<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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MICHAELS STORES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MICHAELS 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)(1)(ii), 14a-6(i)(1), 14a-6(i)(2), or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / 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>
MICHAELS STORES, INC.
P.O. BOX 619566
DFW, TEXAS 75261-9566
May 8, 1995
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Meeting") of Michaels Stores, Inc. (the "Company") to be held at the Omni
Mandalay Hotel, 221 E. Las Colinas Boulevard, Irving, Texas on Tuesday, June 6,
1995, at 10:00 a.m. local time.
The attached Notice of Annual Meeting and Proxy Statement fully describe the
formal business to be transacted at the Meeting, which includes the election of
two directors of the Company.
Directors and officers of the Company will be present to help host the
Meeting and to respond to any questions that our shareholders may have. I hope
that you will be able to attend.
The Company's Board of Directors believes that a favorable vote on each of
the matters to be considered at the Meeting is in the best interest of the
Company and its shareholders and unanimously recommends a vote "FOR" each such
matter. Accordingly, we urge you to review the Company material carefully and to
return the enclosed Proxy promptly. Please sign, date and return the enclosed
Proxy without delay. If you attend the Meeting, you may vote in person even if
you've previously mailed a Proxy.
Sincerely,
SAM WYLY
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
<PAGE>
MICHAELS STORES, INC.
P. O. BOX 619566
DFW, TEXAS 75261-9566
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 6, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Michaels Stores, Inc. (the "Company") will be held at the Omni
Mandalay Hotel, 221 E. Las Colinas Boulevard, Irving, Texas on Tuesday, June 6,
1995, at 10:00 a.m. local time for the following purposes:
(1) The election of two members of the Board of Directors, which will
consist of eight directors on the date of the Meeting, for the term of
office stated in the Proxy Statement.
(2) Such other business as may properly come before the Meeting or any
adjournments thereof.
The close of business on April 7, 1995 has been fixed as the record date for
determining shareholders entitled to notice of and to vote at the Meeting or any
adjournments thereof. For a period of at least 10 days prior to the Meeting, a
complete list of shareholders entitled to vote at the Meeting will be open for
examination by any shareholder during ordinary business hours at the offices of
the Company at 5931 Campus Circle Drive, Irving, Texas 75063.
Information concerning the matters to be acted upon at the Meeting is set
forth in the accompanying Proxy Statement.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN PERSON ARE
URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
MARK V. BEASLEY
SECRETARY
Irving, Texas
May 8, 1995
<PAGE>
MICHAELS STORES, INC.
P.O. BOX 619566
DFW, TEXAS 75261-9566
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 6, 1995
This Proxy Statement is being first mailed on or about May 8, 1995 to
shareholders of Michaels Stores, Inc. (the "Company") by the Board of Directors
to solicit proxies (the "Proxies") for use at the Annual Meeting of Shareholders
(the "Meeting") to be held at the Omni Mandalay Hotel, 221 E. Las Colinas
Boulevard, Irving, Texas on Tuesday, June 6, 1995, at 10:00 a.m. local time, or
at such other time and place to which the Meeting may be adjourned (the "Meeting
Date").
The purpose of the Meeting is to consider and act upon (i) the election of
two directors for terms expiring in 1998, and (ii) such other matters as may
properly come before the Meeting or any adjournments thereof.
All shares represented by valid Proxies, unless the shareholder otherwise
specifies, will be voted (i) FOR the election of the persons named herein under
"Election of Directors" as nominees for election as directors of the Company for
the term described therein, and (ii) at the discretion of the Proxy holders with
regard to any other matter that may properly come before the Meeting or any
adjournments thereof.
Where a shareholder has appropriately specified how a Proxy is to be voted,
it will be voted accordingly. The Proxy may be revoked at any time by providing
written notice of such revocation to Society National Bank, 5050 Renaissance
Tower, 1201 Elm Street, Dallas, Texas 75270, Attention: Mark Asbury by June 5,
1995. If notice of revocation is not received by such date, a shareholder may
nevertheless revoke a Proxy if he attends the Meeting and desires to vote in
person.
RECORD DATE AND VOTING SECURITIES
The record date for determining the shareholders entitled to vote at the
Meeting is the close of business on Friday, April 7, 1995 (the "Record Date"),
at which time the Company had issued and outstanding 21,423,061 shares of Common
Stock, par value $0.10 per share (the "Common Stock"). Common Stock is the only
class of outstanding voting securities of the Company.
QUORUM AND VOTING
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the issued and outstanding shares of Common Stock is necessary to
constitute a quorum to transact business. Each share represented at the Meeting
in person or by proxy will be counted toward a quorum. In deciding all questions
and other matters, a holder of Common Stock on the Record Date shall be entitled
to cast one vote for each share of Common Stock registered in his or her name.
In order to be elected a director, a nominee must receive a plurality of the
votes of the shares of Common Stock present in person or represented by proxy at
the Meeting. Votes that are withheld and broker non-votes will not be counted in
the election of directors, but will be counted toward a quorum.
ELECTION OF DIRECTORS
The Board is divided into three classes. On the Meeting Date, the size of
the Board will be eight directors, with two classes consisting of three
directors and one class consisting of two directors. Members of each class of
directors serve for a term of three years. Each director shall serve until the
Annual Meeting of Shareholders in the year in which his term expires or until
his successor is elected and shall have qualified.
<PAGE>
Two of the directors in the class whose term of office expires in 1995,
Charles J. Wyly, Jr. and Jack E. Bush, have been nominated by the Board of
Directors of the Company for reelection as directors at the Meeting to serve for
a three-year term expiring at the Company's Annual Meeting of Shareholders in
1998 or until their successors are elected and shall have qualified.
Each of the nominees has indicated his willingness to serve as a member of
the Board of Directors if elected; however, in case any nominee shall become
unavailable for election to the Board of Directors for any reason not presently
known or contemplated, the Proxy holders have discretionary authority to vote
the Proxy for a substitute nominee or nominees. Proxies cannot be voted for more
than two nominees. The following sets forth information as to the nominees for
election at the Meeting and each of the directors whose term of office will
continue after the Meeting, including their ages, present principal occupations,
other business experience during the last five years, membership on committees
of the Board of Directors and directorships in other publicly-held companies.
<TABLE>
<CAPTION>
YEAR TERM
NAME AGE POSITION EXPIRES
- ---------------------------------------- --- -------------------------------------------------- ---------
<S> <C> <C> <C>
Nominees for a three-year term ending in
1998:
Charles J. Wyly, Jr.(1) 61 Vice Chairman of the Board of Directors 1995
Jack E. Bush 60 Director, President and Chief Operating Officer 1995
Continuing Directors:
Dr. F. Jay Taylor(2) 71 Director 1996
Richard E. Hanlon 47 Director 1996
Evan A. Wyly 33 Director and Vice President 1996
Sam Wyly(1) 60 Chairman of the Board of Directors and Chief
Executive Officer 1997
Michael C. French 52 Director 1997
Donald R. Miller, Jr. 40 Director and Vice President -- Market Development 1997
<FN>
- ------------------------
(1) Member of the Executive, Compensation and Stock Option Committees.
(2) Member of the Audit and 1994 Non-Statutory Plan Committees.
</TABLE>
Mr. Charles J. Wyly, Jr. became a director of the Company in October 1984
and Vice Chairman in February 1985. Mr. Wyly served as an officer and director
of University Computing Company, a computer software and services company, from
1964 to 1975, including President from 1969 to 1973. Mr. Wyly and his brother,
Sam, founded Earth Resources Company, an oil refining and silver and gold mining
company, and Mr. Wyly served as Chairman from 1968 to 1980. Mr. Wyly served as
Vice Chairman of the Bonanza Steakhouse chain from 1967 to 1989. Mr. Wyly is a
co-founder and currently serves as Vice Chairman of Sterling Software, Inc., a
computer software company, and as Chairman of Maverick Capital, an investment
fund management company. Charles J. Wyly, Jr. is the father-in-law of Donald R.
Miller, Jr., a director and Vice President -- Market Development of the Company.
Mr. Bush became a director of the Company and was elected President and
Chief Operating Officer in August 1991. Prior to joining the Company, Mr. Bush
was Executive Vice President -- Operations and Stores for Ames Department
Stores. Before joining Ames in 1990, Mr. Bush was President, Chief Operating
Officer and a director of Rose's Stores, a discount store chain. From 1980 to
1985, he was Vice President -- Southern Zone Manager for Zayre Corporation.
Previously, Mr. Bush spent 22 years with J.C. Penney Company, where he held a
variety of executive positions in merchandising, operations, marketing,
strategic planning, specialty businesses, discount stores and business
development.
2
<PAGE>
Dr. Taylor became a director of the Company in June 1989. Dr. Taylor was
President of Louisiana Tech University from 1962 until 1987, and since that time
has served as President -- Emeritus of that university. Dr. Taylor also
currently serves as a director of each of Illinois Central Corporation and Pizza
Inn, and performs mediation and arbitration services as a member of The American
Arbitration Association and The Federal Mediation and Conciliation Service.
Mr. Hanlon became a director of the Company in April 1990. Since February
1995, Mr. Hanlon has been Vice President -- Investor Relations of America
Online, Inc., a provider of online computer services. From March 1993 until
February 1995, Mr. Hanlon was a consultant. He was Vice President -- Corporate
Communications from 1988 to 1993 for LEGENT Corporation and a predecessor. From
1987 to 1988, Mr. Hanlon served as a consultant to Sam Wyly, Chairman. From 1983
through 1987, Mr. Hanlon was Director of Investor Relations of University
Computing Company.
Mr. Evan A. Wyly became a director of the Company in September 1992 and has
served as Vice President of the Company since December 1991. In June 1988, Mr.
Wyly founded Premier Partners Incorporated, a private investment firm, and
served as President prior to joining the Company. Mr. Wyly is a Managing
Director of Maverick Capital and a director of Sterling Software, Inc. and
Xscribe Corp., a high-technology information management company.
Mr. Sam Wyly became a director of the Company in July 1984 and was elected
Chairman in October 1984. In 1963, Mr. Wyly founded University Computing
Company, a computer software and services company, and served as President or
Chairman from 1963 until February 1979. Mr. Wyly co-founded Earth Resources
Company, an oil refining and silver and gold mining company, and served as its
Executive Committee Chairman from 1968 to 1980. Mr. Wyly and his brother,
Charles, bought the 20 restaurant Bonanza Steakhouse chain in 1967. It grew to
approximately 600 restaurants by 1989, during which time he served as Chairman.
Mr. Wyly currently serves as Chairman of Sterling Software, Inc., a computer
software company that he co-founded in 1981, and as President of Maverick
Capital, an investment fund management company. Sam Wyly is the father of Evan
A. Wyly, a director of the Company.
Mr. French has served as a director of the Company since September 1992. He
has been a Managing Director of Maverick Capital since 1992 and also has been a
partner with the law firm of Jackson & Walker, L.L.P. since 1976. Since July
1992, Mr. French has served as a director of Sterling Software, Inc.
Mr. Miller has served as Vice President -- Market Development of the Company
since November 1990 and as a director of the Company since September 1992. From
September 1984 to November 1990 he was Director of Real Estate. Prior to joining
the Company, Mr. Miller served in various real estate positions with Bonanza and
Peoples Restaurants. Mr. Miller has served as a director of Sterling Software,
Inc. since September 1993. He also serves on the Board of Directors of Xscribe
Corp. Mr. Miller is the son-in-law of Charles J. Wyly, Jr., Vice Chairman.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a regularly scheduled basis to review significant
developments affecting the Company and to act on matters requiring Board
approval. It also holds special meetings when an important matter requires Board
action between scheduled meetings. The Board of Directors met four times during
the fiscal year ended January 29, 1995 ("fiscal 1994"). During such period, all
members of the Board of Directors participated in at least 75% of all Board and
applicable committee meetings.
The Board of Directors has five standing committees: the Executive
Committee, the Audit Committee, the Stock Option Committee, the 1994
Non-Statutory Plan Committee and the Compensation Committee. The functions of
these committees, their current members, and the number of meetings held during
fiscal 1994 are described below.
3
<PAGE>
EXECUTIVE COMMITTEE. The function of the Executive Committee is to direct
and manage the business and affairs of the Company in the intervals between
meetings of the Board. The Executive Committee is empowered to act in lieu of
the Board on any matter except that for which the Board has specifically
reserved authority to itself and except for those matters specifically reserved
to the full Board pursuant to the Delaware General Corporation Law. The
Executive Committee is comprised of Sam Wyly (Chairman) and Charles J. Wyly, Jr.
The Executive Committee acted by written consent two times in fiscal 1994.
AUDIT COMMITTEE. The Audit Committee was established to review the
professional services and independence of the Company's independent auditors,
and the Company's accounts, procedures and internal controls. The Audit
Committee recommends to the Board of Directors the appointment of the firm
selected to be independent public accountants for the Company and monitors the
performance of such firm; reviews and approves the scope of the annual audit,
and reviews and evaluates with the independent public accountants the Company's
annual audit and annual consolidated financial statements; reviews with
management the status of internal accounting controls; evaluates problem areas
having a potential financial impact on the Company that may be brought to its
attention by management, the independent public accountants or the Board of
Directors; and evaluates all public financial reporting documents of the
Company. The Audit Committee was comprised of Dr. F. Jay Taylor (Chairman) and
William O. Hunt during fiscal 1994. The Audit Committee met three times in
fiscal 1994. Following the Meeting, it is expected that the Audit Committee will
consist of Dr. F. Jay Taylor (Chairman) and Richard E. Hanlon.
STOCK OPTION COMMITTEE. The Stock Option Committee administers the
Company's Key Employee Stock Compensation Program (the "Program"). It approves
the granting of stock options, restricted stock awards and stock appreciation
rights to officers and other key employees that are eligible to participate in
the Program. The Stock Option Committee is comprised of Sam Wyly (Chairman) and
Charles J. Wyly, Jr. The Stock Option Committee acted by written consent nine
times in fiscal 1994.
COMPENSATION COMMITTEE. The function of the Compensation Committee is to
fix the annual salaries and bonuses for the officers and key employees of the
Company. The Compensation Committee is comprised of Charles J. Wyly, Jr.
(Chairman) and Sam Wyly. The Compensation Committee met once in fiscal 1994.
1994 NON-STATUTORY PLAN COMMITTEE. The 1994 Non-Statutory Plan Committee
administers the Company's 1994 Non-Statutory Stock Option Plan (the "1994
Non-Statutory Plan"). The 1994 Non-Statutory Plan Committee has the power,
subject to certain restrictions set forth in the 1994 Non-Statutory Plan, to
determine from time to time the individuals to whom options shall be granted,
the number of shares to be covered by each option and the time or times at which
options shall be exercisable. Messrs. Hunt and Taylor were members of the 1994
Non-Statutory Plan Committee during fiscal 1994. The 1994 Non-Statutory Plan
Committee acted by unanimous written consent two times during the 1994 fiscal
year. Following the Meeting, it is expected that the 1994 Non-Statutory Plan
Committee will consist of Dr. F. Jay Taylor and Richard E. Hanlon.
The Company does not have a nominating committee. The functions customarily
performed by a nominating committee are performed by the Board of Directors as a
whole.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information as of April 7, 1995, regarding
the beneficial ownership of Common Stock by each person known by the Company to
own 5% or more of the outstanding shares
4
<PAGE>
of Common Stock, each director of the Company, certain named executive officers,
and the directors and executive officers of the Company as a group. The persons
named in the table have sole voting and investment power with respect to all
shares of Common Stock owned by them, unless otherwise noted.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER OR OF BENEFICIAL PERCENT
NUMBER OF PERSONS IN GROUP OWNERSHIP OF CLASS
- ------------------------------------------------------------------------ ------------------ -----------
<S> <C> <C>
Sam Wyly ............................................................... 2,484,905(1) 11.2%
5931 Campus Circle Drive
Irving, Texas 75063
Charles J. Wyly, Jr. ................................................... 2,172,607(2) 10.0%
8080 N. Central Expressway, Suite 1100
Dallas, Texas 75206
The Wyly Group ......................................................... 4,357,512(3) 19.3%
8080 N. Central Expressway, Suite 1300
Dallas, Texas 75206
Evan A. Wyly............................................................ 130,875(4) *
Jack E. Bush............................................................ 171,750(5) *
Michael C. French....................................................... 30,500(6) *
Richard E. Hanlon....................................................... 32,600(7) *
William O. Hunt......................................................... 33,000(8) *
Donald R. Miller, Jr.................................................... 67,687(9) *
Dr. F. Jay Taylor....................................................... 36,440(10) *
R. Don Morris........................................................... 105,037(11) *
Douglas B. Sullivan..................................................... 96,750(12) *
FMR Corp. .............................................................. 1,956,800(13) 9.1%
82 Devonshire Street
Boston, Massachusetts 02109
A I M Management Group Inc. ............................................ 1,208,100(14) 5.6%
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
All directors and executive officers as a group (13 persons)............ 5,118,850(15) 23.2%
<FN>
- ------------------------
* Less than 1%
(1) Includes 150,000 shares subject to presently exercisable options held of
record by Mr. Wyly; 600,000 shares subject to presently exercisable options
held of record by Tallulah, Ltd., a limited partnership of which Mr. Wyly
is general partner; 874,536 shares held of record by Tallulah, Ltd.;
536,615 shares held of record by family trusts of which Mr. Wyly is
trustee; 300,000 shares held of record by Maverick Entrepreneurs Fund, Ltd.
("Maverick"), a limited partnership of which Mr. Wyly is a general partner;
7,918 shares held as guardian of a minor child; and 15,836 shares held of
record by certain of Mr. Wyly's adult children, who have given him the
power to vote such shares.
(2) Includes 375,000 shares subject to presently exercisable options held of
record by Mr. Wyly; 755,000 shares held of record by Brush Creek, Ltd., a
limited partnership of which Mr. Wyly is general partner; 742,233 shares
held of record by family trusts of which Mr. Wyly is trustee; 300,000
shares held of record by Maverick, of which Mr. Wyly is a general partner;
and 374 shares held of record by Mr. Wyly's adult children, who have given
him the power to vote such shares.
(3) The Wyly Group consists of Sam Wyly, Charles J. Wyly Jr. and Maverick.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
(4) Includes 75,000 shares subject to presently exercisable options and 55,875
shares held directly.
(5) Subject to presently exercisable options. Excludes 455,925 shares held by
Michaels Stores, Inc. Employees 401(k) Plan and Trust, for which Mr. Bush
is a trustee and a member of the Investment Committee.
(6) Includes 30,000 shares subject to presently exercisable options and 500
shares held by a retirement account directed by Mr. French.
(7) Includes 30,000 shares subject to presently exercisable options and 2,600
shares held directly.
(8) Includes 30,000 shares subject to presently exercisable options and 3,000
shares held by B&G Partnership, Ltd., a limited partnership of which the
limited partners are Mr. Hunt and his spouse, and the general partner of
which is The Hunt Group, Ltd., a Texas limited liability company whose
members are Mr. Hunt and his spouse. Mr. Hunt has chosen not to seek
election to serve as a director for an additional term.
(9) Includes 63,500 shares subject to presently exercisable options, 4,000
shares held directly and 187 shares held by Mr. Miller's spouse.
(10) Includes 15,000 shares subject to presently exercisable options and 21,440
shares held directly.
(11) Includes 90,000 shares subject to presently exercisable options and 15,037
shares held directly. Excludes 455,925 shares held by Michaels Stores, Inc.
Employees 401(k) Plan and Trust, for which Mr. Morris is a trustee and a
member of the Investment Committee.
(12) Includes 80,000 shares subject to presently exercisable options and 16,750
shares held directly.
(13) Based on an amendment to Schedule 13G filed with the Securities and
Exchange Commission dated February 14, 1995, FMR Corp. has sole voting
power with respect to 5,800 shares of Common Stock, has sole power to
dispose of or direct the disposition of 1,956,800 shares of Common Stock
(as a result of its wholly-owned subsidiary, Fidelity Management & Research
Company, acting as investment adviser to several investment companies) and
does not share the power to dispose of or direct the disposition of any
shares of Common Stock. Edward C. Johnson 3d and Abigail P. Johnson each
own 24.9% of the outstanding voting common stock of FMR Corp.
(14) Based on a Schedule 13G filed with the Securities and Exchange Commission
dated February 3, 1995, A I M Management Group Inc. and its wholly-owned
subsidiaries, A I M Advisors, Inc. and A I M Capital Management, Inc., have
shared power to vote or direct the vote with respect to 1,208,100 shares of
Common Stock and have sole power to dispose or to direct the disposition of
1,208,100 shares of Common Stock.
(15) Includes 31,850 shares subject to presently exercisable options held, in
the aggregate, by two executive officers not named in the table and
approximately 24,849 shares held, in the aggregate, directly by such
officers (393 shares of which are based on allocations under the Employee
Stock Purchase Plan as of January 29, 1995).
</TABLE>
6
<PAGE>
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers, based on salary and bonus earned during fiscal 1994.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ---------------------- -------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
FISCAL COMPENSATION AWARDS OPTIONS/ PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) ($) SARS(#)(1) ($) ($)
- ----------------------------------- ------ --------- -------- ------------ --------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sam Wyly, 1994 434,875 -- 74,604(2) -- 200,000 -- --
Chairman of the Board 1993 384,000 -- 73,900(2) -- 100,000 -- --
1992 384,000 -- 66,766(2) -- 600,000 -- --
Charles J. Wyly, Jr. 1994 217,438 -- -- -- 100,000 -- --
Vice Chairman of the Board 1993 192,000 -- -- -- 50,000 -- --
1992 192,000 -- -- -- 300,000 -- --
Jack E. Bush, 1994 442,308 -- -- -- 100,000 -- 59,504(3)
President 1993 376,923 -- -- -- 50,000 -- 77,908(3)
1992 344,769 -- -- -- 75,000 -- 65,680(3)
R. Don Morris, 1994 321,154 -- 49,357(4) -- 60,000 -- 8,355(5)
Executive Vice President 1993 288,461 -- 43,994(4) -- 25,000 -- 7,786(5)
1992 275,000 -- 41,579(4) -- 130,000 -- 7,844(5)
Douglas B. Sullivan, 1994 271,924 -- 20,075(6) -- 60,000 -- 6,560(7)
Executive Vice President 1993 239,878 -- 24,097(6) -- 25,000 -- 6,303(7)
1992 207,692 -- 24,536(6) -- 130,000 -- 6,750(7)
<FN>
- ------------------------------
(1) Options to acquire shares of Common Stock.
(2) Includes life insurance premiums paid by the Company in the amount of
$64,746 in fiscal 1994 and $57,158 in fiscal 1993 and fiscal 1992.
(3) Includes the annual contribution by the Company for Mr. Bush's account
pursuant to the Company's 401(k) Plan in the amount of $3,615 in fiscal
1994 and $4,305 in fiscal 1993, moving and relocation expenses of $23,972
in fiscal 1992, accruals by the Company of $54,488, $63,976 and $30,000 in
fiscal 1994, 1993 and 1992, respectively, for an annuity for Mr. Bush and
split-dollar life insurance providing $1,401, $9,627 and $11,708 of current
net benefit projected on an actuarial basis in fiscal 1994, 1993 and 1992,
respectively.
(4) Includes life insurance premiums paid by the Company in the amount of
$42,651, $35,228 and $31,975 in fiscal 1994, 1993 and 1992, respectively.
(5) Includes the annual contribution by the Company for Mr. Morris' account
pursuant to the Company's 401(k) Plan in the amount of $4,620, $4,324 and
$4,364, and split-dollar life insurance providing $3,735, $3,642 and $3,480
of current net benefit projected on an actuarial basis in fiscal 1994, 1993
and 1992, respectively.
(6) Includes life insurance premiums paid by the Company in the amount of
$16,925, $16,636 and $15,051 in fiscal 1994, 1993 and 1992, respectively.
(7) Includes the annual contribution by the Company for Mr. Sullivan's account
pursuant to the Company's 401(k) Plan in the amount of $3,914, $4,189 and
$4,456, and split-dollar life insurance providing $2,646, $2,114 and $2,294
of current net benefit projected on an actuarial basis in fiscal 1994, 1993
and 1992, respectively.
</TABLE>
7
<PAGE>
OPTION GRANTS DURING 1994 FISCAL YEAR
The following table provides information related to options granted to the
named executive officers during fiscal 1994.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
- ------------------------------------------------------------------------------------ --------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#)(2) FISCAL YEAR ($/SH)(3) DATE 5%($) 10%($)
- -------------------------- ------------- --------------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sam Wyly.................. 100,000(4) 16.2 39.25 4/17/99 1,084,405 2,396,252
100,000(5) 30.75 7/31/99 849,566 1,877,318
Charles J. Wyly, Jr....... 50,000(4) 8.1 39.25 4/17/99 542,203 1,198,126
50,000(5) 30.75 7/31/99 424,783 938,659
Jack E. Bush.............. 50,000(4) 8.1 39.25 4/17/99 542,203 1,198,126
50,000(5) 30.75 7/31/99 424,783 938,659
R. Don Morris............. 30,000(4) 4.9 39.25 4/17/99 325,322 718,876
30,000(5) 30.75 7/31/99 254,870 563,195
Douglas B. Sullivan....... 30,000(4) 4.9 39.25 4/17/99 325,322 718,876
30,000(5) 30.75 7/31/99 254,870 563,195
<FN>
- ------------------------------
(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates of
appreciation on the Company's Common Stock over the term of the options.
These numbers do not take into account provisions of certain options
providing for termination of the option following termination of
employment, nontransferability or vesting over periods.
(2) Options to acquire shares of Common Stock.
(3) The option exercise price may be paid in shares of Common Stock owned by
the executive officer, in cash, or in any other form of valid consideration
or a combination of any of the foregoing, in some cases as determined by
the Board of Directors, the Stock Option Committee, or the 1994
Non-Statutory Plan Committee, as applicable, in its discretion. The
exercise price of each option was equal to the fair market value of the
Common Stock on the date of grant.
(4) Option becomes exercisable with respect to 50% of the shares covered
thereby on each of August 1, 1994 and August 1, 1995.
(5) Option becomes exercisable with respect to 50% of the shares covered
thereby on each of August 1, 1995 and August 1, 1996.
</TABLE>
OPTION EXERCISES DURING 1994 FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised by the
named executive officers during the 1994 fiscal year and the number and value of
options held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT FY-END(#) AT FY-END($)(2)
-------------------------- --------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sam Wyly............ -- -- 750,000 150,000 9,337,500 425,000
Charles J. Wyly,
Jr................. -- -- 375,000 75,000 4,668,750 212,500
Jack E. Bush........ -- -- 171,750 123,250 2,007,812 1,453,437
R. Don Morris....... 32,750 829,843 94,000 93,250 1,130,500 898,750
Douglas B.
Sullivan........... 46,750 1,213,062 80,000 93,250 780,000 898,750
<FN>
- ------------------------------
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise multiplied by the number of shares to which the exercise relates.
(2) The closing price for the Company's Common Stock as reported through The
Nasdaq National Market System on January 27, 1995, the last trading day of
the 1994 fiscal year, was $35.00. Value is calculated on the basis of the
difference between the option exercise price and $35.00 multiplied by the
number of shares of Common Stock underlying the option.
</TABLE>
8
<PAGE>
COMPENSATION OF DIRECTORS
The Company pays Sam Wyly $37,500 per month for serving as Chairman of the
Board and Chief Executive Officer and pays Charles J. Wyly, Jr. $18,750 per
month for serving as Vice Chairman of the Board. Messrs. Taylor and Hanlon, and
prior to the Meeting Mr. Hunt, each receive an annual fee of $24,000 as a member
of the Board of Directors of the Company and a fee of $1,000 for attendance at
each regular or special Board meeting. Each member of the Audit Committee
receives a fee of $1,000 for attendance at each meeting of the Audit Committee.
The members of the Audit Committee are Messrs. Hunt and Taylor. Following the
Meeting, the members of the Audit Committee are expected to be Messrs. Taylor
and Hanlon. Since December 1, 1992, Mr. French has provided advisory services to
the Company, for which he is compensated at the rate of $15,000 per month.
Jackson & Walker, L.L.P., the law firm of which Mr. French is a partner, does
not charge the Company for any time spent by Mr. French on any Company matters.
Directors who are salaried employees of the Company are not compensated for
their Board activities.
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
The Company has entered into agreements with Sam Wyly and Charles J. Wyly,
Jr., directors and executive officers of the Company, which agreements provide
for the employment of such persons by the Company upon a change of control of
the Company (a "Change of Control") for a salary not less than each such
individual's respective annual salary immediately preceding the Change of
Control and allows each such individual to participate in bonuses with other key
management personnel. Each of these agreements (i) is for a term of three years
with provisions for annual automatic one-year extensions and, upon a Change of
Control, an additional extension of 36 months and (ii) requires the Company to
pay to each such individual, if his employment is terminated within three years
of a Change of Control, a sum equal to three times such individual's salary and
bonus during the twelve-month period immediately preceding termination.
The Company has entered into an agreement with Dr. F. Jay Taylor, a director
of the Company, which agreement provides for the engagement by the Company of
Dr. Taylor as a consultant upon a Change of Control for an annual base
compensation not less than the fees received by him from the Company in all
capacities during the twelve-month period immediately preceding the Change of
Control. This agreement (i) is for a term of three years with provisions for
annual automatic one-year extensions and, upon a Change of Control, an
additional extension of 36 months and (ii) requires the Company to pay to Dr.
Taylor, if his consulting arrangement is terminated within three years of a
Change of Control, a sum equal to three times the fees received by him from the
Company in all capacities during the twelve-month period immediately preceding
termination.
During a portion of fiscal 1994, the Company operated under an agreement
with Jack E. Bush, a director and executive officer of the Company, which
provided for Mr. Bush's employment at an annual base salary of $350,000. Such
agreement further provided that the Company would fund a retirement plan
intended to provide Mr. Bush with an annuity of $60,000 per year for life after
age 65; during fiscal 1994, the Company accrued $54,488 pursuant to such
agreement with respect to such retirement plan.
The Company has entered into an agreement with Douglas B. Sullivan, an
executive officer of the Company, which provides for his employment by the
Company upon a Change of Control for a salary not less than his annual salary
immediately preceding the Change of Control and allows him to participate in
bonuses with other key management personnel of the Company. This agreement (i)
is for a term of three years with provisions for annual automatic one-year
extensions and, upon a Change of Control, an additional extension of 12 months
and (ii) requires the Company to pay to Mr. Sullivan, if his employment is
terminated within one year of a Change of Control, a sum equal to his salary and
bonus during the twelve-month period immediately preceding termination.
9
<PAGE>
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company is engaged in a highly competitive industry. In order to
succeed, the Company believes that it must be able to attract and retain
qualified executives. To achieve this objective, the Company has structured an
executive compensation system tied to operating performance that the Company
believes has enabled it to attract and retain key executives and key employees.
During fiscal 1994, the members of the Compensation Committee held primary
responsibility for determining executive compensation levels.
The Compensation Committee, as part of its review and consideration of
executive compensation, takes into account, among other things, the following
goals:
- Provision of incentives and rewards that will attract and retain highly
qualified and productive people;
- Motivation of employees to high levels of performance;
- Differentiation of individual pay based on performance;
- Ensuring external competitiveness and internal equity; and
- Alignment of Company, employee and shareholder interests.
To achieve these goals, the Company's executive compensation policies
integrate annual base compensation with bonuses based on operating performance,
with a particular emphasis on attainment of planned objectives contained in the
Company's annual financial plan, and on individual initiatives and performance.
The planned objectives include same store and overall sales increases; gross
margin, operating profit and growth targets; inventory turn; limits on corporate
general and administrative expenses; net income and earnings per share targets;
and debt to capital ratio levels. The Compensation Committee has not applied a
formula assigning specific weights to the planned objectives, individual
initiatives or performance. Compensation through stock options is designed to
attract and retain qualified executives and to ensure that such executives have
a continuing stake in the long-term success of the Company. When granting stock
options, the Stock Option Committee and the 1994 Non-Statutory Plan Committee,
as well as the Board as a whole, as applicable (collectively, the "Option
Committees"), evaluate a number of criteria, including the recipient's level of
cash compensation, years of service with the Company, position with the Company,
the number of unexercised options held by the recipient, and other factors.
Similarly, the Option Committees have not applied a formula assigning specific
weights to any of these factors when making their determinations. In order to
continue to provide management the long-term incentives afforded by stock
options, during fiscal 1994 the Option Committees and the Board as a whole
approved the grant of additional options to a substantial number of the
Company's officers, directors and employees.
CHIEF EXECUTIVE OFFICER'S COMPENSATION FOR FISCAL 1994. The Company's Chief
Executive Officer is compensated in the form of an annual salary, certain
benefits and, in some years, bonuses and/or stock options. For fiscal 1994, the
Company's Chief Executive Officer did not receive a bonus.
COMPENSATION OF EXECUTIVE OFFICERS. Compensation of the Company's executive
officers is generally comprised of base salary, annual cash bonuses, long-term
incentive compensation in the form of stock options and various benefits. During
a portion of fiscal 1994, Jack E. Bush, President and Chief Operating Officer of
the Company, was subject to an agreement with the Company that provided for a
specified annual base salary. See "Employment and Change of Control Agreements."
In determining salaries for the executive officers in fiscal 1994, including the
Chief Executive Officer and the other named executive officers, the Compensation
Committee took into account individual experience and performance of its
executive officers, as well as the Company's operating performance for fiscal
1994 and the attainment of planned financial and strategic objectives described
above. In determining stock option grants for the Chief Executive Officer and
the other named executive officers, the Option Committees evaluated a number of
criteria, including the recipient's level of cash compensation, years
10
<PAGE>
of service with the Company, position with the Company, the number of
unexercised options held by the recipient, and other factors. Specifically, the
Compensation Committee and Option Committees took into consideration the
attainment of the planned objectives contained in the Company's annual financial
plan with special emphasis on the attainment of profit and growth targets.
This report is submitted by the members of the Compensation and Option
Committees:
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE 1994 NON-STATUTORY PLAN COMMITTEE
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
Charles J. Wyly, Jr. Sam Wyly William O. Hunt
Sam Wyly Charles J. Wyly, Jr. Dr. F. Jay Taylor
</TABLE>
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During fiscal 1994, the members of the Compensation Committee were primarily
responsible for determining executive compensation, and the members of the
Option Committees made decisions related to stock option grants to executive
officers and other employees who were not directors. Decisions related to stock
option grants to directors were made by the 1994 Non-Statutory Plan Committee
and/or the Board as a whole, with individual members abstaining as to specific
grants made to them (the executive officers who are also directors are Sam Wyly,
Charles J. Wyly, Jr. and Jack E. Bush). The following executive officers, who
also are members of the Compensation Committee and the Stock Option Committee,
participated in deliberations concerning executive officer compensation: Sam
Wyly and Charles J. Wyly, Jr.
Sam Wyly and Charles J. Wyly, Jr. are executive officers and members of the
Executive Committees, Stock Option Committees and Boards of Directors of both
the Company and Sterling Software, Inc. Additionally, Sam Wyly and Charles J.
Wyly, Jr. are members of the Compensation Committee of the Company. Accordingly,
Sam Wyly and Charles J. Wyly, Jr. have participated in decisions related to
compensation of executive officers of each of the Company and Sterling Software,
Inc.
During fiscal 1994, Maverick Capital performed investment management
services for the Company pursuant to an agreement that was terminated in May
1994. In addition, during fiscal 1994, the Company had invested $15 million in
an investment partnership managed by Maverick Capital, which investment was
withdrawn in May 1994. Maverick Capital is owned by Sam Wyly, Charles J. Wyly,
Jr., Evan A. Wyly and various Wyly family trusts, including a trust for the
benefit of the wife of Donald R. Miller, Jr. In addition, Michael C. French is a
managing director of, and has an income interest in, Maverick Capital. The
Company believes that the fees and allocations under the investment management
and partnership agreements were comparable to those that would have been charged
to the Company by unaffiliated third parties for comparable arrangements. Total
fees of $150,106 were paid to Maverick Capital during fiscal 1994 pursuant to
these investment management and partnership agreements.
From time to time the Company leases charter aircraft from a company owned
by Sam Wyly and Charles J. Wyly, Jr., for travel by the Company's senior
management in the course of the Company's business. The Company pays for the use
of such aircraft at competitive market rates. For travel during fiscal 1994,
such payments totalled $182,679.
11
<PAGE>
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock during the five fiscal
years ended January 29, 1995, with the cumulative total return on the Dow Jones
Equity Market Index and the Dow Jones Retail -- Other Specialty Index. The
comparison assumes $100 was invested on the last trading day of the fiscal year
ending on January 28, 1990, in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends. Dates on the following
chart represent the last day of the indicated fiscal year. The Company paid no
dividends during such five-year period.
STOCK PERFORMANCE
COMPARISON OF FIVE YEAR TOTAL RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1/26/89 2/1/90 1/31/91 1/29/92 1/28/93 1/27/94
<S> <C> <C> <C> <C> <C> <C>
Michaels Stores 100 123 519 871 858 903
DJ Equity Market Index 100 109 136 151 169 170
DJ Retail - Other Special-
ty 100 113 157 206 193 200
</TABLE>
CERTAIN TRANSACTIONS
Jackson & Walker, L.L.P., a law firm of which Michael C. French is a
partner, provides legal services to the Company. The Company is not charged by
such firm for any time spent by Mr. French on Company matters.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC"). Such persons are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
12
<PAGE>
Based solely on its review of the copies of such forms received by it with
respect to fiscal 1994, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
officers, directors and persons who own more than 10% of a registered class of
the Company's equity securities have been complied with.
INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as independent
auditors to examine the Company's accounts for the current fiscal year.
Representatives of Ernst & Young LLP are expected to be present at the Meeting
with the opportunity to make a statement if they desire to do so and to be
available to answer appropriate questions.
SHAREHOLDERS' PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
action at subsequent annual meetings of the Company consistent with Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as amended. For such
proposals to be considered in the Proxy Statement and Proxy relating to the 1996
Annual Meeting of Shareholders, such proposals must be received by the Company
not later than December 23, 1995. Such proposals should be directed to Michaels
Stores, Inc., P.O. Box 619566, DFW, Texas 75261-9566, Attn: Secretary.
OTHER BUSINESS
The Board of Directors knows of no matter other than those described herein
that will be presented for consideration at the Meeting. However, should any
other matters properly come before the Meeting or any adjournments thereof, it
is the intention of the persons named in the accompanying Proxy to vote in
accordance with their best judgment in the interest of the Company.
MISCELLANEOUS
All costs of solicitation of Proxies will be borne by the Company. In
addition to solicitation by mail, the officers and employees of the Company may
solicit Proxies by telephone or personally, without additional compensation. The
Company may also make arrangements with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation materials to the
beneficial owners of shares of Common Stock held of record by such persons, and
the Company may reimburse them for their out-of-pocket expenses incurred in
connection therewith. The Company has engaged Corporate Investor Communications,
Inc. as proxy solicitor for approximately $6,000.
The Annual Report to Shareholders of the Company, including financial
statements for the fiscal year ended January 29, 1995, accompanies this Proxy
Statement. The Annual Report is not to be deemed part of this Proxy Statement.
By Order of the Board of Directors
MARK V. BEASLEY
SECRETARY
Irving, Texas
May 8, 1995
13
<PAGE>
MICHAELS STORES, INC.
PROXY - ANNUAL MEETING OF SHAREHOLDERS
PROXY
The undersigned hereby appoints R. Don Morris and Mark V. Beasley, each with
power to act without the other and with full power of substitution, as Proxies
to vote, as designated below, all stock of Michaels Stores, Inc. owned by the
undersigned at the Annual Meeting of Shareholders to be held at the Omni
Mandalay Hotel, 221 E. Las Colinas Boulevard, Irving, Texas, on Tuesday, June 6,
1995, at 10:00 a.m., local time, or any adjournment thereof, upon such business
as may properly come before the meeting or such adjournment.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR AND IN THE DISCRETION OF THE
PROXIES ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
This proxy may be revoked prior to the exercise
of the powers conferred by the proxy.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(change of address)
Election as Directors of the two _______________________________
nominees listed below: _______________________________
Charles J. Wyly, Jr., Jack E. Bush _______________________________
_______________________________
(If your address has changed,
please provide your new address
above and mark the corresponding
box on the reverse side of this
card.)
SEE REVERSE SIDE
(Continued, and to be signed and dated, on reverse side)
<PAGE>
/X/ Please mark your SHARES IN YOUR NAME
votes as in this
example.
WITHHOLD AUTHORITY
TO VOTE ON ONE OR MORE
FOR NOMINEES LISTED BELOW
1. Election of / / / /
Directors
(SEE REVERSE)
(For, except as indicated to the contrary below.)
_____________________________________________
2. In their discretion on any other matter that may properly come
before the meeting or any adjournment thereof.
Change
of
/ / Address
Signature ___________________________________________ DATED _____________,1995
(Signature if held jointly) _________________________ DATED _____________,1995
Please date, sign exactly as name appears above and mail promptly this proxy
in the enclosed envelope. When there is more than one owner, each should
sign. When signing as an attorney, administrator, executor, guardian or
trustee, please add your title as such. If executed by a corporation, the
proxy should be signed by a duly authorized officer. If executed by a
partnership, please sign in the partnership name by an authorized person.
