<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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE> 2
LOGO
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W I L L I A M S - S O N O M A
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3250 VAN NESS AVENUE
SAN FRANCISCO, CALIFORNIA 94109
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 26, 1999 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 approve an amendment to Article IV of the
Company's Articles of Incorporation.
(3) To ratify the selection of Deloitte & Touche LLP as independent
accountants for the fiscal year ending January 30, 2000.
(4) 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 30, 1999,
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. A list of
such shareholders will be available for inspection at the Annual Meeting by any
shareholder and, for 10 days prior to the Annual Meeting, at the Company's
offices at the address specified above.
Financial and other information concerning the Company is contained in the
enclosed Annual Report for the fiscal year ended January 31, 1999.
By Order of the Board of Directors,
Dennis A. Chantland, Secretary
San Francisco, California
April 23, 1999
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
WILLIAMS-SONOMA, INC.
3250 VAN NESS AVENUE
SAN FRANCISCO, CALIFORNIA 94109
------------------------------
PROXY STATEMENT
------------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 26, 1999
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 26, 1999, and any adjournments or
postponements thereof. The Annual Report to the shareholders of the Company for
the fiscal year ended January 31, 1999, 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 23, 1999.
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 each of the directors named in this Proxy Statement, in
favor of the amendment to the Articles of Incorporation, and in favor of the
ratification of the selection of Deloitte & Touche LLP 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 30, 1999 will
be entitled to notice of and to vote at the Annual Meeting. At the close of
business on March 30, 1999, there were 55,808,325 outstanding shares of the
Company's common stock (the "Common Stock"), the only class of stock
outstanding, held of record by 551 shareholders. The closing sales price for the
Common Stock on March 30, 1999, as reported by the New York Stock Exchange
(NYSE), was $28.19 per share.
<PAGE> 4
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 26, 1999, 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>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
------------------------------------ ------------------ -----------
<S> <C> <C>
W. Howard Lester................................. 5,187,093(2) 9.2%
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
James A. McMahan................................. 5,675,200(3) 10.2%
2237 Colby Avenue
Los Angeles, CA 90064
Patrick J. Connolly.............................. 502,272(4) *
Gary G. Friedman................................. 831,824(5) 1.5%
Dennis A. Chantland.............................. 62,515(6) *
Richard Hunter................................... 468(7) *
Putnam Investment Management, Inc and
Putnam Investments, Inc........................ 5,677,134(8) 10.2%
One Post Office Square
Boston, MA 02109
AMVESCAP, PLC and group members.................. 3,235,800(9) 5.8%
11 Devonshire Square
London EC2M 4YR, England
All Executive Officers and Directors as a Group
(12 persons)................................... 13,225,977(10) 23.0%
</TABLE>
- ---------------
* Less than 1%.
(1) Assumes exercise of stock options beneficially owned by the named
individual or entity into shares of the Company's common stock. Based on
55,807,965 shares outstanding as of March 26, 1999.
2
<PAGE> 5
(2) Includes 162,000 and 404,500 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 15,303 shares
in the Company's Associate Stock Incentive plan (the "Stock Incentive
Plan") that are allocable to Mr. Lester and fully vested. Does not include
3,486 and 1,081,546 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 13,500 and 51,000 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 47,250 shares subject to nonqualified stock options granted under
the 1993 Plan which are currently exercisable or exercisable within 60
days. Also includes 10,992 shares in the Stock Incentive Plan that are
allocable to Mr. Connolly and fully vested. Does not include 5,238 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 45,000 and 672,000 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 13,574
shares in the Stock Incentive Plan that are allocable to Mr. Friedman and
fully vested.
(6) Includes 62,000 shares subject to nonqualified stock options granted under
the 1993 Plan which are currently exercisable within 60 days. Includes 515
shares in the Stock Incentive Plan that are allocable to Mr. Chantland and
fully vested.
(7) Includes 468 shares in the Stock Incentive Plan that are allocable to Mr.
Hunter and fully vested.
(8) The information above and in this footnote is based on share information
taken from the Schedule 13G of Putnam Investment Management, Inc. and
Putnam Investments, Inc. filed February 11, 1999. Putnam Management, Inc. a
registered investment adviser, and Putnam, Inc., its parent company, have
shared dispositive power (but no voting power) over 5,677,134 shares of
Common Stock.
(9) The information above and in this footnote is based on Schedule 13G filed
February 5, 1998 on behalf of a group by AMVESCAP PLC, a parent holding
company. In addition to AMVESCAP PLC, other group members include AVZ,
Inc., AIM Management Group, Inc., AMVESCAP Group Services, Inc., INVESCO,
Inc., INVESCO North American Holdings, Inc., INVESCO Capital Management,
Inc., INVESCO Funds Group, Inc., INVESCO Management & Research, Inc. and
INVESCO Realty Advisers, Inc. Each member of such group has shared voting
and dispositive power over 3,235,800 shares of Common Stock. AVZ, Inc., AIM
Management Group, Inc., AMVESCAP Group Services, Inc., INVESCO, Inc. and
INVESCO North American Holdings, Inc. are all holding companies. INVESCO
Capital Management, Inc., INVESCO Funds Group, Inc., INVESCO Management &
Research, Inc. and INVESCO Realty Advisers, Inc. are all investment
advisers.
(10) Includes 247,500 and 1,424,246 shares subject to nonqualified stock options
granted under the 1976 Plan and 1993 Plan, respectively, which are
currently exercisable or exercisable within 60 days. Also includes 41,977
shares in the Stock Incentive Plan that are allocable to the executive
officers and fully vested.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
3
<PAGE> 6
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 31, 1999, 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 31, 1999 were filed on a timely basis, except that
Form 3 reporting John Bronson's appointment as an executive officer of the
Company was inadvertently filed late.
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 of directors following this annual
meeting of shareholders 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. 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.
4
<PAGE> 7
The following table sets forth information, as of March 26, 1999, 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 27, 1998.
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE OF
DIRECTOR BENEFICIAL PERCENT OF
NOMINEE AGE PRINCIPAL OCCUPATION SINCE OWNERSHIP CLASS(1)
------- --- -------------------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Charles E. Williams... 83 Founder of the Company and its Vice Chairman 1973 547,125(2) 1.0%
since 1986.
W. Howard Lester...... 63 Chairman of the Company since 1986 and Chief 1979 5,187,093(3) 9.2%
Executive Officer since 1979. Director of The
Good Guys, Inc., CKE Restaurants, Inc.,
Harold's Stores, Inc., and Il Fornaio
Adrian D.P. Bellamy... 57 Chairman and Director of Airport Group Int'l 1997 25,282(4) *
and Gucci Group N.V. Director of The Gap, Inc.,
Paragon Trade Brands, Inc., The Body Shop Inc.
and Shaman Pharmaceuticals, Inc. Chairman and
CEO of DFS Group Ltd. from 1983-1995.
James M. Berry........ 68 Executive Vice President of Finance of Belk 1987 68,550(5) *
Stores Services since 1995. Director of HCC
Insurance Holdings, Inc. since 1993.
Nathan Bessin......... 73 Managing Partner of J. Arthur Greenfield & Co., 1983 75,150(5) *
Certified Public Accountants since 1978.
Director of Mercury General Corp.
Patrick J. Connolly... 52 Executive Vice President, General 1983 502,272(6) *
Manager -- Catalog and Assistant Secretary of
the Company since 1995 and 1983, respectively.
Janet Emerson......... 50 President and Chief Executive Officer of 1997 14,998(4) *
Learningsmith, Inc. since 1995. Director of
Retail -- Stores, Catalog and Wholesale
Divisions, Museum of Fine Arts Boston from
1994-1995
Gary G. Friedman...... 41 Chief Merchandising Officer and 1993 831,824(7) 1.5%
President -- Retail Stores since 1995.
John E. Martin........ 53 Chairman and Director of Diedrich Coffee and 1994 235,500(8) *
Newriders, Inc. since 1997. Chairman and
Director of Culinary Adventures, Inc. since
1998. Director of The Good Guys, Inc. Chairman
and Chief Executive Officer of PepsiCo Casual
Restaurants from 1996-1997. President and Chief
Executive Officer of Taco Bell, a wholly-owned
subsidiary of PepsiCo from 1983-1996.
James A. McMahan...... 76 Chief Executive Officer of McMahan Furniture 1979 5,675,200(5) 10.2%
Stores since 1947.
</TABLE>
- ---------------
* Less than 1%.
(1) Assumes exercise of stock options beneficially owned by the named individual
or entity with shares of the Company's common stock. Based on 55,807,965
shares outstanding as of March 26, 1999.
(2) Includes 1,125 shares in the Stock Incentive Plan that are allocable to Mr.
Williams and fully vested.
(3) Includes 162,000 and 404,500 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. Includes 15,303 shares
in the Stock Incentive Plan that are allocable to Mr. Lester and fully
vested. Does not
5
<PAGE> 8
include 3,486 and 1,081,546 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.
(4) Includes 14,998 shares subject to nonqualified stock options granted under
the 1993 Plan, respectively, which are currently exercisable or exercisable
within 60 days.
(5) Includes 13,500 and 51,000 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.
(6) Includes 47,250 shares subject to nonqualified stock options granted under
the 1993 Plan which are currently exercisable or exercisable within 60 days.
Also includes 10,992 shares in the Stock Incentive Plan that are allocable
to Mr. Connolly and fully vested. Does not include 5,238 shares owned by a
trust established for the benefit of Mr. Connolly's children, in which
shares Mr. Connolly disclaims any beneficial interest.
(7) Includes 45,000 and 672,000 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 13,574
shares in the Stock Incentive Plan that are allocable to Mr. Friedman and
fully vested.
(8) Includes 55,500 shares subject to nonqualified stock options granted under
the 1993 Plan which are currently exercisable or exercisable within 60 days.
COMPENSATION OF DIRECTORS
The Company's directors do not receive any cash compensation for services
provided as members of the Board. Directors (other than employee directors) are
awarded nonqualified stock options annually under the 1993 Plan. Eligible
directors are each awarded an option to purchase 13,500 shares of Common Stock
upon their initial election to the Board and an option to purchase 10,500 shares
of Common Stock each time they are re-elected to the Board. The exercise price
of these options is fixed at the fair market value of the Common Stock on the
date of the relevant annual meeting.
INDEMNIFICATION
Under the Company's Articles of Incorporation, 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 of Incorporation do not eliminate a
director's liability for breach of the duty of loyalty, acts or omissions not in
good faith, certain payments not permitted under the California Corporations
Code or transactions in which the director derives an improper personal benefit.
The Articles of Incorporation 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 California Corporations Code.
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended January 31, 1999 ("fiscal 1998"), the Board of
Directors of the Company held a total of seven meetings and acted by unanimous
written consent on six occasions. The Board of Directors has four standing
Committees: Audit, Compensation, Investment and Nominating and Corporate
Governance.
During fiscal 1998, the Audit Committee of the Board of Directors (the
"Audit Committee") held two meetings. The Audit Committee is currently comprised
of Messrs. Bessin (Chairman), McMahan and Berry. The Audit 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.
6
<PAGE> 9
During the last fiscal year, the Compensation Committee of the Board of
Directors (the "Compensation Committee") held six meetings and acted by
unanimous written consent on one occasion. The Compensation Committee is
currently comprised of Messrs. McMahan (Chairman), Bellamy, Martin and Ms.
Emerson. The Compensation Committee is primarily responsible for officers'
compensation matters and for administering the Company's stock option plans.
The Investment Committee is currently comprised of Messrs. Berry
(Chairman), McMahan and Bessin. The Investment Committee was established during
fiscal 1998 and has not held a meeting. The Investment Committee is primarily
responsible for setting policy regarding investments of the Company's excess
cash.
The Nominating and Corporate Governance Committee is comprised of Mr.
Bellamy (Chairman) and Mr. Lester. The Nominating and Corporate Governance
Committee was established during fiscal 1998 and has not held a meeting. The
Nominating and Corporate Governance Committee is primarily responsible for
determining the qualifications of and selecting director nominees and for
setting policies regarding the corporate governance responsibilities of the
Board and management.
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 31, 1999, except directors Adrian Bellamy and John Martin.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE-NAMED
NOMINEES.
CERTAIN TRANSACTIONS
The Company leases two distribution centers in Memphis, Tennessee from two
partnerships whose partners include an executive officer/director and a director
of the Company. See "Executive Compensation -- Compensation Committee Interlocks
and Insider Participation."
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>
W. Howard Lester.................. 63 Chairman since 1986 and Chief Executive Officer since 1979.
Charles E. Williams............... 83 Founder of the Company and Vice Chairman since 1986.
Dennis A. Chantland............... 56 Executive Vice President and Chief Administrative Officer
since 1995; and Secretary since 1996
Patrick J. Connolly............... 52 Executive Vice President and General Manager, Catalog since
1995; Senior Vice President -- Mail Order, 1991-1995; Vice
President -- Mail Order, 1979-1990; and Assistant Secretary
since 1983.
Gary G. Friedman.................. 41 Chief Merchandising Officer and President, Retail Stores
since 1995; Executive Vice President 1993-1995; Senior Vice
President -- Stores, 1991-1992; and Vice
President -- Stores, 1988-1990.
Richard C. Hunter................. 54 Senior Vice President -- International Operations and
Development since 1996.
John S. Bronson................... 51 Senior Vice President -- Human Resources since 1999.
</TABLE>
7
<PAGE> 10
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 31, 1999 and whose total annual salaries and bonuses exceeded $100,000
during such fiscal year.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION(2) ---------------------
------------------------ SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY($) BONUS($)(9) OPTIONS(#)(3) COMPENSATION($)
--------------------------- ------- --------- ------------ --------------------- ---------------
<S> <C> <C> <C> <C> <C>
W. Howard Lester............................ 1998 681,362 100,000 100,000 5,789(4)
Chief Executive Officer, 1997 628,978 150,000 240,000 7,445
Chairman and Director 1996 498,077 100,000 60,000 7,638
Dennis A. Chantland......................... 1998 419,725 75,000 230,000 2,696(5)
Executive Vice President, 1997 386,892 200,000 230,000 4,038
Chief Administrative Officer and Secretary 1996 342,244 75,000 50,000 4,930
Patrick J. Connolly......................... 1998 315,696 75,000 100,000 3,274(6)
Executive Vice President 1997 286,772 200,000 30,000 2,498
and General Manager -- Catalog and
Director 1996 229,080 75,000 30,000 7,478
Gary G. Friedman............................ 1998 465,539 0 230,000 3,214(7)
Chief Merchandising Officer, 1997 455,253 100,000 180,000 1,109
President -- Retail Division and Director 1996 399,580 75,000 40,000 1,226
Richard C. Hunter........................... 1998 236,847 50,000 20,000 815(8)
Senior Vice President, 1997 303,037 70,000 22,000 1,527
International Operations and Development 1996 41,237 0 100,000 167
</TABLE>
- ---------------
(1) Rows specified "1998," "1997" and "1996" represent fiscal years ended
January 31, 1999, February 1, 1998 and February 2, 1997 respectively.
(2) While the named executive officers enjoy certain perquisites, the aggregate
value of such perquisites for 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.
(3) Figures have been adjusted to reflect the 2-for-1 stock split in May 1998
(the "Stock Split").
(4) Comprised of premiums paid by the Company for term life insurance and
benefits received under the Company's executive supplemental medical plan of
$4,914 and $875, respectively.
(5) Comprised of premiums paid by the Company for term life insurance and
benefits received under the Company's executive supplemental medical plan of
$1,338 and $1,358, respectively.
(6) Comprised of premiums paid by the Company for term life insurance and
benefits received under the Company's executive supplemental medical plan of
$2,016 and $1,258, respectively.
(7) Comprised of premiums paid by the Company for term life insurance and
benefits received under the Company's executive supplemental medical plan of
$714 and $2,500, respectively.
(8) Comprised of premiums paid by the Company for term life insurance and
benefits received under the Company's executive supplemental medical plan of
$805 and $10, respectively.
(9) Amounts represent bonuses earned during each fiscal year.
8
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the information noted for all grants of
stock options made to the Chief Executive Officer and each of the other
executive officers named in the Summary Compensation Table during the fiscal
year ended January 31, 1999:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENTAGE OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------------
NAME GRANTED(#)(1) FISCAL YEAR(%) ($/SH)(1) DATE 5%($) 10%($)
---- ------------- -------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
W. Howard Lester............. 100,000 7.5 27.56 3/10/08 1,733,234 4,392,354
Dennis A. Chantland.......... 80,000 6.0 27.56 3/10/08 1,386,587 3,513,883
150,000 11.2 21.56 9/7/08 2,034,081 5,154,761
Patrick J. Connolly.......... 50,000 3.8 27.56 3/10/08 866,617 2,196,177
50,000 3.8 21.56 9/7/08 678,027 1,718,254
Gary G. Friedman............. 80,000 6.0 27.56 3/10/08 1,386,587 3,513,883
150,000 11.2 21.56 9/7/08 2,034,081 5,154,761
Richard C. Hunter............ 20,000 1.5 27.56 3/10/08 346,647 878,471
</TABLE>
- ---------------
(1) All of these options were repriced to $19.31, except for a portion of the
options held by Messrs. Chantland and Friedman in October 1998 as noted in
the Report on Repricing of Options/SAR's. Figures have been adjusted to
reflect stock splits.
AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUE
The following table sets forth information with respect to the exercise of
stock options during the fiscal year ended January 31, 1999 and the fiscal
year-end value of unexercised options held by the Chief Executive Officer and
each of the other executive officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(2)
OPTIONS VALUE --------------------------- ---------------------------
NAME EXERCISED(#)(1) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. Howard Lester....... 0 $ 0 475,500 359,000 $13,679,604 $7,088,712
Dennis A. Chantland.... 186,000 3,468,075 0 524,000 0 9,944,272
Patrick J. Connolly.... 237,250 6,245,057 19,250 156,000 543,534 2,808,048
Gary G. Friedman....... 101,250 2,612,382 631,000 444,000 17,115,368 8,143,332
Richard C. Hunter...... 44,400 693,811 0 97,600 0 1,637,933
</TABLE>
- ---------------
(1) Figures have been adjusted to reflect Stock Splits
(2) Represents the difference between the closing market price of the Company's
common stock on January 29, 1999 ($34.69 per share) and the exercise price
of the options.
9
<PAGE> 12
REPORT ON REPRICING OF OPTIONS
Options held by Named Officers were repriced in the fiscal year ended
January 31, 1999 as set forth below(1).
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE LENGTH OF ORIGINAL
UNDERLYING OF STOCK EXERCISE PRICE TERM REMAINING
OPTIONS AT TIME OF AT TIME OF AT DATE OF
REPRICED OR REPRICING OR REPRICING OR NEW EXERCISE REPRICING OR
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE($) AMENDMENT
---- ------- ------------ ------------ -------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
W. Howard Lester.......... 10/7/98 100,000 19.31 27.56 19.31 9 years, 6 months
Dennis A. Chantland....... 10/7/98 90,000 19.31 21.56 19.31 10 years
10/7/98 80,000 19.31 27.56 19.31 9 years, 6 months
Patrick J. Connolly....... 10/7/98 50,000 19.31 27.56 19.31 9 years, 6 months
10/7/98 50,000 19.31 21.56 19.31 10 years
Gary G. Friedman.......... 10/7/98 80,000 19.31 27.56 19.31 9 years, 6 months
10/7/98 90,000 19.31 21.56 19.31 10 years
Richard C. Hunter......... 10/7/98 20,000 19.31 27.56 19.31 9 years, 6 months
</TABLE>
- ---------------
(1) The Board of Directors and Compensation Committee view options as essential
to the effort to attract and retain key employees. In order to ensure that
the options fulfilled their purpose, in October 1998, the Board and
Committee determined to lower the exercise price for all outstanding options
granted on or after June 27, 1997 to $19.31, except for a portion of the
options held by Messrs. Chantland and Friedman.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company does not have employment agreements with any of its executive
officers.
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 non-employee Directors.
The Company's executive compensation programs are designed to enable the
Company to attract, retain, motivate and reward highly qualified executives
while maintaining strong and direct links between 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 owns 5,187,093 shares (including
options which are currently exercisable or exercisable within 60 days)
representing 9.2% of the shares of Common Stock as of March 26, 1999. 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, the Committee
considers both pay practices at retailers of comparable size who are part of the
Center for Research in Security Prices ("CRSP") Index for NASDAQ Retail Trade
Stocks, one of the indices used in the Performance Graph, as well as pay
practices at other
10
<PAGE> 13
companies considered comparable based on the industry, revenues and other
factors (together, the "Comparable Companies") when assessing the
competitiveness of the Company's compensation programs. The Committee utilizes
an independent executive compensation advisor for information on competitive
compensation levels.
The Committee considers three major elements in its compensation program:
base salaries, annual cash incentive opportunities, and long-term incentives via
stock options. Base salaries are generally targeted at the median levels of the
Comparable Companies, and actual salaries are adjusted for individual
performance and contributions to the Company's success. In May 1998, the
Committee reviewed the salaries of its executive officers, including the named
executive officers.
Based on the Company's performance in fiscal year 1997, base salary
increases were granted to the following executives effective April 13, 1998.
<TABLE>
<CAPTION>
FROM TO
-------- --------
<S> <C> <C>
Mr. Lester............................. $650,000 $679,200
Mr. Friedman........................... $450,000 $470,200
Mr. Chantland.......................... $400,000 $418,000
Mr. Connolly........................... $300,000 $313,500
</TABLE>
The second component of the Company's executive compensation program is the
Profit Incentive Plan, which rewards participants for extraordinary results
based on the annual financial performance of the Company. Based on the Company's
performance in fiscal year 1998, the following bonus awards were granted to the
executive officers.
<TABLE>
<CAPTION>
BONUS AWARD
-----------
<S> <C>
Mr. Lester....................................... $100,000
Mr. Chantland.................................... $ 75,000
Mr. Connolly..................................... $ 75,000
</TABLE>
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. In 1998, Mr. Lester was granted options to
purchase 100,000 shares, Mr. Chantland was granted options to purchase 230,000
shares, Mr. Friedman was granted options to purchase 230,000 shares and Mr.
Connolly was granted options to purchase 100,000 shares in recognition of their
contributions during 1997 and to further link a significant portion of their
compensation to shareholder returns. All stock options were granted with an
exercise price equal to the fair market value of one share of Common Stock on
the date of the grant.
The Committee believes that the key officers of the Company have provided
excellent services and been diligent in their commitment to the Company.
Although the Company's stock price did not necessarily reflect the quality of
their efforts, the Committee believes that stock ownership by such officers
provides an important incentive for their continued efforts and diligence. In
order to ensure that options fulfilled their purpose of helping the Company
attract and retain key employees, in October 1998 the Board of Directors and the
Committee determined to lower the exercise price for all of the Company's
outstanding stock options granted between June 27, 1997 and October 7, 1998 with
an exercise price greater than $19.31 (except for a portion of the options held
by Messrs. Chantland and Friedman) to $19.31, the Company's closing price at the
time the action was taken.
11
<PAGE> 14
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
1998 compensation levels, no such limits on the deductibility of compensation
applied for any officer of the Company. The Company has not adopted a policy
specifically prohibiting compensation at a level that would limit deductions.
While the Compensation Committee cannot predict how the deductibility limit may
impact the Company's compensation program in future years, the Compensation
Committee intends to maintain an approach to executive compensation which
strongly links pay to performance. The 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
Adrian Bellamy
Janet Emerson
John E. Martin
Members of the Compensation Committee
12
<PAGE> 15
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS OF THE COMPANY,
CRSP* INDEX FOR THE NYSE STOCK MARKET (U.S. COMPANIES), AND
CRSP INDEX FOR NASDAQ RETAIL TRADE STOCKS
<TABLE>
<CAPTION>
WILLIAMS-SONOMA, INC. NYSE STOCK MARKET NASDAQ RETAIL TRADE
--------------------- ----------------- -------------------
<S> <C> <C> <C>
'1/30/94' 100.00 100.00 100.00
'1/29/95' 137.40 99.90 89.70
'1/28/96' 89.40 133.50 98.70
'2/2/97' 182.50 168.30 123.60
'2/1/98' 245.60 213.10 144.20
'1/31/99' 400.20 258.20 176.20
</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 $100.00 on 1/30/94.
* Center for Research in Security Prices, The University of Chicago, Graduate
School of Business.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's warehouse and distribution center is located in Memphis,
Tennessee. The warehouse and distribution center consists of three separate
facilities -- one for mail order operations, one for retail store
13
<PAGE> 16
operations and a third facility which processes non-conveyable merchandise-the
first two of which are leased from two partnerships whose partners include
directors, an executive officer, and significant shareholders of the Company.
The third facility is leased from a third party.
Mail Order Facility
In July 1984, the Company entered into an agreement to lease a 243,000
square foot distribution center from a partnership. 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 and Audit Committees.
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 five-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 that includes Messrs. Lester and McMahan. The partnership
financed the construction of the distribution center through the sale of
$10,550,000 (bearing interest of 10.36%) principal amount of industrial
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 was completed in
October 1995. The lessor financed the construction of the expansion through a
$500,000 capital contribution from its partners and the sale of $9,825,000
(bearing interest of 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
$711,000 per quarter plus applicable taxes, insurance and maintenance expenses.
Both facilities were 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 leases
qualify as operating leases for accounting purposes. 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.
14
<PAGE> 17
PROPOSAL 2
APPROVAL OF AMENDMENT AND RESTATEMENT OF
ARTICLE IV OF THE ARTICLES OF INCORPORATION
BACKGROUND
On March 15, 1999, the Board of Directors approved an amendment and
restatement of Article IV ("Article IV") of the Company's Restated Articles of
Incorporation (the "Article IV Amendment"), and directed the Article IV
Amendment to be submitted to the shareholders for their approval at the Annual
Meeting. As discussed below, approval of the Article IV Amendment by the
Company's shareholders would enhance management's ability to respond to future
opportunities to make acquisitions or sell assets. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE ARTICLE IV AMENDMENT.
DESCRIPTION OF THE PROPOSED ARTICLE IV AMENDMENT
As currently in effect, Article IV requires the approval of two-thirds of
the Company's outstanding shares entitled to vote for the following actions: (a)
a merger or consolidation of the Company or a subsidiary; (b) the sale or other
disposition by the Company or a subsidiary of substantially all of the assets of
the Company or a subsidiary; or (c) the adoption of any plan or proposal for
dissolution or liquidation of the Company. By its terms, Article IV does not
apply to any such transaction solely between the Company and another corporation
of which 50% or more of the outstanding shares entitled to vote are owned,
directly or indirectly, by the Company.
The effect of Article IV is to require a two-thirds supermajority approval
of the Company's outstanding shares in instances where the California General
Corporation Law (the "CGCL") requires either the approval of a lesser proportion
of the Company's shares or no shareholder approval at all. Under the CGCL, the
approval of a majority of the Company's outstanding shares entitled to vote is
generally required to approve a merger or consolidation of the Company, the sale
by the Company of substantially all of its assets, or the voluntary winding up
and dissolution of the Company. The CGCL generally does not require the Company
to obtain the approval of its shareholders for the merger or consolidation of a
subsidiary of the Company, or the sale by a subsidiary of substantially all of
its assets.
Article IV was adopted by the Company's Board of Directors and shareholders
in 1984 as an anti-takeover or defensive measure against an unwanted or coercive
attempt to acquire the Company. In particular, Article IV was designed to
discourage in advance hostile tender offers by persons attempting to acquire,
with a view towards a subsequent business combination, only that portion of the
Company's stock necessary to obtain control and force the business combination.
However, Article IV, may have the negative effect of delaying or impeding
certain common corporate transactions that are unrelated to a hostile takeover
of the Company. First, Article IV requires the approval of two-thirds of the
Company's outstanding shares before any subsidiary, regardless of its size,
could sell substantially all of its assets. However, Article IV permits, without
a shareholder vote, the sale by the Company of all of the stock of a subsidiary
unless such subsidiary constitutes substantially all of the Company's assets.
Second, Article IV requires the Company to obtain the approval of two-thirds of
its outstanding shares before the Company could make any acquisition, regardless
of its size, via a "subsidiary merger," a commonly employed acquisition
structure. (Under this structure, a newly-formed subsidiary of the acquiror
merges with the target, with the shareholders of the target receiving cash
and/or the acquiror's securities in the merger and the target becoming a
wholly-owned subsidiary of the acquiror.) Absent Article IV, such a transaction
would not ordinarily require approval of the Company's
15
<PAGE> 18
shareholders. New York Stock Exchange rules would require shareholder approval
if, in such transaction, the Company was to issue enough of its stock to
increase its outstanding shares or voting power by 20%; however, the vote
required would be a majority of the shares present and voting at a meeting at
which a quorum was present, not two-thirds of the outstanding shares.
The Board of Directors believes it is in the best interests of the Company
and its shareholders to amend and restate Article IV to eliminate the negative
effects discussed above. The Article IV Amendment would eliminate the
requirement that the Company obtain the approval of two-thirds of its
outstanding shares in the case of (i) the merger or consolidation of a
subsidiary, or (ii) the sale or other disposition of substantially all of the
assets of a subsidiary where such assets do not constitute substantially all of
the assets of the Company and its subsidiaries on a consolidated basis.
Therefore, the Article IV Amendment will enhance management's ability to effect
various corporate transactions involving a subsidiary of the Company by
eliminating the need for a shareholder vote, except where such vote would
otherwise be required under the CGCL or the rules of the New York Stock
Exchange.
As stated above, by its current terms Article IV excludes from its coverage
transactions solely between the Company and another corporation of which 50% or
more of the outstanding shares entitled to vote are owned, directly or
indirectly, by the Company. The Article IV Amendment would also modify Article
IV to exclude from Article IV's coverage transactions solely between the Company
and one or more controlled entities or between two or more controlled entities,
with "controlled entity" defined as a legal entity of which 50% or more of the
outstanding equity entitled to vote is owned, directly or indirectly, by the
Company. The Board of Directors believes this modification is necessary to
clarify the intent of the existing exclusion.
Under the CGCL, if a California corporation with 100 or more shareholders
of record files, on or after January 1, 1989, an amendment to its articles of
incorporation containing a supermajority voting provision such as Article IV,
then the supermajority voting provision ceases to be effective after two years
unless readopted by the same shareholder vote specified in the supermajority
voting provision. The Company does not believe that this readoption requirement
would apply to Article IV if it is amended as described above, because Article
IV was originally adopted prior to January 1, 1989. However, if Article IV is
amended as described above, it is possible that a shareholder of the Company or
a third party will assert that Article IV will need to be readopted every two
years by the affirmative vote of at least two-thirds of the Company's
outstanding shares entitled to vote or otherwise cease to be effective.
The full text of Article IV, as amended and restated by the Article IV
Amendment, is set forth in Appendix A to this Proxy Statement.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
Under the terms of Article IV, the Article IV Amendment requires the
affirmative vote of 66 2/3% of the outstanding shares of the Company's Common
Stock. For purposes of calculating the votes for and against the proposal,
abstentions and broker non-votes will be treated as votes against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
AMENDMENT AND RESTATEMENT OF ARTICLE IV.
16
<PAGE> 19
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
As recommended by its Audit Committee, the Board of Directors has selected
Deloitte & Touche LLP as independent accountants for the fiscal year ending
January 30, 2000, subject to ratification by the shareholders.
Deloitte & Touche LLP, 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 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 30, 2000, 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 meeting. However, if
any other matter should properly come before the 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 2000 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 16, 1999.
AVAILABILITY OF REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 1998 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, California 94109
By Order of the Board of Directors
Dennis A. Chantland, Secretary
San Francisco, California
April 23, 1999
17
<PAGE> 20
APPENDIX A
AMENDMENT AND RESTATEMENT OF
ARTICLE IV OF THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION
ARTICLE IV
Notwithstanding that applicable law would otherwise permit action to be
taken with the approval of a lesser percentage, each of the following actions
shall require the affirmative vote of not less than two-thirds of the
outstanding shares of this corporation entitled to vote:
(a) a merger or consolidation of this corporation;
(b) the sale or other disposition by this corporation or a subsidiary of
assets that constitute substantially all of the assets of this
corporation and its subsidiaries on a consolidated basis; or
(c) the adoption of any plan or proposal for dissolution or liquidation of
this corporation;
provided that the provisions of this Article IV shall not apply to any such
transaction solely between this corporation and one or more Controlled Entities
or between two or more Controlled Entities. "Controlled Entity" means a legal
entity of which 50% or more of the outstanding equity entitled to vote is owned,
directly or indirectly, by this corporation.
Notwithstanding any other provision of these Restated Articles of
Incorporation or the Bylaws of this corporation and notwithstanding that a
lesser percentage may be specified by law, these Restated Articles of
Incorporation or the Bylaws of this corporation, the affirmative vote of not
less than two-thirds of the outstanding shares of this corporation entitled to
vote shall be required to amend or repeal, or adopt any provision inconsistent
with this Article IV.
18
<PAGE> 21
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 Dennis A. Chantland, 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 30, 1999, at the 1999 Annual Meeting of
Shareholders of the Company, to be held on Wednesday, May 26, 1999 at 10:00
a.m. (Pacific Daylight Time) at 3250 Van Ness Avenue, San Francisco, California
94109, and any adjournments or postponements thereof.
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 proposal 2, FOR proposal 3, and in the
manner described in item 4 of this Proxy.
(PLEASE DATE AND SIGN ON REVERSE SIDE.)
-----------
SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
<PAGE> 22
<TABLE>
<S> <C> <C> <C> <C>
Please mark
your votes as
indicated in /X/
this example.
The Board of Directors recommends a vote "FOR" Items 1, 2 and 3.
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS FOR the election as WITHHOLD 2. Proposal to approve the amendment and / / / / / /
directors of all nomi- AUTHORITY restatement of Article IV of the
nees listed (except as to vote for all Articles of Incorporation.
marked to the contrary). nominees listed. FOR AGAINST ABSTAIN
/ / / / 3. Proposed to ratify the selection of / / / / / /
Deloitte & Touche LLP as independent
accountants for the 1999 fiscal year.
(INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through that 4. In their discretion, the Proxyholders are authorized to vote
nominee's name in the list below): upon such other business as may properly come before this
meeting, or any adjournments or postponements thereof.
Charles E. Williams Patrick J. Connolly James M. Berry
W. Howard Lester Gary G. Friedman John E. Martin
James A. McMahan Adrian D.P. Bellamy Janet L. Emerson
Nathan Bessin
NOTE: 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 the name signed
by its president or other authorized officer, with
the office held designated. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting
of Shareholders, the Proxy Statement and the Annual
Report for the 1998 Fiscal Year furnished herewith.
______________________________________________________
Please Print Name(s)
Signature(s)____________________________________________________________________________________________ Date ____________, 1999
Please sign exactly as your name or names on this proxy and return it promptly in the enclosed envelope.
- ---------------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE-
</TABLE>
