<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Section240.14a-11(c) or
Section240.14a-12
LONGS DRUG STORES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
[LOGO]
The Annual Meeting of Shareholders of Longs Drug Stores Corporation will be
held at the Regional Center for the Arts, 1601 Civic Drive, Walnut Creek,
California, on Tuesday, May 18, 1999, at 11:00 a.m., for the purposes of (1)
electing four directors; and (2) transacting such other business as may properly
be brought before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on Tuesday, April 6,
1999, will be entitled to vote at the meeting.
If you are unable to be present, you are requested to vote your shares by
signing the enclosed proxy and returning it in the envelope provided.
Walnut Creek, California
April 16, 1999
/s/ ORLO D. JONES
ORLO D. JONES
Secretary
<PAGE>
[LOGO]
EXECUTIVE OFFICES
141 NORTH CIVIC DRIVE
WALNUT CREEK, CALIFORNIA 94596
PROXY STATEMENT
The following information is submitted concerning the enclosed proxy and the
matters to be acted upon at the Annual Meeting of Shareholders of Longs Drug
Stores Corporation (the "Company") to be held on May 18, 1999, or any
adjournment thereof, pursuant to the Notice of said meeting.
The approximate date on which this Proxy Statement and form of proxy are
first being sent or given to shareholders is April 16, 1999.
INFORMATION CONCERNING PROXY
The proxy is solicited on behalf of the Board of Directors of the Company.
It may be revoked at any time before its exercise by filing with the Secretary
of the Company a written revocation or a duly executed proxy bearing a later
date. It may also be revoked by attendance at the meeting and election to vote
in person.
D.F. King & Co., Inc. has been engaged to assist in the solicitation of
proxies from brokers, banks, institutions, and other shareholders for an
anticipated fee of approximately $5,000, plus reasonable out-of-pocket costs and
expenses. Certain directors, officers, and regular employees of the Company may
solicit proxies by mail, telephone, telegraph, or personal interview. The entire
cost of solicitation of proxies will be borne by the Company.
As of April 6, 1999, the Company had 39,265,785 shares of Common Stock
outstanding. Only shareholders of record at the close of business on April 6,
1999, will be entitled to notice of, and to vote at, the Annual Meeting. Each
share is entitled to one vote. A plurality of all the votes cast at the meeting,
with a quorum present, is sufficient to elect a director. Abstentions and broker
non-votes will not be considered votes cast for the purposes of electing
directors.
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS
The following table presents the number of shares of the Company's Common
Stock owned beneficially as of April 6, 1999, by each director and nominee, each
of the five most highly compensated executive officers for the fiscal year ended
January 28, 1999, and all directors and executive officers as a group, and by
all other persons known by the Company to beneficially own more than 5% of the
Company's Common Stock.
1
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
------------------------
% OF
NAME(2) COMMON STOCK CLASS
- ------------------------------------------------------------ ------------- --------
<S> <C> <C>
Robert M. Long.............................................. 4,367,214(3) 11.12%
Vera M. Long................................................ 3,735,103(4) 9.51%
Thomas J. Long Foundation................................... 1,562,674(5) 3.98%
J.M. Long Foundation........................................ 1,079,700(6) 2.75%
Ariel Capital Management, Inc............................... 2,150,655(7) 5.48%
Bill M. Brandon............................................. 32,833 *
Richard M. Brooks........................................... 4,500 *
William L. Chenevich........................................ 200 *
William G. Combs............................................ 11,298 *
Edward E. Johnston.......................................... 1,400 *
Orlo D. Jones............................................... 23,425 *
Mary S. Metz................................................ 660 *
Ronald A. Plomgren.......................................... 337,886(8) *
Stephen D. Roath............................................ 72,137 *
Gerald H. Saito............................................. 17,046 *
Harold R. Somerset.......................................... 600 *
Donald L. Sorby............................................. 500 *
Thomas R. Sweeney........................................... 19,488 *
Frederick E. Trotter........................................ 1,000 *
All directors and executive officers as a group (22
persons).................................................. 7,405,361(9) 18.86%
Employee Profit Sharing Plan................................ 7,398,895(10) 18.84%
</TABLE>
- ------------------------
* Less than 1%
(1) Participants in the Employee Profit Sharing Plan have the right to direct
the trustee as to the voting of the shares of the Company's Common Stock
that have been allocated to their respective stock accounts, and as such
have voting power with respect thereto. The beneficial ownership of each
individual included in this table who is a participant in the plan includes
the shares held in that person's stock account under the plan. The aggregate
number of shares so included for all such individuals is 74,505 and the
maximum so included for any individual is 19,737. See note 10 below.
Beneficial ownership also includes the shares of restricted stock held by
executive officers in respect of which shares the executive officers have
voting power. See note 1 to the Summary Compensation Table on page 6 for the
shares of restricted stock held by the listed executive officers. The
persons named in this table have sole voting and investment powers with
respect to the shares indicated, except as otherwise noted and subject to
community property laws, where applicable.
(2) Except as otherwise noted, the address for all beneficial owners of more
than five percent of the Company's stock is P.O. Box 5222, Walnut Creek,
California 94596.
(3) Includes 208,490 shares held in fiduciary for family members and other
relatives for which R.M. Long has sole voting and investment power and
89,420 shares held in fiduciary capacity for family members for which R.M.
Long has shared voting and investment power with E. Long. Excludes 15,845
shares held by family members. R.M. Long disclaims beneficial ownership of
all shares referenced above. Also includes 3,000,000 shares held in
fiduciary capacity for which R.M. Long has sole voting power and shared
investment power with V.M. Long. Includes 242,056 shares held in a fiduciary
capacity for which R.M. Long has shared voting and investment power.
(4) Includes 3,000,000 shares as to which V.M. Long shares investment power
with R.M. Long. Such shares appear in the table for both V.M. Long and R.M.
Long.
2
<PAGE>
(5) T.R. Sweeney and W.G. Combs, with others, serve as co-trustees of the
Thomas J. Long Foundation, and therefore share investment and voting power
over these 1,562,674 shares. These shares are not included in the table for
any of these individuals and each of them disclaims beneficial ownership
thereof.
(6) Four of the five co-trustees of the J.M. Long Foundation include R.M. Long,
W.G. Combs, O.D. Jones, and S.D. Roath and they therefore share, with all
co-trustees, investment and voting power over these 1,079,700 shares. These
shares are not included in the table for any of these individuals and each
of them disclaims beneficial ownership thereof.
(7) Ariel Capital Management, Inc., in the capacity of investment advisor, has
sole voting and investment power for 2,150,655 shares in behalf of 60
clients whom none individually own 5% or more of the Company's common stock.
Ariel Capital Management, Inc., disclaims beneficial ownership in any of
these shares. The address of Ariel Capital Management, Inc., is 307 N.
Michigan Avenue, Suite 500, Chicago, Illinois 60601.
(8) Includes 242,056 shares held in a fiduciary capacity for which R.A.
Plomgren has shared voting and investment power.
(9) Includes 1,562,674 shares held by the Thomas J. Long Foundation and
1,079,700 shares held by the J.M. Long Foundation because certain of the
trustees of each entity are directors or executive officers of the Company.
(10) Merrill Lynch Trust Company of California is trustee of the Employee Profit
Sharing Plan. Shares allocated to a plan member's account are voted by the
plan member. Shares which are not allocated to a plan member's account, and
shares which are allocated to a plan member's account but for which the
trustee does not timely receive voting instructions, are voted by the
trustee in the same proportion as those shares for which the trustee
properly received directions. On April 6, 1999, the aggregate number of
unallocated shares in the plan was 34,506.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors consists of thirteen members, divided into three
classes. Four directors, as set forth below, are to be elected at the Annual
Meeting. The remaining nine directors will continue to serve as set forth below.
The proxy holders will vote the proxies received by them for the following four
nominees for the terms set below and until their successors are duly elected and
qualified (unless authorization to vote for election of directors has been
withheld). The four nominees receiving the greatest number of votes will be
elected as directors of the Company. The Company is unaware of any nominee who
would be unavailable to serve if elected. In the event that any nominee shall be
unable to serve, the proxies will be voted by the proxy holders for such other
person as may be designated by the Board of Directors.
The following sets forth information as to each nominee for election at this
meeting and each director continuing in office, including their ages, present
principal occupations and those held during the last five years, directorships
in other publicly held corporations, membership in committees of the Board of
Directors, and the year in which each first became a director of the Company.
All occupations listed refer to the Company unless otherwise stated.
3
<PAGE>
NOMINEES FOR ELECTION AT THIS MEETING:
(TERMS TO EXPIRE MAY 2002)
R.M. Brooks, 70, Financial Consultant and Director. Mr. Brooks is a Director
of BEI Technologies, Inc., and Granite Construction, Inc. Mr. Brooks chairs the
Audit Committee and the Stock Investment Committee, and is a member of the Stock
Bonus and Compensation Review Committee and the Nominating Committee. He has
been a Director of the Company since 1988.
W.L. Chenevich, 55, Group Executive Vice President, Visa International; and
Director. Mr. Chenevich is a Director of VeriSign, Inc. Mr. Chenevich is a
member of the Stock Bonus and Compensation Review Committee. He has been a
Director of the Company since 1999.
W.G. Combs, 68, Retired Vice President--Administration of the Company; and
Director. Prior thereto he was Vice President--Administration of the Company;
prior thereto he was Vice President-- Administration and Treasurer of the
Company. He has been a Director of the Company since 1980.
D.L. Sorby, Ph.D., 65, Pharmaceutical Consultant and Director. Prior thereto
he was Dean of the School of Pharmacy at the University of the Pacific. Dr.
Sorby is a member of the Audit Committee. He has been a Director of the Company
since 1995.
DIRECTORS WHOSE PRESENT TERMS EXPIRE MAY 2000:
E.E. Johnston, 81, Insurance Consultant and Director. Mr. Johnston is a
member of the Audit Committee, the Stock Investment Committee, the Nominating
Committee, and the Stock Bonus and Compensation Review Committee. He has been a
Director of the Company since 1980.
M.S. Metz, Ph.D., 61, President, S.H. Cowell Foundation; and Director. Prior
thereto she was Dean, U.C. Berkeley Extension. Dr. Metz is a Director of Pacific
Gas and Electric Corporation, UnionBanCal, and SBC Communications, Inc. Dr. Metz
is a member of the Audit Committee and the Stock Bonus and Compensation Review
Committee. She has been a Director of the Company since 1991.
S.D. Roath, 58, President and Director. He has been a Director of the
Company since 1979.
G.H. Saito, 54, Senior Vice President and District Manager; and Director.
Prior thereto he was Vice President and District Manager. He has been a Director
of the Company since 1995.
T.R. Sweeney, 60, Retired Vice President and District Manager of the
Company; and Director. He has been a Director of the Company since 1978.
DIRECTORS WHOSE PRESENT TERMS EXPIRE MAY 2001:
R.M. Long, 60, Chairman of the Board, Chief Executive Officer, and Director.
Mr. Long chairs the Nominating Committee. He has been a Director of the Company
since 1968.
R.A. Plomgren, 65, Senior Vice President--Development, Chief Financial
Officer, and Director. Prior thereto he was Senior Vice President--Development.
He has been a Director of the Company since 1972.
H.R. Somerset, 63, Business Consultant and Director. Mr. Somerset is a
Director of PLM International, Inc., and Brown and Caldwell. Mr. Somerset chairs
the Stock Bonus and Compensation Review Committee and is a member of the Audit
Committee, the Nominating Committee and the Stock Investment Committee. He has
been a Director of the Company since 1992.
F.E. Trotter, 68, President, F.E. Trotter, Inc.; and Director. Mr. Trotter
is a Director of Pacific Century Financial Corporation, Bank of Hawaii, and Maui
Land and Pineapple Co. Mr. Trotter is a member of the Audit Committee. He has
been a Director of the Company since 1989.
4
<PAGE>
THE BOARD OF DIRECTORS
During the fiscal year ended January 28, 1999, the Board of Directors met
six times. During the fiscal year, each director attended more than 75% of all
meetings of the Board and the Committees upon which they served.
COMMITTEES OF THE BOARD
The Audit Committee is composed entirely of non-employee directors. The
current Committee members are R.M. Brooks (Chairman), E.E. Johnston, M.S. Metz.,
H.R. Somerset, D.L. Sorby, and F.E. Trotter. The Audit Committee's primary
functions are to monitor the Company's accounting, financial reporting, and
control procedures, and to recommend the independent certified public
accountants to be selected by the Company. The Committee met two times during
the fiscal year ended January 28, 1999.
The Stock Bonus and Compensation Review Committee establishes compensation
for the Company's senior executive officers and administers the Company's
long-term incentive plan. The current Committee members are H.R. Somerset
(Chairman), R.M. Brooks, W.L. Chenevich, E.E. Johnston and M.S. Metz. The
Committee met two times during the fiscal year ended January 28, 1999.
The Nominating Committee recommends to the Board of Directors candidates for
directors of the Company. The Committee will consider qualified candidates,
including those submitted by shareholders. Shareholder recommendations may be
submitted to the Secretary in accordance with the Company's Bylaws. The
Committee met two times during the fiscal year ended January 28, 1999. The
current Committee members are R.M. Long (Chairman), R.M. Brooks, E.E. Johnston,
and H.R. Somerset.
The Stock Investment Committee is responsible for authorizing the purchase
and sale by the Corporation, or by its subsidiary, Longs Drug Stores California,
Inc. ("Subsidiary"), or by the Employee Profit Sharing Plan of the Subsidiary,
of shares of the Corporation's Common Stock. The Committee met four times during
the fiscal year ended January 28, 1999. The current Committee members are R.M.
Brooks (Chairman), E.E. Johnston, and H.R. Somerset.
5
<PAGE>
EXECUTIVE COMPENSATION
The table below sets forth the compensation earned by the following persons
during the fiscal years ended January 28, 1999, January 29, 1998, and January
30, 1997, for services rendered in all capacities to the Company and its
subsidiaries: (i) the chief executive officer (CEO) of the company, and (ii) the
four other most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- --------------
OTHER ANNUAL RESTRICTED ALL OTHER
FISCAL COMPENSATION STOCK COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) AWARD(S)(1)($) (2)($)
- ----------------------------------------------- ------ --------- -------- ------------ -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
R.M. Long--CEO & Chairman of the Board 1999 $ 160,000 $350,927 $2,869 $ 81,400 $2,843
1998 160,000 312,336 2,760 66,000 3,045
1997 150,000 306,451 2,986 49,200 3,045
S.D. Roath--President 1999 $ 160,000 $363,924 $2,869 $ 81,400 $2,843
1998 160,000 323,904 2,760 66,000 3,045
1997 150,000 306,451 2,986 49,200 3,045
R.A. Plomgren--Senior Vice 1999 $ 100,000 $220,954 $2,869 $ 65,120 $2,843
President--Development & CFO 1998 100,000 196,656 2,760 52,800 3,045
1997 90,000 192,951 2,986 39,360 3,045
O.D. Jones--Senior Vice President--Properties 1999 $ 100,000 $194,960 $2,869 $ 65,120 $2,843
1998 100,000 173,521 2,760 49,500 3,045
1997 90,000 170,251 2,986 36,900 3,045
B.M. Brandon--Senior Vice President 1999 $ 90,000 $168,965 $2,869 $ 61,050 $2,843
1998 90,000 150,384 2,760 49,500 3,045
1997 80,000 147,548 2,986 36,900 3,045
- --------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------
(1) The number and value (based on the last reported sale price on January 28,
1999), of the aggregate restricted stock holders of the named executive
officers at the end of fiscal 1999 were: R.M. Long, 6,500 shares ($247,000);
S.D. Roath, 6,500 shares ($247,000); R.A. Plomgren, 6,250 shares ($237,500);
O.D. Jones, 6,125 shares ($232,750); and B.M. Brandon, 5,875 shares
($223,250). Dividends paid on restricted shares are retained by the Company
and, when the restricted shares vest, the retained dividends thereon, plus
interest earned from the Company's investment of dividends, are paid to the
recipient.
(2) Comprised entirely of company contributions to the Employee Profit Sharing
Plan for the indicated year that were allocated to the named executive
officer's account.
6
<PAGE>
DIRECTORS' COMPENSATION
Directors who are employees of the Company or any subsidiary of the Company
receive no additional compensation for their services as directors. Each other
member of the Board is paid an annual retainer of $32,000 plus a fee of $900 for
each Board meeting attended. Each director who is not an employee of the Company
or any subsidiary of the Company receives $900 for each Committee meeting
attended; provided, however, if more than one meeting is scheduled for the same
day, the fee paid for any individual additional meeting is one-half (1/2) the
amount of the meeting day. Each Committee Chairman receives an additional annual
fee of $4,000 for each such position held, and each Committee member receives an
additional annual fee of $1,000 for each committee upon which they serve.
In addition to the above compensation, in May, 1998, the Board of Directors
made stock grants to each of the nine directors who is not an employee of the
Company or any subsidiary of the Company. The stock grants ranged from 200 to
300 shares per director. The closing price of the shares on the date of the
grant was $29.875.
TERMINATION AGREEMENTS
The Subsidiary has entered into Agreements with the officers identified in
the table under the caption "Executive Compensation" on page 6, and with 373
other officers and key employees of the Subsidiary, which Agreement provides for
severance payments to such officers and employees. As to R.M. Long and S.D.
Roath, provisions of the Agreement go into effect in the event of their
discharge or resignation from the Subsidiary on or within two years after a
Change in Control (as defined). As to R.A. Plomgren, O.D. Jones, and B.M.
Brandon, provisions of the Agreement go into effect in the event of discharge by
the Subsidiary on or within two years after a Change in Control (as defined) or
by resignation on or after but less than 180 days after the date of a Change in
Control, provided that such resignation was preceded by a material and
detrimental alteration in the executive's position, responsibilities,
compensation, or benefits from those in effect immediately prior to the Change
in Control, or by resignation at any time within the period commencing 180 days
after the date of Change in Control and ending two years after the date of such
Change in Control. Change in Control means i) any change in the ownership or
effective control of the Company or the Subsidiary, or ii) any change in the
ownership of a substantial portion of the assets of the Company or the
Subsidiary, all within the meaning of Section 280(G) of the Internal Revenue
Code of 1986, as amended to date, or any successor provision thereto,
regulations (including temporary and proposed regulations) promulgated
thereunder and judicial interpretations of Section 280(G) and the regulations.
If a Change in Control had occurred on December 31, 1998, and all executives
and other employees covered by the Agreements had been discharged by the
Company, Messrs. R.M. Long, S.D. Roath, R.A. Plomgren, B.M. Brandon and O.D.
Jones would have been entitled to receive $1,474,804, $1,631,359, $932,035,
$874,921, and $856,532, respectively. All other officers and employees covered
by the Agreements would have been entitled to receive $83,280,786.
CERTAIN TRANSACTIONS
In July, 1997, the Subsidiary entered into an agreement with R.E. Lovelady,
an executive officer of the Subsidiary, in connection with his relocation to its
headquarters in Walnut Creek, California. Pursuant to the agreement, the
Subsidiary agreed to loan Mr. Lovelady $105,000 to assist him with the purchase
of a home in the Walnut Creek, California area. The loan, which was made on July
24, 1997, provides for an interest rate of 6.65% and is to be forgiven ratably
over its five-year term. The Company has also agreed to pay Mr. Lovelady each
year an amount equal to the required income taxes on the amount forgiven in such
year, so long as Mr. Lovelady remains an employee of the Company.
7
<PAGE>
REPORT OF THE STOCK BONUS
AND COMPENSATION REVIEW COMMITTEE
The Stock Bonus and Compensation Review Committee consists of five members
of the Board, none of whom is an employee of the Company. One member, D.G.
DeSchane, who retired from the Company in 1988, was a former officer of the
Company, but retired as a Director and member of the Committee in February,
1999. Another member, W.L. Chenevich, was appointed to the Committee in
February, 1999, after the end of the fiscal year. The purpose of the Committee
is to establish compensation for the Company's executive officers and to
administer the Company's long-term incentive plan.
In compensating executives, including the Chief Executive Officer, the
Company's policy has been to employ a straightforward compensation program under
which a significant portion of compensation is tied to the Company's
performance. Given the stability of the senior management team, the Committee
believes this approach provides an appropriate incentive to senior management to
continually strive to increase long-term profitability. The Committee recognizes
that management compensation is a key ingredient in attracting and retaining
capable leadership and that the compensation program must afford members of
senior management the opportunity to earn levels of compensation that they will
find acceptable.
The major components of executive compensation consist of base salary,
bonus, and awards under the Company's incentive equity plan. Base annual
salaries for executive officers are set at levels that the Committee believes,
based on its study of comparative industry data, are relatively low for the
senior management of large, publicly traded retail businesses because of the
Committee's preference to focus on incentive based compensation as the larger
component of total compensation. The companies surveyed for this comparison have
included virtually all of the peer group companies included in the chart
appearing under "Performance Graph" on page 9, and certain additional grocery
and general merchandise retailers, although the precise group of companies
surveyed may vary slightly from year to year. Base annual salaries for executive
officers in the fiscal year ended January 28, 1999, ranged from $79,900 to
$160,000.
The more significant component of cash compensation is the Company's bonus
program. Under this program the Committee establishes an applicable percentage
of the Company's operating income before provisions ("OIBP") for each executive
officer at the beginning of each year. OIBP is, essentially, earnings before
taxes, profit sharing contributions, senior officer bonuses, and any required
LIFO adjustment. The bonus program is designed to produce cash compensation that
the Committee believes is fair and competitive for senior management in
comparable publicly traded retail businesses if the Company achieves target
levels of OIBP. However, the Committee has not established limits on the
percentage of cash compensation that may consist of these bonuses for
performance above these target levels. The applicable percentages are arrived at
on the basis of the percentage of budgeted OIBP necessary to reach the target
range. A cash bonus is paid quarterly to the officer in the amount of his
applicable percentage of OIBP for that quarter. Bonuses for executive officers
in fiscal 1999 ranged from $100,079 to $363,924. These bonuses accounted for
approximately 65% of total cash compensation for all executive officers.
The third component of executive compensation is the periodic granting of
equity based awards under the Company's 1995 Long-Term Incentive Plan. Awards
under this plan can include restricted stock, stock options, performance shares
and stock appreciation rights and can be made to key employees, including
executive officers, key general office employees and the top three managers in
most stores. This plan is intended to provide compensation that will be an
incentive to key employees to enhance the profitable growth of the Company and
the value of its common stock. The difference in size of awards under the plan
has been based primarily on the general level of responsibility of the
recipient. The Committee may also consider subjective factors on a case by case
basis as it believes to be in the Company's best interests. Awards made under
the plan have been a relatively small component of executive officer
compensation. Since the adoption of the 1995 plan through the end of fiscal
1999, awards, in the aggregate, ranging from 3,525 to 12,360 shares of
restricted stock have been made to each executive officer, including the Chief
Executive Officer. Approximately 202,000 additional shares of restricted stock
have been granted to a total of 230 other recipients under the plan.
8
<PAGE>
The compensation for the Company's Chief Executive Officer in fiscal 1999
was established in accordance with the foregoing procedures. Base salary for
fiscal 1999 was 31% of Mr. Long's aggregate salary and bonus. Mr. Long's
applicable percentage in 1999 was unchanged from that of the prior year, with
the increase in bonus resulting from the increase in OIBP attained in 1999. In
awarding restricted stock to Mr. Long in fiscal 1999, the Committee was aware of
Mr. Long's substantial shareholdings in the Company. The Committee believed that
his award was appropriate in light of Mr. Long's overall level of compensation
and the level of awards made to the other executive officers and key employees.
<TABLE>
<S> <C>
H.R. Somerset (Chairman) E.E. Johnston
R.M. Brooks M.S. Metz
W.L. Chenevich
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Stock Bonus and Compensation Review Committee consists of five members
of the Board, none of whom is an employee of the Company. One member, D.G.
DeSchane, who retired from the Company in 1988, was a former officer of the
Company, but retired as a Director and member of the Committee in February 1999.
Another member, W.L. Chenevich, was appointed to the Committee in February,
1999, after the end of the fiscal year. The other members of the committee are
R.M. Brooks, E.E. Johnston, M.S. Metz, and H.R. Somerset.
PERFORMANCE GRAPH
The graph below indicates the cumulative total shareholder return, including
reinvestment of dividends over the last five fiscal years. The stock price
performance shown is not necessarily indicative of future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
LONGS DRUG STORES, S&P 500 INDEX, AND NATIONAL ASSOCIATION OF
CHAIN DRUG STORES ("NACDS") PEER GROUP INDEX.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LONGS DRUG STORES S&P 500 INDEX NACDS PEER GROUP INDEX
<S> <C> <C> <C>
Jan-94 $100.00 $100.00 $100.00
Jan-95 $101.11 $101.00 $108.00
Jan-96 $143.92 $139.00 $141.00
Jan-97 $158.16 $176.00 $179.00
Jan-98 $192.94 $224.00 $281.00
Jan-99 $259.90 $296.00 $490.00
</TABLE>
* The NACDS Peer Group Index is comprised of the following companies:
CVS; Drug Emporium, Inc.; Genovese Drug Stores, Inc.; Horizon
Pharmacy; Longs Drug Stores; Phar-Mor, Inc.; Pharmhouse Corp.; Rite
Aid Corporation; and Walgreen Co.
9
<PAGE>
FINANCIAL STATEMENTS
The Annual Report of the Company, including financial statements for the
fiscal year ended January 28, 1999, is being mailed to all shareholders
concurrently with the mailing of this Proxy Statement. A copy of the Company's
Form 10-K for such fiscal year may be obtained without charge by writing to
Longs Drug Stores Corporation, Attention: Corporate Treasurer, 141 North Civic
Drive, Walnut Creek, California 94596.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(SEC). Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that for the fiscal year ended January 28, 1999, all filing
requirements applicable to its officers, directors, and greater than ten percent
beneficial owners were complied with, except for two late filings of notice
reporting the sale of the Company's common stock in fiscal year 1999 by B.M.
Brandon, Senior Vice President, and B.E. Kilcourse, Senior Vice President--Chief
Information Officer.
CERTIFIED PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP was engaged as certified public
accountants for the fiscal year ended January 28, 1999. The Board of Directors,
on recommendation of its Audit Committee, has retained the firm for the current
fiscal year. Representatives of Deloitte & Touche LLP are expected to be present
at the Annual Meeting. They will have an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
SHAREHOLDER'S PROPOSALS FOR 2000 ANNUAL MEETING
Under the rules of the Securities Exchange Commission, in order for a
shareholder's proposal to be considered for inclusion in the Company's Proxy
Statement for the 2000 Annual Meeting of Shareholders, such proposal must be
received at the Company's Executive Offices at 141 North Civic Drive, Post
Office Box 5222, Walnut Creek, California 94596, Attention: Corporate Secretary,
no later than the close of business on December 20, 1999. In addition, the
By-laws of the Company provide for the timing and content of notice which
shareholders must provide to the Secretary of the Company for the nomination of
directors or other proposals to be properly presented at a shareholders meeting.
Pursuant to these provisions, notice of any such nomination or proposal must be
received by the Company not less than 30 nor more than 60 days prior to the date
of the meeting; however, if shareholders are notified of the meeting date less
than 40 days prior to the date of the meeting, then the notice of any such
nomination or proposal must be given to the Company within 10 days of the date
that shareholders are so notified.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
business other than that described above to be presented for action at the
meeting, but it is intended that all proxies will be exercised upon any other
matters and proposals that may properly come before the meeting or any
adjournment thereof, in accordance with the direction of the persons named
therein.
10
<PAGE>
- -------------------------------------------------------------------------------
PROXY CARD PROXY CARD
LONGS DRUG STORES CORPORATION
141 NORTH CIVIC DRIVE, WALNUT CREEK, CALIFORNIA
ANNUAL MEETING OF SHAREHOLDERS--MAY 18, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints R.M. LONG, S.D. ROATH, R.A. PLOMGREN and each of
them proxies for the undersigned, with the powers the undersigned would
possess if personally present and with full power of substitution to act and
to vote, as designated below, all the shares of the undersigned in Longs Drug
Stores Corporation, at the Annual Meeting of its Shareholders to be held on
Tuesday, May 18, 1999, at 11:00 A.M., and at any adjournment thereof. In the
absence of instructions from me my proxies will vote for all nominees in
Proposal 1. My proxies may vote according to their discretion on any other
matter which may properly come before the meeting.
This card also provides voting instructions to the trustee of the Longs Drug
Stores California, Inc. Employee Profit Sharing Plan. The trustee will vote,
as indicated on the reverse side of this card, the shares of common stock
credited to my account under the Plan.
- -------------------------------------------------------------------------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE
<PAGE>
Please mark
your vote as / x /
indicated in
this example
PROPOSAL 1.
WITHHELD
FOR FOR ALL
1. ELECTION OF DIRECTORS / / / /
Nominees:
R. M. Brooks
W. L. Chenevich
W. G. Combs
D. L. Sorby
WITHHELD FOR: (Write that nominee's name in the space
provided below)
_______________________________________________
Signature(s) ___________________________________________ Date_________
Please sign exactly as name(s) appear(s) hereon. If acting as executor,
administrator, trustee, guardian, etc., you should so indicate in
signing. If the shareholder is a corporation, please sign the full
corporation name, by duly authorized officer. If shares are held
jointly, each shareholder named should sign, date and promptly return
this card in the envelope provided.
- -------------------------------------------------------------------------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE
