SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ROSS STORES, INC.
___________________________________________________________
(Name of Registrant as Specified In Its Charter)
____________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a6(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):
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
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the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
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4) Date Filed:
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=========================================
<PAGE>
April 25, 1995
Dear Stockholder:
Enclosed with this letter are the proxy materials for the
upcoming Annual Meeting. Among the items on the Agenda are
amendments to the components of our equity incentive
compensation program: the Stock Option Plan, Restricted
Stock Plan and Employee Stock Purchase Plan. On behalf of
the Compensation Committee of the Board of Directors, which
unanimously recommended these amendments, I would like to
take this opportunity to explain the Committee's incentive
compensation philosophy and how these amendments fit into
our goal of protecting and increasing the value of the
stockholders' investment.
The cornerstone of our philosophy is the alignment of
management's financial interests with those of the
stockholders. A meaningful amount of total compensation in
the form of equity-based grants more clearly focuses
management's attention on developing and implementing
strategies that will positively affect long-term valuation
of the stock. Further, our equity-based compensation is
directed to those employees who can have a meaningful effect
on the company's performance.
The Board of Directors recommends a vote in favor of these
proposals for two important reasons:
The company's equity compensation programs enable Ross
to attract, motivate and retain the key employees,
particularly in the merchandising organization,
necessary to compete in an increasingly tough
environment for off-price apparel retailers.
A key management focus over the past few years has been the
expansion and strengthening of the company's merchandising
staff through the addition of talented merchants at every
level of the organization -- management, buyers and
assistant buyers. Our equity programs -- in particular the
Stock Option and Restricted Stock Plans -- are important
vehicles that strengthen the overall competitiveness of our
compensation packages and enable the company to accomplish
this strategic objective. These programs helped us deliver
respectable financial results in 1994.
By way of example, our two strongest performing businesses
this past year were Home and Dresses, both of which have
benefited from the addition of new merchandise management
and buyers. Each of these areas realized strong sales
gains over last year and were ahead of plan as well.
Despite one of the toughest climates ever for off-price,
Ross Stores was one of just two companies in our industry
to report gains in both same store sales and earnings per
share for the year. During 1994, comparable store sales
increased 2%, and earnings per share rose 9% to $1.24.
The company's stock award programs are broadbased
throughout the organization, enabling Ross to develop
both a strong senior and middle management team that has had
relatively low turnover in the last few years.
- Restricted stock is granted to about 60 people in key
positions at the middle to upper management levels.
- Stock options are more widely disseminated, with grants
to about 350 employees down through the middle
management ranks of the organization.
- The Employee Stock Purchase Plan offers all qualified
employees an opportunity to become stockholders and had
approximately 800 participants in 1994, the most recent
offering period.
The total proposed increase in shares for all three plans
amounts to 2.4 million, or about 9.7% of total common stock
outstanding. However, dilution from the equity compensation
plans has been offset by the company's stock repurchase
programs over the past several years. As a result, fully-
diluted shares outstanding today are actually lower than they
were in 1988, when the company initiated its first stock
repurchase program.
Enhancing stockholder value remains a top priority for your
Board of Directors and management, and we will continue to
evaluate how our dividend and possible future repurchase
programs can return value to stockholders.
Please feel free to call either Earl Benson, Senior Vice
President and Chief Financial Officer, or Katie Loughnot,
Director of Investor Relations, at 1-510-505-4509, with any
questions you may have.
Respectfully,
/s/G. Orban
George P. Orban
Ross Stores, Inc.
Board of Directors Compensation Committee
===============================
<PAGE>
April 25, 1995
Dear Stockholder:
You are cordially invited to attend the 1995 Ross Stores'
Annual Meeting of Stockholders which will be held at 11:00
a.m. on Thursday, May 25, 1995 at the corporate headquarters
located at 8333 Central Avenue, Newark, California. If
you will need special assistance at the meeting because of a
disability, please contact Mr. Earl T. Benson, Senior
Vice President, Chief Financial Officer and Corporate
Secretary, Ross Stores, Inc., 8333 Central Avenue, Newark,
CA 94560-3433 at least 10 days before the meeting.
Please complete the enclosed proxy card and return it in
the envelope provided for that purpose as soon as possible so
that your shares will be represented and voted at the meeting.
Thank you for your commitment to Ross Stores and for
your cooperation in returning your proxy without delay.
Sincerely,
ROSS STORES, INC.
/s/Norman A. Ferber
Norman A. Ferber
Chairman of the Board and
Chief Executive Officer
====================
<PAGE>
ROSS STORES, INC.
Notice of Annual Meeting of
Stockholders To Be Held May 25, 1995
To the Stockholders:
Please take notice that the Annual Meeting of the Stockholders
of Ross Stores, Inc., a Delaware corporation (the "company"),
will be held on Thursday, May 25, 1995 at 11:00 a.m. PDT,
at the company's corporate headquarters located at 8333 Central
Avenue, Newark, California for the following purposes:
1. To elect three Class III directors for a three year term.
2. To approve the amendments to the 1992 Stock Option Plan to
(i) increase the share reserve by 1,200,000 shares and
(ii) limit the number of shares of Common Stock underlying
options granted to any single individual per fiscal year.
3. To approve the amendment to the 1988 Restricted Stock Plan
to increase the share reserve by 800,000 shares.
4. To approve the amendment to the Employee Stock Purchase Plan
to increase the share reserve by 400,000 shares.
5. To transact such other business as may properly come before
the Annual Meeting or any adjournments or postponements thereof.
Stockholders of record at the close of business on April 10,
1995 are entitled to notice of and to vote at the Annual
Meeting and any adjournments or postponements thereof. For ten
days prior to the Annual Meeting, a complete list of
stockholders entitled to vote at the Annual Meeting will be
available for examination by any stockholder for any purpose
related to the Annual Meeting during ordinary business hours
at the principal office of the company located at 8333
Central Avenue, Newark, California.
By order of the Board of Directors,
Earl T. Benson, Secretary
Dated: April 25, 1995
IMPORTANT: Please fill in, date, sign and mail promptly
the enclosed Proxy in the post-paid envelope provided to
assure that your shares are represented at the meeting.
If you attend the meeting, you may vote in person if you wish to
do so, even though you have sent in your Proxy.
<PAGE>
TABLE OF CONTENTS
Page
PROXY SOLICITATION 1
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 2
INFORMATION REGARDING NOMINEES AND INCUMBENT DIRECTORS 4
COMPENSATION AND OTHER TRANSACTIONS WITH OFFICERS AND DIRECTORS 6
Summary Compensation Table 6
Option Grants in Last Fiscal Year 8
Aggregated Option Exercises and Year-End Value Table 10
Compensation Committee Report 11
Stockholder Return Performance Graph 14
Compensation of Directors 15
Compensation Committee Interlocks and Insider Participation 15
Employment Contracts, Termination of Employment and Change-In-
Control Arrangements 15
Certain Transactions 16
PROPOSAL 1 - ELECTION OF CLASS III DIRECTORS 17
SUPPORTING ARGUMENTS FOR PROPOSALS 2-4 17
PROPOSAL 2 - 1992 STOCK OPTION PLAN
APPROVAL OF AMENDMENTS TO (I) INCREASE THE SHARE
RESERVE BY 1,200,000 SHARES AND (II) LIMIT THE NUMBER OF
SHARES GRANTED TO ANY INDIVIDUAL PER FISCAL YEAR 20
PROPOSAL 3 - 1988 RESTRICTED STOCK PLAN
APPROVAL OF AMENDMENT TO INCREASE THE SHARE
RESERVE BY 800,000 SHARES 23
PROPOSAL 4 - EMPLOYEE STOCK PURCHASE PLAN
APPROVAL OF AMENDMENT TO INCREASE THE SHARE
RESERVE BY 400,000 SHARES 25
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 27
PROXY SOLICITATION 27
TRANSACTION OF OTHER BUSINESS 27
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING 27
===================
<PAGE>
PROXY STATEMENT
1995 ANNUAL MEETING OF STOCKHOLDERS
OF
ROSS STORES, INC.
8333 Central Avenue
Newark, California 94560
(510) 505-4400
PROXY SOLICITATION
The accompanying Proxy is solicited by the management
of Ross Stores, Inc., a Delaware corporation (the "company"),
for use at the Annual Meeting of Stockholders to be held on
Thursday, May 25, 1995, at 11:00 a.m. PDT, or any adjournment
thereof, at which stockholders of record at the close of
business on April 10, 1995, shall be entitled to vote. The
meeting will be held at the company's corporate offices, 8333
Central Avenue, Newark, California.
The date of this Proxy Statement is April 25, 1995,
the approximate date on which the Proxy Statement and form of
Proxy were first sent or given to stockholders. The Annual
Report to Stockholders for the fiscal year ended January 28,
1995, including financial statements, is enclosed
with this Proxy Statement.
The purpose of this Proxy Statement is to provide
the company's stockholders with certain information
regarding the company and its management and to provide the
stockholders with summaries of the matters to be voted upon
at the Annual Meeting of Stockholders. The stockholders will
be asked to (i) elect three Class III directors to serve
a three-year term, (ii) approve increases in the share
reserves of the company's 1992 Stock Option Plan, 1988
Restricted Stock Plan and Employee Stock Purchase Plan; and
(iii) approve an amendment to the company's 1992 Stock
Option Plan to comply with Section 162(m) of the Internal
Revenue Code.
The company had outstanding, on April 10, 1995,
24,632,786 shares of Common Stock, par value $0.01, all
of which are entitled to vote with respect to all matters to
be acted upon at the meeting. Each stockholder is entitled
to one vote for each share of stock held by him or her. The
company's Bylaws provide that a majority of all shares
entitled to vote, whether present or in person or by proxy,
will constitute a quorum for the transaction of business
at the Annual Meeting. For ten days
prior to the Annual Meeting, the company's stockholder list
is available for viewing by the stockholders for any purpose
related to the Annual Meeting during ordinary business
hours at the company's principal place of business located
at 8333 Central Avenue, Newark, California.
Any Proxy given pursuant to this solicitation may be
revoked by the person giving it at any time before it is
exercised by filing with the Secretary of the company an
instrument revoking it, by presenting at the meeting a duly
executed Proxy bearing a later date or by attending the
meeting and voting in person.
<PAGE> 2
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table contains information as of April 1,
1995 (except for First Pacific Advisors, Inc. as noted in
footnote (2)) regarding the ownership of the Common Stock of
the company by (i) all persons who, to the knowledge of the
company, were the beneficial owners of 5% or more of the
outstanding shares of Common Stock of the company, (ii) each
director and each of the executive officers named in the Summary
Compensation Table, and (iii) all executive officers and directors
of the company as a group. Common Stock is the only issued and
outstanding equity security of the company.
Name of Beneficial Owner Amount and Nature Percent of
and the Directors and of Beneficial Common Stock
Executive Officers Ownership (1) Outstanding
First Pacific Advisors, Inc. 1,231,000 (2) 5.0%
11400 West Olympic Blvd.,
Ste. 1200
Los Angeles, CA 90064
Stuart G. Moldaw 971,691 (3) 3.9%
Norman A. Ferber 344,696 (4) 1.4%
Donald G. Fisher 12,000 (5) *
George P. Orban 188,352 (6) *
Philip Schlein 12,600 (7) *
Donald H. Seiler 143,210 (8) *
Donna L. Weaver 15,000 (9) *
Melvin A. Wilmore 349,089 (10) 1.4%
Michael Balmuth 170,824 (11) *
Barbara Levy 116,336 (12) *
Barry S. Gluck 117,836 (13) *
All executive officers and
directors as a group (19 persons
including the above) 3,232,372 (14) 12.4%
_____
*Less than 1%
<PAGE> 3
(1) To the knowledge of the company, the persons named in
the table have sole voting and investment power with
respect to all shares of Common Stock shown as
beneficially owned by them, subject to community
property laws where applicable and the information
contained in the footnotes to this table.
(2) Information is as of December 31, 1994, pursuant to
the Form 13G filed by First Pacific Advisors, Inc.
with the SEC, a copy of which was sent to the
company by First Pacific Advisors, Inc.
(3) Mr. Moldaw. Includes 787,112 shares held in the name
of The SGM and PIM Trust dated December 22, 1981;
88,579 shares held by the Moldaw Family Foundation
and 80,000 shares held by the Moldaw Family
Supporting Foundation. Mr. Moldaw, a director of the
company, is a trustee of the Trust, and president of
the Moldaw Family Foundation and
president and a director of the Moldaw Family
Supporting Foundation. Also
includes options to purchase 16,000
shares of the company's Common Stock.
(4) Mr. Ferber. Includes immediately exercisable options
to purchase 240,000 shares of the company's Common
Stock. Also includes 100,000 shares of the company's
Common Stock that were granted under the company's 1988
Restricted Stock Plan and remain subject to vesting.
(5) Mr. Fisher. Consists of options to purchase 12,000
shares of the company's Common Stock.
(6) Mr. Orban. Includes 172,352 shares held in the name of
Orban Partners. Mr. Orban, a director of the company, is
a general partner and managing partner of Orban
Partners. Also includes options to purchase 16,000
shares of the company's Common Stock.
(7) Mr. Schlein. Includes options to purchase 11,000 shares
of the company's Common Stock.
(8) Mr. Seiler. Includes options to purchase 16,000 shares
of the company's Common Stock. Excludes 523,698
shares of Common Stock held by the 1976 Moldaw
Family Trust. Mr. Seiler, a director of the company,
is a co-trustee of the 1976 Moldaw Family Trust and
disclaims beneficial ownership of the shares held by
this trust. Excludes 10,289 shares held by the 1986
Goldman Grandchildren's Trust. Mr. Seiler is a
trustee of the 1986 Goldman Grandchildren's Trust and
disclaims beneficial ownership of the shares held by this
trust.
(9) Ms. Weaver. Includes options to purchase 12,000 shares
of the company's Common Stock.
(10) Mr. Wilmore. Includes options to purchase 280,000
shares of the company's Common Stock. Also includes
65,000 shares of the company's Common Stock that were
granted under the company's 1988 Restricted Stock Plan
and remain subject to vesting.
(11) Mr. Balmuth. Includes options to purchase 96,824 shares
of the company's Common Stock. Also includes 74,000
shares of the company's Common Stock that were
granted under the company's 1988 Restricted Stock Plan
and remain subject to vesting.
(12) Ms. Levy. Includes options to purchase 78,000 shares
of the company's Common Stock. Also includes 37,500
shares of the company's Common Stock that were
granted under the company's 1988 Restricted Stock Plan
and remain subject to vesting.
(13) Mr. Gluck. Includes options to purchase 73,019 shares
of the company's Common Stock. Also includes 38,000
shares of the company's Common Stock that were
granted under the company's 1988 Restricted Stock Plan
and remain subject to vesting.
(14) Includes 1,419,991 shares subject to outstanding
options held by directors and executive officers
which were exercisable at April 1, 1995. Also includes
445,500 shares of the company's Common Stock granted to
executive officers under the company's Restricted Stock
Plan, all of which remain subject to vesting.
<PAGE> 4
INFORMATION REGARDING NOMINEES AND INCUMBENT DIRECTORS
The Certificate of Incorporation and the Bylaws of
the company provide that the number of members of the
Board of Directors of the company (the "Board") may be fixed
from time to time exclusively by the Board and that the
directors shall be divided into three classes as nearly equal
in number as possible. The term of office of each class of
directors is three years and the terms of office of the three
classes overlap. The Board of Directors presently consists of
nine members with the Class II directors having one vacant
seat which the Board intends to fill. In addition, Mr. Fisher
will step down from the company's Board of Directors after
the 1995 Annual Stockholders Meeting. The three Class III
directors to be elected at the 1995 Annual Meeting are
being elected to hold office until the 1998 Annual Meeting and
until their successors shall have been elected and qualified.
Proxies cannot be voted for more than the three named nominees.
The following table indicates the name, age,
business experience, principal occupation and term of office
of each nominee and of each director of the company whose term
of office as a director will continue after the Annual Meeting.
Principal Position Director
During Last Five Years Age Since
Nominees for Election as Class III Directors For Terms Expiring in 1998
Philip Schlein General partner of U.S. Venture 60 1987
Partners and USVP-Schlein
Marketing Fund since April
1985. From January 1974 to January 1985,
Mr. Schlein was Chief Executive Officer of
Macy's California. Director of ReSound
Corp.
Norman A. Ferber Chairman of the Board and Chief 46 1987
Executive Officer of the
company since March 1993;
President and Chief Executive Officer from
January 1988 to March 1993; President and
Chief Operating Officer from February 1987 to
January 1988. Prior to February 1987,
Mr. Ferber was Executive Vice
President, Merchandising Marketing,
and Distribution of the company.
Melvin A. Wilmore President and Chief Operating 49 1993
Officer of the company since
March 1993; from December
1991 to March 1993,
Executive Vice President
and Chief Operating
Officer. From October 1989
to December 1991, President
and Chief Operating Officer
of Live Specialty Retail, a
division of LIVE
Entertainment, Inc. From
March 1988 to June 1989,
President and General
Partner of Albert's Hosiery
and Bodywear.
Incumbent Class I Directors With Terms Expiring in 1996
Stuart G. Moldaw Chairman Emeritus of the company 68 1982
since March 1993. From August
1982 until March 1993, Chairman of the Board
and, from February 1987 until January 1988,
Chief Executive Officer of the company. Until
February 1990, general partner of U.S. Venture
Partners. Consultant to the company. Chairman
of the Board of Gymboree Corporation and
Director of Natural Wonders, Inc.
<PAGE> 5
Principal Position Director
Director During Last Five Years Age Since
George P. Orban Managing partner of Orban 49 1982
Partners, a private investment
company, since May 1984. From March 1987 until
March 1992, Chairman of the Board, Office Mart
Holdings Corp. Director of Egghead, Inc.
Donald H. Seiler Founder and senior partner of 66 1982
Seiler and Company, Certified
Public Accountants. Mr. Seiler
is a Certified Public Accountant.
Director of Mid-Peninsula
Bancorp.
Incumbent Class II Directors With Terms Expiring in 1997
Donald G. Fisher Chairman of the Board and Chief 66 1986
Executive Officer of The Gap,
Inc. Director of The Charles
Schwab Corporation and
AirTouch Communications.
Donna L. Weaver Chairman, Weaver, Field & London, 51 1986
Inc., an investor relations and
corporate communications firm.
Director of Hancock Fabrics, Inc.
During fiscal 1994, the Board of Directors held
five meetings. Each member of the Board of Directors
attended at least 75% of the total number of Board and
applicable Committee meetings held during the year. The
company has an Audit Committee, a Compensation Committee and
a Nominating Committee.
Audit Committee. Franklin P. Johnson, Jr. served as
a member of the Audit Committee until his retirement from the
Board of Directors in June 1994 at which time Mr. Orban was
elected to serve as a member of the Audit Committee. During
fiscal 1994, Messrs. Seiler, Johnson and Orban and Ms.
Weaver served as members of the Audit Committee, which
held two meetings. The functions of the Audit Committee
include recommending the independent accountants to the Board of Directors;
reviewing and approving the planned scope of the annual audit,
proposed fee arrangements and the results of the annual
audit; reviewing the adequacy of accounting and financial
controls; and reviewing the independence of the independent
accountants.
Compensation Committee. During fiscal 1994, Messrs.
Fisher, Orban and Schlein served as members of the
Compensation Committee, which held one meeting. The
Compensation Committee is responsible for establishing and
administering the policies that govern the compensation of all
executive officers of the company, including the Chief
Executive Officer. The Committee evaluates the
performance of the executive officers and makes
recommendations concerning their compensation levels.
All decisions by the Compensation Committee relating to
the compensation of the company's executive officers are reviewed
and approved by the full Board of Directors.
Nominating Committee. During fiscal 1994, Messrs.
Fisher, Johnson, Orban, Schlein and Seiler and Ms. Weaver
served as members of the Nominating Committee. The Nominating
Committee is primarily responsible for evaluating the
qualifications of and making recommendations concerning
potential new director nominees to the company's Board of
Directors. Stockholders who wish to submit names of
prospective nominees for consideration by the Nominating
Committee should do so in writing to the office of the
Secretary of the company in accordance with the Bylaws of
the company. The last day for submissions for next year's
meeting will be December 27, 1995. The Nominating Committee did not
meet during the year.
Information concerning the executive officers of the
company is set forth in the company's Annual Report on Form 10-
K for the fiscal year ended January 28, 1995.
<PAGE> 6
COMPENSATION AND OTHER TRANSACTIONS
WITH OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table provides certain summary
information concerning compensation paid or accrued by the
company to or on behalf of the company's Chief Executive
Officer and each of the four other most highly compensated
executive officers of the company for the 1994, 1993 and 1992
fiscal years.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
__________________________________________________________________________________________________________
Restricted Securities All Other
Stock Under- Compen-
Salary Bonus Other Annual Awards lying sation
Name and ($) ($) Compensation ($) Options ($)
Principal Position Year <F1> <F2> ($) <F3> (#) <F4>
<S> <C> <C> <C> <C> <C> <C> <C>
Norman A. Ferber 1994 $513,750 $204,198 $0 $1,587,500 150,000 $4,538
Chairman of the Board & 1993 $497,917 $0 $5,071 $0 15,000 $7,138
Chief Executive Officer 1992 $471,250 $294,738 $608 $0 30,000 $6,978
Melvin A. Wilmore 1994 $423,750 $142,588 $1,790 $158,750 25,000 $4,538
President & 1993 $407,083 $0 $19,358 $197,500 25,000 $29,559
Chief Operating Officer 1992 $375,000 $186,150 $18,067 $0 0 $52,966
Michael Balmuth 1994 $359,167 $87,840 $6,050 $396,875 40,000 $7,015
Executive Vice President, 1993 $332,083 $0 $25,479 $138,250 12,000 $34,867
Merchandising 1992 $292,000 $80,541 $3,786 $621,300 20,000 $8,587
Barbara Levy 1994 $267,333 $75,774 $4,474 $0 8,000 $4,690
Senior Vice President & 1993 $195,000 $25,000 $0 $340,625 50,000 $0
General Merchandising 1992 N/A N/A N/A N/A N/A N/A
Manager
Barry S. Gluck 1994 $266,500 $45,774 $2,597 $317,500 20,000 $5,973
Senior Vice President & 1993 $230,000 $0 $845 $98,750 8,000 $7,278
General Merchandising 1992 $197,083 $48,523 $3,955 $133,000 15,000 $5,696
Manager
<PAGE> 7
<FN>
<F1> Includes all payments of salary and deferred compensation
consisting of employee contributions to the company's
Profit Sharing Plan described in footnote 4 below. Ms.
Levy joined Ross in May 1993.
<F2> Includes all payments made to those executive
officers listed in the above Table under the company's
Incentive Compensation Plan as described in the
Compensation Committee Report below. For Ms. Levy the
amount paid in 1994 includes part of her sign-on bonus
($30,000) and the amount paid to Ms. Levy in 1993 was
part of her sign-on bonus.
<F3> Under the terms of his Restricted Stock Grant
Agreement, dated March 15, 1994, Mr. Ferber was granted
100,000 shares of common stock that vest on February 3,
1997. Under the terms of his Restricted Stock Grant
Agreement, dated December 20, 1991, Mr. Wilmore was granted
50,000 shares of common stock, that vest as follows: 12,500
shares on December 31, 1993, and 12,500 shares on
each one-year anniversary thereafter, with all shares
vested at December 31, 1996. Under the terms of
his Restricted Stock Agreement, dated March 18, 1991,
Mr. Balmuth was granted 28,000 shares of common stock
that vest as follows: 7,000 shares on each March 18th of
1993, 1994, 1995 and 1996 with all shares vested on March
18, 1996. Under the terms of his Restricted Stock
Agreement, dated March 16, 1992, Mr. Balmuth was
granted 32,700 shares of common stock that vests as
follows: 12,700 shares on March 17, 1992 and 20,000
shares on March 16, 1996. Under the terms of her Restricted
Stock Agreement, dated May 26, 1993, Ms. Levy was
granted 25,000 shares of common stock that vests as
follows: 5,000 shares on each May 3rd of 1995, 1996 and
1997 and 10,000 shares on May 3, 1998. Under the
terms of his Restricted Stock Agreement, dated March 18,
1991, Mr. Gluck was granted 21,000 shares that vest as
follows: 7,000 shares each March 18th of 1993, 1994 and
1995 with all shares vested on March 18, 1995. Under
the terms of his Restricted Stock Agreement, dated
March 15, 1994, Mr. Gluck was granted 20,000 shares
of common stock that vests as follows: 5,000 shares on
March 15, 1996 and 15,000 shares on March 15,
1997. Dividends are payable to all holders of
restricted stock at the same rate as paid to all
stockholders.
<F4> The amount listed for 1994, 1993 and 1992 for Messrs.
Ferber and Gluck and for 1994 for Ms. Levy consists of
company contributions made for the account of executive
officers under the Ross Stores Employees' Profit Sharing
Retirement Plan, a qualified plan under Sections 401(a)
and 401(k) of the Internal Revenue Code of 1986, as
amended (the "401(k) Plan"). The plan provides that
eligible employees generally may contribute by authorizing
a pre-tax payroll deduction of a minimum of 1% and a
maximum of 15% of their yearly compensation. For
every dollar that an eligible employee contributes
through payroll withholding, up to a maximum of 3% of
compensation, the company also contributes $1.00. The
amount listed for Mr. Wilmore (i) in 1994 consists of
the company contribution under the 401(k) Plan; (ii) in
1993 consists of $22,396 for reimbursement of moving
expenses and $7,163 for company contributions under the
401(k) Plan and; (iii) in 1992 consists of $52,028
for reimbursement of moving expenses and $938 for
company contributions under the 401(k) Plan. The amount
listed for Mr. Balmuth (i) in 1994 consists of the
company contribution under the 401(k) Plan; (ii) in 1993
consists of $25,617 for reimbursement of moving expenses
and $9,250 for company contributions under the 401(k)
Plan; and (iii) in 1992 consists of company
contribution under the 401(k) Plan.
</FN>
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant
of stock options under the company's 1992 Stock Option Plan
during fiscal 1994. There are no provisions under the terms
of this Plan for the granting of Stock Appreciation Rights
(SARs).
<TABLE>
Individual Grants
Number of % of Total
Securities Options Potential Realizable
Underlying Granted to Exercise Value at Assumed Annual
Options Employees or Base Rates of Stock Price Appreciation
Granted in Fiscal Price Expiration for Option Term <F4>
Name and (#) Year ($/Sh) Date
Principal Position <F1> <F2> <F1> <F3> 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
Norman A. Ferber 150,000 20.91% $15.875 03/15/04 $0 $1,497,555 $3,795,099
Chairman of the Board &
Chief Executive Officer
Melvin A. Wilmore 25,000 3.48% $15.875 03/15/04 $0 $249,593 $632,517
President &
Chief Operating Officer
Michael Balmuth 40,000 5.58% $15.875 03/15/04 $0 $399,348 $1,012,026
Executive Vice President,
Merchandising
Barbara Levy 8,000 1.12% $15.875 03/15/04 $0 $79,870 $202,405
Senior Vice President & General
Merchandising Manager
Barry S. Gluck 20,000 2.79% $15.875 03/15/04 $0 $199,674 $506,013
Senior Vice President & General
Merchandising Manager
All Stockholders N/A N/A N/A N/A $0 $238,839,885 $602,786,376
Named executive officers' gain N/A N/A N/A N/A 0% 1.02% 1.02%
as a percent of all stockholders'
gain
<PAGE> 9
<FN>
<F1> All options listed in the above table were granted on March
15, 1994,with an exercise price equal to the fair market
value of the company's Common Stock as determined by
the closing price on the date of grant. The stock option grants
made in 1994 to those executive officers listed above
vest monthly in increments that increase annually over a three
year period from the date of grant. The Board of
Directors has the ability to change the terms of
outstanding options.
See "Employment Contracts, Termination of Employment and
Change-In-Control Arrangements".
<F2> A total of 717,400 shares were granted in the form of
nonqualified stock options during 1994 to all
participants of the 1992 Stock Option Plan.
<F3> All non-qualified stock option grants made under the 1992
Stock Option Plan are made for a term of ten years from
the date of grant.
<F4> The dollar amounts under these columns are the result
of calculations at 0% and at the 5% and 10% rates set forth
by the Securities and Exchange Commission and, therefore,
are not intended to forecast possible future appreciation, if
any, of the Registrant's stock price. The company did
not use an alternative formula for a grant date valuation, as
the company is not aware of any formula which will
determine with reasonable accuracy a present value based on
future unknown or volatile factors. No gain to the
optionees is possible without an increase in stock price, which will
benefit all stockholders commensurably. A zero percent
gain in stock price will result in zero dollars for the
optionee. Appreciation in stockholder value is based on the same rates
of appreciation as shown for those options granted to
executive officers and assumes each outstanding share at
April 2, 1994, the last day of the fiscal month, was
valued at $15.25, the closing price of Ross Stores, Inc.'s
Common Stock on March 31, 1994, the last trading day of the
fiscal month.
</FN>
</TABLE>
<PAGE> 10
AGGREGATED OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information with respect to the
named executive officers concerning the exercise of stock options
during the last fiscal year and unexercised options held as of
the end of last fiscal year.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Year-End Fiscal Year-End
(#) ($)
Name and Exercisable/ Exercisable/
Principal Position Shares Acquired Value Realized ($) Unexercisable Unexercisable
on Exercise (#) <F1> <F2> <F3>
<S> <C> <C> <C> <C>
Norman A. Ferber 33,588 $223,043 195,000/0 $0/0
Chairman of the Board &
Chief Executive Officer
Melvin A. Wilmore 0 $0 250,000/0 $0/0
President &
Chief Operating Officer
Michael Balmuth 28,000 $234, 500 76,824/0 $9,347/0
Executive Vice President,
Merchandising
Barbara Levy 0 $0 58,000/0 $0/0
Senior Vice President &
General Merchandising Manager
Barry S. Gluck 3,000 $26,250 63,019/0 $38,787/0
Senior Vice President &
General Merchandising Manager
<FN>
<F1> The value realized on exercise of the stock option is the
difference between the exercise price of the
shares exercised and the fair market value of the shares
on the date of exercise.
<F2> All options granted under the terms of the company's
1992 Stock Option Plan are exercisable in full as of the
date of grant, but any shares acquired are subject
to certain vesting restrictions. Under the terms of the
stock option agreements, the company has the right to
repurchase all unvested shares at the optionee's cost.
A portion of the exercisable shares shown in the Table
above are unvested and subject to the right of repurchase
by the company.
<F3> The value of unexercised in-the-money options at the end
of the fiscal year is calculated by multiplying the
number of exercisable in-the-money shares by the
difference between the closing price ($10.5625) of Ross
Stores Common Stock on January 28, 1995 (the last trading
date of the fiscal year) and the exercise price per
share of the shares. A portion of the shares subject
to these options are unvested and subject to
repurchase provisions as described in footnote (2) above.
</FN>
</TABLE>
<PAGE> 11
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the
"Committee"), which consists of three independent outside
directors, establishes and administers the policies that govern the
compensation of all executive officers of the company. The
Committee considers the performance of the executive officers and makes
recommendations concerning their compensation levels. All decisions by
the Committee relating to the compensation of the company's executive
officers are reviewed and approved by the full Board of Directors.
The Board of Directors did not revise or make any material
modifications to the Committee's recommendations concerning executive officer
compensation during the last fiscal year.
Compensation Philosophy
The company's compensation policies aim to align the
financial interests of the company's management with those of its
stockholders. The company's executive compensation philosophy
is also to integrate executive pay with the strategic objectives of the
company, recognize individual initiative and achievements and assist the
company in attracting, motivating and retaining a group of high-performing
executives.
Compensation for the company's executive officers, including
those individuals named in the foregoing Tables, consists of the
following elements: base salary, annual incentive bonus, restricted
stock granted under the 1988 Restricted Stock Plan, stock options
granted under the 1992 Stock Option Plan and other benefits
typically offered to corporate executives. A significant portion
of each executive officer's total compensation consists of components
with values which may vary from year to year depending upon the company's
achievement of its strategic objectives.
Section 162(m) of the Internal Revenue Code of 1986
It is the Committee's policy to seek to qualify executive
compensation for deductibility under Section 162(m) of the Internal
Revenue Code of 1986, to the extent consistent with the company's
overall objectives in attracting, motivating and retaining its
executives. The Committee has reviewed the company's executive
compensation structure in light of the current tax law. The Committee
believes that grants made under its 1992 Stock Option Plan will be
fully deductible when an option is exercised. Grants under the
company's 1988 Restricted Stock Plan do not qualify as performance-
based compensation and, therefore, may not be fully deductible to the
extent the vesting of restricted stock, when added to other nonexempt
compensation for a particular executive, exceeds the $1 million limit
in any tax year. However, the Committee believes that only
compensation paid to the company's Chairman and Chief Executive Officer
or President and Chief Operating Officer is at risk of not being
fully deductible because of the size of their restricted stock
awards. The Committee has concluded that amending the Restricted Stock
Plan to comply with the requirements for performance-based compensation
under Section 162(m) would weaken the company's efforts to recruit and
retain key executives over the long term. The Committee believes
that other nonexempt components of the company's executive
compensation, including bonuses under the Incentive Compensation Plan,
when added together for any executive, are unlikely to materially exceed
$1 million in the upcoming tax year. The Committee will continue
to evaluate periodically the advisability of qualifying certain elements
of the company's executive compensation as fully deductible performance-based
compensation.
Executive Officers' 1994 Compensation
Salary. Base salaries for executive officers are initially
determined by competitive requirements to recruit the executive.
Salaries are then reviewed annually with recommended adjustments
made based upon the individual performance of each executive officer and his
or her relative contribution in achieving the company's strategic goals.
During 1994, the average merit increase in base salaries for all executive
officers as a group was 3.6%.
Annual Incentive Bonus. The company's Incentive Compensation Plan
was adopted by the Board of Directors effective May 1987 and is
designed to allow management to share in the company's success based on
the company's attainment of varying levels of pre-tax earnings. At the
<PAGE> 12
commencement of each fiscal year, the Committee and the Board of Directors
determine the incentive payouts at varying levels of pre-tax earnings
for the company and the percentage of year-end base salary payable in
the form of bonuses to participants based upon the level of pre-
tax earnings subsequently achieved by the company for the fiscal year.
At fiscal year-end, participants are paid incentive awards based on
this previously determined formula.
Based on the targeted pre-tax earnings goal set for 1994, the
Plan provided for awards to executive officers that ranged from 28% to
65% of base salary, depending on the position of the executive officer.
However, potential and actual awards to participants over the last
three fiscal years have ranged from 0% to 63% of executive officers'
base salaries, based on the actual level of pre-tax earnings achieved each
year relative to the targeted goal, as well as the position of the
executive officer. During fiscal 1994, the company did not meet its targeted
pre-tax earnings goal. However, the company did achieve an actual level of
pre-tax earnings relative to the targeted goal that qualified for a lower
than targeted bonus payment under the Plan. Total payments made under the
Plan for fiscal 1994 to all executive officers as a group represented
approximately 22% of their total cash compensation as a group and 24%
of their total salaries as a group.
Stock Award Programs. The company's stock award programs consist
of the 1988 Restricted Stock Plan ( "Restricted Stock Plan" ) and the
1992 Stock OptionPlan ( "Option Plan" ). A majority of the
members of the Board are not employees of the company
and are not eligible to receive awards under either the
Restricted Stock Plan or the Option Plan. The Restricted Stock Plan and
the Option Plan were established with two important objectives:
(1) to align the financial interests of the company's stockholders
and the executive officers by providing incentives that focus management
attention on the successful long-term strategic management of the business
and appreciation in stockholder value; and (2) to recruit,
motivate and retain a high-performing group of senior and middle managers.
The Committee makes recommendations to the Board of
Directors concerning the granting of awards to executive officers
from both the Restricted Stock Plan and the Option Plan. The levels
of stock awards granted to executive officers under the Option Plan
are based on the following factors: the executive officer's
position, past and expected future contributions to the achievement of
the company's strategic objectives, existing stock ownership position and
the level of previous stock awards. Each member of the Committee individually
weighs the above factors and then the Committee reaches a consensus as to what
the awards should be. The levels of stock awards granted to executive
officers under the Restricted Stock Plan are determined primarily by
the retentive value of the grant necessary to retain key executives
over the long term as well as to protect the company against outside
offers of employment to key individuals. The officers must satisfy
vesting requirements to obtain the stock. In addition, when making
grants of restricted stock awards, the Committee also
considers the same factors listed above for stock option awards.
All stock option awards are granted with an exercise price based
on the fair market value of the company's common stock on the date of
grant. These awards provide value to the executive officers
only when and to the extent that the fair market value of the company's
common stockappreciates over the fair market value on the date of grant. All
awards made in fiscal 1994 to executive officers under the Option Plan have a
term of ten years and vest monthly in progressively increasing annual
increments over a three year period. Unless otherwise specified in the
stock option agreement, all options are immediately exercisable,
subject to the company's right to repurchase unvested shares at the
optionee's cost.
Chief Executive Officer's 1994 Compensation
A majority of the total potential compensation for the company's Chief
Executive Officer is in the form of annual incentive bonuses and stock
plan awards that may vary according to the company's achievement of its
strategic objectives in addition to those motivational and
retentive factors deemed necessary and appropriate by the Committee.
Mr. Ferber's 1994 incentive bonus and stock award compensation were
earned under the same plans made available to the executive officers,
as noted above.
Salary. Mr. Ferber's base salary is established by the terms of
his employment agreement entered into with the company on June 8, 1994,
amended March 16, 1995, which extends through February 3, 1997,
unless earlier extended, re-negotiated or terminated by the parties. It
currently
<PAGE> 13
provides for an annual salary of not less than $522,000. Mr. Ferber's
1994 annual base salary of $515,000 represented an increase of 3% over
his 1993 base salary. (See " Employment Contracts, Termination of
Employment and Change-In-Control Arrangements" for further discussion
of Mr. Ferber's employment agreement.)
Bonus. The annual incentive bonus portion of Mr.
Ferber's compensation is based on the company's achievement of
targeted pre-tax earnings, as established by the Committee and the
Board of Directors. During fiscal 1994, the company did not meet its
targeted pre-tax earnings goal, but did achieve an actual level of
pre-tax earnings relative to the targeted goal that qualified for a
lower than targeted bonus payment under the Incentive Compensation Plan.
Mr. Ferber received an annual bonus of $204,198 for 1994, which equaled
28% of his total cash compensation and 40% of his salary for the period.
Stock Awards. Mr. Ferber received 100,000 shares of restricted
stock during 1994 that vest in full on February 3, 1997. During 1994,
Mr. Ferber also received options under the Option Plan potentially
exercisable for 150,000 shares of common stock with an exercise price
of $15.875, the closing price on the date of grant. These
shares vest monthly in progressively increasing annual increments
over a period of three years. The size of the 1994 restricted stock
and stock option grants made to Mr. Ferber
were based primarily on the equity value deemed necessary, in the
Committee's and Board of Directors' judgment, to ensure retention of
Mr. Ferber over the vesting period of these shares. Secondary considerations,
all relatively equal in weight, in determining the size of his 1994
equity grants were Mr. Ferber's position with the company, his past and
expected future contributions to the achievement of the company's
strategic objectives, his existing stock ownership position and the level of
previous equity grants. During 1992 and 1993, Mr. Ferber did not receive
any restricted stock awards and only received modest stock option
grants potentially exercisable for 30,000 and 15,000 shares respectively.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE
COMPANY'S BOARD OF DIRECTORS
Donald G. Fisher George P. Orban Philip Schlein
<PAGE> 14
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative
total stockholder returns for the company's common stock over the last
five years with the Standard & Poors 500 Index and the Standard &
Poors Retail Composite Index. The comparison graph assumes that the
value of the investment in Ross Stores Common Stock and the comparative
indices was $100 on January 31, 1990 and measures the performance of
this investment as of the last trading day in the month of January for
each of the following five years.
These measurement dates are based on the historical month-end data
available and may vary slightly from the company's actual fiscal year
end date for each period. Data with respect to returns for the Standard &
Poors indices is not readily available for periods shorter than one
month. The total return assumes the reinvestment of dividends. The
Company began paying dividends during 1994. The graph is an historical
representation of past performance only and is not necessarily indicative of
future returns to stockholders.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG ROSS STORES, INC., S&P 500 AND S&P RETAIL COMPOSITE INDEX
(GRAPH)
1990 1991 1992 1993 1994 1995
ROSS STORES $100 $52 $179 $184 $110 $91
S&P 500 $100 $108 $133 $147 $166 $167
S&P RETAIL COMPOSITE $100 $117 $164 $196 $189 $175
<PAGE> 15
Compensation of Directors
During the fiscal year ended January 28, 1995, directors who were
not employees of the company received an annual retainer fee of $23,000,
plus $1,000 for attendance at each Board Meeting and $500 for attendance
at each meeting of a committee of the Board. For the fiscal year ending
February 3, 1996, directors who are not employees of the company will
receive an annual retainer of $24,000, plus $1,000 for attendance
at each Board Meeting and $500 for attendance at each meeting of a
committee of the Board. For both fiscal 1995 and 1994, if more than
one committee meeting is held on the same day, each committee member
receives payment for only one committee meeting. Travel expenses are
reimbursed.
In addition to compensation received as a Board member, Stuart
G. Moldaw, Chairman Emeritus, receives an annual fee of $80,000 for
his services as consultant to the company, and he also receives
administrative support. The company pays the annual premium of
approximately $128,000 on a split-dollar life insurance policy, face
value $4 million, held by Mr. Moldaw. In the most recent fiscal
year, $65,230 of the premium was reported as taxable compensation to
Mr. Moldaw and $63,330 of the premium was added to the amount
refundable to the company upon death or cancellation of the
policy. The company also pays the premiums of the executive medical
insurance for Mr. Moldaw and his spouse. (See also " Certain
Transactions.")
Compensation Committee Interlocks and Insider Participation
Mr. Fisher, Mr. Orban and Mr. Schlein served on the
Compensation Committee of the Board of Directors for the past fiscal
year.
Employment Contracts, Termination of Employment and Change-In-
Control Arrangements
The company and Norman A. Ferber, Chairman of the Board and
Chief Executive Officer, entered into an employment agreement on June
8, 1994, amended March 16, 1995, and extends through February 3, 1997.
Upon notice from Mr. Ferber, at specified times, the Board will consider
extending the agreement for successive two-year periods. The agreement
provides that Mr. Ferber will receive an annual salary of not less than
$522,000 and that, after January 27, 1996, Mr. Ferber may elect to
step down as Chief Executive Officer but continue to serve as Chairman
of the Board throughout the term of the agreement with no change in
compensation. In the event (i) Mr. Ferber's employment involuntarily
terminates due to disability; (ii) the company terminates
his employment without cause and, incertain instances,
for cause; or (iii) he resigns for good reason, Mr. Ferber would
be entitled to continued payment of his then current salary,
including an annual bonus, through the remaining term of the
employment agreement; all stock options held by Mr. Ferber would become
fully vested and he would be entitled to those restricted stock shares
which are vested as of the date of his termination based upon vesting in
equal monthly installments over a three-year period beginning February
3, 1994. Additionally, under the above circumstances or if
Mr. Ferber's employment involuntarily terminates due to death,
the company would continue Mr. Ferber's (and/or his eligible
dependents) health care coverage under the company's benefit
plans at no cost to Mr. Ferber (and/or his eligible dependents) for a
five year period. Further, he would be reimbursed for any excise taxes
paid pursuant to Internal Revenue Code Section 4999. In the event
there is a change-incontrol of the company, all restricted stock and
stock options held by Mr. Ferber would become fully vested (except as
described below).
The company and Melvin A. Wilmore, President and Chief
Operating Officer, entered into an employment agreement as of March 15,
1994, amended March 16, 1995, and extends through February 3, 1997. Upon
notice from Mr. Wilmore at specified times, the Board will consider
extending the term of the agreement for successive two-year periods.
The agreement provides that Mr. Wilmore will receive an annual salary
of not less than $430,000.In the event (i) Mr. Wilmore's employment
involuntarily terminates due to disability; (ii) the company
terminates his employment without cause and, in certain instances,
for cause; or (iii) he resigns for good reason, Mr. Wilmore would
be entitled to continued payment of his then current salary,
including an annual bonus, through the remaining term
of the employment agreement; all stock options held by Mr. Wilmore
would become fully vested. Additionally, under the above circumstance,
(i) Mr. Wilmore's restricted stock grant agreement, dated March 15, 1994,
<PAGE> 16
provides that he would be entitled to those 45,000 shares of
restricted stock which are vested as of the date of his termination based
upon vesting in equal monthly installments over a three-year period
beginning March 15, 1994; and (ii) Mr. Wilmore's restricted stock grant
for 20,000 shares provides that he would be entitled to those restricted
stock shares which are vested as of the date of his termination based upon
vesting in equal monthly installments over a three-year period beginning
March 16, 1995. Additionally, he would be reimbursed for any excise taxes
paid pursuant to Internal Revenue Code Section 4999. In the event there is
a change-incontrol of the company, all restricted stock and stock
options held by Mr. Wilmore would become fully vested (except as
described below).
The company and Michael Balmuth, Executive Vice President,
Merchandising, entered into an employment agreement as of February 1, 1995
which extends through February 3, 1997. Upon notice from Mr. Balmuth at
specified times, the Board will consider extending the term of
the agreement for successive two-year periods. The agreement provides
that Mr. Balmuth will receive an annual salary of not less than
$384,000. In the event (i) Mr. Balmuth's employment involuntarily
terminates due to disability; (ii) the company terminates his employment
without cause and, in certain instances, for cause; or (iii) he resigns for
good reason, Mr. Balmuth would be entitled to continued payment of his then
current salary, including an annual bonus, through the remaining term
of the employment agreement; all stock options held by Mr. Balmuth
would become fully vested; and he would be entitled to certain
restricted stock shares which are vested as of the date of his
termination based upon vesting in equal monthly installments over a
two-year period beginning February 1, 1995. Additionally, he would be
reimbursed for any excise taxes paid pursuant to Internal Revenue Code
Section 4999. In the event there is a change-incontrol of the
company, all restricted stock and stock options held by Mr. Balmuth
would become fully vested (except as described below).
Under the terms of the individual agreements for all the participants
in the company's 1988 Restricted Stock Plan and 1992 Stock Option
Plan, each employee, including executive officers, is entitled only
to those shares vested as of the date of termination. However, the
company's Board of Directors generally has the discretion to accelerate
vesting or change other terms of an outstanding agreement. In the
event of certain mergers or acquisition transactions which result in a
change-in-control of the company, any unvested shares of restricted
stock automatically become vested shares and the company's Board of
Directors must either accelerate vesting of all outstanding stock
options or arrange for the options to be assumed by the new owners.
Certain Transactions
On February 5, 1993, the company made a relocation loan of $300,000
to Mr. Wilmore at an annual interest rate of 0%. The loan, which is
secured by a deed of trust on his home, is due on February 5, 1996.
The amount outstanding on March 31, 1995 was $300,000.
The company leases three stores in Roseville, Dublin and East
San Jose, California, from entities affiliated with Stuart G. Moldaw, a
current director. The Roseville, California store is leased from a
partnership in which trusts established by a former director of the
company and Stuart G. Moldaw are partners. Donald H. Seiler, also a
director, is a trustee of these trusts. In fiscal 1994, the company
paid $262,500 in rent. Mr. Moldaw's and his trusts' interests in the
partnership total 40.38%. The Dublin, California store is leased from a
partnership in which Mr. Moldaw, trusts established by Mr. Moldaw and members
of his family are limited partners. In fiscal 1994, the company paid
$243,571 in rent. Mr. Moldaw's and his family's interests in the partnership
total 86.57%. The East San Jose, California store is leased from a limited
partnership in which Mr. Moldaw, trusts established by Mr. Moldaw and
members of his family are affiliated. In fiscal 1994, the company
paid $233,215 in rent. Mr. Moldaw's, his trusts' and his family members'
interests in the partnership total 6.2%. The company believes that the general
terms and conditions of the above leases, including the rental
payments by the company, were made at prevailing market rates.
<PAGE> 17
PROPOSAL 1
ELECTION OF CLASS III DIRECTORS
If elected, each nominee will hold office for a three-year term
or until his or her successor is elected and qualified unless he or
she resigns or his or her office becomes vacant by death, removal, or
other cause in accordance with the Bylaws of the company. Management
knows of no reason why any of these nominees should be unable or
unwilling to serve, but if any nominee(s) should for any reason be
unable or unwilling to serve, the proxies will be voted for the
election of such other person(s) for the office of director as
management may recommend in the place of such nominee(s).
Vote Required
The plurality of the votes cast by the shares of Common Stock
present or represented and voting at the Annual Meeting will determine
the election of the directors. Abstentions will be counted as present in
determining if a quorum is present but will not affect the election of
directors.
The Board of Directors unanimously recommends that the stockholders
vote FOR the three nominees listed under "Information Regarding
Nominees And Incumbent Directors."
SUPPORTING ARGUMENTS FOR INCREASING THE SHARE RESERVES FOR THE
OPTION PLAN, RESTRICTED STOCK PLAN AND EMPLOYEE STOCK PURCHASE
PLAN
(Proposals 2-4)
The Board of Directors believes that the company's stock
award programs, consisting primarily of the 1992 Stock Option Plan
("Option Plan") and the 1988 Restricted Stock Plan ("Restricted Stock
Plan"), have played a key role in enabling Ross Stores to recruit,
motivate and retain an effective group of senior and middle level
management. The need to amend the Option Plan has caused management
and the Board of Directors to re-evaluate the long-term role of the
Option, Restricted Stock and Employee Stock Purchase Plans in providing
appropriate incentives to increase the value of the company for the
benefit of its stockholders. From that review, it was determined
that these stock award programs continue to deliver substantial
benefits to the company and its stockholders, as discussed below.
The cornerstone of the company's compensation philosophy is
the alignment of management's financial interests with those
of the stockholders. A meaningful amount of total compensation in the form
of equity-based grants more clearly focuses management's attention on
developing and implementing strategies that will positively affect long-term
valuation of the stock. Further, equity-based compensation is
directed to those employees who can have a meaningful effect on
the company's performance.
The Board of Directors recommends a vote in favor of these
proposals for two important reasons:
- - The company's equity compensation programs enable Ross to
attract, motivate and retain the key employees, particularly in
the merchandising organization, necessary to compete in an
increasingly tough environment for off-price apparel retailers.
A key management focus over the past few years has been the
expansion and strengthening of the company's merchandising staff
through the addition of talented merchants at every level of the
<PAGE> 18
organization -- management, buyers and assistant buyers. The
equity programs -- in particular the Option and Restricted Stock Plans
-- are important vehicles that strengthen the overall
competitiveness of the company's compensation packages and enable
Ross to accomplish this strategic objective. These programs
helped the company deliver respectable financial results in
1994. By way of example, the two strongest performing
businesses this past year were Home Accents and Dresses, both of
which have benefited from the addition of new
merchandise management and buyers. Each of these areas realized
strong sales gains over last year and were ahead of plan as well.
Despite one of the toughest climates ever for off-price retailers,
Ross was one of just two companies in its industry to
report gains in both same store sales and earnings per share
for the year. During 1994, Ross Stores comparable store
sales increased 2%, and earnings per share rose 9% to $1.24.
- The company's stock award programs are broadbased throughout the
organization, enabling Ross to develop both a strong senior and
middle management team that has had relatively low turnover in the
last few years.
- Restricted stock is granted to about 60 people in key positions at
the middle to upper management levels.
- Stock options are more widely disseminated, with grants to
about 350 employees down through the middle management ranks
of the organization.
- The Employee Stock Purchase Plan offers all qualified employees
an opportunity to become stockholders and had approximately
800 participants in 1994, the most recent offering period.
The total proposed increase in shares for all three plans amounts
to 2.4 million, or about 9.7% of total common stock outstanding.
However, dilution from the equity compensation plans has been
offset by the company's stock repurchase programs over the past
several years. As a result, fully-diluted shares outstanding today
are actually lower than they were in 1988 when the company initiated its
first stock repurchase program.
The company's Board of Directors and management firmly believe
that effective equity compensation programs represent a key
competitive advantage in today's increasingly difficult environment
for apparel retailers, and in particular, the off-price sector. These
programs helped Ross Stores deliver respectable financial performance
relative to its industry in 1994. Approval of these proposals is
critical to enabling the company to continue to make progress in 1995
and beyond.
The employee equity compensation awards to be made under the
Option Plan, Restricted Stock Plan and Purchase Plan for
the remainder of fiscal 1995 and future years are not
determinable now. The following table shows the grants made to the
indicated executive officers and groups for fiscal 1995, as of April 10,
1995, under then Option Plan and Restricted Stock
Plan. The company anticipates that for fiscal 1995 these amounts will
be approximately 86% of the options granted and approximately 92% of
the restricted stock awarded. Any grants or awards made under these two
plans during the remainder of the fiscal year will be to new hires or
due to promotions. The information for the Purchase Plan reflects the
purchases made during fiscal 1994 since the number of shares to be
purchased for fiscal 1995 and future years is not determinable
now. Non-employee directors are not eligible to participate in the
company's Option Plan, Restricted Stock Plan or the Purchase Plan.
On April 10, 1994, the fair market value of the company's Common
Stock was $10.875.
<PAGE> 19
<TABLE>
1992 STOCK OPTION 1988 RESTRICTED EMPLOYEE STOCK
PLAN STOCK PLAN PURCHASE PLAN
NUMBER NUMBER NUMBER
DOLLAR OF DOLLAR OF DOLLAR OF
NAME & POSITION VALUE SHARES VALUE SHARES VALUE SHARES
<F1> <F2> <F3>
<S> <C> <C> <C> <C> <C> <C>
Norman A. Ferber $0 45,000 $0 0 $20,706 1,904
Chairman & Chief Executive Officer
Melvin A. Wilmore $0 30,000 $217,500 20,000 $20,706 1,904
President & Chief Operating Officer
Michael Balmuth $0 20,000 $163,125 15,000 $8,145 749
Executive Vice President,
Merchandising
Barbara Levy $0 20,000 $135,938 12,500 $9,092 836
Senior Vice President & General
Merchandising Manager
Barry S. Gluck $0 10,000 $65,250 6,000 $15,073 1,386
Senior Vice President & General
Merchandising Manager
Irene A. Jamieson N/A <F4> N/A <F4> $184,875 17,000 N/A <F4> N/A<F4>
Senior Vice President & General
Merchandising Manager
All Executive Officers as a group $0 233,000 $995,063 91,500 $202,830 18,651
(13 persons, including the above)
Non-Executive Officers as a group $0 136,000 $554,625 51,000 $182,222 16,756
(21 persons)
All employees as a group (excluding $0 250,800 $483,938 44,500 $875,133 80,472
the company's officers)
<FN>
<F1> Based on the difference between the exercise price of the
options ($11.750) and the fair market value of the
company's Common stock on April 10, 1995. All options are
granted with an exercise price equal to the fair market
value as determined by the closing price on the date of grant.
<F2> Based on the fair market value of the company's common
stock on April 10, 1995.
<F3> Based on the fair market value of the company's common
stock on April 10, 1995. Pursuant to the terms of the
Purchase Plan, each employee's purchase price was 85% of
the closing price on December 30, 1994.
<F4> Information not required under Item 10 of Schedule 14A
of the Exchange Act.
</FN>
</TABLE>
<PAGE> 20
PROPOSAL 2
1992 STOCK OPTION PLAN
APPROVAL OF AMENDMENTS TO (1) INCREASE THE SHARE RESERVE BY
1,200,000 SHARES AND (2) LIMIT THE NUMBER OF SHARES OF COMMON
STOCK UNDERLYING OPTIONS GRANTED TO ANY SINGLE EMPLOYEE PER
FISCAL YEAR
Background
The Board has adopted, subject to stockholders' approval,
amendments to the Option Plan which (i) increases the number of
shares which may be issued pursuant to the exercise of options
granted or to be granted under the Option Plan by 1,200,000
shares of Common Stock; and (ii) limits the number of shares of
Common Stock underlying options granted to any single employee
per fiscal year to 2% of the shares outstanding on April 10,
1995, subject to the adjustment for stock splits or other
changes in the company's capital structure (the "Amendments").
In 1993, changes were made to the federal corporate income
tax law that limit the ability of public companies to deduct
compensation in excess of $1 million paid annually to the
company's CEO and the four other most highly compensated
executive officers. There are exemptions from this limit -
including compensation based on the attainment of performance
goals established by the Compensation Committee and approved by
the company's stockholders. Currently, any compensation paid
by the company pursuant to the Option Plan is excluded from
this $1 million limitation. However, if the stockholders
approve the proposed increase to the share reserve of the
Option Plan, the company will be unable to rely upon this
exemption unless the stockholders also approve a limit on the
aggregate number of shares of stock underlying the options that
may be granted after such amendment to any eligible employee
under the Option Plan during the fiscal year. The Board of
Directors' policy is to seek to qualify executive compensation
for deductibility to the extent possible and consistent with
the company's overall objectives in attracting, motivating and
retaining its executives.
Vote Required
The affirmative vote of a majority of the shares of Common
Stock present or represented and entitled to vote at the Annual
Meeting is required for approval of this proposal. Abstentions
will be counted as present in determining if a quorum is
present and will be counted as if voted against this proposal.
Broker non-votes will be counted as present in determining if a
quorum is present but will have no effect on this proposal.
The Board of Directors unanimously recommends that the
stockholders vote FOR approval of the Amendments to the Option
Plan.
Summary of the Option Plan
The following summary of the Option Plan is qualified in
its entirety by the specific language of the Option Plan, as
amended. Copies of the Option Plan are available to any
stockholder upon request addressed to Earl T. Benson, Senior
Vice President and Chief Financial Officer, Ross Stores, Inc.,
8333 Central Avenue, Newark, California 94560.
The Option Plan is administered by the Board of Directors
or a committee of members of the Board appointed by the Board.
Options granted, which may be either nonqualified stock options
or incentive stock options, provide a right to purchase shares
of the company's Common Stock. All options must be granted, if
at all, by March 16, 2002.
<PAGE> 21
Subject to approval by the stockholders, the Board has
amended the plan to increase the aggregate number of shares
issuable under the Option Plan by 1,200,000 shares, subject to
adjustment for stock splits or other changes in the company's
capital structure. As of April 10, 1995, 460,991 shares remain
available for future stock option grants and 3,367,883 shares
are outstanding and eligible for exercise. In addition, the
Board has amended the plan, also subject to stockholder
approval, to limit the number of shares for which options may
be granted to any employee within any fiscal year to no more
than two percent of the number of shares of Common Stock of the
company issued and outstanding on April 10, 1995. The Option
Plan provides that appropriate adjustments will be made to the
share reserve, the limitation on the maximum size of option
grants, and to outstanding options in the event of any stock
dividend, stock split, reverse stock split, combination,
reclassification or similar change in the capital structure of
the company. To the extent that any outstanding option expires or
terminates prior to exercise in full or if shares issued upon the
exercise of an option are repurchased by the company, the shares for which
such option is not exercised or the repurchased shares are
returned to the plan and become available for future grants.
All employees (including officers) of the company, persons
who become employees within thirty (30) days of the date of
grant of an option, and consultants may, in the discretion of
the Board, be granted options under the Option Plan. Non-
employee members of the Board of Directors are ineligible to
participate under the Option Plan. The Board presently has
established a policy of granting options which are nonqualified
stock options for purposes of federal tax law.
Options granted under the Option Plan are evidenced by
written agreements specifying the number of shares covered
thereby and the option price, which shall not be less than the
fair market value of the shares as of the date of grant of the
option. Generally, any stock options not exercised within ten
years of the date of grant expire and the shares subject to the
option become available for future grants. The Board has the
authority to select the optionee, fix the number of shares to
be covered by each option, determine the fair market value of
the common stock, and determine the manner of vesting and
exercisability of the option. Unless otherwise specified by
the Board, all options are immediately exercisable, subject to
the company's right to repurchase unvested shares at the
optionee's original per share cost. The Board typically grants
options that provide for vesting in progressively increasing
monthly increments over a three or four year period.
Shares subject to an option granted under the Option Plan
may be purchased for cash, by check or cash equivalent, by
tender of certain shares of the company's Common Stock owned by
the optionee having a fair market value not less that the
option price, by a minimum cash down payment and the optionee's
promissory note for the balance (if permitted by Board of
Directors), by the assignment of the proceeds of a sale of some
or all of the shares of Common Stock being acquired upon the
exercise of the option, or by any combination of these methods.
During the lifetime of the optionee, the option may be
exercised only by the optionee. An option may not be
transferred or assigned, except by beneficiary will or the laws
of descent and distribution or nonqualified option transfers
based on certain court orders. Unless otherwise provided by
the Board, in the event an optionee ceases to be an employee of
the company for any reason, except death or disability, the
optionee may exercise an option in order to purchase vested
shares within three months after the date of termination of
employment, but in any event no later than the date of
expiration of the option. In the event of termination of
employment due to death or disability, an optionee (or the
optionee's legal representative) may exercise an option in
order to purchase vested shares within twelve months after such
date of termination of employment (to the extent exercisable on
that date), but in any event no later than the date of
expiration of the option.
Generally, in the event of certain mergers or acquisitions
of the voting stock or assets of the company constituting a
change-in-control, the Board of Directors, in its sole
discretion, will either provide that all shares acquired upon
exercise of options will become fully vested shares or arrange
for the acquiring corporation to assume all outstanding
options. To the extent that options are neither exercised as of
the date of the change-of-control nor assumed by the acquiring
corporation, they will terminate.
<PAGE> 22
The Board may terminate or amend the Option Plan at any
time, but, without the approval of the company's stockholders,
the Board may not amend the Option Plan to increase the number
of shares subject thereto or to change the class of persons
eligible to receive options under the Option Plan.
Summary of the Federal Income Tax Consequences of the
Option Plan
The following summary is a general guide as to the United
States federal income tax consequences under current law with
respect to participation in the Option Plan.
Incentive Stock Options. Options designated as incentive
stock options are intended to fall within the provisions of
Section 422 of the Code. An optionee recognizes no taxable
income as the result of the grant or exercise of an option for
regular income tax purposes but may, as described below, become
subject to the alternative minimum tax upon the exercise of an
incentive stock option.
For optionees who neither dispose of their shares for two
years following the date the option was granted nor within one
year following the transfer of the shares upon exercise of the
option, the gain on sale of the shares (which is the difference
between the sale price and the purchase price of the shares)
will be taxed as long-term capital gain. If an optionee
satisfies such holding periods upon a sale of the stock, the
company will not be entitled to any deduction for federal
income tax purposes. If an optionee disposes of shares within
two years after the date of grant or within one year from the
date of exercise (a "disqualifying disposition"), the
difference between the option price and the fair market value
of the shares on the Determination Date, as defined below, (not
to exceed the gain realized on the sale if the sale is at a
loss) will be taxed at ordinary income rates at the time of
disposition. Any gain in excess of that amount will be a
capital gain. If a loss is recognized, there will be no
ordinary income, and such loss will be a capital loss. A
capital gain or loss will be long-term if the optionee has held
the shares more than twelve months. Any ordinary income
recognized by the optionee upon the disposition of stock
generally should be deductible by the Company for federal
income tax purposes, subject to the limits on deductible
compensation paid to certain executive officers imposed under
Section 162(m) of the Code.
The difference between the option price and the fair
market value of the shares on the Determination Date of
exercise of an incentive stock option is an adjustment item for
alternative minimum tax purposes which could subject an
optionee to an alternative minimum tax which is to be paid if
such tax exceeds the regular tax for the year. Special rules
may apply with respect to certain subsequent sales of the
shares in a disqualifying disposition, certain basis
adjustments for purposes of computing the alternative minimum
taxable income on a subsequent sale of the shares, and tax
credits which may arise with respect to optionees subject to
the alternative minimum tax.
Nonqualified Stock Options. Nonqualified stock options
have no special tax status. An optionee generally recognizes
no taxable income as the result of the grant of such an option.
Upon exercise of a nonqualified stock option, the optionee
normally recognizes ordinary income in the amount of the
difference between the option price and the fair market value
of the stock on the Determination Date. If the optionee is an
employee, such ordinary income generally is subject to
withholding of income and employment taxes. The Determination
Date is the date on which the option is exercised unless the
shares are not vested and/or the sale of the shares at a profit
would subject the optionee to suit under Section 16(b) of the
Securities Exchange Act of 1934 (the "Exchange Act"), in which
case the determination date is the later of (i) the date on
which the shares vest, or (ii) the date the sale of the shares
at a profit would no longer subject the optionee to suit under
Section 16(b) of the Exchange Act. Section 16(b) of the
Exchange Act is applicable only to executive officers,
directors and beneficial owners of more than 10% of the Common
Stock of the company. Upon the sale of stock acquired by the
exercise of a nonqualified stock option, any gain or loss,
based on the difference between the sale price and fair market
value on the date of recognition of income, will be taxed as a
capital gain or loss. A capital gain or loss will be long-term
if the optionee has held the shares more than twelve months
from the Determination Date. The company generally should be
entitled to a deduction equal to the amount of ordinary income
recognized by the optionee as a result of the exercise of an
nonqualified stock option, subject to the limits on deductible
compensation paid to certain executives imposed under Section
162(m) of the Code.
<PAGE> 23
Potential Limitation on Company Deductions. Section
162(m) of the Code denies a deduction to any publicly held
corporation for compensation paid to certain employees in a
taxable year to the extent that compensation exceeds $1 million
for certain executive officers. Certain kinds of compensation,
including qualified "performance-based compensation," are
disregarded for purposes of the deduction limitation. In
accordance with proposed Section 162(m) regulations,
compensation attributable to stock options will qualify as
performance-based compensation, provided that: (i) the stock
award plan contains a per employee limitation on the number of
shares for which stock options and stock appreciation rights
may be granted during a specified period; (ii) the per employee
limitation is approved by the stockholders; (iii) the award is
granted by a compensation committee comprised solely of
"outside directors"; and (iv) the exercise price of the award
is no less than the fair market value of the stock on the date
of grant. If the stockholders approve the Amendments,
compensation received from grants made under the Option Plan
will be treated as performance-based compensation and,
therefore, will be excluded for purposes of calculating the $1
million deduction limit.
PROPOSAL 3
1988 RESTRICTED STOCK PLAN
APPROVAL OF AN AMENDMENT TO INCREASE THE SHARE RESERVE BY
800,000 SHARES
Background
The Board of Directors believes that, for the reasons
previously discussed, the availability of an adequate number of
shares in the share reserve for the Restricted Stock Plan is an
important factor in attracting, retaining and motivating the
qualified officers and employees essential to the success of
the company. Therefore, subject to stockholder approval, the
Board has amended the Restricted Stock Plan to increase the
number of shares reserved for issuance under the Restricted Stock Plan by
800,000 shares.
Vote Required
The affirmative vote of a majority of the shares of Common
Stock present or represented and entitled to vote at the Annual
Meeting is required for approval of this proposal. Abstentions
will be counted as present in determining if a quorum is
present and will be counted as if voted against this proposal.
Broker non-votes will be counted as present in determining if a
quorum is present but will have no effect on this proposal.
The Board of Directors unanimously recommends that stockholders
vote FOR approval of this proposal to increase the shares
reserve for the Restricted Stock Plan.
Summary of the Restricted Stock Plan
The following summary of the Restricted Stock Plan is
qualified in its entirety by the specific language of the
Restricted Stock Plan, as amended. Copies of the Restricted
Stock Plan are available to any stockholder upon request
addressed to Earl T. Benson, Senior Vice President and Chief
Financial Officer, Ross Stores, Inc., 8333 Central Avenue,
Newark, California 94560.
The Restricted Stock Plan is administered by the Board of
Directors or a committee of members of the Board appointed by
the Board. Under the Restricted Stock Plan, all employees
(including officers) of the company and any current or future
parent or subsidiary corporation of the company are eligible to
receive shares of Common Stock pursuant to the Restricted Stock
Plan ("Plan Shares"). The Board in its sole discretion,
determines which individuals will be awarded Plan Shares
("Participants"), the number of shares
<PAGE> 24
awarded and the vesting of the Plan Shares. Plan Shares are
granted at no cost to the Participant.
Subject to approval by the stockholders, the Board has
amended the Restricted Stock Plan to increase the aggregate
number of shares issuable under the plan by 800,000 shares. As
of April 10, 1995, only 38,300 shares remained available for
future awards. The Restricted Stock Plan provides that
appropriate adjustments will be made to the share reserve in
the event of any stock dividend, stock split, reverse stock
split, combination, reclassification or similar change in the
capital structure of the company. To the extent that any Plan
Shares are reacquired by the company, such shares are returned
to the plan and become available for future grants.
Vesting of Plan Shares is set forth in a stock grant
agreement executed between the company and the Participant.
Plan Shares typically vest two to five years after the date of
grant. In the event a Participant's employment with the company
is terminated before his or her Plan Shares vest, all unvested
shares are automatically reaquired by the company at no cost.
The standard form of stock grant agreement provides that,
in the event of certain mergers, sales of the company's voting
stock or assets in which there is a change-in-control of the
company, all Plan Shares become immediately and fully vested and no
longer subject to forfeiture.
The Board of Directors may at any time terminate or amend
the Restricted Stock Plan. However, the rights of a
Participant with respect to Plan Shares granted prior to any
such action by the Board may not be impaired without such
Participant's consent. Unless extended by the Board, the
Restricted Stock Plan will terminate on March 14, 1998.
Summary of the Federal Income Tax Consequences of the
Restricted Stock Plan
The following summary is a general guide as to the United
States federal income tax consequences under current law with
respect to participation in the Restricted Stock Plan.
A Participant will recognize ordinary income on the
Determination Date (as described below) in an amount equal to
the fair market value on the Determination Date of the stock
acquired under the Restricted Stock Plan. Generally, such
oridinary income is subject to withholding of income and
employment taxes. The company generally should be entitled to a
deduction equal to the amount of ordinary income recognized by
the Participant, subject to the limit on the deductibility of
compensation paid to certain executives imposed under Section
162(m) of the Code.
Under Section 162(m) of the Code, certain kinds of
compensation, including qualified "performance-based
compensation," are disregarded for purposes of this deduction
limitation. Since the company's standard form of stock grant
agreement does not make vesting of these grants contingent upon
the achievement of an objective performance goal, compensation
received from grants made under the Restricted Stock Plan will
not be treated as "performance-based compensation" and,
therefore, will be included for purposes of calculating the $1
million deduction limit.
The Determination Date for a Participant's Plan Shares is
the date those Plan Shares vest or, if applicable, the later
date when they are no longer subject to a substantial risk of
forfeiture pursuant to Section 16(b) of Exchange Act and are
not subject to trading restrictions under the company's trading
window policy. However, the Participant may elect pursuant to
Section 83(b) of the Code to have the determination date be the
date the Plan Shares are transferred to the Participant by
filing an election (a "Section 83(b) Election") with the
Internal Revenue Service not later than 30 days after the date
of such transfer.
In general, any gain or loss recognized by the Participant
on the sale or exchange of the Plan Shares should be capital
gain or loss. Such gain or loss will be long-term if the
Participant holds the Plan Shares for more than twelve months
after the Determination Date and short-term if the Participant
holds the Plan Shares for twelve months or less after the
Determination Date. The Participant's basis in such Plan
Shares should generally be the fair market value of such Plan
Shares on the Determination Date.
<PAGE> 25
There are no federal income tax consequences to the company as
a result of a sale or exchange of the Plan Shares by the
Participant.
PROPOSAL 4
EMPLOYEE STOCK PURCHASE PLAN
APPROVAL OF AN AMENDMENT TO
INCREASE THE SHARE RESERVE BY
400,000 SHARES
Background
The Third Amended and Restated Employee Stock Purchase
Plan (the "Purchase Plan") is a broad-based equity compensation
plan. The Purchase Plan encourages broad employee stock
ownership and the level of participation in this voluntary plan
indicates its success in practice. Almost 800 employees
purchased company stock through the Purchase Plan in 1994. The
Board believes that the availability of an adequate number of
shares in the share reserve of the Purchase Plan is an
important factor in attracting, retaining and motivating
qualified employees essential to the success of the company.
Therefore, subject to stockholder approval, the Board has
amended the Purchase Plan to increase the number of shares
reserved for issuance under the Purchase Plan by 400,000
shares.
Vote Required
The affirmative vote of a majority of the shares of Common
Stock present or represented and entitled to vote at the Annual
Meeting is required for approval of this proposal. Abstentions
will be counted as present in determining if a quorum is
present and will be counted as if voted against this proposal.
Broker non-votes will be counted as present in determining if a
quorum is present but will have no effect on this proposal.
The Board of Directors unanimously recommends that the
stockholders vote FOR approval of this proposal to increase the
shares reserve for the Purchase Plan.
Summary of the Purchase Plan
The following summary of the Purchase Plan is qualified in
its entirety by the specific language of the Purchase Plan, as
amended. Copies of the Purchase Plan are available to any
stockholder upon request addressed to Earl T. Benson, Senior
Vice President and Chief Financial Officer, Ross Stores, Inc.,
8333 Central Avenue, Newark, California 94560.
The Purchase Plan enables employees to purchase shares of
the company's Common Stock through payroll deduction. Subject
to approval by the stockholders, the Board has amended the
Purchase Plan to increase the maximum aggregated number of
shares issuable under the plan by 400,000 shares. As of April
10, 1994, only 89,030 shares remained available for purchase
under the Plan. The Purchase Plan provides that appropriate
adjustments will be made to the shares subject to purchase and
in the purchase price in the event of any stock dividend, stock
split, reverse stock split, combination, reclassification,
merger, sale, reorganization or similar change in the capital
structure of the company. To the extent that any purchase
right under the Purchase Plan expires or is terminated, the
shares subject to the unexercised portion of such purchase
right are returned to the plan.
The Purchase Plan is administered by the Board of
Directors or a committee of members of the Board appointed by
the Board. The Board of Directors may at any time amend or
terminate the Purchase Plan, except that approval of the
company's stockholders is required to increase the number of
shares authorized for issuance under the Purchase Plan or to
change the designation of corporations
<PAGE> 26
whose employees may purchase shares of the company's Common
Stock pursuant to the Purchase Plan. The Plan will
continue until terminated by the Board of Directors or all of
the shares reserved for issuance under the Purchase Plan have been issued.
Any employee of the company or any parent or subsidiary
corporation of the company (including any officer or director
who is also an employee) is eligible to participate in the
Purchase Plan as long as the employee is customarily employed
for more than five months in any calendar year and for at least
20 hours per week. Participation in the Purchase Plan is
limited to employees who have completed at least six months of
continuous employment as of the commencement of an Offering (as
defined below). However, no employee who owns or holds options
to purchase, or who as a result of participation in the
Purchase Plan would own or hold options to purchase, 5% or more
of the company's Common Stock is entitled to participate in the
Purchase Plan.
The Purchase Plan, which qualifies under Section 423 of
the Code, is implemented by two separate offerings of Common
Stock each year (any one of which is referred to an
"Offering"). One Offering is for a period of twelve months,
beginning on or about January 1 of each year; the other
Offering is for a period of six months, beginning on or about
July 1 of each year. Employees are eligible to participate in
the six-month Offering if they meet the eligibility criteria
set forth above and if they are not participating in the annual
Offering. To participate, eligible employees must authorize
payroll deductions which may not exceed 10% of the
participant's compensation for any pay period during an
Offering. The purchase price per share at which the shares of
the company's Common Stock are sold under the Purchase Plan is
equal to 85% of the lesser of the fair market value of the
Common Stock on (i) the first day of the Offering or (ii) the
last day of the Offering. The number of shares of the
company's Common Stock a participant purchases in each Offering
is determined by dividing the total amount of payroll
deductions withheld from the participant's compensation by the
per share purchase price. In a single twelve month Offering,
participants may not purchase more than that number of shares
of the company's Common Stock having a fair market value
(determined as of the first day of the Offering) exceeding
$25,000 and in a single six month Offering, participants may
not purchase more than that number of shares of the company's
Common Stock having a fair market value exceeding $12,500.
Summary of the Federal Tax Consequences of the Purchase Plan
The following summary is a general guide as to the United
States federal income tax consequences under current law with
respect to participation in the Purchase Plan.
Rights granted under the Purchase Plan are intended to
qualify for favorable federal tax treatment associated with
rights granted under an employee stock purchase plan which
qualifies under provisions of Section 423 of the Code.
A participant will be taxed on amounts withheld for the
purchase of shares as if such amounts were actually received.
Other than this, a participant recognizes no taxable income
either as a result of commencing to participate in the Purchase
Plan or purchasing shares of the company's Common Stock under
the terms of the Purchase Plan.
If a participant disposes of shares acquired under the
Purchase Plan, at least two years after the beginning of the
Offering and at least one year after the stock is transferred
to the participant, then the lesser of (i) the excess of the
fair market value of the stock at the time of such disposition
over the purchase price or (ii) the excess of the fair market
value of the stock as of the beginning of the Offering over the
purchase price (determined as if the shares were purchased at
the beginning of the Offering) will be treated as ordinary
income. Any further gain or any loss will be taxed as a long-
term capital gain or loss. Capital gains currently are
generally subject to lower tax rates than ordinary income. The
maximum capital gains rate for federal income tax purposes is
28% while the ordinary rate is effectively 39.6% at the present
time.
If the participant disposes of shares acquired under the
Purchase Plan before the expiration of either of the holding
periods described above (a "disqualifying disposition"), then
the excess of the fair market value of the stock on the
purchase date over the purchase price will be treated as
ordinary
<PAGE> 27
income at the time of such disposition. The balance of any
gain will be treated as capital gain. Even if the stock is
later disposed of for less than its fair market value on the
exercise date, the same amount of ordinary income is attributed
to the participant, and a capital loss is recognized equal to
the difference between the sale price and the fair market value
of the stock on the purchase date. Any capital gain or loss
will be long or short-term depending on whether the stock has
been held for more than one year.
There are no federal income tax consequences to the
company by reason of the grant or exercise of rights under the
Purchase Plan. The company is entitled to a deduction in the
year of a disqualifying disposition equal to the amount of
ordinary income recognized by the participant as a result of
the disposition, except to the extent such deduction is limited
by Section 162(m) of the Code and the satisfaction of a tax
reporting obligation.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the
company's Audit Committee, has appointed Deloitte & Touche LLP
as the independent certified public accountants for the company
for the fiscal year ending February 3, 1996. Deloitte & Touche
LLP, or its predecessor Touche Ross & Co., has acted in such
capacity since 1982. It is anticipated that a representative
of Deloitte & Touche LLP will be present at the Annual Meeting
to respond to appropriate questions and to make a statement if
he or she so desires.
PROXY SOLICITATION
The cost of solicitation of Proxies will be borne by the
company. The company has retained Georgeson & Co. to assist in
soliciting proxies by mail, telephone and personal interview
for a fee of $8,000 plus expenses. Management may use the
services of its directors, officers and others to solicit
Proxies, personally or by telephone. Arrangements may also be
made with brokerage houses and other custodians, nominees and fiduciaries
to forward solicitation material to the beneficial owners of the
stock held of record by such persons, and the company may
reimburse them for reasonable out-of-pocket expenses incurred
by them in so doing.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business
which management intends to present or knows that others will
present at the Annual Meeting is as set forth above. If any
other matter or matters are properly brought before the Annual
Meeting, or any adjournment thereof, it is the intention of the
persons named in the accompanying Proxy to vote the Proxy on
such matters in accordance with their best judgment.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the
next annual meeting of stockholders of the company (1) must be
received by the company at its offices at 8333 Central Avenue,
Newark, California 94560 no later than December 27, 1995 and
(2) must satisfy the conditions established by the Securities
and Exchange Commission for stockholder proposals to be
included in the company's Proxy Statement for that meeting.
By Order of the Board of Directors,
Earl T. Benson, Secretary
Dated: April 25, 1995
<PAGE>
Front:
PROXY
ROSS STORES, INC.
The undersigned hereby appoints Norman A. Ferber and Melvin A.
Wilmore, and either of them, as attorneys of the undersigned with
full power of substitution, to vote all shares of stock which the
undersigned is entitled to vote at the Annual Meeting of
Stockholders of Ross Stores, Inc., to be held on May 25, 1995 at
11:00 a.m. PDT, at the company's corporate offices, 8333 Central
Avenue, Newark, California, and at any continuation or
adjournment thereof, with all powers which the undersigned might
have if personally present at the meeting.
WHERE NO CONTRARY CHOICE IS INDICATED BY THE STOCKHOLDER, THIS
PROXY, WHEN RETURNED, WILL BE VOTED FOR SUCH NOMINEES AND
PROPOSALS AND WITH DISCRETIONARY AUTHORITY UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THIS PROXY MAY
BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby acknowledges receipt of: (a) Notice
of Annual Meeting of Stockholders dated April 25, 1995; (b)
the accompanying Proxy Statement; and (c) the Annual
Report to Stockholders for the fiscal year ended January
28, 1995 and hereby expressly revokes any and all proxies
heretofore given or executed by the undersigned with respect
to the shares of stock represented by this Proxy and by
filing this Proxy with the Secretary of the Corporation,
gives notice of such revocation.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
ADDRESS CHANGE
See Reverse Side
Back:
Common X Please mark your choices like this
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
FOLLOWING PROPOSALS:
PROPOSAL 1. Election for a three-year term of three Class
III Directors proposed in the accompanying
Proxy Statement.
Norman A. Ferber Philip Schlein Melvin A. Wilmore
FOR all nominees listed (except as marked
to the contrary)
WITHHOLD AUTHORITY to vote for all
nominees listed.
INSTRUCTION:To withhold authority to vote for any
individual nominee write that nominee's name
in the space provided below.
PROPOSAL 2. To approve the amendments to the 1992 Stock
Option Plan to (i) increase the share reserve by
1,200,000 shares and (ii) limit the number
of shares underlying options granted to a
single individual per fiscal year.
FOR AGAINST ABSTAIN
PROPOSAL 3. To approve the amendment to the 1988
Restricted Stock Plan to increase the share reserve by
800,000 shares.
FOR AGAINST ABSTAIN
PROPOSAL 4. To approve the amendment to the Employee
Stock Purchase Plan to increase the share reserve
by 400,000 shares.
FOR AGAINST ABSTAIN
PROPOSAL 5. To transact such other business as may properly
come before the annual meeting or any adjournments
or postponements thereof.
ADDRESS CHANGE
Please mark this box if you have written an address change on
the reverse side.
Dated: (Be sure to date Proxy) , 1995
Authorized Signature
Printed Name
Please sign exactly as your name(s) appear(s) on your
stock certificate. If shares of stock are held of record in
the names of two or more persons or in the name of
husband and wife, whether as joint tenants or otherwise,
both or all of such persons should sign the Proxy. If
shares of stock are held of record by a corporation, the
Proxy should be signed by the President or Vice
President and the Secretary or Assistant Secretary.
Executors or administrators or other fiduciaries who execute
the above Proxy for a deceased stockholder should give their
full titles.
YOUR VOTE IS IMPORTANT TO THE COMPANY
=============================
ROSS STORES, INC.
AMENDED AND RESTATED
1992 STOCK OPTION PLAN
1. Purpose. On February 24, 1984, the Ross Stores, Inc.
1984 Stock Option Plan (the "Initial Plan") was adopted. On
February 19, 1987, the Initial Plan was amended and restated in
its entirety (the "First Plan"). On March 14, 1988, the First
Plan was amended and restated in its entirety (the "Second
Plan"). On March 17, 1989 the Second Plan was amended and
restated in its entirety (the "Third Plan"). On March 18, 1991
the Third Plan was amended and restated in its entirety (the
"Fourth Plan"). On March 16, 1992, the Fourth Plan was amended
and restated in its entirety and renamed the Ross Stores, Inc.
1992 Stock Option Plan (the "1992 Plan"). The 1992 Plan is
hereby amended and restated in its entirety (the "Plan"),
effective as of the date of the 1995 Annual Meeting of the
Stockholders of Ross Stores, Inc. The Plan is established to
create additional incentive for key employees, consultants, and
certain prospective key employees of Ross Stores, Inc. and any
present or future parent and/or subsidiary corporations of such
corporation (collectively referred to as the "Company") to
promote the financial success and progress of the Company. For
purposes of the Plan, a parent corporation and a subsidiary
corporation shall be as defined in sections 424(e) and 424(f)
of the Internal Revenue Code of 1986, as amended (referred to
herein as the "Code" or the "1986 Code").
2. Administration.
a. The Plan shall be administered by the Board of
Directors (the "Board") unless and until the Board delegates
administration to a committee as provided in subparagraph 2(c).
b. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
i. To determine from time to time which of
the persons eligible under the Plan shall be granted an
option under the Plan (an "Option"); when and how each Option
shall be granted; whether an Option will be an incentive
stock option as defined in section 422 of the Code or a
nonqualified stock option; the provisions of each Option
granted (which need not be identical), including the time or
times such Option may be exercised in whole or in part; and
the number of shares for which an Option shall be granted to
each such person.
ii. To construe and interpret the Plan and
Options granted under it, and to establish, amend and revoke
rules and regulations for its administration. The Board, in
the exercise of this power, may correct any defect, omission
or inconsistency in the Plan or in
<page 2)
any option agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.
iii. To amend the Plan as provided in
paragraph 9.
iv. Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient
to promote the best interests of the Company.
c. The Board may delegate administration of the
Plan to a committee composed of not fewer than two (2) members
(the "Committee"), all of the members of which Committee shall
be Disinterested Persons and may also be, in the discretion of
the Board, Outside Directors. If administration is delegated
to a Committee, the Committee shall have, in connection with
the administration of the Plan, the powers theretofore
possessed by the Board (and references in this Plan to the
Board shall thereafter be to the Committee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board
may abolish the Committee at any time and revest in the Board
the administration of the Plan. Notwithstanding anything in
this paragraph 2 to the contrary, the Board or the Committee
may delegate to a committee of one or more members of the Board
the authority to grant Options to eligible persons who (1) are
not then subject to Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and/or (2) are either
(i) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income
resulting from such Option, or (ii) not persons with respect to
whom the Company wishes to comply with section 162(m) of the
Code.
d. "Covered Employee" means the Chief Executive
Officer and the four (4) other highest compensated officers of
Ross Stores, Inc. within the meaning of section 162(m) of the
Code and the regulations promulgated thereunder.
e. "Disinterested Person" means a member of the
Board (a "Director") who either (i) was not during the one year
prior to service as an administrator of the Plan granted or
awarded equity securities pursuant to the Plan or any other
plan of the Company or any of its affiliates entitling the
participants therein to acquire equity securities of the
Company or any of its affiliates except as permitted by Rule
16b-3(c)(2)(i) promulgated under the Exchange Act; or (ii) is
otherwise considered to be a "disinterested person" in
accordance with Rule 16b-3(c)(2)(i) promulgated under the
Exchange Act, or any other applicable rules, regulations or
interpretations of the Securities and Exchange Commission.
f. "Outside Director" means a Director who either
(i) is not a current employee of Ross Stores, Inc. or an
"affiliated corporation" (as defined in the Treasury
regulations promulgated under section 162(m) of the Code), is
not a former employee of Ross Stores, Inc. or an affiliated
corporation receiving compensation for prior services (other
than benefits under a taxqualified pension plan), was not an
officer of Ross Stores, Inc. or an affiliated corporation at any
time, and is not currently receiving direct or indirect
remuneration in any capacity other than as a
<PAGE> 3
Director, or (ii) is otherwise considered an "outside director"
for purposes of section 162(m) of the Code.
3. Eligibility.
a. Eligible Persons. The option may be granted
only to employees (including officers and directors), persons
who become employees within thirty (30) days of the date of
grant of an Option and consultants of the Company. An
individual who is a member of the Board who is not an employee
of the Company shall not be eligible to receive the grant of an
Option, even if providing consulting services to the Company.
The Board shall, in the Board's sole discretion, determine
which persons shall be granted Options (an "Optionee"). A
consultant of the Company and any other person who is granted
an Option prior to becoming an employee as provided above shall
be eligible to be granted only a nonqualified stock option
unless the consultant is also an employee of the Company. An
Optionee may, if otherwise eligible, be granted additional
Options.
b. Fair Market Value Limitation. The
aggregate fair market value of the stock for which an Optionee
may be granted incentive stock options under all stock option
plans of the Company, including the Plan, shall comply with the
limitation set forth in section 422(d) of the 1986 Code (i.e.,
shall not become exercisable at a rate faster than $100,000 per
calendar year). Such limitation as applied to an incentive stock option
shall be referred to as the "fair market value limitation." In the
event an Optionee receives an Option intended to be an
incentive stock option which is subsequently determined to have
exceeded the fair market value limitation, the Option shall be
amended, if necessary, in accordance with applicable Treasury
Regulations and rulings to preserve, as the first priority, to
the maximum possible extent, the status of the Option as an
incentive stock option and to preserve, as a second priority,
to the maximum possible extent, the total number of shares
subject to the Option.
c. Subject to the provisions of paragraph 7
relating to adjustments upon changes in stock, no person shall
be eligible to be granted Options covering more than that
number of shares equal to two percent (2%) of the Company's
outstanding common stock on April 10, 1995, the record date for
the Company's 1995 Annual Meeting of Stockholders (or
492,656 shares of the Company's common stock).
4. Shares Subject to Option. The maximum number of
shares which may be issued under the Plan shall be 7,600,000
shares of the Company's authorized but unissued common stock or
treasury stock, subject to adjustment as provided in paragraph
7 below. In the event that any outstanding Option for any
reason expires or is terminated and/or shares subject to
repurchase are repurchased by the Company, the shares of common
stock allocable to the unexercised portion of such Option, or
so repurchased, may again be subjected to an Option.
5. Time for Granting Options. All Options shall be
granted, if at all, within ten (10) years from March 16, 1992.
<PAGE> 4
6. Terms, Conditions and Form of Options. Subject to
the provisions of the Plan, the Board shall determine for each
Option (which need not be identical) the number of shares for
which the Option shall be granted, the option price of the
Option, the exercisability of the Option, whether the Option is
a nonqualified stock option or an incentive stock option, and
all other terms and conditions of the Option not inconsistent
with this paragraph 6. Options granted pursuant to the Plan
shall be evidenced by written agreements specifying the number
of shares covered thereby, in such form as the Board shall from
time to time establish, and shall comply with and be subject to
the following terms and conditions:
a. Option Price. The option price shall be not
less than the fair market value, as determined by the Board, of
the shares of common stock of the Company on the date of the
granting of the Option, except that as to an Optionee who at
the time the Option is granted owns stock possessing more than
ten percent (10%) of the total combined voting power or value
of all classes of stock of the Company within the meaning of
section 422(b)(6) of the Code (a "Ten Percent Owner Optionee"),
the option price for any Option which is an incentive stock
option granted to the Ten Percent Owner Optionee shall not be
less than one hundred ten percent (110%) of the fair market
value of the shares on the date the Option is granted.
b. Exercise Period of Options. The Board shall
have the power to set the time or times within which each
Option shall be exercisable or the event or events upon the
occurrence of which all or a portion of each Option shall be
exercisable and the term of each Option; provided, however,
that no incentive stock option shall be exercisable after the
expiration of ten (10) years from the date such Option is
granted, no nonqualified stock option shall be exercisable
after the expiration of ten (10) years and one (1) month from
the date such Option is granted, and provided further that no
Option which is an incentive stock option granted to a Ten
Percent Owner Optionee shall be exercisable after the
expiration of five (5) years from the date such Option is
granted.
c. Payment of Option Price. Payment of the option
price for the number of shares being purchased pursuant to any
Option shall be made (1) in cash or cash equivalent, (2) by
tender to the Company of shares of the Company's common stock
which (i) either have been owned by the Optionee for more than
six (6) months or were not acquired, directly or indirectly,
from the Company, and (ii) have a fair market value, as
determined by the Board, not less than the option price, (3) by
the assignment of the proceeds of a sale of some or all of the
shares being acquired upon the exercise of an Option, or (4) if
specifically permitted by the Board and set forth in the
Optionee's Option, by the Optionee's promissory note if the
Optionee is an employee and/or director of the Company at the
time the Option is granted. Notwithstanding the foregoing, an
Option may not be exercised by the tender of the Company's
common stock to the extent such tender of stock would
constitute a violation of the provisions of any law, regulation
or agreement restricting the redemption of the Company's common
stock. In the event the Board permits the exercise of an
Option in whole or in part by means of the Optionee's
promissory note, the Board shall determine the
provisions of such note; provided, however, that the principal
shall be due and
<PAGE> 5
payable not more than four (4) years after the Option is
granted, and interest shall be payable at least annually and be
at least equal to the minimum interest rate to avoid imputed
interest pursuant to all applicable sections of the Code. The
Board shall have the authority from time to time to permit the
Optionee to secure any promissory note used to exercise an
Option with collateral other than the Company's common stock.
Notwithstanding the foregoing, in the event the Company at any
time becomes subject to the regulations promulgated by the
Board of Governors of the Federal Reserve System affecting the
extension of credit in connection with the Company's
securities, any promissory note shall not initially exceed the
maximum loan value of the collateral as defined by applicable
regulations and the Optionee shall prepay, at the request of
the Company, any promissory note to the extent necessary to
permit the Company to comply with applicable regulations. The
Company reserves, at any and all times, the right, in the
Company's sole and absolute discretion, to establish, decline
to approve and/or terminate any program and/or procedures for
the exercise of Options by means of an assignment of the
proceeds of a sale of some or all of the shares of stock to be
acquired upon such exercise.
d. Option Transferability. An incentive stock
option shall not be transferable except by will or by the laws
of descent and distribution, and shall be exercisable during
the lifetime of the person to whom the incentive stock option
is granted only by such person. A nonqualified stock option
shall not be transferable except by will or by the laws of
descent and distribution or pursuant to a qualified domestic
relations order satisfying the requirements of Rule 16b-3
promulgated under the Exchange Act and the rules thereunder (a
"QDRO"), and shall be exercisable during the lifetime of the
person to whom the Option is granted only by such person or any
transferee pursuant to a QDRO. The person to whom the Option
is granted may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party
who, in the event of the death of the Optionee, shall
thereafter be entitled to exercise the Option.
e. Standard Option Terms.
i. Incentive Stock Options. Unless
otherwise provided for by the Board at the time an Option is
granted, an Option designated by the Board as an "Incentive
Stock Option" shall comply with and be subject to the terms
and conditions set forth in the form of Incentive Stock
Option Agreement attached hereto as Exhibit A and
incorporated herein by reference.
ii. Nonqualified Stock Options. Unless
otherwise provided for by the Board at the time an Option is
granted, an Option designated by the Board as a "Nonqualified
Stock Option" shall comply with and be subject to the terms
and conditions set forth in the form of Nonqualified Stock
Option Agreement attached hereto as Exhibit B and
incorporated herein by reference.
iii. Authority to Vary Terms. The Board shall
have the authority from time to time to vary the terms of the
option agreements set forth as Exhibits A and/or B either in
connection with the grant of an individual Option or in
connection with the
<PAGE> 6
authorization of a new standard form or forms; provided,
however, that the terms and conditions of such option
agreements shall be in accordance with the terms of the
Plan. Such authority shall include, but not by way of
limitation, the authority to grant Options which are not
immediately exercisable; provided, however, that in the
event of (1) a merger in which the Company is not the
surviving corporation, (2) the sale or exchange by the
stockholders of the Company of all or substantially all of
the stock of the Company where the stockholders before such
sale or exchange do not retain, directly or indirectly, at
least a majority of the beneficial interest in the voting
stock of the Company, or (3) the sale or exchange of all or
substantially all of the Company's assets (other than a sale
or transfer to a subsidiary of the Company as defined in
section 424(f) of the Code), any outstanding Options which
are not immediately exercisable under their terms, shall
become fully exercisable prior to consummation of such
merger or sale of assets at such time as the Board shall
determine; or the surviving or acquiring corporation, as a
condition precedent to consummation of such merger or sale
of assets shall assume the outstanding Options or issue
substitute Options.
7. Effect of Change in Stock Subject to Plan.
Appropriate adjustments shall be made in the number and class
of shares of stock subject to the Plan, the maximum number of
shares subject to award to any person during any calendar year
pursuant to subparagraph 3(c), and to any outstanding Options
and in the exercise price of any outstanding Options in the
event of a stock dividend, stock split, reverse stock split,
combination, reclassification or like change in the capital
structure of the Company.
8. Provision of Information. Each Optionee shall be
given information concerning the Company equivalent to that
information generally made available to the Company's common
stockholders.
9. Termination or Amendment of Plan. The Board may
terminate or amend the Plan at any time; provided, however,
that without the approval of the Company's stockholders, there
shall be (i) no increase in the total number of shares covered
by the Plan (except by operation of the provisions of paragraph
7 above), and (ii) no change in the class of persons eligible
to receive Options. In any event, no amendment may adversely
affect any then outstanding Option or any unexercised portion
thereof, without the consent of the Optionee, unless such
amendment is required to enable the Option to qualify as an
incentive stock option (as defined in the Code). The Board may
in its sole discretion submit any other amendment to the Plan
for shareholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of
section 162(m) of the Code and the regulations promulgated
thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
10. Continuation of Initial Plan, First Plan, Second
Plan, Third Plan, Fourth Plan, and 1992 Plan as to Outstanding
Options. Notwithstanding any other provision of the Plan to the
contrary, the terms of the Initial Plan, the First Plan, the
Second Plan, the Third Plan, the Fourth Plan, and the 1992 Plan
shall remain in effect and apply to
<PAGE> 7
Options granted pursuant to the Initial Plan, the First Plan,
the
Second Plan, the Third Plan, the Fourth Plan, and the 1992
Plan, respectively.
In Witness Whereof, the undersigned Secretary of the
Company certifies that the foregoing Amended and Restated Ross
Stores, Inc. 1992 Stock Option Plan was duly adopted by the
Board of Directors of the Company on the 16th day of March,
1995.
By:_______________________
Title:____________________
<PAGE> 8
PLAN HISTORY
February 24, 1984 Board of Directors adopted the Plan with a
share reserve of 300,000
June 1, 1984 Shareholders approved the Plan
October 19, 1984 Board of Directors approved 2 for 1 stock split
July 2, 1985 Board of Directors approved 3 for 2 stock split
February 19, 1987 Board of Directors adopted the Amended and
Restated Plan and increased the share
reserve to 1,900,000
June 8, 1987 Shareholders approved the Amended and Restated
Plan and the increase of the share reserve
to 1,900,000
March 14, 1988 Board of Directors adopted the Second Amended
and Restated Plan
May 27, 1988 Shareholders approved the Second Amended and
Restated Plan
March 17, 1989 Board of Directors adopted the Third Amended
and Restated Plan and increased the share
reserve to 3,400,000
May 25, 1989 Stockholders approved the Third Amended and
Restated Plan and the increase of the share
reserve to 3,400,000
March 18, 1991 Board of Directors adopted the Fourth Amended
and Restated Plan and increased the share
reserve to 4,900,000
May 31, 1991 Stockholders approved the Fourth Amended and
Restated Plan and the increase of the share
reserve to 4,900,000
March 16, 1992 Board of Directors adopted the 1992 Stock
Option Plan and increased the share reserve
to 6,400,000
May 28, 1992 Stockholders approved the 1992 Stock Option
Plan and the increase of the share reserve
to 6,400,000
March 16, 1995 Board of Directors adopted the Amended and
Restated 1992 Stock Option Plan and
increased the share reserve to 7,600,000
(all expressly subject to stockholder
approval as a condition precedent).
[May __, 1995 Stockholders approve the Amended and Restated
1992 Stock Option Plan and the increase in
the share reserve to 7,600,000]
===============
<PAGE>
THIRD AMENDED AND RESTATED
ROSS STORES, INC.
1988 RESTRICTED STOCK PLAN
(As Amended March 16, 1995)
1. Purpose. The Ross Stores, Inc. 1988 Restricted Stock
Plan (the "Initial Plan") was adopted on March 14, 1988. On
March 17, 1989, the Initial Plan was amended and restated in
its entirety (the "First Plan"). On March 18, 1991, the First
Plan was amended and restated in its entirety (the "Second
Plan"). The Second Plan is hereby amended and restated in its
entirety (the "Plan"), effective March 16, 1992. The Plan is
established to create additional incentive for key employees of Ross Stores,
Inc. and any successor corporation thereto (collectively
referred to as the "Company"), and any present or future parent
and/or subsidiary corporations of such corporation (all of whom
along with the Company being individually referred to as a
"Participating Company" and collectively referred to as the
"Participating Company Group") to promote the financial success
and progress of the Participating Company Group. For purposes
of the Plan, a parent corporation and a subsidiary corporation
shall be as defined in sections 424(e) and 424(f) of the
Internal Revenue Code of 1986, as amended (the "Code").
2. Administration. The Plan shall be administered by
the Board of Directors of the Company (the "Board") and/or by a
duly appointed committee of the Board having such powers as
shall be specified by the Board. Any subsequent references to
the Board shall also mean the committee if it has been
appointed. All questions of interpretation of the Plan or of
the provisions of the grant of shares under the Plan shall be
determined by the Board, and such determinations shall be final
and binding upon all persons having an interest in the Plan.
Any officer of a Participating Company shall have the authority
to act on behalf of the Company with respect to any matter,
right, obligation, or election which is the responsibility of
or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter,
right, obligation, or election.
3. Eligibility. All employees (including officers) of a
Participating Company are eligible to participate in the Plan.
The Board shall, in the Board's sole discretion, determine
which individuals shall have the right to acquire shares under
the Plan (the "Participants").
4. Share Reserve. There shall be a share reserve of
2,650,000 shares of the common stock of the Company (the
"Stock"). Such share reserve shall be reduced by the number of
shares of Stock granted under the Plan. (In the event that any
shares granted pursuant to the Plan are reacquired under the
terms of the Plan by a Participating Company, the shares so
reacquired shall be returned to the share reserve.)
Appropriate adjustments shall be made in the number and class
of shares of Stock in such share
<PAGE> 2
reserve in the event of a stock dividend, stock split, reverse
stock split, combination, reclassification or like change in
the capital structure of the Company.
5. Compliance with Securities Laws. Inability of the
Company to obtain from any regulatory body having jurisdiction
authority deemed by the Company's counsel to be necessary to
the lawful issuance of any Stock hereunder shall relieve the
Company of any liability in respect of the non-issuance of such
Stock as to which such requisite authority shall not have been
obtained.
6. Stock Grant. After the Board has granted a Participant
shares of Stock under the Plan, the Company shall advise such
Participant in writing of the terms, conditions and
restrictions of the grant, including the number of shares of
Stock which the Participant has been granted. The number of
shares of Stock which a Participant may receive under the Plan
shall be determined by the Board in its sole discretion.
Subject to the provisions of paragraph 7 hereof, the grant
shall be made in the form attached hereto as Exhibit A ("Stock
Grant Agreement"). Notwithstanding any other provision of the
Plan to the contrary, the Board may not require a Participant
to make any monetary payment as a condition of receiving a
grant under the Plan. Therefore, for purposes of Rule 16b-
3(a)(1), the "price at which securities may be offered" shall
be zero (0) dollars.
7. Authority to Vary Terms. The Board shall have the
authority from time to time to vary the terms of the standard
form of Stock Grant Agreement set forth as Exhibit A either in
connection with a single grant or in connection with the
authorization of a new standard form or forms; provided,
however, that the terms and conditions of such revised or
amended stock grant agreements shall be in accordance with the
terms of the Plan.
8. Provision of Information. Each Participant who
receives a grant shall be given access to information
concerning the Company equivalent to that information generally
made available to the Company's common stockholders so long as
the Participant retains ownership of such shares.
9. Term. Unless otherwise terminated, the Plan shall
continue until March 14, 1998.
10. Termination or Amendment of Plan. The Board may
terminate or amend the Plan at any time. In any event, no
amendment may adversely affect any outstanding grant without
the consent of the Participant. A grant shall be considered as
outstanding as of the effective date of such grant as
determined by the Board.
11. Continuation of Initial Plan, First Plan and Second
Plan. Notwithstanding any other provision of the Plan to the
contrary, the terms of the Initial Plan, the First Plan and the
Second Plan shall remain in effect and apply to grants made
pursuant to the terms of the Initial Plan, the First Plan and
the Second Plan.
<PAGE> 3
IN WITNESS WHEREOF, the undersigned Secretary of the
Company certifies that the foregoing Third Amended and Restated
Ross Stores, Inc. 1988 Restricted Stock Plan was duly adopted
by the Board of Directors of the Company on March 16, 1992 and
amended on March 16, 1995.
__________________________
<PAGE> 4
PLAN HISTORY
March 14, 1988 Board of Directors adopted the Plan with a share
reserve of 450,000
May 27, 1988 Shareholders approved the Plan
March 17, 1989 Board of Directors adopted the increase of share
reserve to 850,000
May 25, 1989 Shareholders approved the increase of share
reserve to 850,000
March 18, 1991 Board of Directors adopted the increase of share
reserve to 1,350,000
May 31, 1991 Shareholders approved the increase of share
reserve to 1,350,000
March 16, 1992 Board of Directors adopted the increase of share
reserve to 1,850,000
May 28, 1992 Shareholders approved the increase of share
reserve to 1,850,000
March 16, 1995 Board amends plan to increase share reserve to
2,650,000 shares
[________, 1995] Stockholders approve above amendment
=============
<PAGE>
THIRD AMENDED AND RESTATED
ROSS STORES, INC. EMPLOYEE STOCK PURCHASE PLAN
(As Amended Effective March 16, 1995)
1. Purpose. The Third Amended and Restated Ross Stores,
Inc. Employee Stock Purchase Plan (the "Plan") is established
to provide eligible employees of Ross Stores, Inc. ("Ross") and
any current or future parent or subsidiary corporation of Ross
(collectively referred to as the "Company") with an opportunity
to acquire a proprietary interest in the Company by the
purchase of common stock of Ross. For purposes of this Plan, a
parent corporation and a subsidiary corporation shall be as
defined in section 424(e) and 424(f) of the Internal Revenue
Code of 1986, as amended (the "Code"). It is intended that the
Plan shall qualify as an "employee stock purchase plan" under
section 423 of the Code (including any future amendments or
replacements of such section), and the Plan shall be
so construed. Any term not expressly defined in the Plan but defined
for purposes of section 423 of the Code shall have the same
definition herein.
2. Administration. The Plan shall be administered by the
Board of Directors of Ross (the "Board') and/or by a management
committee duly appointed by the Board having such powers as
shall be specified by the Board. Any subsequent references to
the Board shall mean the committee if it has been appointed.
All questions of interpretation of the Plan or of any option
granted pursuant to the Plan (an "Option") shall be determined
by the Board and shall be final and binding upon all persons
having an interest in the Plan and/or any Option. Subject to
the provisions of the Plan, the Board shall determine all of
the relevant terms and conditions of Options granted pursuant
to the Plan; provided, however, that all Participants granted
Options pursuant to the Plan shall have the same rights and
privileges within the meaning of section 423(b)(5) of the Code.
All expenses incurred in connection with the administration of
the Plan shall be paid by the Company.
3. Share Reserve. The maximum number of shares which may
be issued under the Plan shall be 1,000,000 shares of Ross
common stock (the "Shares"). In the event that any Option for
any reason expires or is terminated, the Shares allocable to
the unexercised portion of such Option may again be subjected
to an Option.
4. Eligibility. Any employee of the Company is eligible
to participate in the Plan except the following:
(a) employees who are customarily employed by the
Company for less than twenty (20) hours a week;
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(b) employees who have not completed six (6) months
of continuous employment with the Company as of the
commencement of an Offering Period.
(c) employees whose customary employment is for not
more than five (5) months in any calendar year; and
(d) employees who own or hold options to purchase or
who, as a result of participation in this Plan, would own or
hold options to purchase, stock of a corporation which
comprises part of the Company possessing five percent (5%) or
more of the total combined voting power or value of all classes
of stock of such corporation within the meaning of section
423(b)(3) of the Code.
5. Offering Dates.
(a) Offering Periods. Except as otherwise set forth
below, the Plan shall be implemented by two separate series of
offerings (any one of which shall be referred to hereinafter as
an "Offering"). One series of Offerings shall involve
sequential Offerings of twelve (12) months in duration (an
"Annual Offering Period"). An Annual Offering Period shall
commence on the first day of January of each year and end on
the last day of December of the same year. The second series
of Offerings shall involve Offerings of six (6) months in
duration (a "Half-Year Offering Period"). A Half-Year Offering
Period shall commence on the first day of July of each year and
end on the last day of December of the same year. The first
Half-Year Offering Period shall commence on July 1, 1989. An
employee is eligible to participate in a given Half-Year
Offering Period only if (i) the
eligibility requirements set forth in paragraph 4 above are
satisfied prior to or as of the beginning of such Half-Year
Offering Period, and (ii) the employee is not participating in
the Annual Offering Period for that calendar year (due to
ineligibility or an election not to participate in such Annual
Offering Period.) (Unless otherwise specified, the term
"Offering Period" as used herein shall refer to either an
Annual Offering Period or a Half-Year Offering Period.)
Notwithstanding the foregoing, the Board may establish a
different term for one or more Offerings and/or different
commencing and/or ending dates for such Offerings; provided,
however, that such different terms shall comply with the
provisions of section 423(b)(7) of the Code. An employee who
becomes eligible to participate in the Plan after an Offering
Period has commenced shall not be eligible to participate in
such Offering but may participate in any subsequent Offering
provided such employee is still eligible to participate in the
Plan as of the commencement of any such subsequent Offering.
The first day of an Offering Period shall be the "Offering
Date") for such Offering Period. In the event the first and/or
last day of an Offering Period is not a business day, the
Company shall specify the business day that will be deemed the
first or last day, as the case may be, of the Offering Period.
(b) Governmental Approval; Stockholder Approval.
Notwithstanding any other provision of the Plan to the
contrary, any Option granted pursuant to the Plan shall be
subject to
(i) obtaining all necessary governmental approvals
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and/or qualifications of the sale and/or issuance of the
Options and/or the Shares, and (ii) obtaining any necessary
stockholder approval of the plan.
6. Participation in the Plan.
(a) Initial Participation. An eligible employee
shall become a Participant on the first Offering Date after
satisfying the eligibility requirements and delivering to the
Company's payroll office at such time prior to such Offering
Date as may be established by the Company (the "Enrollment
Date") a subscription agreement indicating the employee's
election to participate and authorizing payroll deductions. An
eligible employee who does not deliver a subscription agreement
to the Company's payroll office prior to the applicable
Enrollment Date for the first Offering Period after becoming
eligible to participate in the Plan shall not participate in
the Plan for that Offering Period or for any subsequent
Offering Period unless such employee subsequently enrolls in
the Plan by filing a subscription agreement with the Company
prior to the applicable Enrollment Date for such subsequent
Offering Period.
(b) Continued Participation. Subject to satisfying
the eligibility requirements for a particular Offering Period,
a Participant shall automatically participate in each
succeeding Annual Offering Period until such time as such
Participant withdraws from the Plan pursuant to paragraph 11 or
terminates employment as provided in paragraph 12. A
Participant is not required to file any additional subscription
agreements for subsequent Annual Offering Periods in order to
continue participation in the Plan.
7. Right to Purchase Shares. Except as set forth below,
as of the first day of an Offering Period (the "Offering Date")
for an Annual Offering Period each Participant in such Offering
Period shall be granted an Option consisting of the right to
purchase that number of whole Shares arrived at by dividing
twenty-five thousand dollars ($25,000) by one hundred percent
(100%) of the fair market value of the Shares on the Offering
Date, and as of the Offering Date for a Half-Year Offering
Period each Participant in such Offering Period shall be
granted an Option consisting of the right to purchase that
number of whole Shares arrived at by dividing twelve thousand
five hundred dollars ($12,500) by one hundred percent (100%) of
the fair market value of the Shares on the Offering Date.
8. Purchase Price. The purchase price at which Shares may
be acquired in an Offering pursuant to the exercise of all or
any portion of an Option granted under the Plan (the "Offering
Exercise Price") shall be set by the Board; provided, however,
that the purchase price shall not be less than eighty-five
percent (85%) of the lesser of (a) the fair market value of the
Shares on the Offering Date of such Offering Period, or (b) the
fair market value of the Shares at the time of exercise of the
Option. Unless otherwise provided by the Board prior to the
commencement of an Offering Period, the Offering Exercise Price
shall be eighty-five percent (85%) of the lesser of (a) the
fair market value of the Shares on the Offering Date of such
Offering Period or (b) the fair market value of the Shares at
the time of exercise of the Option.
<PAGE> 4
9. Payment of Purchase Price. Shares which are acquired
pursuant to the exercise of all or any portion of an Option may
be paid for only by means of payroll deductions accumulated
during the Offering Period. Except as set forth below, the
amount of Compensation to be withheld from a Participant's
Compensation during each pay period shall be determined by the
Participant's subscription agreement. For purposes of the
Plan, a Participant's "Compensation" with respect to an
Offering shall include all amounts paid in cash and includable
as "wages" subject to tax under section 3101(a) of the Code
without applying the dollar limitation of section 3121(a) of
the Code, provided, however, Compensation shall not include
amounts paid as annual bonuses under the Company's Management
Incentive Compensation Program. Accordingly, Compensation
shall include salaries, commissions, overtime and bonuses other
than bonuses paid as annual bonuses under the Company's
Management Incentive Compensation Program. "Compensation"
shall not include reimbursements of expenses, allowances, or
any amount deemed received without the actual transfer of cash
or any amounts directly or indirectly paid pursuant to the Plan
or any other stock purchase or stock option plan.
(a) During an Offering Period, a Participant may
elect to decrease the amount withheld from his or her
Compensation by filing an amended subscription agreement with
the Company on or before the "Change Notice Date." The "Change
Notice Date" shall initially be the seventh (7th) day prior to
the end of the first pay period for which such election is to
be effective; however, the Company may change such Change
Notice Date from time to time.
(b) The amount of payroll withholding with respect
to the Plan for any Participant during any pay period shall not
exceed ten percent (10%) of the Participant's Compensation for
such pay period.
(c) Payroll deductions shall commence on the first
payday following the Offering Date and shall continue to the
end of the Offering Period unless sooner altered or terminated as
provided in the Plan.
(d) Individual accounts shall be maintained for each
Participant. All payroll deductions from a Participant's
Compensation shall be credited to such account and shall be
deposited with the general funds of the Company. All payroll
deductions received or held by the Company may be used by the
Company for any corporate purpose.
(e) Interest shall not be paid on sums withheld from
a Participant's Compensation.
(f) On the last day of an Offering Period, each
Participant who has not withdrawn from the Offering or whose
participation in the Offering has not terminated on or before
such last day shall automatically acquire pursuant to the
exercise of the Participant's Option the number of whole Shares
arrived at by dividing the total amount of the Participant's
accumulated payroll deductions for the Offering by the Offering
Exercise Price; provided, however, in no event shall the
<PAGE> 5
number of Shares purchased by the Participant exceed the number
of Shares subject to the Participant's Option.
(g) Any cash balance remaining in the Participant's
account shall be refunded to the Participant as soon as
practical after the last day of the Offering Period. In the
event the cash to be returned to a Participant pursuant to the
preceding sentence is an amount less than the amount necessary
to purchase a whole Share, the Company may establish procedures
whereby such cash is maintained in the Participant's account
and applied toward the purchase of Shares in the subsequent
Offering.
(h) At the time the Option is exercised, in whole or
in part, or at the time some or all of the Shares are disposed
of, the Company shall withhold from the Participant's
Compensation, or the Participant shall otherwise make adequate
provision for, an amount equal to the federal, state, local and
foreign tax withholding obligations of the Company, if any,
which arise upon exercise of the Option or disposition of
Shares, respectively.
(i) No Shares shall be purchased on behalf of a
Participant whose participation in the Offering or the Plan has
terminated on or before the date of exercise.
(j) The Company may, from time to time establish (i)
a minimum required withholding amount for participation in any
Offering which shall not exceed one percent (1%) of the
participant's Compensation, (ii) limitations on the frequency
and/or number of changes in the amount withheld during an
Offering, (iii) an exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, and/or (iv)
such other limitations or procedures as deemed advisable by the
Company in the Company's sole discretion which are consistent
with the Plan and in accordance with the requirements of
section 423 of the Code.
(k) Any portion of a Participant's Option remaining
unexercised after the end of the Offering Period to which such
Option relates shall expire immediately upon the end of such
Offering Period. Any Shares subject to the unexercised portion
of an Option at the end of an Offering Period shall be returned
to the Plan's share reserve.
10. Limitations on Purchase of Shares; Rights as a Stockholder.
(a) Fair Market Value Limitation. No Participant
shall be entitled to purchase Shares under the Plan (or any
other employee stock purchase plan which is intended to meet
the requirements of section 423 of the Code sponsored by Ross,
a parent corporation of Ross as defined in section 424(e) of
the Code, or a subsidiary corporation of Ross as defined in
section 424(f) of the Code) at a rate which exceeds $25,000 in
fair market value, determined as of the Offering Date for each
Offering Period (or such other limit as may be imposed by the
Code), for each calendar year
<PAGE> 6
in which the Participant participates in the Plan (or any other
employee stock purchase plan described in this sentence).
(b) Pro Rata Allocation. In the event the number of
Shares which might be purchased by all Participants in the Plan
exceeds the number of Shares available in the Plan, the Company
shall make a pro rata allocation of the remaining Shares in as
uniform a manner as shall be practicable and as the Company
shall determine to be equitable.
(c) Rights as a Stockholder and Employee. A
Participant shall have no rights as a stockholder by virtue of
the Participant's participation in the Plan until the date of
the issuance of a stock certificate(s) for the shares being
purchased pursuant to the exercise of the Participant's Option.
No adjustment shall be made for dividends or distributions or
other rights for which the record date is prior to the date
such stock certificate(s) are issued. Nothing herein shall
confer upon a Participant any right to continue in the employ
of the Company or interfere in any way with any right of the
Company to terminate the Participant's employment at any time.
11. Withdrawal.
(a) Withdrawal From an Offering. A Participant may
withdraw from an Offering by signing and delivering to the
Company's payroll office, a written notice of withdrawal on a
form provided by the Company for such purpose. Such withdrawal
may be elected at any time prior to the end of an Offering
Period. Unless otherwise indicated, withdrawal from an
Offering shall not result in a withdrawal from the Plan or any
succeeding Annual Offering Period herein. A Participant is
prohibited from again participating in an Offering upon
withdrawal from such Offering at any time.
(b) Return of Payroll Deductions. Upon withdrawal
from an Offering, the withdrawn Participant's accumulated
payroll deductions shall be returned as soon as practicable
after the withdrawal, without the payment of any interest, to
the Participant and all of the Participant's rights in the
Offering shall terminate. Such accumulated payroll deductions
may not be applied to any other Offering under the Plan.
(c) Withdrawal from the Plan. A Participant may
withdraw from the Plan by signing a written notice of
withdrawal on a form provided by the Company for such purpose
and delivering such notice to the Company's payroll office. In
the event a Participant voluntarily elects to withdraw from the
Plan, the Participant may not resume participation in the Plan during the
same Offering Period, but may participate in any subsequent
Offering under the Plan by filing a new subscription agreement
in the same manner as set forth above for initial participation
in the Plan.
<PAGE> 7
12. Termination of Employment. Termination of a
Participant's employment with the Company for any reason,
including retirement or death or the failure of a Participant
to remain an employee eligible to participate in the Plan,
shall terminate the Participant's participation in the Plan
immediately. In such event, the payroll deductions credited to
the Participant's account shall, as soon as practicable, be
returned to the Participant or, in the case of the
Participant's death, to the Participant's legal representative,
and all of the Participant's rights under the Plan shall
terminate. Interest shall not be paid on sums returned to a
Participant pursuant to this paragraph 12. A Participant whose
participation has been so terminated may again become eligible
to participate in the Plan by again satisfying the requirements
of paragraph 4.
13. Repayment of Payroll Deductions. In the event a
Participant's rights in the Plan or any Offering therein are
terminated, the Company shall deliver as soon as practicable to
the Participant any payroll deductions credited to the
Participant's account with respect to the Plan or any such
Offering. Interest shall not be paid on sums returned to a
Participant pursuant to this paragraph 13.
14. Capital Changes. In the event of changes in the common
stock of the Company due to a stock split, reverse stock split,
stock dividend, combination, reclassification, or like change
in the Company's capitalization, or in the event of any merger,
sale, or any other reorganization, appropriate adjustments
shall be made by the Company in the Shares subject to purchase
and in the purchase price per share.
15. Non-Transferability. An Option may not be transferred
in any manner otherwise than by will or the laws of descent and
distribution and shall be exercisable during the lifetime of
the Participant only by the Participant.
16. Reports. Each Participant who exercised all or part of
his or her Option for an Offering Period shall receive as soon
as practicable after the last day of such Offering Period a
report of such Participant's account setting forth the total
payroll deductions accumulated, the number of Shares purchased
and the remaining cash balance to be refunded or retained in
the Participant's account pursuant to paragraph 9(g), if any.
17. Plan Term. This Plan shall continue until terminated
by the Board or until all of the Shares reserved for issuance
under the Plan have been issued, whichever shall first occur.
18. Amendment or Termination of the Plan. The Board may at
any time amend or terminate the Plan, except that such
termination cannot affect Options previously granted under the
Plan, nor may any amendment make any change in an Option
previously granted under the Plan which would adversely affect
the right of any Participant (except as may be necessary to
qualify the Plan as an employee stock purchase plan pursuant to
section 423 of the Code), nor may any amendment be made without
approval of the stockholders of the Company within twelve (12)
months of the adoption of such amendment if such amendment
would authorize the
<PAGE> 8
sale of more shares than are authorized for issuance under the
Plan or would change the designation of corporations whose
employees may be offered Options under the Plan. To the extent
permitted by governing law, the Board authorizes the Vice
President of Human Resources to adopt amendments to the Plan.
IN WITNESS WHEREOF, the undersigned Secretary of the
Company certifies that the foregoing Third Amended and Restated
Ross Stores, Inc. Employee Stock Purchase Plan was duly adopted
by the Board of Directors of the Company on March 16, 1992 and
amended on March 16, 1995.
<PAGE> 9
PLAN HISTORY
March 14, 1988 Board of Directors adopted the Plan
May 27, 1988 Shareholders approved the Plan
May 25, 1989 Board of Directors adopted the Amended and Restated
Plan
May 25, 1989 Shareholders approved the Amended and Restated Plan
March 18, 1991 Board of Directors adopted the Second Amended and
Restated Plan
May 31, 1991 Shareholders approved the Second Amended and
Restated Plan
March 16, 1992 Board of Directors adopted the Third Amended and
Restated Plan to increase the share reserve to
600,000 shares.
May 28, 1992 Shareholders approved the Third Amended and
Restated Plan
March 16, 1995 Board amends plan to increase share reserve to
1,000,000 shares
[_______, 1995] Stockholders approve above amendment
<PAGE> 10
ROSS STORES, INC.
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application _____ Annual Offering Period
_____ Change in Purchase Right Accrual _____ Half-Year Offering Period
I hereby elect to participate in the Employee Stock Purchase
Plan (the "Stock Purchase Plan") of Ross Stores, Inc. (the
"Company") and subscribe to purchase the shares of the
Company's common stock determined in accordance with the Stock
Purchase Plan.
I hereby authorize payroll deductions in the amount of
$_____ or _____ percent of my base pay [fill in one only] from
each paycheck throughout the Offering Period in accordance with
the Stock Purchase Plan. (The amount deducted each pay period
must be between 1% and 10% of compensation and must be stated
in whole percentages). I understand that these payroll
deductions will be accumulated for the purchase of shares of
common stock of the Company at the applicable purchase price
determined in accordance with the Stock Purchase Plan. I
further understand that, except as otherwise set forth in the
Stock Purchase Plan, shares will be purchased for me
automatically on the last day of the Offering Period unless I
otherwise withdraw from the Stock Purchase Plan or from the
Offering by giving written notice to the Company or terminate
employment with the Company.
I further understand that I will automatically participate
in each subsequent Annual Offering Period under the Plan until
such time as I file with the Company the notice of withdrawal
from the Stock Purchase Plan attached hereto.
Shares purchased for me under the Stock Purchase Plan
should be issued in my name as set forth below. (I understand
that Shares may be issued in my name alone or together with my
spouse as community property or as joint tenants.)
NAME: __________________________
ADDRESS: _______________________
__________________________
SOCIAL SECURITY NUMBER: _________
I am familiar with the terms and provisions of the Stock
Purchase Plan and hereby agree to participate in the Stock
Purchase Plan subject to all of the terms and provisions
thereof. I understand that the Board reserves the right to
amend the Stock
<PAGE> 11
Purchase Plan and this Option as may be necessary to qualify
this Option as an option granted pursuant to an employee stock
purchase plan as defined in section 423 of the Internal Revenue
Code of 1986, as amended. The effectiveness of this
Subscription Agreement is dependent upon my eligibility to
participate in the Stock Purchase Plan.
Date:___________________ Signature:_________________________
<PAGE> 12
ROSS STORES, INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I hereby elect to withdraw from the offering under the
Employee Stock Purchase Plan (the "Stock Purchase Plan") of
Ross Stores, Inc. (the "Company") which commenced _________,
19______ (the "Offering"), and hereby request that all payroll deductions
credited to my account with respect to the Offering (if any),
and not previously used to purchase shares of common stock of
the Company under the Stock Purchase Plan, be paid to me as
soon as is practical. I understand that this Notice of
Withdrawal automatically terminates my interest in the
Offering.
As to participation in future Annual Offering Periods of
the Stock Purchase Plan, I elect as follows:
_______ I elect to participate in future
Annual Offering Periods of the Stock Purchase
Plan.
I understand that by making the election set forth above I
shall continue to participate in the Stock Purchase Plan, and
that I shall be enrolled in the next Annual Offering Period of
the Stock Purchase Plan commencing after the date of this
withdrawal, until such time as I elect to withdraw from the
Stock Purchase Plan or any such subsequent offering.
_______ I elect not to participate in future
offerings of the Stock Purchase Plan.
I understand that by making the election set forth above I
terminate my interest in the Stock Purchase Plan and that no
further payroll deductions will be made unless I file a new
subscription agreement in accordance with the Stock Purchase
Plan to become a participant in another offering under the
Stock Purchase Plan and I am eligible to participate in the
Stock Purchase Plan at that time.
I understand that if no election is made as to
participation in future offerings of the Stock Purchase Plan, I
will be deemed to have elected to participate in future Annual
Offering Periods.
Date: _____________ Signature:______________
