to purchase 6,750 shares of
Common Stock, subject to adjustment pursuant to Section 16.
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During the term of the Plan, a Non-Employee Director shall also be
granted a nonqualified stock option to purchase 2,250 shares of Common Stock,
subject to adjustment pursuant to Section 16, on the date of each annual
meeting of the Company's shareholders, at which such Non-Employee Director is
re-elected to continue to serve on the Company's Board of Directors.
The purchase price under each nonqualified stock option granted to
Non-Employee Directors shall be equal to the fair market value of the stock
subject to the option on the date the option is granted. A nonqualified stock
option granted to Non-Employee Directors shall not be exercisable until six
months after the date of grant of such option, at which time such option shall
be fully exercisable for a period of ten (10) years from the date of grant.
Except as specifically provided in this Section 5, no options shall be
granted under the Plan to any Non-Employee Director. The provisions of this
Section 5 may not be amended more than once every six months, other than to
comply with changes in the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act ("ERISA"), or the rules promulgated
thereunder.
6. Duration of Options.
Subject to Section 5, each option and all rights associated therewith
shall expire on such date as the Committee may determine, and shall be subject
to earlier termination as provided herein; provided, however, that all stock
options shall expire within ten (10) years from the date on which such options
are granted and provided further that in the case of incentive stock options
granted to any person possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company (or an Affiliate,
as applicable) (a "10% Shareholder"), each incentive stock option shall expire
in any event within five (5) years from the date on which such incentive stock
option is granted.
7. Purchase Price.
Subject to Section 5, the purchase price of the stock covered by each
option shall be determined by the Committee, but (a) in the case of incentive
stock options, shall not be less than one hundred percent (100%) of the fair
market value of such stock (as determined under Section 9) on the date the
incentive stock option is granted, (b) in the case of incentive stock options
granted to 10% Shareholders, shall not be less than one hundred and ten percent
(110%) of the fair market value of such stock (as determined under Section 9)
on the date the incentive stock option is granted, and (c) in the case of
nonqualified stock options, shall not be less than seventy-five percent (75%)
of the fair market value of such stock (as determined under Section 9) on the
date the nonqualified stock option is granted. The purchase price of the
shares upon exercise of an option shall be paid in full at the time of exercise
(i) in cash or by check payable to the order of the Company, (ii) by delivery
of shares of Common Stock of the Company already owned by, and in the
possession of the option holder, or (iii) if authorized by the Committee or if
specified in the option being exercised, (x) by a promissory note made by
option holder in favor of the Company, upon the terms and conditions determined
by the Committee including, to the extent the Committee determines appropriate,
a security interest in the shares issuable upon exercise or other property, or
(y) through a "cashless exercise," in either case complying with applicable law
(including,
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<PAGE> 32
without limitation, state and federal margin requirements), or any combination
thereof. Shares of Common Stock used to satisfy the exercise price of an
option shall be valued at their fair market value determined (in accordance
with Section 9) on the date of exercise (or if such date is not a business day,
as of the close of the business day immediately preceding such date).
8. Exercise of Options.
In no event shall any option be exercisable earlier than six months
after the date of grant except in the case of the death or disability of the
option holder, in which case such option may be exercisable in accordance with
Section 14. Subject to Section 5, each option granted under this Plan may be
exercisable in full upon the expiration of such six month period or in such
installments during the period prior to its expiration date as the Committee
shall determine. Furthermore, unless otherwise determined by the Committee, if
the option holder shall not in any given installment period purchase all of the
shares which the option holder is entitled to purchase in such installment
period, then the option holder's right to purchase any shares not purchased in
such installment period shall continue until the expiration date or sooner
termination of the option holder's option. No option may be exercised for a
fraction of a share and no partial exercise of any option may be for less than
(i) one hundred (100) shares or (ii) the total number of shares then eligible
for exercise, if less than one hundred (100) shares.
9. Fair Market Value of Common Stock.
The fair market value of a share of Common Stock of the Company shall
be determined for purposes of the Plan by reference to the closing price on the
principal stock exchange on which such shares are then listed or, if such
shares are not then listed on a stock exchange, by reference to the closing
price (if approved for quotation on the NASDAQ National Market System) or the
mean between the bid and asked price (if other over-the-counter issue) of a
share as supplied by the National Association of Securities Dealers, Inc.
through NASDAQ (or its successor in function), in each case as reported by The
Wall Street Journal, for the business day immediately preceding the date on
which the option is granted (which, for all purposes, shall be the date on
which the Committee makes the determination granting the option) or exercised
(or, if for any reason no such price is available, in such other manner as the
Committee may deem appropriate to reflect the then fair market value thereof).
10. Withholding Tax.
Upon (i) the disposition by an employee or other person of shares of
Common Stock acquired pursuant to the exercise of an incentive stock option
granted pursuant to the Plan within two years of the granting of the incentive
stock option or within one year after exercise of the incentive stock option or
(ii) the exercise of non-qualified stock options, the Company shall have the
right to require such employee or such other person to pay the Company the
amount of any taxes which the Company may be required to withhold with respect
to such shares.
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11. Nontransferability.
An incentive stock option granted under the Plan shall, by its terms,
be non-transferable by the option holder, either voluntarily or by operation of
law, otherwise than by will or the laws of descent and distribution, and shall
be exercisable during the option holder's lifetime only by the option holder,
regardless of any community property interest therein of the spouse of the
option holder, or such spouses's successors in interest. If the spouse of the
option holder shall have acquired a community property interest in such option,
the option holder, or the option holder's permitted successors in interest, may
exercise the option on behalf of the spouse of the option holder or such
spouse's successors in interest.
A non-qualified stock option granted under the Plan shall, by its
terms, be non-transferable by the option holder, either voluntarily or by
operation of law, otherwise than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of ERISA, or the rules thereunder, and shall be exercisable
during the option holder's lifetime only by the option holder or, to the extent
permitted by the Committee or by the terms of the option agreement, the spouse
of the option holder who obtained the option pursuant to such a qualified
domestic relations order described herein or pursuant to Section 14.
12. Shares to be Issued in Compliance with Federal Securities Laws
and Exchange Rules.
At the discretion of the Committee, any option may provide that the
option holder (and any transferee), by accepting such option, represents and
agrees that none of the shares purchased upon exercise of the option will be
acquired with a view to any sale, transfer or distribution of said shares in
violation of the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations promulgated thereunder, or any applicable state "blue
sky" laws, and the person entitled to exercise the same shall furnish evidence
satisfactory to the Company (including a written and signed representation) to
that effect in form and substance satisfactory to the Company, including an
indemnification of the Company in the event of any violation of the Securities
Act or state blue sky laws by such person. The Company shall use its
reasonable efforts to take all necessary and appropriate action to assure that
the shares issuable upon the exercise of any option shall be issued in full
compliance with the Securities Act, state blue sky laws and all applicable
licensing requirements of any principal securities exchange on which shares of
the same class are listed.
13. Termination of Employment.
If a holder of an incentive stock option ceases to be employed by the
Company or any of its Affiliates for any reason other than the option holder's
death or permanent disability (within the meaning of Section 22(e)(3) of the
Code), the option holder's incentive stock option shall be exercisable for a
period of three (3) months after the date the option holder ceases to be an
employee of the Company or such Affiliate (unless by its terms it sooner
expires) to the extent exercisable on the date of such cessation of employment
and shall thereafter expire and be void and of no further force or effect. A
leave of absence approved in writing by the Committee shall not be deemed a
termination of employment for the purposes of this Section 13, but no option
may be exercised during any such leave of absence, except during the first
three (3) months thereof. Termination of employment or other relationship with
the Company by the holder of a
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<PAGE> 34
nonqualified stock option will have the effect specified in the individual
option agreement, as determined by the Committee, subject to Section 5. Any
option transferred pursuant to a qualified domestic relations order pursuant to
Section 11 shall continue to be subject to the provisions governing the grant
to the original grantee, including without limitation, the provisions governing
exercisability, vesting and termination (which shall be determined by reference
to the employment status of the original grantee), unless the option agreement
or the Committee provides otherwise.
14. Death or Permanent Disability of Option Holder.
If the holder of an incentive stock option dies or becomes permanently
disabled (within the meaning of Section 22(e)(3) of the Code) while the option
holder is employed by the Company or any of its Affiliates, the option holder's
option shall be exercisable for a period of one (1) year after the date of such
death or permanent disability (unless by its terms it sooner expires) to the
extent exercisable on the date of death or permanent disability and shall
thereafter expire and be void and of no further force or effect. During such
period after death, such incentive stock option may, to the extent that it
remained unexercised (but exercisable by the option holder according to such
option's terms) on the date of such death, be exercised by the person or
persons to whom the option holder's rights under the option shall pass by the
option holder's will or by the laws of descent and distribution. The death or
disability of a holder of a nonqualified stock option will have the effect
specified in the individual option agreement, as determined by the Committee,
subject to Section 5.
15. Privileges of Stock Ownership.
No person entitled to exercise any option granted under the Plan shall
have any of the rights or privileges of a shareholder of the Company in respect
of any shares of stock issuable upon exercise of such option until certificates
representing such shares shall have been issued and delivered. No shares shall
be issued and delivered upon the exercise of any option unless and until there
shall have been full compliance with all applicable requirements of the
Securities Act (whether by registration or satisfaction of exemption
conditions), all applicable listing requirements of any national securities
exchange on which shares of the same class are then listed and any other
requirements of law or of any regulatory bodies having jurisdiction over such
issuance and delivery.
16. Adjustments.
If the outstanding shares of the Common Stock of the Company (or any
other class of shares or securities which shall have become eligible for grant
under the Plan pursuant to this sentence) are increased or decreased or changed
into or exchanged for a different number or kind of shares or securities of the
Company through reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction, an
appropriate and proportionate adjustment shall be made in the maximum number
and kind of shares as to which options may be granted under this Plan. A
corresponding adjustment changing the number or kind of shares allocated to
unexercised options or portions thereof, which shall have been granted prior to
any such change, shall likewise be made. Any such adjustment in the
outstanding options shall be made without change in the aggregate purchase
price applicable to the unexercised portion
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of the option but with a corresponding adjustment in the price for each share
or other unit of any security covered by the option.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all the property or more than eighty percent
(80%) of the then outstanding stock of the Company to another corporation, the
Plan shall terminate, and all options theretofore granted hereunder shall
terminate; provided, however, that notwithstanding the foregoing, the Committee
shall provide in writing in connection with such transaction for any or all of
the following alternatives (separately or in combinations): (i) for the
options theretofore granted to become immediately exercisable notwithstanding
the provisions of Section 8; (ii) for the assumption by the successor
corporation of the options theretofore granted or the substitution by such
corporation for such options and rights of new options and rights covering the
stock of the successor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices; (iii)
for the continuance of the Plan by such successor corporation in which event
the Plan and the options theretofore granted shall continue in the manner and
under the terms so provided; or (iv) for the payment in cash or stock in lieu
of and in complete satisfaction of such options.
Adjustments under this Section 16 shall be made by the Committee,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. No fractional shares of stock
shall be issued under the Plan on any such adjustment.
17. Amendment and Termination of Plan.
The Committee may at any time suspend or terminate the Plan. Subject
to Section 5, the Committee may also at any time amend or revise the terms of
the Plan, provided that no such amendment or revision shall, unless appropriate
shareholder approval of such amendment or revision is obtained, increase the
maximum number of shares in the aggregate which may be sold pursuant to options
granted under the Plan, except as permitted under the provisions of Section 16,
or change the minimum purchase price of incentive stock options set forth in
Section 7, or increase the maximum term of incentive stock options provided for
in Section 6, or permit the granting of options to anyone other than as
provided in Sections 4 or 5, or otherwise materially increase the benefits
accruing to participants under the Plan.
Notwithstanding the foregoing, no amendment, suspension or termination
of the Plan shall, without specific action of the Committee and the consent of
the option holder, in any way modify, amend, alter or impair any rights or
obligations under any option theretofore granted under the Plan.
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Effective Date of Plan.
The Plan shall be submitted for approval by the holders of the
outstanding voting stock of the Company within twelve (12) months from the date
the Plan is adopted by the Board of Directors. The Plan shall be deemed
approved by the holders of the outstanding voting stock of the Company by the
affirmative vote of the holders of a majority of the voting shares of the
Company present, or represented, and entitled to vote at a meeting duly held in
accordance with the California Corporations Code, excluding from such vote all
shares held by directors of the Company.
Approved and adopted by
Board of Directors on
March 17, 1993
Shareholder approvals
received on
May 26, 1993
Amended on
- --------------------------------
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PROXY
WILLIAMS-SONOMA, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Williams-Sonoma, Inc. (the "Company")
hereby appoints W. HOWARD LESTER and RUSSELL SOLT, and each of them, with full
power of substitution to each, true and lawful attorneys, agents and
proxyholders of the undersigned, and hereby authorizes them to represent and
vote, as specified herein, all shares of Common Stock of the Company held of
record by the undersigned on March 31, 1995, at the 1995 Annual Meeting of
Shareholders of the Company, to be held on Wednesday, May 24, 1995 at 10:00
a.m. (Pacific Daylight Time) at 3250 Van Ness Avenue, San Francisco, California
94109, and any adjournment or postponements thereof.
(Please date and sign on reverse side.)
<PAGE> 38
THE PROXY WHEN PROPERLY SIGNED WILL BE VOTED IN THE MANNER DIRECTED ON THIS
PROXY BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NAMED DIRECTORS, FOR PROPOSALS 2, 3, AND 4 AND IN THE
MANNER DESCRIBED IN ITEM 5 OF THIS PROXY.
<TABLE>
<S> <C>
PLEASE MARK YOUR CHOICES LIKE
[ ] ________________________ THIS [ ] IN BLUE OR BLACK INK
COMMON
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, 3, AND 4.
<TABLE>
<S> <C> <C>
1. CHARLES E. WILLIAMS, W. HOWARD LESTER, WITHHOLD AUTHORITY
FOR the election as JAMES A. MCMAHAN, NATHAN BESSIN, to vote for all nominees
directors of all nominees PATRICK J. CONNOLLY, GARY G. FRIEDMAN, listed.
listed (except as marked to F. WARREN HELLMAN, JAMES M. BERRY,
the contrary). MILLARD S. DREXLER, JOHN E. MARTIN.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST ABOVE.)
[ ] [ ]
</TABLE>
<TABLE>
<S> <C> <C>
2. Proposal to amend the Company's 4. Proposal to ratify the 5. In their discretion, the
Articles of Incorporation to add a selection of Deloitte & Touche Proxyholders are authorized to
par value of $.01 per share of as independent accountants for vote upon such other business as
common stock and preferred stock. for the 1995 fiscal year. may properly come before this
meeting, or any adjournments or
For Against Abstain postponements thereof.
[ ] [ ] [ ]
3. Proposal to amend the Company's
1993 Stock Option Plan to increase the
size of the stock options awarded
annually to nonemployee directors upon
their reelection from 2,250 shares of
common stock to 5,250 shares of common
stock.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] Dated: _________________________ 1995.
PLEASE SIGN THIS PROXY EXACTLY AS YOUR
NAME OR NAMES APPEAR ON THIS PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
______________________________________
Signature
Signature
______________________________________
Please Print Name(s)
______________________________________
NOTE: WHEN STOCK HAS BEEN ISSUED IN
THE NAME OF TWO OR MORE PERSONS, ALL
SHOULD SIGN. WHEN SIGNING AS ATTORNEY,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
GIVE FULL TITLE AS SUCH. A CORPORATION
SHOULD HAVE ITS NAME SIGNED BY ITS
PRESIDENT OR OTHER AUTHORIZED OFFICER,
WITH THE OFFICE HELD DESIGNATED.
</TABLE>
THE ABOVE-SIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS, THE PROXY STATEMENT AND THE ANNUAL REPORT FOR
THE 1994 FISCAL YEAR FURNISHED HEREWITH.
