<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section 240.14a-12
Mac Frugal's Bargains Close-outs Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Dan Zuckerman
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
[MAC FRUGAL'S LOGO]
May 15, 1997
Dear Stockholder:
You are cordially invited to attend our 1997 Annual Meeting of Stockholders
to be held at 9:00 a.m. on Wednesday, June 18, 1997 at the Long Beach Airport
Marriott Hotel, 4700 Airport Plaza Drive, Long Beach, California 90815. Enclosed
are the Notice of Annual Meeting, Proxy Statement and Proxy Card relating to the
Annual Meeting which we urge you to read carefully. The Company's 1996 Annual
Report to Stockholders is also enclosed. Whether or not you expect to attend the
Annual Meeting, please sign and date the enclosed Proxy Card and return it as
promptly as possible to ensure that your shares will be voted. Because mail
delays occur frequently, it is important that the enclosed Proxy Card be
returned well in advance of the meeting.
ON BEHALF OF YOUR BOARD OF DIRECTORS
[SIG]
DAVID H. BATCHELDER
Chairman of the Board
<PAGE> 3
[MAC FRUGAL'S LOGO]
NOTICE OF ANNUAL MEETING
TO BE HELD JUNE 18, 1997
TO THE STOCKHOLDERS OF
MAC FRUGAL'S BARGAINS - CLOSE-OUTS INC.:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Mac Frugal's Bargains - Close-outs Inc., a Delaware corporation
(the "Company"), will be held at the Long Beach Airport Marriott Hotel, 4700
Airport Plaza Drive, Long Beach, California 90815, on Wednesday, June 18, 1997,
beginning at 9:00 a.m., local time. The Annual Meeting will be held for the
following purposes:
1. To elect six (6) directors of the Company to serve during the ensuing
year or until their successors have been duly elected and qualified.
2. To transact such other business as may properly come before the meeting
or any postponements or adjournments thereof.
The Board of Directors has fixed April 28, 1997 as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof, and only stockholders of record at the
close of business on that date are entitled to such notice and to vote at the
Annual Meeting. A list of stockholders entitled to vote at the meeting will be
available at the offices of the Company for 10 days prior to the meeting.
We hope that you will use this opportunity to take an active part in the
affairs of the Company by voting on the business to come before the meeting
either by executing and returning the enclosed Proxy Card or by casting your
vote in person at the meeting.
STOCKHOLDERS UNABLE TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO DATE
AND SIGN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. A STAMPED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE. IF A STOCKHOLDER RECEIVES MORE THAN ONE PROXY
CARD BECAUSE HE OR SHE OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES,
EACH PROXY CARD SHOULD BE COMPLETED AND RETURNED.
By Order of the Board of Directors
[SIG]
PHILIP L. CARTER
President and Chief Executive Officer
Dominguez, California
May 15, 1997
<PAGE> 4
[MAC FRUGAL'S LOGO]
2430 EAST DEL AMO BOULEVARD
DOMINGUEZ, CALIFORNIA 90220-6306
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 18, 1997
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Mac Frugal's Bargains - Close-outs Inc.
(the "Company") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 9:00 a.m., local time, on June 18, 1997, at the Long
Beach Airport Marriott Hotel, 4700 Airport Plaza Drive, Long Beach, California
90815, and any postponements or adjournments thereof for the purposes set forth
in the accompanying Notice of Annual Meeting. This Proxy Statement and the
accompanying Form of Proxy were first mailed to stockholders on or about May 15,
1997.
RECORD DATE AND VOTING
April 28, 1997 has been fixed as the record date (the "Record Date") for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting, and any postponements or adjournments thereof. As of April 28,
1997, there were 24,999,855 shares of the Company's Common Stock, par value
$.02778 per share (the "Common Stock"), issued and outstanding. No shares of the
Company's preferred stock, par value $1.00 per share, were outstanding as of
that date. A majority of the shares entitled to vote, present in person or
represented by proxy, will constitute a quorum at the meeting.
Each share of Common Stock issued and outstanding on the Record Date is
entitled to one vote on any matter presented for consideration and action by the
stockholders at the Annual Meeting. With respect to all matters other than the
election of directors, the affirmative vote of a majority of shares of the
Common Stock present in person or represented by proxy at the meeting and
entitled to vote on the subject matter will be the act of the stockholders.
Directors will be elected by a plurality of the votes of the shares of the
Common Stock present in person or represented by proxy and entitled to vote on
the election of directors. Abstentions will be treated as the equivalent of a
negative vote for the purpose of determining whether a proposal has been adopted
and will have no effect for the purpose of determining whether a director has
been elected. Unless otherwise instructed, proxies solicited by the Company will
be voted "FOR" the nominees named herein for election as directors.
New York Stock Exchange rules generally require that when shares are
registered in street or nominee name, its member brokers must receive specific
instructions from the beneficial owners in order to vote on certain proposals.
Pursuant to Delaware law, a broker non-vote will not be treated as present or
voting in person or by proxy on the proposal. A broker non-vote will have no
effect for the purpose of determining whether a director has been elected.
A stockholder giving a proxy has the power to revoke it at any time before
it is exercised by giving written notice of revocation to the Secretary of the
Company, by executing a subsequent proxy, or by attending the Annual Meeting and
voting in person. Subject to any such revocation, all shares represented by
properly executed proxies will be voted in accordance with the specifications on
the enclosed proxy card.
<PAGE> 5
ELECTION OF DIRECTORS
The Company's by-laws state that the Board of Directors shall consist of
not less than five nor more than nine members. The specific number of Board
members within this range is established by the Board of Directors and is
currently set at seven. The Board of Directors is proposing for election to the
Board at the Annual Meeting four of the seven directors elected at the 1996
annual meeting of stockholders plus two directors thereafter appointed to fill
vacancies on the Board; leaving one vacancy. Each of the directors elected at
the Annual Meeting will serve until the next annual meeting of stockholders or
until his successor is duly elected and qualified. Should any nominee become
unavailable to serve as a director or should any vacancy occur before the
election (which events are not anticipated), the proxies may be voted for a
substitute nominee selected by the Board of Directors or the authorized number
of directors may be reduced. If for any reason the authorized number of
directors is reduced, the proxies will be voted, in the absence of instructions
to the contrary, for the election of the remaining nominees named in this Proxy
Statement. To the Company's knowledge, all nominees are and will be available to
serve. The nominees are listed below and have supplied the following background
information to the Company:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
DURING THE LAST 5 YEARS, OTHER DIRECTOR
NAME AGE BUSINESS EXPERIENCE AND DIRECTORSHIPS SINCE
- ------------------------- --- ----------------------------------------------- --------
<S> <C> <C> <C>
David H. Batchelder 47 Chairman of the Board of the Company since 1990
March 1997; Chairman of the Board and Chief
Executive Officer since 1988, Batchelder &
Partners, Inc. (investment advisory and
consulting firm); Managing Member since March
1996 of Relational Investors LLC (general
partner of an active investment fund);
Director, Santa Fe Pacific Gold Corporation,
and Morrison Knudson Corporation.
Philip L. Carter 48 President and Chief Executive Officer of the 1995
Company since March 1995; Executive Vice
President, Chief Financial Officer since August
1993; Senior Vice President, Chief Financial
Officer since October 1991.
Mark J. Miller 45 Executive Vice President of Merchandise and 1995
Stores of the Company since March 1995;
Executive Vice President, General Merchandise
Manager since September 1992; Vice President of
Merchandising/ General Merchandise Manager
1991-1992, The Disney Store, Inc.
Peter C. Cooper 45 Owner, Cooper & Co. (real estate development 1997
and financial investment), founded in 1989.
I. T. Corley 52 Chairman and Chief Executive Officer since 1997
1995, Strategic Materials, Inc. (glass
recycler); Director and Chief Operating Officer
from 1991 to 1995, Allwaste, Inc.
(environmental services)
James J. Zehentbauer 35 Director since 1996 and Investment Banking 1990
Partner since 1990, Batchelder & Partners, Inc.
(financial advisory and consulting firm).
</TABLE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ELECTION OF
ALL OF THE ABOVE NOMINEES.
For information concerning beneficial ownership of Common Stock by
directors, see "Security Ownership of Certain Beneficial Owners and
Management -- Security Ownership of Management" below. The Board of Directors
met a total of four times during the fiscal year ended February 2, 1997 ("fiscal
1996"). All directors attended 75% or more of the meetings of the Board of
Directors and the committees of which they were a member.
2
<PAGE> 6
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
Audit Committee -- The Board has a standing Audit Committee which reviews
the audit and control functions of the Company, the Company's accounting
principles, policies and practices and financial reporting, the scope of the
audit conducted by the Company's auditors, the fees and all non-audit services
of the independent auditors and the independent auditors' opinion and letter of
comment to management and management's response thereto. The Audit Committee
also recommends to the Board the selection of the Company's independent
auditors. The Audit Committee met four times in fiscal 1996. At the date of this
Proxy Statement the Audit Committee was comprised of Messrs. Zehentbauer
(Chairman), Cooper and Corley.
Compensation and Organization Committee -- The Board has a Compensation and
Organization Committee (the "Compensation Committee") whose members at the date
of this Proxy Statement were Messrs. Batchelder (Chairman), Cooper and Corley.
The Compensation Committee is authorized to review and recommend to the Board
the salaries, bonuses and perquisites of the Company's executive officers. The
Compensation Committee also reviews and recommends to the Board any new
compensation or retirement plans and administers the Company's 1990 Employee
Stock Incentive Plan (the "1990 Plan"). The Compensation Committee met twice in
fiscal 1996.
Nominating Committee -- The Board of Directors also has a standing
Nominating Committee whose members at the date of this proxy statement were
Messrs. Batchelder (Chairman) and Zehentbauer. The Nominating Committee is
authorized to review matters regarding the structure of the Company's Board of
Directors and the qualifications of proposed nominees to serve on the Board. The
Nominating Committee will consider nominees for director whose names are timely
submitted in writing by holders of the Company's Common Stock addressed to the
Chairperson of the Nominating Committee accompanied by such information
regarding the nominee as would be required under the rules of the Securities and
Exchange Commission were the stockholders soliciting proxies with regard to the
election of such nominee. The Nominating Committee met twice in fiscal 1996.
DIRECTOR COMPENSATION
Standard Compensation -- Directors who are not employees of the Company or
its subsidiaries receive $15,000 per year (the "Retainer Fee") or, in lieu
thereof, a director may elect to receive an option to purchase shares of Common
Stock pursuant to the Non-Employee Directors Plan discussed below. Each of the
current non-employee directors of the Company elected to receive such an option,
in lieu of the Retainer Fee, in fiscal 1996. Additionally, non-employee
directors receive $1,000 for each meeting of the Board or committee meeting
which they attend plus reimbursement of any expenses they may incur with respect
to such meeting, and up to $1,000 per diem for time expended on matters on the
Company's behalf. Chairmen of the Audit, Compensation and Nominating Committees
receive additional annual retainer fees of $10,000, $8,000 and $5,000,
respectively; the Chairman of the Board receives a $25,000 additional annual
retainer fee. Directors who are employees of the Company or its subsidiaries
serve as directors without compensation.
Stock Option Plan for Non-Employee Directors -- In 1992, the Company
adopted the Non-Employee Directors Plan. The purpose of the Non-Employee
Directors Plan is to provide directors who are not employed by the Company with
the opportunity to obtain equity ownership interests in the Company through the
exercise of stock options. The Non-Employee Directors Plan is designed to link
the non-employee directors' compensation more closely with the Company's
performance.
Only directors of the Company who are not employees of the Company or one
of its subsidiaries are eligible to participate in the Non-Employee Directors
Plan. The Non-Employee Directors Plan is administered by the Board of Directors,
although, as discussed below, the grant of options is automatic. The expenses of
administering the Non-Employee Directors Plan are borne by the Company.
3
<PAGE> 7
As originally adopted, the Non-Employee Directors Plan provided for options
to be awarded under two different circumstances. First, each non-employee
director was automatically granted on the date of the annual meeting at which
the director is elected (including at each annual stockholder meeting at which
the director is re-elected), an option to purchase shares of Common Stock at an
exercise price equal to the fair market value of the Common Stock at the close
of business on the day before such annual meeting. Pursuant to the Non-Employee
Directors Plan as originally adopted, the number of shares covered by this
option was 2,500. However, on March 15, 1995, the Board of Directors approved an
amendment to the Non-Employee Directors Plan that reduced the number of shares
covered by these options to 2,250 and on December 11, 1996, the Board of
Directors approved a further amendment that eliminated the grant of this
automatic annual option until the date of the annual stockholder's meeting in
2000. These options are not exercisable until the annual meeting of stockholders
following the date of grant.
The second feature of the Non-Employee Directors Plan permits each
non-employee director to elect, on the date of each annual meeting at which he
is elected or re-elected, to receive an option to purchase shares of Common
Stock in lieu of being paid the Retainer Fee. If the non-employee director makes
such an election, on the six-month anniversary of the date of the election (the
"Date of Grant") such director will be granted an option exercisable for a
number of shares of Common Stock equal to the amount of the director's Retainer
Fee divided by 20% of the fair market value of the shares of Common Stock at the
close of business on the Date of Grant. The exercise price for any such option
will be 80% of the fair market value of the Common Stock on the Date of Grant.
These options become exercisable on the date of the first annual meeting of
stockholders following the Date of Grant.
Upon exercise of the options granted under the Non-Employee Directors Plan,
the exercise price must be paid to the Company in cash or by check. The options
expire on the earlier of the tenth anniversary of the date of grant or six
months after the recipient of the option ceases to be a director. The
Non-Employee Directors Plan originally authorized the issuance of up to 200,000
shares of Common Stock, subject to adjustment to prevent dilution. In 1995, the
Company's stockholders approved an amendment to the Non-Employee Directors Plan
which increased the number of shares reserved for issuance thereunder by 200,000
shares to an aggregate of 400,000 shares, subject to adjustment to prevent
dilution.
The Non-Employee Directors Plan became effective, with stockholder
approval, upon its adoption by the Company's Board of Directors on March 18,
1992. Awards may not be granted under the Non-Employee Directors Plan after
March 18, 2002. Although any option that was duly granted on or prior to such
date may thereafter be exercised in accordance with its terms, no shares of
Common Stock may be issued pursuant to any award after March 18, 2012.
Other Option Agreements -- On December 11, 1996, the Board of Directors
granted to each of the non-employee members of the Board of Directors an option
to purchase 50,000 shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock on the date of grant. These options vest and
become exercisable in full on the third anniversary of the date of grant, but
only if the holder is then a member of the Board of Directors. The Board of
Directors granted options on the same terms and conditions to each of Messrs.
Cooper and Corley upon their election effective January 1, 1997 to fill then
existing vacancies on the Board of Directors. All such options immediately and
fully vest and become exercisable in certain defined events including a merger
of the Company, a change in control of the Company, or a sale of substantially
all of the assets of the Company.
4
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS
The table below sets forth the compensation paid to or accrued for the
Chief Executive Officer of the Company and the other executive officers of the
Company (collectively, the "Named Executive Officers"), for the fiscal years
ended February 2, 1997, January 28, 1996 and January 29, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(3) COMPENSATION
------------------------------------------------ AWARDS
OTHER ANNUAL ------------ ALL OTHER
NAME AND PRINCIPAL FISCAL BONUS COMPENSATION OPTIONS/SARS COMPENSATION
POSITION(1) YEAR SALARY($) ($)(4) ($)(5) (#)(6) ($)(7)
- -------------------------- ------ --------- -------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Philip L. Carter(2) 1996 528,346 385,000 1,080 210,000 3,608
Current President and 1995 411,416 -- 1,254 320,000 5,472
Chief Executive Officer 1994 274,000 106,586 780 8,426 5,223
Mark J. Miller 1996 410,481 252,000 1,199 150,000 3,608
Executive Vice President 1995 360,750 -- 633 50,000 5,341
of
Merchandise and Stores 1994 308,270 119,942 530 8,426 5,318
Frank C. Bianchi(2) 1996 174,238 87,500 270 75,000 3,608
Senior Vice President 1995 -- -- -- -- --
of Human Resources 1994 -- -- -- -- --
Earl C. Bonnecaze(2) 1996 173,489 85,000 388 75,000 23,891
Senior Vice President 1995 70,769 -- 175 65,000 64,275
of Stores 1994 -- -- -- -- --
Michael Dobbs(2) 1996 163,942 82,500 248 75,000 3,431
Senior Vice President 1995 -- -- -- -- --
of Distribution 1994 -- -- -- -- --
</TABLE>
- ---------------
(1) The Company maintains written employment agreements with each of its
executive officers. See "Employment Agreements" below.
(2) Prior to March 15, 1995, Mr. Carter was Executive Vice President and Chief
Financial Officer of the Company. Mr. Bonnecaze joined the Company in July
1995 and prior to December 11, 1996, Mr. Bianchi was Vice President of Human
Resources and Mr. Dobbs was Vice President of Distribution.
(3) In addition to the annual salary and bonus compensation shown in the table,
the executive officers of the Company received other annual compensation in
the form of other personal benefits. The amount of such other annual
compensation paid to each executive officer did not exceed the lesser of
$50,000 or ten percent of the total of annual salary and bonus reported for
such executive officer for each respective fiscal year.
(4) Represents bonuses paid pursuant to employment agreements. Bonuses shown for
any fiscal year were accrued during the fiscal year shown and paid in the
following fiscal year.
(5) Represents reimbursement for taxes incurred in connection with the group
term life insurance paid for by the Company.
(6) Represents options granted pursuant to the 1990 Plan. See "1990 Employee
Stock Incentive Plan" below.
(7) Includes fiscal 1996 contributions of $3,608 to the Company's defined
contribution profit sharing plan (the "Profit Sharing Plan") for each of
Messrs. Carter, Miller, Bianchi and Bonnecaze, and $3,431 for Mr. Dobbs;
fiscal 1995 contributions to the Profit Sharing Plan of $4,500 for each of
Messrs. Carter and Miller, and $2,096 for Mr. Bonnecaze; fiscal 1994
contributions to the Profit Sharing Plan of $4,500 for each of Messrs.
Carter and Miller; and moving expenses for Mr. Bonnecaze of $61,977 for
fiscal 1995 and $20,283 for fiscal 1996. The balance of the amounts shown
represents premiums for the group term life insurance paid for by the
Company on behalf of the Named Executive Officers.
5
<PAGE> 9
The following table shows information with respect to stock options granted
under the 1990 Plan to the Named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS/ VALUE AT ASSUMED ANNUAL
SHARES SARS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR OPTION
OPTIONS/ EMPLOYEES EXERCISE TERM
SARS IN FISCAL PRICE -----------------------
NAME GRANTED YEAR ($/SH)(4) EXPIRATION DATE 5% 10%
- ------------------------ ---------- ---------- ---------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Philip L. Carter........ 210,000(2) 16.4% $ 25.50 Dec. 11, 2006 $3,367,731 $8,534,491
Mark J. Miller.......... 150,000(2) 11.7 25.50 Dec. 11, 2006 2,405,522 6,096,065
Frank C. Bianchi........ 75,000(2) 5.8 25.50 Dec. 11, 2006 1,202,761 3,048,032
Earl C. Bonnecaze....... 75,000(2) 5.8 25.50 Dec. 11, 2006 1,202,761 3,048,032
Michael Dobbs........... 75,000(2) 5.8 25.50 Dec. 11, 2006 1,202,761 3,048,032
</TABLE>
- ---------------
(1) Except as set forth above, no options have been or will be granted with
respect to fiscal 1996 performance.
(2) Becomes exercisable in full on the third anniversary of the date of grant.
(3) All options were granted with an exercise price equal to the fair market
value per share of the Common Stock on the date of grant.
The following table shows information with respect to fiscal 1996 option
exercises and year-end option values for each of the Named Executive Officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/ OPTIONS/
SARS AT FISCAL SARS AT FISCAL
YEAR-END(#) YEAR-END($)
---------------- --------------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) VALUE REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(2)
- ----------------------- ---------------- ----------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Philip L. Carter....... -- -- 292,018/365,158 2,192,104/1,405,421
Mark J. Miller......... -- -- 79,351/217,075 820,266/717,945
Frank C. Bianchi....... -- -- 28,785/88,141 306,616/137,471
Earl C. Bonnecaze...... -- -- 21,666/118,334 168,119/336,256
Michael Dobbs.......... 9,800 98,425 1,985/88,141 14,328/137,471
</TABLE>
- ---------------
(1) The amounts in this column are options to purchase shares of Common Stock
granted under the 1990 Plan.
(2) The amounts in this column are based upon the closing price of the Common
Stock on January 31, 1997 of $23.00 per share.
6
<PAGE> 10
EMPLOYMENT AGREEMENTS
Each of the Company's Named Executive Officers serves pursuant to a written
employment agreement. The Company entered into an amended and restated agreement
with Mr. Carter as of March 12, 1997 pursuant to which Mr. Carter is employed as
the Company's President and Chief Executive Officer at an annual base salary of
$590,000. The Company entered into a new agreement with Mr. Miller as of March
15, 1995 pursuant to which Mr. Miller is employed as the Company's Executive
Vice President of Merchandise and Stores at an initial annual base salary of
$375,000. The Company also entered into employment agreements with Mr. Bonnecaze
as of July 17, 1995 at an initial base salary of $160,000, with Mr. Bianchi as
of December 11, 1996 at an initial base salary of $175,000, and with Mr. Dobbs
as of December 11, 1996 at an initial base salary of $165,000. None of the
agreements provide for any fixed term of employment and all are subject to
termination by the Board of Directors upon 30 days' notice.
Base Salaries -- The base salaries payable under these agreements are
subject to increase annually at the discretion of the Board of Directors.
Effective March 10, 1997, Mr. Miller's annual base salary was increased to
$450,000, Mr. Bonnecaze's annual base salary was increased to $182,000, Mr.
Bianchi's annual base salary was increased to $180,000, Mr. Dobbs' annual base
salary was increased to $177,000.
Performance Stock Options -- Pursuant to their employment agreements, the
Company's Named Executive Officers are entitled to participate in any
performance stock option program approved annually by the Compensation Committee
of the Board of Directors. On December 11, 1996, the Compensation Committee
approved the grant of 210,000 options to Mr. Carter, 125,000 to Mr. Miller and
75,000 each to Messrs. Bianchi, Bonnecaze and Dobbs.
Performance Bonus -- Pursuant to their employment agreements, the Company's
Named Executive Officers are entitled to participate in any performance bonus
plan approved annually by the Compensation Committee of the Board of Directors.
The performance bonus plan approved by the Compensation Committee for fiscal
1996 provided that bonuses would be paid in fiscal 1997 based upon a combination
of the fiscal 1996 financial performance of the Company and the individual
executive's performance during fiscal 1996. The plan further provided that the
maximum bonus that could be paid would not exceed 50% of the executive officer's
base salary for fiscal 1996 in the case of the Senior Vice Presidents, 60% in
the case of the Executive Vice President and 70% in the case of Mr. Carter. The
performance bonus paid to the Named Executive Officers with respect to fiscal
1996 is shown in the "Summary Compensation Table" above.
Termination of Employment; Change of Control -- Each of the employment
agreements provides that, in the event the Named Executive Officer's employment
is terminated, the Company will continue to make the base salary payments at the
rate then being paid for 34.8 months after termination of the agreement in the
case of Mr. Carter, 18 months in the case of Mr. Miller, twelve months in the
case of Messrs. Bianchi and Dobbs, and, in the case of Mr. Bonnecaze, six months
if his employment is terminated prior to the second anniversary of the date of
his employment agreement, nine months if his employment is terminated prior to
the third such anniversary and twelve months if his employment is terminated
subsequent to the third such anniversary. The employment agreements also provide
that if, within two months after a Change of Control (as defined in the
agreements), the Named Executive Officer terminates his employment, then the
Company will pay him a lump sum severance payment equal to 2 (2.9 in the case of
Mr. Carter) multiplied by the sum of his annual base salary in effect during the
year immediately preceding termination and the amount of any incentive, bonus or
other cash compensation that was paid to him during either the 12 months
immediately preceding the date of termination or the 12 months immediately
preceding the Change of Control, whichever is greater. In addition, the Named
Executive Officer would be entitled to receive a cash payment equal to the
amount by which the greater of (i) the closing price of the Common Stock on the
day before termination or (ii) the highest price per share actually paid in
connection with the Change of Control, exceeds the per share exercise price of
each then vested and exercisable stock option held by such Named Executive
Officer, multiplied by the number of shares covered by each such option. As used
in the employment agreements, a Change in Control is defined to mean the
acquisition by any person of beneficial ownership of more than 35% of the
combined voting power of the Company's outstanding securities, as a result of
purchases of such securities which are not expressly approved by the Board of
Directors.
7
<PAGE> 11
Mr. Carter's employment agreement additionally provides that the Company
will pay him the lump sum severance payment described above in the event his
employment is terminated without cause within eighteen months following an
Approved Change in Control. An Approved Change in Control is defined in Mr.
Carter's agreement to mean the acquisition by any person of beneficial ownership
of more than 80% of the combined voting power of the Company's outstanding
securities, as a result of a transaction which is expressly approved by the
Board of Directors. Mr. Carter's agreement further provides that any unvested
portion of that certain stock option to purchase 250,000 shares of the Common
Stock granted to Mr. Carter on May 2, 1995 shall immediately vest and become
exercisable in the event of a Change in Control or an Approved Change in
Control.
1990 EMPLOYEE STOCK INCENTIVE PLAN
In 1990, the Company adopted the 1990 Plan. The 1990 Plan originally
authorized the issuance of up to 1,750,000 shares of Common Stock including
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code ("Incentive Stock Options"), stock options that do not qualify as
incentive stock options, stock appreciation rights and restricted shares of
Common Stock. In 1993, the stockholders approved an amendment to the 1990 Plan
which increased the number of shares reserved for issuance thereunder by
1,450,000 shares to an aggregate of 3,200,000 shares. Officers and other
salaried employees of the Company are eligible to participate in the 1990 Plan.
As of the date of this Proxy Statement, approximately 108 persons were eligible.
The 1990 Plan is administered by the Compensation Committee. The
Compensation Committee selects from the eligible participants under the 1990
Plan and determines the terms and conditions of all grants and awards to such
participants including the terms and conditions under which each option may be
exercisable and the expiration date of each option, except that each option must
expire no later than ten years from the date of grant. Grants and awards are
made in consideration of services rendered or to be rendered by the recipients
thereof.
Options to purchase shares of Common Stock were granted to the Named
Executive Officers of the Company during fiscal 1996 as described above in the
table entitled "Option/SAR Grants in Last Fiscal Year." All such options (a)
become exercisable in full on the third anniversary of the date of grant, (b)
have an exercise price equal to the fair market value of the Common Stock on the
date of grant, and (c) immediately and fully vest and become exercisable in
certain defined events including a merger of the Company, a change in control of
the Company, or a sale of substantially all of the assets of the Company.
Payment of the exercise price of options granted under the 1990 Plan must be
made in full in cash or cash equivalent concurrently with the exercise of such
option.
LONG TERM CASH INCENTIVE AWARD PLAN
In fiscal 1996, the Company adopted a long term cash incentive award plan
for its executive officers. Pursuant to this plan, each executive officer will
receive an amount equal to his annual base salary in fiscal 1999 if the
Company's aggregate earnings per share over the three fiscal years ending with
fiscal 1999 exceeds a target level. In addition, the executive officer must
remain in the Company's employ through the end of fiscal 1999 in order to earn
this award.
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Company's Compensation and Organization Committee (the "Committee") has
established policies for the compensation of the Company's Chief Executive
Officer and the other executive officers (the "Executive Officers") set forth in
the Summary Compensation Table based upon the responsibilities of the individual
Executive Officers and the Company's financial performance. The Company enters
into employment agreements with its Executive Officers that set forth the
elements of compensation that have been
8
<PAGE> 12
approved by the Committee. The form of these agreements has been structured to
allow the Committee to tie a significant portion of each Executive Officer's
overall compensation to criteria based on the Company's financial performance.
EXECUTIVE COMPENSATION PROGRAM
Compensation which may be earned by an Executive Officer in any fiscal year
typically consists of base salary, cash bonus and stock options. Special bonus
and stock option awards may be made at the time an executive is first hired by
the Company or is promoted. In 1996, the Committee structured incentive
compensation to more heavily emphasize long-term performance. This was
implemented through a long-term cash incentive award, which presents a potential
cash payout based upon the Company's aggregate financial performance over the
three fiscal years ending with fiscal 1999, and by granting a three year bank of
stock options.
- -- BASE SALARY
The Committee establishes base salaries at levels determined through
the Company's overall salary structure and the Company's own experience in
attracting qualified executives. Adjustments are made to reflect an
individual's contributions to the Company and the specific job
responsibilities. The amount thereby arrived at is set forth in the
Executive Officer's employment agreement. The Committee does not peg salary
levels to the amounts paid by other companies; nevertheless, the Committee
compares salary levels at the Company to those reported by other companies
that participate in retail industry compensation surveys to ensure that
salaries at the Company are within the range paid by comparably sized
retail companies. Because participation in these surveys is on an anonymous
basis, the Committee is unable to determine the extent to which the
companies that participate in the salary survey are the same as the retail
companies included in the Stockholder Return Performance Presentation on
page 11 of this Proxy Statement. Base salaries are reviewed annually and
any changes in base salary are made at the discretion of the Committee,
subject to ratification by the Board of Directors. Actual salary increases
are based upon evaluations of a particular officer's individual performance
and contribution to the Company.
- -- ANNUAL CASH BONUS
Executive Officers are eligible for an annual cash bonus only if
certain pre-tax earnings objectives for the fiscal year are met. At the
discretion of the Committee, a certain part of the bonus may be based on
the Committee's subjective evaluation of the Executive Officer's individual
performance during the fiscal year, but only if the amount of pre-tax
operating income exceeds a certain threshold. A maximum bonus level is set
for each Executive Officer, expressed as a percentage of base salary, in
the event that pre-tax operating income exceeds targeted levels. For 1996,
Mr. Carter's maximum target bonus equaled seventy percent of his base
salary, and other executives' bonuses represented a lower percentage of
their annual salaries depending on their position with the Company.
- -- STOCK OPTIONS
The Committee's practice has been to make annual stock option grants
toward the end of the fiscal year, based on performance goals (and subject
to a maximum award level) established by the Committee at the beginning of
the year. Because stock option grants are awarded as an annual incentive,
the Committee does not generally consider the size of the previous years'
grants in determining the number of options that may be granted in the
current year.
- -- LONG-TERM INCENTIVE CASH AWARDS
In 1996, the Committee adopted a long-term incentive cash award
program for its senior executives in order to promote the Company's
long-term performance. Under this program, if the Company's aggregate
earnings per share during the 1997 through 1999 fiscal years exceed a
target level, then each senior executive will receive a bonus equal to his
1999 base salary, provided that the executive remains employed with the
Company through the end of the Company's 1999 fiscal year.
9
<PAGE> 13
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER AND OTHER
EXECUTIVE OFFICERS IN FISCAL 1996
The Committee followed the policies outlined above in establishing salaries
for fiscal 1996. The salary payable to Messrs. Carter, Miller, Bianchi,
Bonnecaze and Dobbs is set forth in an employment agreement between the Company
and each of the Executive Officers.
Also consistent with these policies, at the beginning of fiscal 1996 the
Committee established operating income performance goals for purposes of
determining annual cash bonuses and stock option grants. The Company's pre-tax
operating income for 1996 satisfied the target performance goal established at
the beginning of the year under the annual bonus program, resulting in bonuses
being earned at the maximum level. While the Committee continues to view option
grants as a form of annual compensation, in 1996 the Committee granted a three
year bank of options which, to promote long-term performance, vest only if the
executive remains employed with the Company on the third anniversary of the
grant date. Correspondingly, the number of shares subject to these option grants
was set at three times the size of annual grants in 1995 excluding, in the case
of Mr. Carter, those options granted to Mr. Carter in 1995 in connection with
his promotion to Chief Executive Officer. Finally, as indicated above, the
Committee established a long-term incentive cash award program which establishes
a three year earnings per share target, which target the Committee considers to
reflect confidential business information. Although the earnings per share
target is a three year goal, the long-term incentive award will be payable in
2000 if the target is satisfied in less than three years. The amount payable
under the long-term incentive cash award program will be equal to the
executives' fiscal 1999 base salary and will be payable only if the executive
remains employed through the end of the 1999 fiscal year.
- -- OTHER
Legislation adopted by Congress in 1993 places a $1 million limitation
on the deduction available to public companies for compensation paid to
certain executives, unless the compensation is treated as "performance
based" (as defined under the Internal Revenue Code of 1986, as amended) or
satisfies another exception. In December 1995 the Internal Revenue Service
("IRS") adopted final regulations to implement this legislation. The
Committee has not developed specific policies to address this new tax
provision. However, the Committee believes that amounts recognized on
exercise of stock options granted before the Annual Meeting will qualify as
performance-based compensation under the proposed IRS regulations. The
Committee, along with the Company, will evaluate the Company's compensation
programs on an ongoing basis in view of the limiting provisions of Section
162(m) of the Internal Revenue Code of 1986, as amended.
Submitted by the Compensation and Organization Committees.
David H. Batchelder (Chairman)
Peter C. Cooper
I. T. Corley
The Report of the Compensation and Organization Committee on Executive
Compensation shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of the date of this Proxy Statement, the members of the Compensation
Committee of the Board of Directors were Messrs. Batchelder (Chairman), Cooper
and Corley, none of whom was an officer or employee of the Company during fiscal
1996 or is a former officer of the Company.
10
<PAGE> 14
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the Dow Jones Equity Composite Stock Index and
the Dow Jones Retailers-Other Specialty Composite Stock Index for the five
fiscal years commencing February 3, 1992 and ending February 2, 1997. The stock
performance graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such acts.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Measurement Period Retailers-Other
(Fiscal Year Covered) Mac Frugal's Dow Jones Equity Specialty
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 83.77 111.15 131.26
1993 77.27 124.38 122.92
1994 88.31 125.18 127.83
1995 70.13 170.55 114.69
1996 119.48 221.51 136.43
</TABLE>
11
<PAGE> 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following security ownership information is set forth, as of April 28,
1997, with respect to certain persons or groups known to the Company to be
beneficial owners of more than 5% of the Company's outstanding Common Stock and
with respect to each director of the Company, each of the Named Executive
Officers, and all current directors, nominees and executive officers as a group
(10 persons). Other than as set forth below, the Company is not aware of any
other person who may be deemed to be a beneficial owner of more than 5% of the
Company's Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT
AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
------------------------------------------------- ------------- ----------
<S> <C> <C>
David H. Batchelder.............................. 53,930 *
Peter C. Cooper.................................. 22,000 *
I. T. Corley..................................... 1,000 *
Anthony Luiso.................................... 38,715 *
James J. Zehentbauer............................. 22,650 *
Philip L. Carter................................. 130,750 *
Mark J. Miller................................... 100 *
Frank C. Bianchi................................. 1,925 *
Earl C. Bonnecaze................................ 200 *
Michael Dobbs.................................... 2,370 *
All Directors and Executive Officers
as a Group (11 persons)........................ 273,640 1.1%
</TABLE>
- ---------------
(*) Denotes less than 1% of the sum of the 24,999,855 shares of Common Stock
outstanding at April 28, 1997 plus shares that are subject to options that
are presently exercisable or will become exercisable within 60 days after
April 28, 1997 by that person or group, as the case may be.
(1) Includes shares which may be acquired pursuant to options exercisable on or
within 60 days after April 28, 1997, as follows: Mr. Batchelder (33,715);
Mr. Luiso (33,715); Mr. Zehentbauer (22,650); Mr. Carter (130,750); Mr.
Bianchi (385); Mr. Dobbs (2,370); and all directors and executive officers
as a group (223,585). Unless otherwise indicated, each person has sole
investment and voting power as to the shares indicated.
(2) The percentages are based upon 24,999,855 shares of Common Stock outstanding
at April 28, 1997 plus shares that are subject to options that are
exercisable or will become exercisable within 60 days after April 28, 1997
by that person or group, as the case may be.
12
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
AMOUNT
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
-------------------------------------------------- -------------- -----------
<S> <C> <C>
Westport Asset Management, Inc.(2)................ 1,526,200 6.10%
253 Riverside Avenue
Westport, Connecticut 06880-4816
Brandes Investment Partners, L.P.(3).............. 1,641,330 6.57%
San Diego, California
FMR Corp.(4)...................................... 1,806,300 7.23%
82 Devonshire Street
Boston, Massachusetts 02109
NewSouth Capital Management, Inc.(5).............. 2,315,138 9.26%
1000 Ridgeway Loop Road, Suite 233
Memphis, Tennessee 38120
First Pacific Advisors, Inc.(6)................... 2,685,300 10.74%
11400 West Olympic Boulevard, Suite 1200
Los Angeles, California 90064
</TABLE>
- ---------------
(1) The percentages are based upon 24,999,855 shares of Common Stock outstanding
at April 28, 1997.
(2) The Company received a Schedule 13G dated February 13, 1997 from Westport
Asset Management, Inc. ("Westport") reporting beneficial ownership of
1,526,200 shares of Common Stock, of which Westport has shared dispositive
and voting power over 1,507,600 shares, and sole dispositive and voting
power over 18,600 shares. In the Schedule 13G, Westport reported that all
shares were acquired in the ordinary course of business and not for the
purpose of influencing control of the Company. The Company is unaware of any
change in the foregoing information.
(3) The Company received a Schedule 13G dated February 13, 1997 from Brandes
Investment Partners, L.P. ("Brandes") reporting beneficial ownership of
1,641,330 shares of Common Stock, of which Brandes has shared dispositive
power over 1,638,600 of such shares and sole voting power over all such
shares. In the Schedule 13G, Brandes reported that all such shares were
acquired in the ordinary course of business and not for the purpose of
influencing control of the Company. The Company is unaware of any change in
the foregoing information.
(4) The Company received from FMR Corp. an amended Schedule 13G dated February
14, 1997 reporting that it beneficially owned an aggregate of 1,806,300
shares of Common Stock, of which it has sole dispositive power over all such
shares and sole voting power over 57,400 of such shares. In the Schedule
13G, FMR Corp. stated that all such shares were acquired in the ordinary
course of business and not with the purpose of influencing the control of
the Company. The Company is unaware of any change in the foregoing
information.
(5) The Company received an amended Schedule 13G dated February 12, 1997 from
NewSouth Capital Management, Inc. ("NewSouth") reporting that it
beneficially owned an aggregate of 2,315,138 shares of Common Stock, of
which it has sole dispositive power over all such shares and sole voting
power over 2,201,638 of such shares. In the Schedule 13G, NewSouth stated
that all shares were acquired in the ordinary course of business and not for
the purpose of influencing control of the Company. The Company is unaware of
any change in the foregoing information.
(6) The Company received an amended Schedule 13G dated February 13, 1997 from
First Pacific Advisors, Inc. ("First Pacific") reporting beneficial
ownership of 2,685,300 shares of Common Stock. This Amended Schedule 13G
also reported that First Pacific has shared dispositive power over all such
shares and shared voting power over 878,300 shares. In its Schedule 13G,
First Pacific reported that all shares were acquired in the ordinary course
of business and not for the purpose of influencing control of the Company.
The Company is unaware of any change in the foregoing information.
13
<PAGE> 17
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own more
than 10% of the Common Stock (collectively "Insiders") to file initial reports
of ownership (Forms 3) and reports of changes in ownership of Common Stock
(Forms 4 and Forms 5) with the Securities and Exchange Commission as well as the
Company and the New York Stock Exchange.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations from each Insider
known to the Company that no other reports were required, during fiscal 1996 all
Section 16(a) filing requirements applicable to its Insiders were complied with.
INDEPENDENT PUBLIC ACCOUNTANTS
For fiscal 1996, Deloitte & Touche provided audit services which included
examination of the Company's annual consolidated financial statements, timely
review of unaudited quarterly financial information, assistance and consultation
in connection with the Company's annual report on Form 10-K filed with the
Commission, and the audit of the Company's profit sharing plan. Audit services
were provided with the approval of the Board of Directors which, among other
things, considered the independence of the public accountants. Arrangements for
non-audit services, if any, are made by management with the knowledge of the
Board of Directors. A meeting of the Audit Committee will be held in the near
future, at which time a recommendation will be made as to the selection of the
Company's auditors for the current fiscal year. A representative of Deloitte &
Touche is expected to attend the Annual Meeting to make any statements he or she
may desire and to respond to any stockholder questions.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any proposal relating to a proper subject which an eligible stockholder may
intend to present for action at the Company's 1998 Annual Meeting of
Stockholders and which such stockholder may wish to have included in the proxy
materials for such meeting in accordance with the provisions of Rule 14a-8
promulgated under the Exchange Act must be received as far in advance of the
meeting as possible in proper form by the Secretary of the Company at 2430 East
Del Amo Boulevard, Dominguez, California 90220-6306, and in any event not later
than February 15, 1998. It is suggested that any such proposal be submitted by
certified mail, return receipt requested.
OTHER BUSINESS OF THE ANNUAL MEETING
Management is not aware of any matters to come before the Annual Meeting or
any postponement or adjournment thereof other than the election of directors.
However, inasmuch as matters of which management is not now aware may come
before the meeting or any postponement or adjournment thereof, the proxies
confer discretionary authority with respect to acting thereon, and the persons
named in such proxies intend to vote, act and consent in accordance with their
best judgment with respect thereto, provided that, to the extent the Company
becomes aware a reasonable time before the Annual Meeting of any matter to come
before such meeting, the Company will provide an opportunity to vote by proxy
directly on such matter. Upon receipt of such proxies in time for voting, the
shares represented thereby will be voted as indicated thereon and as described
in this Proxy Statement.
14
<PAGE> 18
MISCELLANEOUS
The solicitation of proxies is made on behalf of the Company and all the
expenses of soliciting proxies from stockholders will be borne by the Company.
In addition to the solicitation of proxies by use of the mails, officers and
regular employees may communicate with stockholders personally or by mail,
telephone, telegram or otherwise for the purpose of soliciting such proxies, but
in such event no additional compensation will be paid to any such persons for
such solicitation. The Company will reimburse banks, brokers and other nominees
for their reasonable out-of-pocket expenses in forwarding soliciting material to
beneficial owners of shares held of record by such persons.
By Order of the Board of Directors
[SIG]
PHILIP L. CARTER
President and Chief Executive Officer
Dominguez, California
May 15, 1997
15
<PAGE> 19
________________________________________________________________________________
MAC FRUGAL'S BARGAINS - CLOSE-OUTS INC.
ANNUAL MEETING OF STOCKHOLDERS -- JUNE 18, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Mac Frugal's Bargains - Close-outs, Inc.,
a Delaware corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement and appoints David H. Batchelder,
Philip L. Carter, or either of them, proxies with full power of substitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the Annual Meeting of Stockholders of Mac Frugal's Bargains - Close-outs Inc.
to be held Wednesday, June 18, 1997 at 9:00 A.M. at the Long Beach Airport
Marriott Hotel, 4700 Airport Plaza Drive, Long Beach, California 90815, and at
any postponements or adjournments thereof, and to vote all shares of Common
Stock which the undersigned would be entitled to vote if personally present, on
the matters set forth on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE NOMINEES AS DIRECTORS AND AS
SUCH PROXY HOLDERS DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE
ANNUAL MEETING OF ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF.
(Continued, and to be dated and signed on the reverse side)
MAC FRUGAL'S BARGAINS - CLOSE-OUTS INC.
P.O. BOX 11343
NEW YORK, N.Y. 10203-0343
________________________________________________________________________________
________________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF EACH OF THE
MATTERS SET FORTH BELOW.
1. Election of Directors
FOR all nominees / / WITHHOLD AUTHORITY to vote / / *EXCEPTIONS / /
listed below for all nominees listed below
NOMINEES: David H. Batchelder, Philip L. Carter, Mark J. Miller,
Peter C. Cooper, I. T. Corley and James J. Zehentbauer.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below.)
*Exceptions_______________________________________________________________
2. In their discretion, upon any other matters which may properly come before
the Annual Meeting or any postponements or adjournments thereof.
Address Change and/or / /
Comments Mark Here
NOTE: Please sign exactly as shown at the left.
If stock is jointly held each owner should sign.
Executors, administrators, trustees, guardians,
attorneys and corporate officers should indicate
their fiduciary capacity or full title when
signing.
Dated _________________________________, 1997
_____________________________________________
(Signature)
_____________________________________________
(Signature, if held jointly)
VOTES MUST BE INDICATED / /
(X) IN BLACK OR BLUE INK
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
_______________________________________________________________________________
