<PAGE>
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.1a-11(c) or 240.1a-12
50-OFF STORES, INC.
(Name of Registrant as Specified In Its Charter)
50-OFF STORES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(l), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed in table below per Exchange Act Rule 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
*Set forth amount on which the filing is calculated and state how it was
determined.
[ ] 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:
Notes:
<PAGE>
50-OFF STORES, INC.
SAN ANTONIO, TEXAS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 26, 1995
To the Stockholders of 50-OFF STORES, INC.:
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Stockholders of 50-
OFF STORES, INC., a Delaware corporation (the "Company"), will be held Tuesday,
September 26, 1995 at 10:00 a.m., at the San Antonio Airport Hilton, 611 NW Loop
410, San Antonio, Texas 78216, for the following purposes:
1. To elect six directors of the Company.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on August 24, 1995 are
entitled to notice of and to vote at the meeting.
You are cordially invited to attend the meeting. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, WE ASK THAT YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE.
By order of the Board of Directors
Joseph Lehrman
Secretary
San Antonio, Texas
August 25, 1995
<PAGE>
50-OFF STORES, INC.
SAN ANTONIO, TEXAS
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 26, 1995
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of 50-OFF STORES, INC., a Delaware corporation
(the "Company" or "50-OFF"), for use at the Annual Meeting of Stockholders of
the Company to be held at the San Antonio Airport Hilton, 611 NW Loop 410, San
Antonio, Texas 78216 on September 26, 1995 commencing at 10:00 a.m. and at all
adjournments thereof. The mailing address of the Company is 8750 Tesoro Drive,
San Antonio, Texas 78217, and its telephone number is (210) 805-9300. This Proxy
Statement is to be mailed on or about August 31, 1995.
The Board has fixed the close of business on August 24, 1995 as the record
date for the meeting. Only Stockholders of record of outstanding shares of the
Company's common stock, $.01 par value ("Common Stock"), at the close of
business on Thursday, August 24, 1995 will be entitled to vote at the meeting.
In deciding all questions, a holder of Common Stock is entitled to one vote, in
person or by proxy, for each share held in his name on the record date. At
August 24, 1995, there were 12,200,915 shares of Common Stock entitled to vote.
1
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting, pursuant to which this Proxy Statement is being
distributed and assuming the presence of a quorum, six directors are to be
elected by a plurality of the votes cast by the holders of the outstanding
Common Stock. Under applicable Delaware law, in tabulating the vote, broker
nonvotes will be disregarded and have no effect on the outcome of the vote. Each
outstanding share of Common Stock entitles the holder thereof to one vote with
respect to the election of the six director positions to be filled at the
meeting.
The nominees for director are Charles Siegel, Charles J. Fuhrmann II,
Joseph Lehrman, James M. Raines, Cecil Schenker and Richard Sherman. All of the
nominees are presently directors of the Company. Michael Moffitt and Stanley
Spigel, current directors, are not standing for reelection and, accordingly,
will not serve on the Board or any committee thereof after the Annual Meeting.
For information concerning the backgrounds of the current directors and
nominees, see "DIRECTORS AND EXECUTIVE OFFICERS." THE ENCLOSED PROXY, IF
PROPERLY SIGNED AND RETURNED, AND UNLESS AUTHORITY TO VOTE IS WITHHELD, WILL BE
VOTED FOR THE ELECTION OF THESE SIX NOMINEES. The Board of Directors has no
reason to believe that any of such nominees will be unable to serve if elected.
In the event any of such nominees become unavailable for election, votes will be
cast, pursuant to authority granted by the enclosed proxy, for such substitute
nominee as may be designated by the Board of Directors. All directors will serve
until the Annual Meeting of Stockholders to be held in 1996 or until their
successors are elected. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE ELECTION OF EACH OF THE SIX NOMINEES.
- ---
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are:
NAME AGE POSITION(S) HELD/BUSINESS EXPERIENCE
- ----------------------- ----- --------------------------------------------
Charles Siegel 56 Chairman of the Board, President and Chief
Executive Officer. A co-founder of the Company
and has served as President and Chief Executive
Officer of the Company since December of 1982, as
a director since March 1975 and as Chairman of
the Board since March 1991. Served in various
executive capacities in the retail discount
industry for over 35 years .
Joseph Lehrman 70 Secretary, Treasurer and Director. A co-founder
of the Company and has served as Treasurer of the
Company since January 1976, as Secretary since
September 1982 and as a director since March
1975. Served as a Vice-President of the Company
since January 1976. Engaged in various executive
capacities in the retail discount industry for
over 40 years.
Dennis Barringer 47 Executive Vice-President. Has served as Executive
Vice-President since July 1993 and served as
Director of Stores since July 1992. Joined the
Company from McCrory Stores where he served as
Vice President of Merchandise since December
1986. Served as a District and Store Manager with
K-Mart from 1968 to 1986.
Allen Fields 38 Vice-President - Store Operations. Has served as
Vice-President - Store Operations since January
1995. Joined the Company from Hill Department
Stores where he served as a District Manager
since January 1994. Served as a District Manager
with McCrory Stores from May 1989 to December
1993 and, from February 1987 until April 1989,
served as a Store Manager with Jamesway Corp.
Joe Goldstein 49 Vice-President - Divisional Merchandise Manager
(Softlines). Has served as Vice-President -
Division Merchandise Manager (Softlines) since
September 1993. Served as Merchandise Manager for
Value City from November 1992 to September 1993
and, from April 1987 to November 1992, served as
Vice President - General Merchandise Manager for
Alden's. Has over 20 years of retail experience,
primarily in buying and general merchandising
capacities.
2
<PAGE>
Richard Kelly 45 Vice-President - Distribution and Transportation.
Has served as Vice-President - Distribution and
Transportation since November 1994. Joined the
Company from Grossman's where he served as
Logistics Facility Manager since January 1994.
Served as a management consultant for Center City
Consolidators from January 1993 to December 1993.
Served as Assistant Vice President, Distribution
Services for T.J. Maxx, Inc. from October 1992 to
December 1992. Served as Director, Logistics
Operations for Rent-A-Center Inc. from March 1991
to September 1992 and as General Manager of
southwestern/western regional distribution from
September 1988 to February 1991.
David Siegel 50 Vice-President - Advertising and Public
Relations. Has served as Vice-President -
Advertising and Public Relations of the Company
since August 1984 and served as Advertising
Director since 1975. David Siegel is the brother
of Charles Siegel, President of the Company.
Doug Sims 47 Vice-President - Loss Prevention and Internal
Audit. Has served as Vice-President - Loss
Prevention and Internal Audit since March 1994
and served as Director of Loss Prevention since
June 1990. Self-employed in polygraph/
investigations for numerous retail corporations
from July 1980 to June 1990.
Roy E. Springer 47 Vice-President - Human Resources. Has served as
Vice-President-Human Resources since July 1993.
Served as Director of Human Resources since 1989
and as District Store Manager of the Company from
1988 until 1989. Held various multiunit
management positions for other retail
organizations for 10 years prior to joining the
Company.
Anthony Tramontano 61 Vice-President - Inventory Control. Has served as
Vice-President -Inventory Control since February
1995. Served as Vice-President - Hardlines
Merchandise since September 1983 and as
merchandise manager for hardlines, linens and
domestics since June 1979. Served as buyer of all
hardlines, linens and domestics from 1975 to June
1979. Has over 35 years of retail experience,
primarily in buying and general merchandising
capacities.
Ray Trevino 51 Vice-President-Real Estate and Construction. Has
served as Vice-President Real Estate and
Construction since February 1995. Served as Vice-
President - Store Operations of the Company since
September 1989. Served as District Manager for
the Company's border stores from 1982 to 1989
and, from 1975 to 1982, served in various
capacities for the Company at store level.
James G. Scogin 34 Controller - Chief Accounting Officer. Has served
as Controller-Chief Accounting Officer since
February 1995 and served as Controller since June
1992. A Certified Public Accountant, was employed
by Deloitte & Touche LLP from August 1985 to June
1992.
Charles J. Fuhrmann II 50 Director. Has served as a director of the Company
since October 1994. Since May 1991, has been a
private investor and independent, strategic and
financial consultant to private and public
companies. See "Certain Relationships and Related
Transactions." From 1978 through May 1991, was
Vice President and Managing Director, Investment
Banking of Merrill Lynch & Co., Inc., New York
City, New York.
Michael Moffitt 58 Director. Has served as a director of the Company
since August 1990. Since January 1994, has served
as President of Travelfest Superstores, Inc. (a
retail store for leisure travel). Served as
President, Chief Operating Officer and Director
of Tuesday Morning, Inc. (a chain of deep
discount retail stores specializing in home and
gift products) from January 1985 until March 1989
and as Vice President-Buying for two years
beginning in 1983. Has almost 30 years of retail
experience, primarily with department stores in
various buying and general merchandising
capacities.
3
<PAGE>
James M. Raines 55 Director. Has served as a director of the Company
since March 1991. Since September 1988, has been
actively involved in investments in both private
and public companies through his own investment
firm, James M. Raines & Company. See "Certain
Relationships and Related Transactions." From
1985 through 1988, was Senior Vice President of
Lovett, Mitchell Webb & Garrison, an investment
banking firm in Houston, Texas.
Cecil Schenker 53 Director. Has served as a director since July
1991. Previously served as a director from
October 1983 until July 1986. A corporate
securities attorney and the managing partner of
the San Antonio, Texas office of the law firm of
Akin, Gump, Strauss, Hauer & Feld, L.L.P. of
which he has been a partner, through his
professional corporation, for more 10 years.
Akin, Gump, Strauss, Hauer & Feld, L.L.P. has
regularly performed legal services for the
Company. See "Certain Relationships and Related
Transactions." Serves as a director of Taco
Cabana, Inc. (a Mexican patio cafe chain).
Richard Sherman 51 Director. Has served as a director since July
1991. A retail consultant, has served as
President and Chief Executive Officer of Rally's,
Inc. (a fast-food restaurant chain) from
September 1987 until January 1991. From August
1989 until January 1991, served as Chairman of
the Board of Rally's, Inc. From April 1984 until
April 1986, was President, Chief Operating
Officer and Director of San Antonio based
Church's Fried Chicken, Inc. (a fast-food
restaurant chain) and from April 1986 until July
1987 served as that company's Chief Executive
Officer. Serves as a member of the Board of
Trustees of Paul Quinn College in Dallas, Texas
and as a director of Reed's Jeweler's, Inc., Taco
Cabana, Inc. (a Mexican patio cafe chain) and
Papa John's International Inc. (a fast food
restaurant chain).
Stanley Spigel 49 Director. Has served as a director since July
1991. Since 1980, has owned Spigel Properties
which owns and manages over 3,000,000 square feet
of shopping center space in Texas, including
certain space leased to the Company for two
stores. See "Certain Relationships and Related
Transactions." Serves as a director of First
Interstate Bank San Antonio and is a member of
the International Council of Shopping Centers.
Pat L. Ross, who served as Vice President - Chief Financial Officer,
resigned from such position effective August 15, 1995.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires each director and executive officer of the Company, and
each person who owns more than 10% of the Common Stock to file by specific dates
with the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of change in ownership of Common Stock. Officers,
directors and 10% stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file. The Company is
required to report in this report any failure of its directors, executive
officers and 10% stockholders to file by the relevant due date any of these
reports during the Company's fiscal year.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, all Section 16(a) filing requirements
applicable to the Company's officers, directors and 10% stockholders were
complied with for the fiscal year ended February 3, 1995.
4
<PAGE>
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held ten meetings in fiscal 1995. The Board has three standing
committees to assist it in the discharge of its responsibilities: the Audit
Committee, the Compensation Committee and the Executive Committee. During fiscal
1995, the Audit Committee held one meeting, the Compensation Committee held two
meetings and the Executive Committee held eight meetings. These three committees
are described in more detail below.
The Audit Committee is responsible for monitoring the financial condition
of the Company and reviewing its financial policies and procedures, its internal
accounting controls and the objectivity of its financial reporting. The Audit
Committee currently consists of Michael Moffitt, James M. Raines and Charles J.
Fuhrmann II.
The Compensation Committee is responsible for administering the Stock
Option Plan, reviewing the salary and benefit structure of the Company with
respect to its executive officers and recommending specific actions concerning
that structure to the Board. The Compensation Committee currently consists of
Cecil Schenker, Richard Sherman and Stanley Spigel.
The Executive Committee reviews and analyzes business strategy and business
development and makes recommendations to the Board. The Executive Committee
currently consists of Richard Sherman, Chairman, Michael Moffitt, Charles J.
Fuhrmann II and Charles Siegel with Dennis Barringer serving as a non-voting
member.
The Company has no nominating committee.
Each outside director received $700 per Board meeting attended and, if
serving on the Executive Committee, $1,000 per Executive Committee meeting
attended (and $500 per telephone meeting in excess of two hours in duration).
Effective May 1, 1995, each outside director receives $750 per Board meeting
attended (and $500 per telephone meeting in excess of two hours duration). In
addition, each outside director receives $750 per meeting for services as
members of, or $1,000 per meeting for chairing, the Audit and Compensation
Committees. Outside members of the Executive Committee receive $1,000 per
meeting attended, the Chairman $1,500, (and $500 per telephone meeting in excess
of two hours duration). Each outside director also receives stock option grants.
See "Stock Option Plan."
For the fiscal year ended February 3, 1995, no director attended fewer than
75% of the aggregate of the total number of meetings of the Board and the total
number of meetings of all committees on which he served.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the compensation
earned during the Company's last three fiscal years by the Company's Chief
Executive Officer and Executive Vice-President, the only executive officers
earning compensation in excess of $100,000 in fiscal 1995 (collectively the
"named executive officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------- -------------------------------------
AWARDS PAYOUTS
------------------------ ------------
LONG-TERM
RESTRICTED INCENTIVE
STOCK PLAN ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS AWARD(S) OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($) ($) (1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CHARLES SIEGEL 1995 250,000 - - - - 308
CHAIRMAN, PRESIDENT AND CEO 1994 250,000 - - - - 1,444
1993 250,000 100,000 - 40,000 - 3,857
DENNIS BARRINGER 1995 120,774 - - 40,000 - -
EXECUTIVE VICE PRESIDENT 1994 102,885 5,592 - 20,000 - -
1993(2) 46,042 10,000 - 15,000 - -
</TABLE>
(1) Represents Company matching contributions under the Company's Profit Sharing
Plan and Trust.
(2) Represents partial year compensation.
Perquisites and other personal benefits did not exceed the lesser of
either $50,000 or 10% of the total of annual salary and bonus reported for any
named executive officer.
The Company has an amended employment agreement (the "Agreement") with
Charles Siegel, effective February 18, 1995, which expires on June 15, 1996. The
Agreement may be extended by the Company and Charles Siegel year to year by
written agreement. The Company will automatically offer a one year extension in
1996 if the Company achieves certain operating results. Pursuant to the
Agreement, Mr. Siegel receives a base salary of $200,000 and is eligible to
participate in a bonus plan adopted by the Board of Directors. Upon termination
of the Agreement, Mr. Siegel is entitled to $50,000 additional compensation
payable immediately and unless terminated for a "material breach" as defined in
the Agreement, severance pay of $250,000 payable monthly over a two year period.
STOCK OPTION PLAN
Under the Company's Stock Option Plan (the "Option Plan"), stock options
may be granted to full-time employees, directors, advisors and outside
consultants of the Company for the purchase or acquisition of up to 3,000,000
shares of Common Stock in the aggregate. Shares that by reason of the expiration
of an option (other than by reason of exercise) or which are no longer subject
to purchase pursuant to an option granted under the Option Plan may be
reoptioned thereunder. The Company's Compensation Committee (the "Committee")
sets specific terms and conditions of options granted under the Option Plan and
administers the Option Plan, as well as the Company's other employee benefit
plans which may be in effect from time to time.
Employees of the Company are eligible to receive either incentive stock
options or nonqualified stock options or a combination of both, as the Committee
determines. Non-employee participants may be granted only nonqualified stock
options. Stock options may be granted for a term not to exceed ten years (five
years with respect to a holder of 10% or more of the Company's shares in the
case of an incentive stock option) and are not transferable other than by will
or the laws of descent and distribution. Each option may be exercised within the
term of the option pursuant to which it is granted, or within thirty days after
the termination of employment of the optionee, or within one year after
termination in case of termination because of death or disability, in each case
to the extent the option was then exercisable.
6
<PAGE>
The exercise price of all incentive stock options must be at least equal to
the fair market value of the Common Stock on the date of grant, or 110% of fair
market value with respect to any incentive stock option issued to a holder of
10% or more of the Company's shares. Any nonqualified stock option to be issued
pursuant to the Option Plan must be at an exercise price equal to at least 85%
of the fair market value of the Common Stock. Stock options may be exercised by
payment in cash of the exercise price with respect to each share to be
purchased, by delivering Common Stock already owned by such optionee with a
market value equal to the exercise price, or by methods in which a concurrent
sale of the acquired stock is arranged with the exercise price payable in cash
from such sale proceeds, or by a combination of the foregoing methods.
The Option Plan provides that each outside director would automatically
receive a grant of 75,000 nonqualified stock options. In accordance with the
terms of the Option Plan, in April 1991, all current outside directors,
excluding Mr. Fuhrmann, received options for 75,000 shares each. Mr. Fuhrmann,
who joined the Board in October 1994, also received options for 75,000 shares in
accordance with the Option Plan. Subject to availability of shares allocated to
the Option Plan and not already reserved for other outstanding stock options,
outside directors who join the Board in the future will also receive a grant of
options for 75,000 shares, vesting in the same manner as the prior awards,
effective upon their appointment or election to the Board.
Such directors' options vest ratably in five equal annual installments,
with the first such installment vesting on the date of grant. Options granted to
outside directors become exercisable in five equal annual installments
commencing with the first anniversary following the date of grant through the
sixth anniversary following the date of grant. Options, once granted and to the
extent vested, remain exercisable throughout their term, regardless of whether
the holder continues as a director. The exercise price of the options is equal
to 100% of the fair market value of the covered shares of Common Stock at the
time of grant.
If following five years of service as an outside director of the Company
the director continues as such, then for each of the next five years for which
such director serves he will be automatically granted in such year nonqualified
stock options for an additional 15,000 shares. Such additional nonqualified
options will be granted to each outside director on the business day following
the next annual meeting of stockholders at which such director is reelected
following the expiration of the five-year period from the date of initial option
grant. Such options will be granted at an exercise price equal to the then
prevailing fair market value of the Common Stock. Each such option will vest in
full immediately and become exercisable on the first anniversary date following
its grant and will continue to be exercisable in whole or in part until the
third anniversary of the grant date.
The Option Plan terminates on August 28, 2000. The Board of Directors
may, however, terminate the Option Plan at any time prior to such date.
Termination of the Option Plan will not alter or impair, without the consent of
the optionee, any of the rights or obligations pursuant to any option granted
under the Option Plan.
The Company repriced employee stock options (excluding executive officer
options) at $4.125 per share effective December 5, 1994.
As of August 18, 1995, stock options covering an aggregate of 1,506,260
shares of Common Stock were outstanding. During the fiscal year ended
February 3, 1995, stock options for 7,500 shares of Common Stock were exercised
at a share price of $5.08, and stock options covering an aggregate of 110,085
shares were terminated. Stock options for 273,250 shares of Common Stock were
granted during the 1995 fiscal year. Options for 213,550 shares of Common Stock
have been granted, and options for 33,850 shares of Common Stock have been
terminated, during the 1996 fiscal year.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options
granted to the named executive officers during the Company's fiscal year ended
February 3, 1995:
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1995
----------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE APPRECIATION FOR OPTION
TERM (3)
-----------------------------------------------
% OF TOTAL
OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED (#) (1) IN FISCAL 1995 (2) ($/SH) DATE 5% 10%
---- --------------- ------------------ -------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
CHARLES SIEGEL - - - - - -
DENNIS BARRINGER 40,000 18% $4.13 10-18-2001 $67,200 $156,400
</TABLE>
(1) Mr. Barringer's 40,000 options vest ratably in five equal annual
installments beginning with the October 18, 1994 date of grant and
become exercisable one year after vesting.
(2) In fiscal 1995, options for an aggregate 223,250 were granted to
employees.
(3) The dollar amounts under these columns use the 5% and 10% rates of
appreciation prescribed by the Securities and Exchange Commission. The
5% rate of appreciation would result in a per share price of $5.81. The
10% rate of appreciation would result in a per share price of $8.04.
This presentation is not intended to forecast possible future
appreciation of the Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
The following table sets forth certain information concerning the value of
unexercised options held by the named executive officers at February 3, 1995 (no
options were exercised by such officers during the fiscal year ended on such
date):
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Options at FY-End (#) Options at FY-End ($) (1)
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles Siegel 130,000 60,000 (2) (2)
Dennis Barringer 16,000 59,000 (2) (2)
</TABLE>
(1) Values stated are based on the $2.875 closing price of the Common
Stock as reported on the NASDAQ National Market System on February 3,
1995 and equal the aggregate amount by which the market value of the
option shares exceeds the exercise price of such options at the end of
the fiscal year.
(2) The exercise price of the option shares exceeds the market value of
such options.
8
<PAGE>
PROFIT SHARING PLAN AND TRUST
The Company's Profit Sharing Plan and Trust (the "Profit Sharing Plan") was
adopted effective April 1, 1990 and is intended to constitute a qualified cash
or deferred profit sharing plan within the meaning of Section 401(a) and 401(k)
of the Internal Revenue Code of 1986. The Profit Sharing Plan is subject to the
Employee Retirement Income Security Act of 1974. All employees of the Company
who have attained the age of 21, and, with respect to employees hired on or
after April 1, 1990, who have also completed at least 1,000 hours of service in
a 12-month period (a "year of service"), are eligible to participate. Each
eligible employee is allowed to contribute up to 15% of his earnings as shown on
the employee's W-2 form. Through February 1995, the Company matched 25% of the
participating employees' contributions up to a maximum of 6% of the employees'
earnings and will determine any future matching after the financial results are
known each year.
All participating employees' contributions to the Profit Sharing Plan are
at all times fully vested and nonforfeitable. Contributions made by the Company
and credited to employees' accounts are vested 20% after two years of service,
40% after three years of service, 60% after four years of service, 80% after
five years of service and 100% after six years of service, but all such Company
contributions are fully vested and nonforfeitable upon (i) the employee's
reaching the normal retirement age of 65, (ii) the employee's death or
disability prior to age 65 or (iii) termination of the Profit Sharing Plan. All
forfeitures of non-vested Company contributions are reallocated to nonforfeiting
participants' accounts.
Participating employees may choose among alternative investment vehicles
(Company Common Stock is not an option). Distributions may be made prior to
normal retirement age upon a showing of hardship. The annual benefits payable
upon retirement at normal retirement age cannot be estimated due to the number
of variables which operate under the Profit Sharing Plan. The Company made
aggregate contributions of $33,575 to the Profit Sharing Plan during fiscal
1995, $67,998 during fiscal 1994 and $49,835 during fiscal 1993.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive compensation is structured to provide incentives for executive
officer performance that result in improvements in the Company's financial
results, both short term and long term. Compensation is set at levels which are
believed to be sufficiently competitive with companies of similar size and type
to attract and retain the best executives. Incentive compensation in the form of
stock options is used to align the interests of the Company's executives and its
shareholders. Each executive's compensation is based upon both individual and
Company performance. The compensation of executive officers consists of three
principal parts, each of which is reviewed regularly by the Committee.
Salaries represent the fixed portion of compensation for executive
officers. Changes in salary depend upon individual performance, level of
responsibility, experience, seniority and Company performance.
Bonuses are paid in cash, and, in fiscal 1995, participants, excluding the
Chief Executive Officer, who were rated excellent or outstanding were to share
in a pool equal to 25% of pre-tax, pre-bonus profits over $3,600,000. No bonus
was paid under this bonus plan in fiscal 1995. For fiscal 1996, participants,
including the Chief Executive Officer, who are rated excellent or outstanding
will share in a pool equal to 25% of pre-tax, pre-bonus profits over $538,000.
The third principal part of compensation is stock option grants. The number
of options granted is based on a number of factors, including salary level,
Company and individual performance, competitive considerations and individual
levels of stock ownership. All options are granted at fair market value, and,
therefore, any value which ultimately accrues to executive officers is based
entirely on Company performance as perceived by the Company's investors who
establish the price for the Common Stock.
The three principal components of compensation and the written employment
agreement with Mr. Siegel, the Company's Chief Executive Officer, were the basis
for the fiscal 1995 compensation of Mr. Siegel. Mr. Siegel's compensation for
fiscal 1995 was a salary of $250,000. No options were granted to Mr. Siegel in
fiscal 1995. The Committee noted that Mr. Siegel's direct and beneficial
ownership of 369,249 shares provides a significant incentive for executive
officer performance structured to achieve improved financial results. In fiscal
1996, an amended employment agreement was entered into with Mr. Siegel providing
for a base salary of $200,000, a decrease of 20 percent from fiscal 1995, and a
change in bonus structure. See "Executive Compensation."
This report is submitted by the Compensation Committee:
Cecil Schenker
Richard Sherman
Stanley Spigel
10
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1995, Cecil Schenker, Richard Sherman and Stanley Spigel
served on the Company's Compensation Committee.
The Company has two real estate leases in force with Spigel Properties,
whose owner is Stanley Spigel, a director of the Company and a member of the
Company's Compensation Committee. The leases for such store locations cover an
aggregate of approximately 47,000 square feet, expire at February 1999 and
December 1999 and provide for one five-year renewal option and an aggregate
annual rental of approximately $144,000 in fiscal 1996. The leases also provide
for percentage rental payments which, along with minimum rentals and the
Company's pro-rata share of taxes, insurance and property maintenance, typically
do not exceed 4% of sales. The Company paid an aggregate of $136,000 in minimum
rental and an aggregate of $14,000 in percentage rental for these locations
during fiscal 1995.
During fiscal periods prior to August 1988, and again since February 1991,
the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. has regularly
performed legal services as counsel to the Company. Cecil Schenker, a director
of the Company and a member of the Company's Compensation Committee, is the sole
shareholder of Cecil Schenker, P.C., a partner with Akin, Gump, Strauss, Hauer &
Feld, L.L.P.
The Company believes that the abilities of Mr. Schenker and Mr. Spigel to
make fair compensation decisions have not been compromised by the relationships
referred to above.
11
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph reflects a comparison of the cumulative total
stockholder return (change in stock price) of the Common Stock from February 2,
1990 through February 3, 1995 with the Nasdaq Stock Market (United States
companies only) and the Nasdaq Retail Trade Stocks. The comparison assumes $100
was invested on February 2, 1990 in the Common Stock and in each of the
foregoing indices. The comparisons in this table are required by the Securities
and Exchange Commission and, therefore, are not intended to forecast or be
indicative of possible future performance of the Common Stock.
Comparison of the Five Year Cumulative Total Stockholder Return Among
50-OFF-Stores Inc., Nasdaq Stock Market, and Nasdaq Retail Trade Stocks
-----------------------------------------------------------------------
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
February 2, 1990 1991 1992 1993 1994 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50-Off Stores, Inc. 100 210.19 768.04 347.93 204.12 79.34
Nasdaq Stock Market 100 103.27 157.98 178.58 196.42 179.98
Nasdaq Retail 100 120.42 210.26 189.69 204.08 195.98
</TABLE>
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership (as defined by the
rules of the Securities and Exchange Commission) of the Common Stock as of
August 18, 1995 by each person known by the Company to be a beneficial owner of
more than 5%, all directors, the named executive officers, and all directors and
executive officers as a group.
Number of Shares Percent of
Name Beneficially Owned Class (1)
Charles Siegel 369,249 (2) 3.0%
Joseph Lehrman 300,500 (2) 2.5%
Charles J. Fuhrmann II 15,000 (2) *
Michael Moffitt 61,250 (2) *
James M. Raines 45,000 (2) *
Cecil Schenker 60,000 (2) *
Richard Sherman 45,000 (2) *
Stanley Spigel 55,000 (2) *
Dennis Barringer 24,000 (2) *
All executive officers and
directors as a group (18
persons) 1,090,049 8.5%
* Less than 1%
(1) This calculation is the quotient of: (a) the number of shares of Common
Stock currently beneficially owned by the named individual or group
plus the number of shares of Common Stock, if any, for which options
held by such person or group are currently exercisable or become
exercisable within 60 days of August 18, 1995; divided by (b) the total
number of shares of Common Stock outstanding and the number of shares
of Common Stock, if any, for which options held by such person or group
are currently exercisable or become exercisable within 60 days of
August 18, 1995.
(2) Includes 160,000 shares, in the case of Mr. Siegel, 80,000 shares in
the case of Mr. Lehrman, 60,000 shares in the cases of Mr. Moffitt and
Mr. Schenker, 55,000 shares in the case of Mr. Spigel, 45,000 shares in
the cases of Mr. Raines and Mr. Sherman and 24,000 shares in the case
of Mr. Barringer and 15,000 shares in the case of Mr. Fuhrmann which
are issuable pursuant to presently exercisable options (or those
exercisable within 60 days of August 18, 1995).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The investment firm of James M. Raines & Company, the owner of which is a
director of the Company, performed consulting services for a fee in connection
with the Company's Regulation S offering conducted during the fiscal year ended
February 3, 1995.
Charles J. Fuhrmann II, a director of the Company, performed certain
financial and strategic advisory services for a fee during fiscal 1995 and the
first six and one-half months of fiscal 1996. On August 18, 1995, the Company
entered into a consulting agreement with Mr. Fuhrmann covering an expansion of
these services to include certain services typically performed by the Chief
Financial Officer. The agreement is for a term of up to seven months. As
compensation, Mr. Fuhrmann will receive $12,500 per month, including any fees
for services as a director or committee member during the term of the agreement,
and received options to acquire up to 35,000 shares of Common Stock at an
exercise price equal to the fair market value on the date of grant. Such options
will be fully vested and exercisable by August 18, 1996 and will expire on
August 17, 2000. The agreement is cancellable by either party on one month's
notice commencing on November 15, 1995.
13
<PAGE>
See "Compensation Committee Interlocks and Insider Participation" for
additional relationships and related transactions.
INDEPENDENT AUDITORS
The financial statements and schedules of the Company as of February 3,
1995 and for the year then ended were audited by Deloitte & Touche LLP. It is
anticipated that if the management nominees are elected as directors, the new
Board of Directors will reappoint such firm as independent certified public
accountants for the current fiscal year. Representatives of Deloitte & Touche
LLP will be present at the Annual Stockholders' Meeting, will have an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
REVOCABILITY OF PROXY
A stockholder giving a proxy has the power to revoke it at any time before
its exercise. A proxy may be revoked by filing with the Secretary of the Company
a written revocation or duly executed proxy bearing a later date. A proxy will
be revoked if the stockholder who executed it is present at the Meeting and
elects to vote in person.
SPECIFICATIONS BY STOCKHOLDERS
Properly executed proxies in the accompanying form which are filed before
the Meeting and not revoked will be voted in accordance with the directions and
specifications contained therein. Unless a different direction or specification
is given, properly executed proxies which are filed and not revoked will be
voted as hereinabove described.
SUBMISSION OF STOCKHOLDER PROPOSALS
The Company intends to conduct the next annual meeting in approximately
July 1996. Any stockholder proposal to be presented at such 1996 annual meeting
should be directed to Joseph Lehrman, Secretary of the Company, 8750 Tesoro
Drive, San Antonio, Texas 78217, and must be received by the Company on or
before March 1, 1996. Any such proposal must comply with the requirements of
Rule 14a-8 promulgated under the Securities Exchange Act of 1934.
SOLICITATION OF PROXIES
This solicitation is made on behalf of the Board of Directors of the
Company. The cost of soliciting these proxies will be borne by the Company. In
addition to solicitation by mail, the Company may make arrangements with
brokerage houses and other custodians, nominees and fiduciaries to forward
proxies and proxy materials to their principals and may reimburse them for their
expenses in doing so.
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report of the Company on
Form 10-K for its fiscal year ended February 3, 1995. Stockholders are referred
to such Report for financial information about the activities of the Company,
but such Report is not incorporated into this Proxy Statement and is not to be
deemed a part of the proxy soliciting material.
OTHER MATTERS
The Board of Directors does not intend to present and does not have any
reason to believe that others will present at the Annual Meeting any items of
business other than as stated in the Notice of Annual Meeting of Stockholders.
If, however, other matters are properly brought before the Meeting, it is the
intention of the persons named in the accompanying proxy to vote the shares
represented thereby in accordance with their best judgment and discretionary
authority to do so as included in the proxy.
The foregoing notice and proxy statement are sent by order of the Board of
Directors.
Joseph Lehrman
Secretary
San Antonio, Texas
August 25, 1995
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON TUESDAY, SEPTEMBER 26, 1995
The undersigned hereby appoints Charles Siegel and Joseph Lehrman as proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below and on all other subjects as may
properly come before the meeting, all the shares of common stock of 50-OFF
Stores, Inc. held of record by the undersigned on the record date, August 24,
1995, at the annual meeting of stockholders of the Company to be held on
Tuesday, September 26, 1995 at 10:00 a.m. or at any adjournments thereof.
<TABLE>
<C> <S> <C>
1. ELECTION OF DIRECTORS
[_]FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote for all nominees listed below:
(except as marked to the
contrary below):
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW):
CHARLES SIEGEL JOSEPH LEHRMAN RICHARD SHERMAN CECIL SCHENKER
JAMES M. RAINES CHARLES J. FUHRMANN II
The undersigned acknowledges receipt of the formal notice of such meeting and
the accompanying Proxy Statement and fiscal 1995 Annual Report on Form 10-K of
the Company.
This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. IF THE SIGNED CARD IS RETURNED AND NO DIRECTION IS
MADE, THE PROXIES WILL VOTE FOR ALL NOMINEES LISTED IN 1. ABOVE AND AT THEIR
DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
Dated:__________________, 1995.
-------------------------------
Signature
-------------------------------
Signature
Please sign exactly as name
appears on the certificate.
When shares are held by joint
tenants, both should sign. If
a corporation, please sign in
full corporate name by
president or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
When signing as attorney,
executor, administrator,
trustee, guardian, officer or
partner, please give full
title as such.
PLEASE DO NOT FOLD OR MUTILATE
THIS CARD
