[PAYLESS LETTERHEAD]
March 10, 2000
To Our Stockholders:
It is my pleasure to invite you to our 2000 annual meeting of
stockholders. This year it will be held on Wednesday, April 19, 2000, at 10:00
a.m., at the Payless Cashways, Inc. Store Support Center, located at 800 N.W.
Chipman Road, Suite 5900, Lee's Summit, Missouri.
With this letter, you will find the formal notice of the 2000 annual
meeting, our 1999 Annual Report and our Proxy Statement for the 2000 annual
meeting. When you have finished reading the Proxy Statement, please promptly
mark, sign, and return to us the enclosed proxy card, to ensure that your shares
will be represented. This year, you may also vote by telephone or over the
Internet as indicated on the proxy card instructions.
Please be advised that this year's format will be substantially
different from our past meetings. As you may know, in the interest of saving
time and expense, many public companies have moved the annual meeting location
and simplified the meeting content as well. This year we will meet at our Store
Support Center offices, eliminate all management presentations, and conduct only
the formal business required at this meeting, the election of directors. Of
course, if you have any questions, we will be available at the meeting, or
throughout the year via the telephone or our web site: www.payless.cashways.com.
We appreciate your continuing interest in our Company.
Thank you,
/S/Millard E. Barron
Millard E. Barron
President and
Chief Executive Officer
<PAGE>1
[PAYLESS LOGO]
BUILDING MATERIALS
800 N.W. Chipman Road, Suite 5900
Lee's Summit, Missouri 64063-5717
------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
PAYLESS CASHWAYS, INC.
To Be Held April 19, 2000
To the Stockholders of PAYLESS CASHWAYS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Payless
Cashways, Inc. will be held at the offices of Payless Cashways, Inc., 800 N.W.
Chipman Road, Suite 5900, Lee's Summit, Missouri, on Wednesday, April 19, 2000
at 10:00 a.m. for the following purposes:
1. To elect three Class III directors to a term of three years each as
set forth in the Proxy Statement.
2. To transact such other and further business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on February 21,
2000, as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting.
Dated: March 10, 2000
BY ORDER OF THE BOARD OF DIRECTORS
/S/Gary D. Gilson
Gary D. Gilson, Secretary
- --------------------------------------------------------------------------------
You are cordially invited to attend the meeting. However, whether or not you
plan to be personally present at the meeting, please date and sign the enclosed
proxy and return it promptly in the enclosed envelope. You may also vote by
telephone or over the Internet as indicated on the proxy card instructions.
If you later desire to revoke your proxy, you may do so at any time before
it is exercised.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>2
General Information for Stockholders
In order to provide every stockholder with an opportunity to vote on
all matters scheduled to come before the Annual Meeting, whether or not the
stockholder attends in person, proxies are solicited from stockholders by the
Board of Directors of Payless Cashways, Inc. ("Payless" or the "Company"). When
the enclosed proxy card is properly executed and returned or your proxy is given
by phone or over the Internet, the shares represented will be voted by the
persons designated as proxies, in accordance with the stockholder's directions.
Stockholders may vote on a matter by marking the appropriate box on the card or,
if no box is marked for a specific matter, the shares will be voted as
recommended by the Board of Directors on that matter. You may also vote by
telephone or over the Internet by following the instructions included with your
proxy card.
If your shares are held in "street name," you will need to follow the
voting instructions on the form you receive from your broker or other nominee.
The availability of telephone or Internet voting will depend on their voting
processes.
Management knows of no matters other than those set forth on the proxy
card that will be presented for action at the Annual Meeting. Execution of the
proxy, either by signing the proxy card, voting by telephone or over the
Internet, confers on each of the persons designated as proxies the discretionary
authority to vote the shares represented in accordance with their best judgment
on any other business that may properly come before the meeting as to which the
Company did not have notice prior to January 18, 2000.
Any stockholder executing a proxy, by mail, by telephone or over the
Internet, may revoke that proxy or submit a revised proxy at any time before it
is voted. A stockholder may also vote by ballot at the Annual Meeting, thereby
canceling any proxy previously returned as to any matter voted on by ballot. A
stockholder wishing to name as his or her proxy someone other than those
designated on the proxy card may do so by crossing out the names of the
designated proxies and inserting the name(s) of the person(s) he or she wishes
to have act as his or her proxy. In such case, it will be necessary that the
proxy be delivered by the stockholder to the person(s) named, and that the
person(s) named be present and vote at the meeting. Proxy cards on which
alternate proxies have been named should not be mailed directly to the Company.
Holders of the Common Stock, par value $.01 per share, of the Company
(the "Common Stock") at the close of business on February 21, 2000, the record
date for the Annual Meeting (the "Record Date"), are entitled to receive notice
of, and to vote at, the Annual Meeting. At the close of business on such date, a
total of 20,000,000 shares of Common Stock were outstanding. Each share of
Common Stock is entitled to one vote on each matter to be presented at the
Annual Meeting. It is expected that this Proxy Statement and the enclosed form
of proxy will be mailed to the stockholders on or about March 10, 2000.
Matters to be Considered at the Annual Meeting
1. Proposal No. 1 - Election of Directors
The business and affairs of the Company are to be managed by or under
the direction of a Board of Directors. Pursuant to the Certificate of
Incorporation of the Company, the terms of the directors are divided
into three classes, designated Class I, Class II and Class III. Each
class consists, as nearly as may be possible, of one-third the total
number of directors constituting the entire Board of Directors, which
currently is eight with one vacancy. There are currently three Class
III directors standing for election. The current terms of the Class III
directors, Class I directors and Class II directors expire in 2000,
2001 and 2002, respectively. At each Annual Meeting, successors to the
class of directors whose terms expire at that Annual Meeting are
elected for a 3-year term.
At the Annual Meeting of Stockholders in 2000, three Class III
directors are to be elected. The nominees listed below have been
approved by the Board of Directors. It is the intention of the persons
named as proxies in the accompanying form of proxy, unless such
authority is withheld, to vote for the election of the nominees set
forth below. In order to be elected a director, a nominee must
receive a plurality of the votes of the shares present
<PAGE>3
in person or represente by proxy at the Annual Meeting and entitled to
vote in the election of directors. The abstention or failure to vote
shares present at an Annual Meeting and broker nonvotes do not have
the effect of a vote "for" or "against" a nominee.
The nominees have consented to their nomination and have agreed to
serve if elected. In case the nominees are not available for election
for reasons not presently known to the Company, discretionary authority
will be exercised by the proxies named in the enclosed form of proxy to
vote for substitutes selected by the Board of Directors. Information
regarding the nominees is set forth below.
Principal Occupation and
Name Age Five-Year Employment History
Peter G. Danis 67 Non-Executive Chairman of the Board of
First designated as Payless since December 1997;Chief Executive
a director: 1997 Officer of Boise Cascade Office Products
Class III Corporation and Executive Vice President
of Boise Cascade Corporation from 1995 to
April 1998; President of Boise Cascade
Office Products Corporation from 1995 to
February 1998; served in various upper
management positions with both Boise
Cascade Corporation and Boise Casca Office
Products Corporation since 1968; and
currently a director of Boise Cascade
Office Products Corporation. Mr.Danis is a
member of the Compensation Committee of
the Payless Board of Directors.
David G. Gundling 49 President and Chief Executive Officer of
First designated as Hagemeyer P.P.S. North America, Inc. since
a director: 1997 1997; President and Chief Operating Officer
Class III of Richfood Pennsylvania, Inc. from 1996 to
1997 and Executive Vice President and a
director of Super Rite Corporation from
1987 to 1996. Mr. Gundling is Chairman
of the Compensation Committee of the Payless
Board of Directors.
Donald E. Roller 62 Acting Chief Executive Officer of Payless
First designated as from January 1998 until June 1998; Executive
a director: 1997 Vice President - North American Gypsum USG
Class III Corporation from January 1996 to November
1996; President and Chief Executive Officer
of United States Gypsum Company from
January 1993 to November 1996; and currently
a director of Boise Cascade Office Products
Corporation and Jacksonville Saving
Bank. Mr. Roller is Chairman of the Audit
and Finance Committee member of the
Compensation Committee of the Payless Board
of Directors.
The Board of Directors unanimously recommends a vote "FOR" the proposal
to elect the nominees as Class III directors of the Company.
Information regarding the four directors who were previously designated
and will continue to serve their terms is set forth below.
Principal Occupation and
Name Age Five-Year Employment History
Millard E. Barron 50 President and Chief Executive Officer of
First designated as Payless since June 1998; President of
a director: 1998 Zellers, Inc. and Executive Vice
Class I President of Hudson's Bay Company from
September 1996 to February 1998; Senior
Vice President and Chief Operating
Officer o the International Division of
Wal-Mart Stores, Inc. from August 1994
to September 1996; Vice President -
Operations of Wal-Mart Stores, Inc. from
November 1992 to August 1994; and
currently a director of American Homestar
Corporation.
<PAGE>4
Principal Occupation and
Name Age Five-Year Employment History
H.D. Cleberg 61 President and Chief Executive Officer of
First designated as Farmland Industries, Inc. since 1991.
a director: 1997 Mr. Cleberg is a member of the Audit
Class I and Finance Committee and a member of the
Corporate Governance and Nominating
Committee of the Payless Board of
Directors. Ms. Renae Gonner, the
Company's VicePresident-Marketing and
Advertising, is Mr. Cleberg's daughter.
Max D. Hopper 65 Founder and principal of Max D. Hopper
First designated as Associates, Inc., a consulting firm
a director: 1997 specializing in the strategic use of
Class II advanced information systems, since
January 1995; retired Chairman of The
SABRE Technology Group and Senior Vice
President for American Airlines, both
units of AMR Corporation; and currently
a director of Gartner Group, Inc.,
Metrocall, Inc., USDATA Corporation, Inc.,
United Stationers, Inc., Exodus
Communications, Inc., and Accrue Software,
Inc. Mr. Hopper is a member of the
Corporate Governance and Nominating
Committee and the Audit and Finance
Committee of the Payless Board of
Directors.
Peter M. Wood 61 Former Managing Director of J.P. Morgan
First designated as & Co., Incorporated from 1986 until 1996;
a director: 1997 and currently a director of Middlesex
Class II Mutual Assurance Company and Stone &
Webster, Incorporated. Mr. Wood is
Chairman of the Corporate Governanc
and Nominating Committee and a member of
the Audit and Finance Committee of the
Payless Board of Directors.
The current Board of Directors (with the exception of Mr. Barron) took
office December 2, 1997. Mr. Barron took office on June 17, 1998. During fiscal
1999, there were seven meetings of the Board of Directors. During fiscal 1999,
each director attended 75% or more of all meetings of the Board of Directors and
of the committees on which he served, except for Mr. Gundling who attended seven
of ten meetings. In addition to attending Board of Directors and committee
meetings during the year, the directors conferred with officers regarding
corporate matters, performed independent research and analysis, and reviewed
material submitted by management to the Board of Directors and committees for
consideration and action.
Committees of the Board
The Board of Directors currently has three standing committees. Their
functions are described below:
Compensation - The Compensation Committee reviews the compensation
(wages, salaries, supplemental compensation and benefits) of the employees of
the Company, approves compensation and benefit policies and plans, approves
direct and indirect executive officer compensation, administers stock programs,
and oversees the Company's executive development plan. The Committee also makes
recommendations to the Board of Directors regarding election of executive
officers and compensation and benefits for directors. During fiscal 1999, there
was one meeting and one special meeting of the Compensation Committee. The
members of the Compensation Committee are David G. Gundling, Chair; Peter G.
Danis; and Donald E. Roller.
Corporate Governance and Nominating - The Corporate Governance and
Nominating Committee reviews the size, composition and effectiveness of
the Board of Directors, including retention, tenure and retirement
policies, criteria for selection of nominees to the Board of
Directors, qualifications of candidates, and membership and structure of Board
Committees. The Committee also reviews developments in corporate
governance generally and makes appropriate recommendations to the
Board of Directors. The Corporate Governance and Nominating Committee
met one time during fiscal 1999 and recommended to the Board of
<PAGE>5
Directors the combination of the Audit and Finance Committees. The
members of the Company's Corporate Governance and Nominating Committee are Peter
M. Wood, Chair; H.D. Cleberg; and Max D. Hopper.
Audit and Finance - In April of 1999, the Audit and the Finance
Committees were combined to form the Audit and Finance Committee. This Committee
monitors and reviews the adequacy of financial, operating and system controls,
financial reporting, compliance with legal, ethical and regulatory requirements,
and the performance of the external and internal auditors. The Committee serves
as the conduit for communication between the Board of Directors and external and
internal auditors. The Committee recommends to the Board of Directors the
independent public accountants to conduct the annual examination of financial
statements and also reviews the proposed scope and fees of the examination, as
well as its results, and any significant, non-audit services and fees.
The Committee also considers the financing requirements of the Company,
reviews and makes recommendations to the Board of Directors with respect to
acquisitions, divestitures, extraordinary capital expenditure requests, and
significant changes in the capital structure of the Company, including the
incurrence/defeasance of long-term indebtedness and the issuance/redemption of
equity securities, and other major financial transactions.
The Audit and Finance Committee met two times during fiscal 1999. The
members of the Audit and Finance Committee are Donald E. Roller, Chair; H.D.
Cleberg; Peter M. Wood; and Max D. Hopper. Prior to April, 1999, the Audit
Committee, comprised of H. D.Cleberg, Chair; and Peter M. Wood, met one time.
The Finance Committee was comprised of Donald E. Roller, Chair; David G.
Gundling; and Max D. Hopper.
Compensation of Directors
The Company pays each non-employee director (i) an annual directors'
fee of $25,000, except that the Non-Executive Chairman is paid an annual fee of
$100,000, payable quarterly, (ii) $1,000 for each meeting of the Board of
Directors attended by the director, (iii) $1,000 for each committee meeting
attended by the director and (iv) a $2,000 per diem for special matters
undertaken on behalf of the Company at the request of the Chairman or the CEO.
Committee chairs are paid an additional annual fee of $3,500.
In October 1999, Non-Executive Chairman Peter G. Danis was granted
options to purchase 30,000 shares of Common Stock and H.D. Cleberg, David G.
Gundling, Max D. Hopper, Donald E. Roller and Peter M. Wood were each granted
options to purchase 15,000 shares of Common Stock pursuant to the Payless
Cashways, Inc. 1998 Omnibus Incentive Plan (discussed in the section entitled,
"Report on Executive Compensation"). All such options have an exercise price
equal to the fair market value of the Common Stock on the date of grant, and are
subject to a four-year vesting schedule with one-fourth of the grant vesting on
each anniversary from the grant date.
Compensation Committee Interlocks and Insider Participation
Members of the Compensation Committee of the Company's Board of
Directors during fiscal 1999 were David G. Gundling, Chair; Peter G. Danis;
and Donald E. Roller. During a portion of fiscal 1998, Mr. Roller served as
Acting Chief Executive Officer of the Company.
<PAGE>6
Performance Graph
The graph set forth below compares the indexed total return on an
investment in the Company's Common Stock against the Russell 2000 and the
Standard and Poor's Retail (Building Materials) Index ("S&P Building Materials
Index"). The graph is based on stock performance and assumes the reinvestment of
any dividends. The period covered is December 2, 1997 (the date on which the
Common Stock was first traded) through the Company's 1999 fiscal year end or the
nearest practicable date.
The current indices are presented in the following graph.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
As of As of As of As of As of As of As of As of As of
12/2/97 2/28/98 5/31/98 8/31/98 11/30/98 2/28/99 5/31/99 8/31/99 11/26/99
------ ------- ------- ------- -------- ------- ------- ------- --------
S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Payless Cashways, Inc.(1).......$100.00....$86.73 $106.12 $54.07 $46.92 $73.47 $69.39 $57.14 $49.96
Russell 2000....................$100.00...$106.79 $105.58 $78.14 $91.97 $90.70 $101.43 $98.92 $104.99
S&P Building Materials Index....$100.00...$116.31 $143.00 $134.94 $171.58 $207.96 $197.53 $202.45 $252.79
<FN>
(1) Fiscal quarters and year end on a Saturday, therefore closest
available date is utilized.
</FN>
</TABLE>
The closing price on February 18, 2000 was $2.31 per share.
Report on Executive Compensation
The Compensation Committee is composed entirely of directors who are
not executive officers of the Company. The members of the Compensation
Committee are Mr. Gundling, Chair; Mr. Danis; and Mr. Roller.
The Committee is responsible, on behalf of the Board of Directors, for
reviewing the compensation (wages, salaries, supplemental compensation and
benefits) of the Company's executive officers, including approval of
compensation and benefit policies, approval of direct and indirect executive
officer compensation, administration of stock incentive programs, and oversight
of the Company's executive development plan.
The Compensation Committee believes that it is in the best interest of
the Company's stockholders to attract, retain and motivate top quality executive
officers by offering a competitive compensation package that establishes a
relationship between executive pay and the enhancement of stockholder value.
The Committee reviews its executive officer compensation program each
year. Periodically, the Committee has engaged an independent, executive
compensation consulting firm to conduct a formal study to determine
whether the Company's compensation program is competitive with executive
compensation programs of comparable companies (including building
Material retailers, similarly-sized companies, and other retail companies).
In connection with these studies, the consulting firm has reviewed
industry data obtained from national compensation survey in which
the Company participates, including an annual compensation study
<PAGE>7
published by an executive compensation consulting firm. In years in which a
formal study is not completed, the conclusions of the mostrecent study
are updated based on a survey of retail compensation trends published by
executive compensation consulting firms, published wage and salary surveys, and
inflation indices.
Each year the Committee reviews the performance of the Company and
approves an annual base salary and an annual incentive bonus opportunity for
each executive officer consistent with the objectives set forth below. When
appropriate, the Committee recommends incentive compensation awards pursuant to
the Company's 1998 Omnibus Incentive Plan.
Annual Base Salary
The Compensation Committee believes that annual base salaries of the
Company's executive officers should be maintained at levels that are competitive
with salaries at comparable companies. As a result, the Committee historically
has set annual base salaries at approximately the 50th percentile of annual base
salaries for executives in similar positions at comparable companies. Prior to
the beginning of each fiscal year, the Committee reviews the performance of the
Company and base salaries of executive officers, compares base salaries against
those of comparable companies and determines pay adjustments, as appropriate.
The performance criteria used by the Compensation Committee include the
reporting responsibilities of each executive officer and corporate performance
in terms of sales, earnings before interest, taxes, depreciation and
amortization ("EBITDA"), income, operating goals and similar factors. The
Compensation Committee does not employ any specific weighting of the performance
criteria and application of the criteria is also dependent upon the position of
the particular executive officer. When the Company entered into employment
agreements with executive officers (discussed in the section entitled "Summary
Compensation Table"), the annual base salaries under the agreements were
established consistent with these criteria.
Corporate Management Incentive Plan
The Committee establishes annual incentive bonus opportunities pursuant
to the Company's Corporate Management Incentive Plan. Under the program,
executive officers are entitled to receive bonus payments based upon the
Company's achievement of EBITDA targets, as follows: (i) if the Company achieves
110% or more of the EBITDA target, then executive officers may receive as much
as 150% of their incentive levels; (ii) if the Company achieves a minimum of
100% of the EBITDA target, then executive officers are entitled to receive 100%
of their incentive levels; (iii) if the Company achieves a minimum of 90% of the
EBITDA target, then executive officers may receive 50% of their incentive
levels; and (iv) if the Company fails to achieve a minimum of 90% of the EBITDA
target, then the Company will not pay any portion of the incentive levels. The
Committee sets incentive levels for executive officers based on salary grade.
Total cash compensation (base salary plus annual incentive bonus opportunity)
for executive officers is intended to exceed the Company's established
competitive levels (50th percentile of base salaries and incentives for
executives in similar positions at comparable companies) when superior
performance levels are achieved, i.e., performance which exceeds 100% EBITDA.
During fiscal 1999, no incentives were paid because the minimum EBITDA target
was not achieved.
1998 Omnibus Incentive Plan
In January 1998, the Board of Directors adopted the Payless Cashways,
Inc. 1998 Omnibus Incentive Plan (the "Plan") for the purposes of (i) giving the
Company and its affiliates a competitive advantage in attracting, motivating and
retaining employees and outside directors; (ii) more closely aligning the
interests of the Company's employees with the interests of the Company's
stockholders; and (iii) motivating the Company's employees to enhance the
Company's value for the benefit of its stockholders. The Plan was amended and
restated in February 1999. The Plan authorizes the Compensation Committee to
grant employees and outside directors options (non-qualified stock options and,
upon stockholder approval, incentive stock options), limited rights, dividend
equivalents, restricted stock, performance shares, performance units (including
performance-based cash awards), and other rights, interests or options relating
to 2,400,000 shares of the Company's Common Stock. The Plan also authorizes the
Committee to provide reload options in connection with options granted under the
Plan.
<PAGE>8
Chief Executive Officer Compensation
During fiscal 1999, the Board of Directors determined the compensation
of Mr. Barron (in his capacity as Chief Executive Officer) using the criteria
described above.
The compensation of Mr. Barron, Chief Executive Officer of the Company
consists of (a) an annual base salary, (b) an annual incentive cash bonus based
on achievement of certain performance goals, and (c) options to purchase shares
of the Company's Common Stock under the 1998 Omnibus Incentive Plan discussed
above.
In June 1999, based on annual base salaries for executives in similar
positions at comparable companies, and based on objective and subjective
evaluation of his accomplishment or progress toward accomplishment of short term
and long term strategic and business plan goals, the Committee recommended and
the Board of Directors approved an increase in Mr. Barron's annual base salary
to $550,000 and a grant of options to purchase 60,000 shares of Common Stock. No
adjustments were made to Mr. Barron's annual bonus.
Other Information
Section 162(m) of the Internal Revenue Code generally limits deductions
by publicly held corporations for federal income tax purposes to $1 million of
compensation paid to each of the executive officers listed in the corporation's
summary compensation table unless such excess compensation is "performance
based" as defined in Section 162(m). The Company does not anticipate that any
executive officer's compensation for fiscal 1999 will exceed $1 million for
purposes of Section 162(m). Thus, it is the current intention of the Committee
that all compensation paid under the executive compensation program will be tax
deductible to the Company no later than in the year paid to each executive
officer.
The Committee will review from time to time the potential impact of
Section 162(m) on the deductibility of executive compensation. However, the
Committee intends to maintain the flexibility to take actions that it considers
to be in the best interests of the Company and its stockholders and which may be
based on considerations in addition to tax deductibility.
The Compensation Committee: David G. Gundling - Chair
Peter G. Danis
Donald E. Roller
<PAGE>9
Summary Compensation Table
The following table sets forth the compensation during each of the last
three completed fiscal years for the Company's named executive officers who held
the positions listed in fiscal 1999:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
----------------------------------------------- -- ------------------------------ -----------------
(a) (b) (c) (d) (e) (f) (g) (h)
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Position Year Salary($) Bonus($)(1) Compensation($)(2) Awards ($) Options/ SARs(#) Compensation($)(3)
------------------ ---- --------- ----------- ------------------ ---------- ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Millard E. Barron- 1999 498,077 --- --- --- 60,000 ---
President, Chief 1998 246,412 83,819 8,654 --- 350,000 ---
Executive Officer
and Director (4)
David J. Krumbholz- 1999 212,000 --- --- --- 20,000 7,077
Vice 1998 206,424 28,800 --- --- 100,000 2,004
President-Store 1997 192,000 78,800 --- --- --- 1,901
Operations
Kelly R. Abney- 1999 207,000 --- --- --- 20,000 6,981
Vice President- 1998 192,135 25,500 --- --- 100,000 2,095
Logistics, 1997 134,692 94,625 13,613 --- --- 2,909
Replenishment and
Facilities
Ronald D. Long - 1999 200,000 --- --- --- --- 10,692
Vice President- 1998 192,635 38,339 --- --- 75,000 2,065
Merchandising 1997 165,192 109,916 --- --- -- ---
James L.Deats- Vice 1999 175,000 --- 14,922 --- 20,000 ---
President-Infor- 1998 20,192 --- --- --- 60,000 ---
mation Systems(4)
<FN>
(1) Except for $83,819 and $13,589, for Mr. Barron and Mr. Long in 1998,
respectively, the amounts reflected in column (d) above represent the
retention bonuses and success bonuses that were paid in December 1997
and June 1998, which are more fully described in the text below this
table.
(2) The amounts reflected in column (e) above reflect a relocation
allowance for (i) Mr. Barron for 1998, (ii) Mr. Abney for 1997, and
(iii) Mr. Deats for 1999.
(3) All other compensation for fiscal 1999 consists of payments for
vacation balances for Mr. Krumbholz, Mr. Abney and Mr. Long in the
amounts of $4,077, $3,981 and $7,692, respectively. The Employee
Savings Plan estimated contributions for 1999 are $3,000 for Mr.
Krumbholz, Mr. Abney and Mr. Long, respectively.
(4) Messrs. Barron and Deats were not employed by the Company in fiscal
1997.
</FN>
</TABLE>
Millard E. Barron, David J. Krumbholz, Kelly R. Abney, Ronald D. Long
and James L. Deats (the "Executives") have entered into employment agreements
with the Company (the "Employment Agreements") as of December 1, 1999. The term
of each Employment Agreement is one year unless sooner terminated pursuant to
the terms of the Employment Agreement; provided, however that each Employment
Agreement will be automatically renewed for an additional term of one year at
the end of the initial term and each succeeding term, unless either the Company
or the Executive serves notice on the other at least ninety (90) days prior to
the expiration of the term, in accordance with certain specified procedures,
that the party giving notice intends to end the Employment Agreement at the
conclusion of the then-current term.
If the Company terminates an Executive's Employment Agreement for
"Cause" (as such term is defined in the respective Employment Agreement), the
Employment Agreement and the Company's obligation to make further base salary
and Incentive Compensation payments thereunder shall thereupon terminate and no
severance is owed. If (i) the Executive terminates his Employment Agreement for
"Good Reason" (as such term is defined in the respective Employment
Agreement), (ii) the Company terminates the Employment Agreement without
<PAGE>10
"Cause," or (iii)the Employment Agreement terminates due to expiration, the
Executive shall be entitled to the following severance benefits: (a) the Company
shall continue to pay the Executive the Executive's base salary for a period of
one year after the date the Executive's employment with the Company is
terminated (the "Severance Period"); (b) in the event the Compensation Commit-
tee determines that Incentive Compensation is to be paid in the year in which
the Executive's employment is terminated, then at the discretion of the Chief
Executive Officer, the Executive may receive Incentive Compensation prorated
for the time during which services were rendered in the year of termination,
at the rate determined by the Compensation Committee for the calculation of
Incentive Compensation for that year; (c) during the Severance Period, the
Company shall provide the Executive with medical, dental, vision and regular
and supplemental life insurance coverage substantially similar to the cover-
age that the Executive was receiving or entitled to receive immediately prior
to the date of termination of the Executive's employment unless the Executive
receives similar benefits elsewhere; and (d) the Company, at its expense, will
provide to the Executive outplacement services up to a maximum of $30,000. If,
however, the Executive's employment is terminated within twelve months with-
out "Cause" as a result of a "Change of Control" (as defined in the respec-
tive Employment Agreement), and if the Executive is not offered a comparable
position by the Company, then the Severance Period shall be extended to the
second anniversary of the date of the termination of employment, and the
Executive shall be entitled to receive continued payments of base salary
during the second year of the Severance Period. All severance benefits other
than continued payments of base salary shall cease on the first anniversary
of the termination of employment in the event of a Change of Control. In no
event, however, is the Company required to provide base salary continuation or
other severance benefits if the Executive violates his confidentiality,
non-solicitation, non-disparagement or non-competition obligations.
In the event of the Executive's death or if the Executive should become
unable to perform the essential functions of his position, with or without
reasonable accommodation by the Company, the Executive's Employment Agreement
shall terminate, and the Executive shall not be entitled to receive severance
benefits.
In connection with the Company's Plan of Reorganization, and because of
the difficulty of recruiting key employees to a debtor in a bankruptcy
proceeding and the difficulty in general of recruiting in a tight labor market,
the Company presented for the Bankruptcy Court's approval, and the Bankruptcy
Court approved, an Amended Reorganization Retention Plan (the "Retention Plan")
with respect to approximately 350 key employees, including David J. Krumbholz,
Kelly R. Abney and Ronald D. Long. Pursuant to the Retention Plan, these
employees were eligible for a retention bonus (the "Retention Bonus") if they
(i) were employed by the Company on the date of payment, and (ii) had performed
at expectations measured against performance standards for their position. The
Retention Bonus was paid in two equal installments on December 2, 1997 and June
5, 1998. Pursuant to the Retention Plan, certain executive officers, including
David J. Krumbholz, Kelly R. Abney, and Ronald D. Long were also eligible for an
additional discretionary bonus (the "Success Bonus") on the effective date of
the Plan of Reorganization. The purpose of the Success Bonus was to give these
executive officers an incentive to cause the effective date of the Plan of
Reorganization to occur as early as possible, and the maximum total amount of
the Success Bonus pool was designed to decrease in steps if the effective date
did not occur by specified dates.
<PAGE>11
<TABLE>
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Potential Realizable Value at
Individual Grants Assumed Annual Rates of Stock
Price Appreciation of Option
Term(3)
-------------- ---------------- --------------- ------------ ------------- --------------
(a) (b) (c) (d) (e) (f) (g)
Number of Percent of Total
Securities Options/SARs Exercise or
Underlying Granted to Base Price
Options/SARs Employees in ($ / Expiration
Name Granted (#)(1) Fiscal Year ($/Share)(2) Date 5%($) 10%($)
---- -------------- ------------ -------- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Millard E. Barron 60,000 12.90% 1.5938 10/13/09 60,140 152,406
David J. Krumbholz 20,000 4.30% 1.5938 10/13/09 20,047 50,802
Kelly R. Abney 20,000 4.30% 1.5938 10/13/09 20,047 50,802
Ronald D. Long --- --- --- --- --- ---
James L. Deats 20,000 4.30% 1.5938 10/13/09 20,047 50,802
<FN>
(1) The options were granted pursuant to the Plan. Additional Plan
information is described in the section entitled, "Report on Executive
Compensation."
(2) The exercise prices are equal to the fair market value of the Company's
Common Stock on the date of the grant.
(3) The amounts listed under columns (f) and (g) illustrate values that
might be realized upon exercise immediately prior to the expiration of
the options' terms using 5 percent and 10 percent appreciation rates,
compounded annually from the date of the grant to the stated expiration
date of the options, and are not intended to forecast possible future
appreciation, if any, of the Company's stock price.
</FN>
</TABLE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Shares Acquired on Underlying Unexercised In-the-Money Options/
Name Exercise (#) Value Realized ($) Options/ SARs at FY-End (#) SARs at FY-End ($)(1)
---- ------------ ------------------ --------------------------- ----------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Millard E. Barron --- --- 87,500 322,500 13,250 39,750
David J. Krumbholz --- --- 25,000 95,000 2,650 7,950
Kelly R. Abney --- --- 25,000 95,000 2,650 7,950
Ronald D. Long --- --- 18,750 56,250 1,988 5,963
James L. Deats --- --- 15,000 65,000 9,825 29,475
<FN>
(1) The value of unexercised in-the-money options is calculated by
subtracting the exercise price from the closing price of the Company's
Common Stock at fiscal year end, and multiplying the difference by the
number of shares granted as options.
</FN>
</TABLE>
Retirement Program
Pension Benefits
The Payless Cashways Amended Retirement Plan ("Retirement Plan")
(benefits under which were frozen June 17, 1999) is a defined benefit plan under
which the annual pension benefits payable to employees, including officers, upon
normal retirement age are based upon both service credit prior to
December 1, 1989, and service after December 1, 1989 through June 17,
1999. The normal retirement benefit for service prior to December 1, 1989, is
the greater of 1) the product of (i) 1.25% of average compensation (the
average for the five calendar years ending December 31, 1983), plus .9% of
that average annual compensation in excess of the individual's
<PAGE>12
"covered compensation" (a particular dollar amount which increases depending
on the year of birth to 1950), multiplied by (ii) the number of years and
fractional years of benefit service prior to December 1, 1983, or 2) the
product of (i) 1% of average annual compensation (the average for calendar
years 1986, 1987 and 1988), plus .5% of that average annual compensation in
excess of the individual's "covered compensation" (a particular dollar amount
which increases depending on the year of birth), multiplied by (ii) the number
of years of benefit service prior to December 1, 1989. The normal retirement
benefit for each year and fractional year of benefit service subsequent to
December 1, 1989, through June 17, 1999, is the sum of (a) 1% of annual compen-
sation for the year, plus (b) an additional .5% of annual compensation in excess
of the "covered compensation" for the year.
As of the end of fiscal 1999, years of service credited pursuant to
the Retirement Plan were as follows: Mr. Barron: 0, Mr. Krumbholz: 24, Mr.
Abney: 7, Mr. Long: 16 and Mr. Deats: 0. The estimated monthly benefits
payable at age 65 under the Retirement Plan (computed as a straight single life
annuity), based on actual credited service and compensation, is as follows for
the executive officers named in the Summary Compensation Table above: Mr.
Barron: $0, Mr. Krumbholz: $3,059, Mr. Abney: $850, Mr. Long: $1,481
and Mr. Deats: $0.
Certain Transactions
Canadian Imperial Bank of Commerce and its affiliates ("CIBC") and Van
Kampen American Capital Prime Rate Income Trust ("Van Kampen"), each of which
beneficially owns in excess of 5% of the outstanding Common Stock, are or have
been parties to the Amended and Restated Agreement, dated as of December 2,
1997, as amended by that certain Second Amended and Restated Credit Agreement
dated as of November 17, 1999 (the "Credit Agreement"). The Credit Agreement
provides for a term loan facility in the principal amount of approximately $109
million. CIBC, as consideration for its role as Coordinating and Collateral
Agent under the Credit Agreement, received amounts in excess of $60,000 in
agency fees under the Credit Agreement. In addition, pursuant to the terms of
the Credit Agreement, CIBC and Van Kampen and other Lenders thereunder have been
paid interest, commitment fees and letter of credit fees.
Certain Beneficial Ownership
The table below sets forth certain information, as of January 14, 2000,
regarding the beneficial ownership of the Company's Common Stock by (i) each of
the Company's directors and nominees, (ii) each person known by the Company to
be the beneficial owner of 5% or more of each class of the Company's voting
securities, (iii) each of the executive officers named in the table entitled
"Summary Compensation Table" above and (iv) all of the Company's directors and
executive officers as a group. As required by the rules and regulations of the
SEC, the number of shares of Common Stock beneficially owned includes shares as
to which a right to acquire ownership within 60 days exists, such as through the
exercise of employee stock options and conversion of convertible securities.
<TABLE>
<CAPTION>
Name and Address Shares Beneficially
of Beneficial Owner Owned Percent of Class
- ------------------- ------------------- ----------------
<S> <C> <C>
Millard E. Barron(1) 141,500 0.7%
David J. Krumbholz(2) 41,302 0.2%
Kelly R. Abney(2) 40,543 0.2%
Ronald D. Long(3)(4) 34,318 0.2%
James L. Deats(5) 15,000 *
H. D. Cleberg(6) 37,413 0.2%
Peter G. Danis(7) 74,500 0.4%
David G. Gundling(4) 38,750 0.2%
Max D. Hopper (4)(8) 33,750 0.2%
Donald E. Roller(9) 68,750 0.3%
Peter M. Wood(4 58,750 0.3%
</TABLE>
<PAGE>13
<TABLE>
<CAPTION>
Name and Address Shares Beneficially
of Beneficial Owner Owned Percent of Class
- ------------------- ------------------- ----------------
<S> <C> <C>
Canadian Imperial Bank
of Commerce(10)
Commerce Court 1,257,340 6.3%
Toronto, Ontario M5L 1A2
Van Kampen American Capital
Prime Rate Income Trust(11) 1,024,159 5.1%
One Parkview Plaza
Oakbrook Terrace, IL 60181
All Directors and Executive Officers 658,331 3.3%
as a group (15 persons)(12)
- ---------------------------
<FN>
(1) Includes 87,500 shares subject to options.
(2) Includes 40,000 shares subject to options.
(3) Includes 18 shares held by the 401k plan.
(4) Includes 33,750 shares subject to options.
(5) Includes 15,000 shares subject to options. As of February 18, 2000, Mr.
Deats had purchased an additional 5,000 shares, which are not reflected
in the table.
(6) Includes 33,750 shares subject to options and 3,663 shares owned by a
trust for the benefit of Mr. Cleberg's wife of which he is trustee. As of
February 18, 2000, Mr. Cleberg had purchased an additional 10,000
shares, which are not reflected in the table.
(7) Includes 67,500 shares subject to options.
(8) As of February 18, 2000, Mr. Hopper had purchased an additional 12,000
shares, which are not reflected in the table.
(9) Includes 63,750 shares subject to options.
(10) Based on a Questionnaire dated February 10, 2000, Canadian Imperial
Bank of Commerce has sole voting power and sole dispositive power with
respect to 1,257,340 shares.
(11) Based on a Questionnaire dated January 18, 2000, Van Kampen American
Capital Prime Rate Income Trust has sole voting power and sole
dispositive power with respect to 1,024,159 shares.
(12) Includes 546,250 shares subject to options.
* Less than 0.1%.
</FN>
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and executive officers and persons who
beneficially own more than 10 percent of a registered class of the Company's
equity securities to file, with the SEC, initial reports of ownership and
reports of changes in ownership of stock and other equity securities of the
Company. Officers, directors and beneficial owners of more than 10 percent of
the Company's equity securities are required by regulation to furnish the
Company with copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely on review of the copies of such reports and written
representations of directors and executive officers that no other reports were
required during 1999, all Section 16(a) filing requirements applicable to its
officers, directors and beneficial owners of more than 10 percent of the
Company's equity securities were complied with on a timely basis.
2. Other Business
As of the date of delivery of the text of this Proxy Statement to the
printer, management knew of no other business that will be presented for action
at the Annual Meeting. In the event that any other business should properly come
before the meeting, it is the intention of the persons designated as proxies on
the proxy card to take such action as shall be in accordance with their best
judgment.
<PAGE>14
Other Information, Stockholder Proposals
The Board of Directors, on the recommendation of the Audit and Finance
Committee, has selected the firm of KPMG LLP as independent auditor to examine
the financial statements of the Company for the fiscal year 2000.
Representatives of KPMG LLP will be present at the Annual Meeting, will have an
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
The Company currently plans to hold the 2001 Annual Meeting in the
Kansas City, Missouri, metropolitan area on or around April 19, 2001. Management
will appropriately consider all proposals from stockholders meeting the
requirements set forth in the following paragraphs. When adoption of a proposal
is clearly in the best interests of the Company and the stockholders generally,
and does not require stockholder approval, the Board of Directors will usually
adopt the proposal, if appropriate, rather than including the proposal in the
Proxy Statement.
A stockholder proposal may be considered at the Company's Annual
Meeting in 2001 only if it meets the following requirements. First, the
stockholder making the proposal must be a stockholder of record on the record
date for such Annual Meeting, must continue to be a stockholder of record at the
time of such meeting, and must be entitled to vote thereat. Second, the
stockholder must deliver or cause to be delivered a written notice to the
Company's Secretary. Such notice must be received by the Secretary no later than
February 18, 2001. The notice shall specify (i) the name and address of the
stockholder as they appear on the books of the Company, (ii) the number of
shares of the Company which are beneficially owned by the stockholder; (iii) any
material interest of the stockholder in the proposed business described in the
notice; (iv) if such business is a nomination for director, each nomination
sought to be made, together with the reasons for each nomination, a description
of the qualifications and business or professional experience of each proposed
nominee and a statement signed by each nominee indicating his or her willingness
to serve if elected, and disclosing the information about him or her that is
required by the Exchange Act, and the rules and regulations promulgated
thereunder to be disclosed in the proxy materials for the meeting involved if he
or she were a nominee of the Company for election as one of its directors; (v)
if such business is other than a nomination for director, the nature of the
business, the reasons why it is sought to be raised and submitted for a vote of
the stockholders and if and why it is deemed by the stockholder to be beneficial
to the Company, and (vi) if so requested by the Company, all other information
that would be required to be filed with the SEC if, with respect to the business
proposed to be brought before the meeting, the person proposing such business
was a participant in a solicitation subject to Section 14 of the Exchange Act.
Notwithstanding satisfaction of the above, the proposed business may be deemed
not properly brought before the meeting if, pursuant to state law or any rule or
regulation of the SEC, it was offered as a stockholder proposal and was omitted
from the proxy materials for the meeting.
Pursuant to the Rules and Regulations of the SEC, stockholder proposals
requested for inclusion in the Company's Proxy Statement must meet the following
criteria: (i) the proponent must be a record or beneficial owner of at least 1%
or $2,000 in market value of securities entitled to be voted on the proposal and
must have held such securities for at least one year; (ii) the proponent may
submit no more than one proposal; (iii) the proposal and any supporting
statement together shall not exceed 500 words; (iv) proposals must be received
by the Company's Secretary on or before the date provided in the Proxy
Statement; and (v) the proposal must contain the name of the proposing
stockholder(s) and a contact address. For stockholder proposals to be considered
for inclusion in the Company's proxy materials for the 2001 Annual Meeting of
Stockholders, such proposals must be received by the Secretary of the Company on
or before November 10, 2000.
The Corporate Governance and Nominating Committee will consider persons
recommended by stockholders as director nominees. In order to be eligible for
nomination as a director by the Corporate Governance and Nominating Committee, a
director nominee must be under the age of 70 at the date of the Annual Meeting
of Stockholders at which such director would be elected. All letters of
nomination should be sent to the Secretary of the Company and should include the
nominee's name and qualifications and a statement from the nominee that he or
she consents to being named in the Proxy Statement and will serve as a director
if elected. In order for any nominee to be considered by the
Corporate Governance and Nominating Committee and, if accepted, to be
<PAGE>15
included in the Company's Proxy Statement, letters of nomination must be
received by the Secretary of the Company on or before November 10, 2000.
In addition to the solicitation of proxies by mail, officers or other
employees of the Company, without extra remuneration, may solicit proxies by
telephone or personal contact. The Company may retain a firm to assist in the
solicitation of proxies from individual stockholders, brokers, nominees,
fiduciaries and other custodians. The Company also will request brokerage
houses, nominees, custodians and fiduciaries to forward soliciting material to
beneficial owners of stock held of record and will pay such persons for
forwarding the material. All costs for the solicitation of proxies by the Board
of Directors will be paid by the Company.
The Company's Annual Report to Stockholders, including financial
statements for the year ended November 27, 1999, is enclosed with this Proxy
Statement.
BY ORDER OF THE BOARD OF DIRECTORS
/S/Gary D. Gilson
Gary D. Gilson, Secretary
March 10, 2000
<PAGE>
FRONT
PAYLESS CASHWAYS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
YOUR VOTE IS IMPORTANT!
You can vote one of three ways:
1. Vote by Telephone.
2. Vote by Internet.
3. Vote by Mail.
VOTE BY TELEPHONE
Your Telephone vote is quick, easy and immediate. Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. Using a Touch-Tone Telephone, call Toll Free 1-800-758-6973 and
follow the instructions.
3. When instructed, enter the Control Number, which is printed on
the lower right-hand corner of the back-side of your proxy card.
4. Follow the simple recorded instructions.
Please note that all votes cast by Telephone must be made prior to 5:00 p.m.
Central Time, April 18, 2000.
Your telephone vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed, dated, and returned the proxy card.
If you vote by telephone, please do not return your proxy by mail.
VOTE BY INTERNET
Your Internet vote is quick, convenient and your vote is immediately submitted.
Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. Visit our Internet voting site at http://www.umb.com/proxy and follow the
instructions on the screen.
Please note that all votes cast by Internet must be submitted prior to 5:00 p.m.
Central Time, April 18, 2000.
Your Internet vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed, dated and returned the proxy card.
If you vote by Internet, please do not return your proxy by mail.
VOTE BY MAIL
To vote by mail, read the accompanying Proxy Statement then complete, sign and
date the proxy card below. Detach the card and return it in the envelope
provided herein.
IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET, DETACH PROXY CARD AND RETURN.
- -------------------------------------------------------------------------------
PAYLESS CASHWAYS, INC.
800 N.W. Chipman Road, Lee's Summit, Missouri 64063
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Millard E. Barron and Timothy R. Mertz,
or either of them, as Proxy/Proxies, with the power to appoint their substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of common stock of Payless Cashways, Inc. held of record by the
undersigned on February 21, 2000 at the Annual Meeting of Stockholders to be
held on April 19, 2000, or any adjournment or postponement thereof. This Proxy
revokes all prior Proxies given by the undersigned.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
1. ELECTION OF DIRECTORS
FOR the nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
Nominees: 01 Peter G. Danis
02 David G. Gundling
03 Donald E. Roller
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting and all matters incident
to the conduct of the meeting.
<PAGE>
BACK
- --------------------------------------------------------------------------------
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made, this
proxy will be voted for Proposal 1.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such; if a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by an authorized
person.
Dated: __________________________________, 2000
-----------------------------------------
Signature
-----------------------------------------
Signature if held jointly
-----------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
-----------------------------------------
[Control Number]
<PAGE>
[Payless Letterhead]
March 10, 2000
Dear MoneyBuilder Participant:
As a participant in the Payless Cashways, Inc. Employee Savings Plan
(the "MoneyBuilder Plan"), you have the right to direct the Trustee of the
MoneyBuilder Plan how you wish the shares of the Company's common stock
allocated to your MoneyBuilder account on February 21, 2000 to be voted at the
Company's Annual Meeting of Stockholders scheduled for April 19, 2000. The only
matter proposed in the Company's Proxy Statement to be voted upon at the Annual
Meeting is the election of three directors.
Enclosed are the following materials for you to consider and act upon:
1. The Company's Proxy Statement for the Annual Meeting of Stockholders;
2. Voting Instructions card for you to give directions to the Trustee as to the
voting of the shares allocated to your account; and
3. The Company's Annual Report for 1999.
After reviewing the enclosed materials, please complete, sign and
return the enclosed Voting Instructions card to Securities Transfer Division,
UMB Bank, N.A., P.O. Box 410064, Kansas City, Missouri 64179-0013 in the
enclosed prepaid return envelope. UMB Bank, N.A. will tabulate the votes in
order to permit the Trustee to vote the shares allocated to your account as you
direct. If you do not sign and return the enclosed Voting Instructions card, the
shares in your account will be voted in the same proportion as the shares with
respect to which timely directions are received by the Trustee.
The shares allocated to your account can be voted at the meeting only
by the Trustee pursuant to your instructions. In order for your instructions to
be followed, the enclosed "Voting Instructions" card must be received by April
17, 2000.
Sincerely,
/s/ Louise R. Iennaccaro
---------------------------------
Louise R. Iennaccaro
Chairperson of the Plan Committee
<PAGE>
FRONT
PAYLESS CASHWAYS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
YOUR VOTE IS IMPORTANT!
You can vote one of three ways:
1. Vote by Telephone.
2. Vote by Internet.
3. Vote by Mail.
VOTE BY TELEPHONE
Your Telephone vote is quick, easy and immediate. Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. Using a Touch-Tone Telephone, call Toll Free 1-800-758-6973 and follow
the instructions.
3. When instructed, enter the Control Number, which is printed on the lower
right-hand corner of the back-side
of your proxy card.
4. Follow the simple recorded instructions.
Please note that all votes cast by Telephone must be made prior to 5:00 p.m.
Central Time, April 14, 2000.
Your telephone vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed, dated, and returned the proxy card.
If you vote by telephone, please do not return your proxy by mail.
VOTE BY INTERNET
Your Internet vote is quick, convenient and your vote is immediately submitted.
Just follow these easy steps:
1. Read the accompanying Proxy Statement.
2. Visit our Internet voting site at http://www.umb.com/proxy and follow
the instructions on the screen.
Please note that all votes cast by Internet must be submitted prior to 5:00 p.m.
Central Time, April 14, 2000.
Your Internet vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed, dated and returned the proxy card.
If you vote by Internet, please do not return your proxy by mail.
VOTE BY MAIL
To vote by mail, read the accompanying Proxy Statement then complete, sign and
date the proxy card below. Detach the card and return it in the envelope
provided herein.
IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET, DETACH PROXY CARD AND RETURN.
- -------------------------------------------------------------------------------
PAYLESS CASHWAYS, INC. EMPLOYEE SAVINGS PLAN
VOTING INSTRUCTIONS
Voting Instructions to: The Chase Manhattan Bank, N.A. as Trustee of the
Payless Cashways, Inc. Employee Savings Plan
I hereby direct that the voting rights pertaining to shares of Payless Cashways,
Inc. held by the Trustee and attributable to my account in the above-described
plan shall be exercised at the Annual Meeting of Stockholders of the Company to
be held April 19, 2000, or at any adjournment of such meeting, in accordance
with the instructions below, to vote upon Proposal 1.
1. ELECTION OF DIRECTORS
01 Peter G. Danis For Withhold
02 David G. Gundling For Withhold
03 Donald E. Roller For Withhold
<PAGE>
BACK
- --------------------------------------------------------------------------------
(See reverse side for matters to be voted on)
If you fail to give specific directions, or fail to return this instruction
card, the shares allocated to your account will be voted by the Trustee in the
same proportion as the shares for which timely directions are received by the
Trustee and voted in such manner.
Please sign exactly as name appears below.
Dated:______________________, 2000
----------------------------------
Participant's Signature
----------------------------------
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
----------------------------------
[Control Number]
