<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
[ ] 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
LOGO
---------------------------------------------------------------------------
W I L L I A M S - S O N O M A
---------------------------------------------------------------------------
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 31, 2000,
commencing at 10:00 a.m. (Pacific Daylight Time) for the following purposes:
(1) To elect eleven directors to serve until the next annual meeting of
shareholders or until their respective successors shall be elected and
qualified.
(2) To amend the Company's Bylaws to increase the authorized number of
members of the Company's Board of Directors from not less than six and
no more than eleven to not less than seven and no more than thirteen.
(3) To ratify the selection of Deloitte & Touche LLP as independent
accountants for the fiscal year ending January 28, 2001.
(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 April 4, 2000 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 30, 2000.
By Order of the Board of Directors,
Nancy J. Himmelfarb, Secretary
San Francisco, California
April 21, 2000
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 31, 2000
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 31, 2000, and any adjournment or
postponement thereof. The Annual Report to the shareholders of the Company for
the fiscal year ended January 30, 2000, 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 21, 2000.
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 or her 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
proposed amendment to the Company's Bylaws 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 materials 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 $5,000.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Only shareholders of record at the close of business on April 4, 2000 will
be entitled to notice of and to vote at the Annual Meeting. At the close of
business on April 4, 2000, there were 55,554,638 outstanding shares of the
Company's common stock (the "Common Stock"), the only class of stock
outstanding, held of record by 564 shareholders. The closing sales price for the
Common Stock on April 4, 2000, as reported by the New York Stock Exchange (NYSE)
was $30.50 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 his or her
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, 2000, 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.................................. 5,035,701(2) 9.0%
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
James A. McMahan.................................. 5,685,700(3) 10.2%
2237 Colby Avenue
Los Angeles, CA 90064
Patrick J. Connolly............................... 496,046(4) *
Gary G. Friedman.................................. 477,981(5) *
John S. Bronson................................... 51,391(6) *
John W. Tate...................................... 221(7) *
Dennis A. Chantland............................... -- *
Putnam Investment Management, Inc. and The Putnam
Advisory Co. ................................... 3,381,735(8) 6.1%
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
(17 persons).................................... 12,806,291(10) 22.4%
</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
55,554,438 shares outstanding as of March 31, 2000.
2
<PAGE> 5
(2) Includes 162,000 and 512,500 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 15,911 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
981,546 shares 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 61,500 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 91,250 shares subject to nonqualified stock options granted under
the 1993 Plan which are currently exercisable or exercisable within 60
days. Also includes 11,316 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 464,150 shares subject to nonqualified stock options granted under
the 1993 Plan which are currently exercisable or exercisable within 60
days. Also includes 13,831 shares in the Stock Incentive Plan that are
allocable to Mr. Friedman and fully vested.
(6) Includes 40,000 shares subject to nonqualified stock options granted under
the 1993 Plan which are currently exercisable or exercisable within 60 days
and 281 shares in the Stock Incentive Plan that are allocable to Mr.
Bronson and fully vested.
(7) Includes 221 shares in the Stock Incentive Plan that are allocable to Mr.
Tate 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 18, 2000. Putnam Management, Inc. a
registered investment adviser, and Putnam, Inc., its parent company, have
shared dispositive power (but no voting power) over 3,381,735 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 202,500 and 1,442,898 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 43,329
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 furnish to the Company reports of ownership and changes
in ownership of all classes of the Company's equity
3
<PAGE> 6
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 30, 2000, and/or
written representations from such reporting persons, the Company believes that
all reports required to be filed by such reporting persons during or with
respect to the fiscal year ended January 30, 2000 were filed on a timely basis,
except as follows: Form 4 reporting John Bronson's purchase and sale of 11,110
shares of common stock and Form 4 reporting Gary Friedman's sale of 101,250
shares of common stock were inadvertently filed late. Also filed late was Form 3
reporting Edward Mueller's appointment as a director of the Company.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, eleven 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 presently 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
eleven. The proposed amendment to the Company's Bylaws, as described in Proposal
2, does not affect the number of directors to be elected. Under California law,
the eleven 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
eleven 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.
The following table sets forth information, as of March 31, 2000, with
respect to each person nominated for election as a director which has been
furnished to the Company by the nominees. All nominees, with the exception of
Edward Mueller, who was appointed by the Board in 1999, and Michael Lynch, who
was
4
<PAGE> 7
nominated by the Board for election at the 2000 Annual Meeting of Shareholders,
were elected directors at the Annual Meeting of Shareholders held on May 26,
1999.
<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......... 84 Founder of the Company and its Vice 1973 547,528(2) 1.0%
Chairman since 1986.
W. Howard Lester............ 64 Chairman of the Company since 1986 and 1979 5,035,701(3) 9.0%
Chief Executive Officer since 1979.
Director of The Good Guys, Inc., CKE
Restaurants, Inc., Harold's Department
Stores, Inc. and Il Fornaio.
Adrian D.P. Bellamy......... 57 Chairman and Director of Gucci Group 1997 44,784(4) *
N.V., Director of The Gap, Inc., The
Body Shop Inc., Reckitt Benckiser plc
and Shaman Pharmaceuticals, Inc. and
Chairman and CEO of DFS Group Ltd. from
1983-1995.
James M. Berry.............. 69 Executive Vice President of Finance of 1987 79,050(5) *
Belk Stores Services, Inc. since 1995.
Director of HCC Insurance Holdings,
Inc. since 1993.
Nathan Bessin............... 74 Managing Partner of J. Arthur 1983 85,650(5) *
Greenfield & Co., Certified Public
Accountants since 1978. Director of
Mercury General Corp.
Patrick J. Connolly......... 53 Executive Vice President, General 1983 496,046(6) *
Manager -- Catalog and Assistant
Secretary of the Company since 1995 and
1983, respectively.
Gary G. Friedman............ 42 Chief Merchandising Officer and 1993 477,981(7) *
President -- Retail Stores of the
Company since 1995.
Michael R. Lynch............ 48 Managing Director of Goldman Sachs & (8) -- *
Co. since 1976.
John E. Martin.............. 54 Chairman and Director of Diedrich 1994 246,000(9) *
Coffee and Easyriders, Inc. since 1997.
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 from
1983-1996.
Edward A. Mueller........... 52 President of SBC Int'l Operations since 1999 -- *
1999. President of Pacific Bell from
1997-1999. President of Southwestern
Bell from 1994-1997. Director of
TeleDanmark.
James A. McMahan............ 77 Chief Executive Officer of McMahan 1979 5,685,700(5) 10.2%
Furniture Stores from 1947 to 1999.
</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 55,554,438
shares outstanding as of March 31, 2000.
(2) Includes 1,528 shares in the Stock Incentive Plan that are allocable to Mr.
Williams and fully vested.
5
<PAGE> 8
(3) Includes 162,000 and 512,500 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 15,911 shares
in the Stock Incentive Plan that are allocable to Mr. Lester and fully
vested. Does not include 981,546 shares established by Mr. Lester for the
benefit of his children, respectively, in which shares Mr. Lester disclaims
any beneficial interest.
(4) Includes 34,500 shares subject to nonqualified stock options granted under
the 1993 Plan which are currently exercisable or exercisable within 60 days.
(5) Includes 13,500 and 61,500 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.
(6) Includes 91,250 shares subject to nonqualified stock options granted under
the 1993 Plan which are currently exercisable or exercisable within 60 days.
Also includes 11,316 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 464,150 shares subject to nonqualified stock options granted under
the 1993 Plan, which are currently exercisable or exercisable within 60
days. Also includes 13,831 shares in the Stock Incentive Plan that are
allocable to Mr. Friedman and fully vested.
(8) Nominated by the Board for election at the 2000 Annual Meeting of
Shareholders. Goldman Sachs & Co. has, from time to time in the past,
performed investment banking services for the Company.
(9) Includes 66,000 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.
Under the Company's Restated Bylaws, the Company is required to indemnify
directors and officers, and may (to the extent authorized from time to time by
the Board of Directors) indemnify the Company's employees and agents, in each
case to the extent permitted by California law.
6
<PAGE> 9
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended January 30, 2000, the Board of Directors of
the Company held a total of six meetings and acted by unanimous written consent
on six occasions. The Board of Directors has three standing Committees: Audit,
Compensation and Nominating and Corporate Governance.
During the last fiscal year, the Audit Committee of the Board of Directors
(the "Audit Committee") held three meetings. The Audit Committee is comprised of
Messrs. Bessin (Chairman), Berry and Mueller. 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.
During the last fiscal year, the Compensation Committee of the Board of
Directors (the "Compensation Committee") met once. The Compensation Committee is
comprised of Messrs. McMahan (Chairman), Bellamy and Ms. Emerson. The
Compensation Committee is primarily responsible for officers' compensation
matters and for administering the Company's stock option plans.
During the last fiscal year, the Nominating and Corporate Governance
Committee of the Board of Directors (the "Nominating & Corporate Governance
Committee") did not conduct any meetings. The Nominating and Corporate
Governance Committee is comprised of Mr. Bellamy (Chairman) and Mr. Lester. The
Nominating and Corporate Goveranance Committee is primarily responsible for
determining the qualifications of and selecting director nominees and for
setting policies regarding 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 30, 2000, except directors John Martin and Adrian Bellamy.
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."
7
<PAGE> 10
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............... 64 Chairman since 1986 and Chief Executive Officer since 1979.
Charles E. Williams............ 84 Founder of the Company and Vice Chairman since 1986.
Patrick J. Connolly............ 53 Executive Vice President and General Manager, Catalog since
1995; Senior Vice President -- Mail Order, 1991 - 1995; Vice
President -- Mail Order, 1979 - 1990
Gary G. Friedman............... 42 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.
John S. Bronson................ 52 Senior Vice President of Human Resources since 1999
John W. Tate................... 49 Senior Vice President -- Chief Financial Officer since 1999
J. Duane Weeks................. 51 Senior Vice President of Supply Chain since 1999
Ronald A. Loeb................. 67 Senior Vice President -- General Counsel since 1999
Cynthia Archer................. 46 Senior Vice President -- Direct to Consumer Operations since
1999
</TABLE>
8
<PAGE> 11
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 30, 2000 and whose total annual salaries and bonuses exceeded $100,000
during such fiscal year.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL -------------
COMPENSATION(2) SECURITIES
------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY($) BONUS($)(10) OPTIONS(#)(3) COMPENSATION($)
--------------------------- ------- --------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
W. Howard Lester.......................... 1999 750,656 -- 100,000 4,997(4)
Chief Executive Officer, 1998 681,362 100,000 100,000 5,789
Chairman and Director 1997 628,978 150,000 240,000 7,445
Patrick J. Connolly....................... 1999 385,958 75,000 40,000 1,491(5)
Executive Vice President 1998 315,696 75,000 100,000 3,274
and General Manager-Catalog, Assistant 1997 286,772 200,000 30,000 2,498
Secretary and Director
Gary G. Friedman.......................... 1999 511,602 -- 40,000 567(6)
Chief Merchandising Officer, 1998 465,539 -- 230,000 3,214
President -- Retail Division and
Director 1997 455,253 100,000 180,000 1,109
John S. Bronson........................... 1999 396,822 -- -- 1,336(7)
Senior Vice President of Human Resources
John W. Tate.............................. 1999 205,249 -- -- 235,556(8)
Senior Vice President, Chief Financial
Officer
Dennis A. Chantland....................... 1999 314,202 -- -- 1,446(9)
Former Chief Administrative Officer 1998 419,725 75,000 230,000 2,696
and Secretary 1997 386,892 200,000 230,000 4,038
</TABLE>
- ---------------
(1) Rows specified "1999," "1998" and "1997" represent fiscal years ended
January 30, 2000, January 31, 1999 and February 1, 1998, 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 each 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 in excess
of $50,000 for $4,997.
(5) Comprised of premiums paid by the Company for term life insurance in excess
of $50,000 for $1,491.
(6) Comprised of premiums paid by the Company for term life insurance in excess
of $50,000 for $567.
(7) Comprised of premiums paid by the Company for term life insurance in excess
of $50,000 for $1,336.
(8) Comprised of a one-time only relocation allowance of $141,558, a one-time
only guaranteed payment of $93,750, and premiums paid by the Company for
term life insurance in excess of $50,000 for $248.
(9) Comprised of premiums paid by the Company for term life insurance in excess
of $50,000 for $1,446.
(10) Amounts represent bonuses earned during each fiscal year.
9
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the information noted for all grants of
stock options made to the Chief Executive Officer and each of the other
executive officers named in the Summary Compensation Table during the fiscal
year ended January 30, 2000:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENTAGE OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR(%) ($/SH) DATE 5%($) 10%($)
---- ---------- -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
W. Howard Lester.............. 100,000 5.46 29.00 3/18/09 1,823,794 4,621,853
Patrick J. Connolly........... 40,000 2.18 29.00 3/18/09 729,518 1,848,741
Gary G. Friedman.............. 40,000 2.18 29.00 3/18/09 729,518 1,848,741
John S. Bronson............... 200,000 10.92 28.31 3/19/09 3,561,116 9,024,567
John W. Tate.................. 125,000 6.82 32.50 7/6/09 2,554,884 6,474,579
Dennis A. Chantland........... 0 0 0 0 0 0
</TABLE>
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 30, 2000 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 UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL
YEAR-END(#) 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 $ 0 578,500 356,000 $13,967,530 $4,390,400
Patrick J. Connolly...... 0 0 61,250 154,000 1,166,445 1,726,440
Gary G. Friedman......... 370,850 14,528,243 376,150 368,000 7,748,246 4,920,880
John S. Bronson.......... 0 0 0 200,000 0 638,000
John W. Tate............. 0 0 0 125,000 0 0
Dennis A. Chantland
(3).................... 142,000 5,224,006 0 0 0 0
</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 30, 2000 ($31.50 per share) and the exercise price
of the options.
(3) Mr. Chantland terminated his employment with the Company prior to year end.
He is included in this table because he would have been among the four most
highly compensated executive officers had he been an executive officer on
January 30, 2000.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company does not have employment agreements with any of its executive
officers.
10
<PAGE> 13
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting the Company's
executive compensation policy and determining the compensation paid to executive
officers of the Company. The Compensation Committee is 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 5,035,701 shares (including
options which are currently exercisable or exercisable within 60 days)
representing 9.0% of the shares of Common Stock as of March 31, 2000.
The Company competes with a number of different companies, both within and
outside the retail industry, for talented executives. Accordingly, the
Compensation 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 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 Compensation Committee utilizes an independent executive
compensation advisor for information on competitive compensation levels.
The Compensation Committee considers three major elements in its
compensation program -- base salary, annual cash incentive opportunities, and
long term incentives via stock options. Base salaries are generally targeted at
the third quartile of comparable companies and actual salaries are adjusted for
individual performance and contributions to the Company's success. In March
1999, the committee reviewed the salaries of its executive officers, including
certain executive officers named in the summary compensation table. Based on the
Company's performance in the fiscal year 1999, base salary increases were
granted to the following executives effective April 5, 1999.
<TABLE>
<CAPTION>
FROM TO
-------- --------
<S> <C> <C>
Mr. Lester............................. $679,000 $750,000
Mr. Friedman........................... $470,000 $520,000
Mr. Connolly........................... $313,500 $400,000
</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 performance of the Company. Based on the Company's
performance in fiscal year 1999, bonus awards were granted to the Named
Executive Officers as follows:
<TABLE>
<S> <C>
Mr. Connolly...................................... $ 75,000
</TABLE>
The third component of the Company's executive compensation program is
stock ownership. The link to shareholder value is an integral part of the
Company's executive compensation program. The stock options
11
<PAGE> 14
granted to the Named Executive Officers reflect competitive practices of
Comparable Companies and their assessment of the individual contributions. In
1999 the following stock option awards were granted:
<TABLE>
<S> <C>
Mr. Lester................................... 100,000 options
Mr. Friedman................................. 40,000 options
Mr. Connolly................................. 40,000 options
</TABLE>
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
1999 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
Janet Emerson
Adrian Bellamy
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 NYSE STOCK MARKET NASDAQ RETAIL TRADE
--------------- ----------------- -------------------
<S> <C> <C> <C>
1/29/95 100.00 100.00 100.00
1/28/96 65.10 133.70 110.00
2/2/97 132.80 168.50 137.80
2/1/98 178.70 213.30 160.80
1/31/99 291.30 258.50 196.60
1/30/00 264.60 263.90 161.10
</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 1/29/95.
* Center for Research in Security Prices, The University of Chicago, Graduate
School of Business.
13
<PAGE> 16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Two of the Company's distribution facilities are leased from two
partnerships whose partners include a director and an executive
officer/director, both of whom are significant shareholders of the Company.
The Company has an agreement to lease a distribution facility which expires
in June, 2004. The lessor is a partnership comprised of W. Howard Lester,
chairman of the Board, chief executive officer and significant shareholder of
the Company and James A. McMahan, a director and significant shareholder of the
Company. The partnership financed the construction through the sale of
$6,300,000 principal amount of industrial development bonds due June 2008. The
partnership financed the construction of additional 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. Rental
payments consist of the basic annual rent of $618,000, 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.
The Company has an agreement to lease another distribution facility. The
lessor is a partnership that includes Messrs. Lester and McMahan. The lease has
an initial, non-cancelable term of 15 years 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
$2,700,000 per year plus applicable taxes, insurance and maintenance expenses.
The partnership financed the construction of the distribution facility through
the sale of $10,550,000, 10.36% principal amount of industrial development bonds
due August 2015. The lessor financed the construction of an expansion through
the sale of $9,825,000, 9.01% principal amount of industrial development bonds
due in August 2015.
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.
PROPOSAL 2
AMENDMENT OF THE COMPANY'S BYLAWS
The Company's Restated Bylaws currently provide that the authorized number
of members of the Company's Board of Directors shall be not less than six and no
more than eleven members. The exact number of directors is currently set at
eleven members. Under the Restated Bylaws, either the Board of Directors or the
shareholders of the Company may change the authorized number of directors within
these limits, except that no such amendment that reduces the authorized number
of directors shall have the effect of removing any director then currently
serving on the Board of Directors until such director's term of office expires.
The approval of the shareholders of the Company is required to change the
variable range of the authorized number of directors or to set a fixed number of
directors without provision for variation.
The Board of Directors believes that it is in the best interests of the
Company and its shareholders to increase the range of the authorized number
directors to a range that is not less than seven and no more than thirteen
directors. Such an amendment would allow the Company's Board of Directors to
further change the number of authorized directors within the limits set forth
above in order to be able to appoint newly qualified candidates as they become
available during the year without the additional cost and delay of a special
shareholders' meeting. Such amendment of the Restated Bylaws would not have an
effect on any of the current members of the Company's Board of Directors or on
the currently authorized number of directors. The amendment of the Company's
Restated Bylaws is necessary to give the Board of Directors additional
14
<PAGE> 17
flexibility to attract and add new members to the Board of Directors who are
critical to the immediate and long-term success of the Company.
At the Annual Meeting, the shareholders are being asked to approve the
amendment and restatement of the first sentence of Section 1.2 of the Company's
current Restated Bylaws, to provide that the authorized number of the Company's
Board of Directors shall be not less than seven and no more than thirteen
members, as follows:
"Section 1.2 Number of Directors.
The affairs of the corporation shall be managed by a Board of Directors
consisting of not less than seven (7) nor more than thirteen (13)
directors."
All other provisions of the Company's current Restated Bylaws, including
the remaining provisions of Section 1.2, would remain unchanged by this proposed
amendment.
VOTE REQUIRED
The amendment of the Company's Restated Bylaws to provide that the
authorized number of members of the Company's Board of Directors shall be not
less than seven and no more than thirteen members requires the affirmative vote
of the holders of a majority of the Company's outstanding shares entitled to
vote.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
AMENDMENT TO THE COMPANY'S RESTATED BYLAWS.
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 28, 2001, subject to ratification by the shareholders.
Deloitte & Touche LLP has audited the Company's financial statements for
the last twenty years. 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 28, 2001, 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.
15
<PAGE> 18
PROPOSALS OF SHAREHOLDERS
Proposals intended to be presented by shareholders at the 2001 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 15, 2000.
AVAILABILITY OF REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 1999 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
Nancy J. Himmelfarb, Secretary
San Francisco, California
April 21, 2000
16
<PAGE> 19
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 Patrick J. Connolly, 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 April 4, 2000, at the 2000 Annual Meeting of
Shareholders of the Company, to be held on Wednesday, May 31, 2000 at 11:00 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
- --------------------------------------------------------------------------------
X FOLD AND DETACH HERE X
<PAGE> 20
Please mark
your votes as [X]
indicated in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2 AND 3.
1. ELECTION OF DIRECTORS FOR the election as WITHHOLD
directors of all nomi- AUTHORITY
nees listed (except as to vote for all
marked to the contrary). nominees listed.
[ ] [ ]
(Instruction: To withhold authority to vote for any individual
nominee, strike a line through that nominee's name in the list below):
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 Michael R. Lynch
Nathan Bessin Edward A. Mueller
FOR AGAINST ABSTAIN
2. Proposal to amend the Company's
Bylaws to increase the authorized
number of members of the Company's [ ] [ ] [ ]
Board of Directors from not less
than six and no more than eleven to
not less than seven and no more than
thirteen.
FOR AGAINST ABSTAIN
3. Proposal to ratify the selection of
Deloitte & Touche LLP as independent
accountants for the 2000 fiscal [ ] [ ] [ ]
year.
4. In their discretion, the
Proxyholders are authorized to vote
upon such other business as may
properly come before this meeting,
or any adjournments or postponements
thereof.
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 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 1999 Fiscal
Year furnished herewith.
________________________________________
Please Print Name(s)
Signature(s)____________________________________________________________________
Date__________________, 2000 Please sign exactly as your name or names appear on
this proxy and return it promptly in the enclosed envelope.
- --------------------------------------------------------------------------------
X FOLD AND DETACH HERE X
