<PAGE> 1
Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE GOOD GUYS, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- - --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- - --------------------------------------------------------------------------------
(3) Filing Party:
- - --------------------------------------------------------------------------------
(4) Date Filed:
<PAGE> 2
THE GOOD GUYS, INC,
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 26, 2000
The Annual Meeting of Shareholders of The Good Guys, Inc. will be held at
the Ritz-Carlton Hotel, located at 600 Stockton Street, San Francisco,
California on Wednesday, January 26, 2000, at 11:00 a.m., for the following
purposes:
1. To elect Directors to serve for the ensuing year and until their
successors are duty elected and qualified.
2. To approve an increase by 400,000 in the number of shares covered
by the Employee Stock Purchase Plan.
3. To ratify the selection of Deloitte & Touche LLP as independent
certified public accountants for the Company.
4. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on December 17, 1999
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ RONALD A. UNKEFER
----------------------------------
Ronald A. Unkefer
Chairman and Chief Executive Officer
Brisbane, California
December 28, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POST-PAID ENVELOPE. IF
YOU ARE ABLE TO ATTEND THE MEETING, AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU
MAY DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.
<PAGE> 3
THE GOOD GUYS, INC.
7000 MARINA BOULEVARD
BRISBANE, CALIFORNIA 94005-1840
------------------------
PROXY STATEMENT
------------------------
The enclosed proxy is solicited on behalf of the Board of Directors of The
Good Guys, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Shareholders to be held at the Ritz-Carlton Hotel, 600 Stockton
Street, San Francisco, California, on Wednesday, January 26, 2000, at 11:00 a.m.
Any proxy given may be revoked by a shareholder at any time before it is
voted by filing with the Secretary of the Company a notice in writing revoking
it, or by duly executing a proxy bearing a later date. Proxies may also be
revoked by any shareholder present at the meeting who expresses a desire to vote
his or her shares in person. Subject to any such revocation, all shares
represented by properly executed proxies which are received prior to the meeting
will be voted in accordance with the specifications on the proxy. If no
specification is made with regard to a proposal set forth in the proxy, the
shares will be voted in favor of the proposal.
A copy of the Annual Report of the Company for its fiscal year ended
September 30, 1999 is being mailed to shareholders with this proxy statement.
The approximate date on which this proxy statement and the accompanying proxy
are being sent to shareholders is December 28, 1999.
VOTING
Only shareholders of record on December 17, 1999 (the "Record Date") will
be entitled to notice of and to vote at the meeting. At the close of business on
the Record Date, the Company had 19,654,249 shares of Common Stock outstanding.
Each holder of record of Common Stock on the Record Date is entitled to one vote
per share on each matter to be considered at the Annual Meeting of Shareholders.
A majority of all shares represented in person or by proxy at the Annual Meeting
constitutes a quorum for the transaction of business at the meeting. Abstentions
are considered as shares present and entitled to vote and therefore will have
the same effect as a vote against a matter presented at the meeting. Brokers who
hold shares in street name for customers have the authority to vote on certain
matters; with respect to any other matters, shares as to which brokers have not
received discretionary voting authority from their customers are considered as
shares not entitled to vote with respect to such matters, but are counted toward
the establishment of a quorum.
Each participant in The Good Guys! Profit-Sharing Plan and The Good Guys!
Deferred Pay Plan is entitled to instruct the respective Plan's Trustee to vote
the shares of Common Stock allocated to such participant's account on each
matter to be considered at the Annual Meeting of Shareholders. If a participant
does not give voting instructions to the Trustee, the shares of Common Stock as
to which he or she was entitled to provide instructions shall be voted by the
Trustee in the manner directed by the respective Plan's Administrative
Committee. Unallocated shares of Common Stock shall be voted in the same
proportion as the allocated shares of Common Stock in each respective Plan.
ELECTION OF DIRECTORS
Directors are elected to hold office until the next annual shareholders'
meeting or until their successors have been elected. Unless otherwise instructed
by the shareholder, it is intended that the shares represented by the enclosed
proxy will be voted for the nominees named below. Although management
anticipates that all of the nominees will be able to serve, if any nominee is
unable or unwilling to serve at the time of the meeting, the proxy may be voted
for a substitute nominee chosen by management.
<PAGE> 4
All of the nominees are presently directors of the Company and no nominee
has any family relationship with any other nominee or executive officer.
Effective June 30, 1999, Robert A. Gunst resigned as a director and effective
July 1, 1999, Ronald A. Unkefer was elected as Chairman of the Board to fill the
vacancy created by Mr. Gunst's resignation. The number of directors of the
Company was increased from 6 to 7 in July, 1999, at which time Gary M. Lawrence
became a member of the Board, and was increased from 7 to 9 in September 1999,
at which time Joseph P. Clayton and Joseph M. Schell became members of the
Board. The beneficial ownership of the Company's stock by the nominees is set
forth under "Certain Shareholders."
The following table and biographical summaries set forth the names and ages
of the nominees, their principal occupations at present, the positions and
offices held by each of them with the Company in addition to the position as
director, and the period during which each of them has served as a director of
the Company.
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NOMINEE AGE SINCE
------- --- ------------
<S> <C> <C>
Ronald A. Unkefer........................................... 55 1999
Stanley R. Baker(1)(2)...................................... 55 1976
Russell M. Solomon(1)(2).................................... 74 1986
W. Howard Lester(1)(2)...................................... 64 1990
John E. Martin(1)(2)........................................ 54 1990
Horst H. Schulze............................................ 60 1997
Gary M. Lawrence............................................ 43 1999
Joseph P. Clayton........................................... 50 1999
Joseph M. Schell............................................ 53 1999
</TABLE>
- - ---------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
Ronald A. Unkefer founded the Company on July 1, 1973. From 1973 to 1993,
he served as Chairman and Chief Executive Officer. In January 1993, he retired
from the position of Chief Executive Officer to pursue venture capital and
broadcasting interests and continued to serve as Chairman of the Company until
January 1996. Mr. Unkefer returned to the Company as its Chairman and Chief
Executive Officer on July 1, 1999. Currently, he also serves as Chairman of
First Ventures, a venture capital fund investing in internet and technology
companies in Silicon Valley and is Chairman of First Broadcasting, an owner and
developer of major market radio stations.
Stanley R. Baker has been a director of the Company since its incorporation
in 1976 and was Secretary of the Company from 1976 until his resignation as an
employee of the Company in August 1991. Mr. Baker became Vice President, Video
Merchandising in 1986, and Vice President, Co-Head of Merchandising in 1990.
From August 1991 to the present Mr. Baker has been a private investor.
Russell M. Solomon is the founder and Chairman of MTS Incorporated (dba
Tower Records).
W. Howard Lester has been the Chief Executive Officer of Williams-Sonoma,
Inc., a publicly held specialty retailer, since 1979 and has also been the
Chairman of that Corporation since 1986. Mr. Lester is a director of Il Fornaio
(America) Corp., a publicly held chain of Italian restaurants and wholesale
bakeries, and Harold's Stores, Inc., a specialty apparel retailer.
John E. Martin has served as Chairman of Easyriders, Inc., an operator of
restaurants and apparel stores, since June 1997, and also has served as Chairman
of Diedrich Coffee, Inc., an operator of specialty coffee stores, since November
1997. From October 1996 to June 1997, he served as Chairman and Chief Executive
Officer of PepsiCo Casual Restaurants International, a subsidiary of PepsiCo.
From 1983 until October 1996, he served as Chief Executive Officer of Taco Bell,
another subsidiary of PepsiCo and he also served as Chairman of Taco Bell from
June 1994 until October 1996. Mr. Martin is a director of Williams-Sonoma, Inc.
Horst H. Schulze has been the President and Chief Operating Officer of the
Ritz-Carlton Hotel Company, L.L.C. since 1988.
2
<PAGE> 5
Gary M. Lawrence has been a partner in the law firm of Akin, Gump, Strauss,
Hauer & Feld, L.L.P., a leading international law firm with offices in the
United States, Europe and Russia, since 1989. Mr. Lawrence was Chair of the
Mergers and Acquisitions Group from 1997 to 1999 and is currently Chair of the
Technology Practice Group. Mr. Lawrence is also a member of the firm-wide
management and strategic planning committees of Akin Gump.
Joseph P. Clayton has more than 24 years of experience in the consumer
electronics industry. From June 1997 to September 1999 he served as Chief
Executive Officer of Frontier Corporation and since September 1999 has been Vice
Chairman and a director of Global Crossing, Ltd. following its merger with
Frontier. From March 1992 to January 1997 he served as Executive Vice President
of Marketing and Sales for Thomson Consumer Electronics for the Americas and
Asia.
Joseph M. Schell was the Senior Managing Director, Director of Investment
Banking and a member of the Executive Committee of NationsBank Montgomery
Securities from May 1985 until June 1999. Prior to joining NationsBank
Montgomery Securities, he was with Kidder, Peabody and Company, providing
investment-banking services to utility and energy clients. He presently is a
private investor and serves on the Boards of Directors of Dycom Industries, a
publicly held engineering, construction and maintenance services company, and
Sanmina Corporation, a publicly held electronics contract manufacturing services
company.
The Board of Directors has established an Audit Committee and a
Compensation Committee, but has not established a Nominating Committee. The
Audit Committee met three times during fiscal 1999. Responsibilities of the
Audit Committee include (1) reviewing financial statements and consulting with
the independent auditors concerning the Company's financial statements,
accounting and financial policies, and internal controls, (2) reviewing the
scope of the independent auditors' activities and the fees of the independent
auditors, and (3) maintaining good communications among the Committee, the
Company's independent auditors and the Company's management on accounting
matters. The Compensation Committee met twice during fiscal 1999. The function
of the Compensation Committee is to approve stock plans and option grants and
review and make recommendations to the Board of Directors regarding executive
compensation and benefits.
The total number of meetings of the Board of Directors during fiscal 1999
was fourteen. Each of the incumbent directors, with the exception of Horst H.
Schulze, attended at least 75% of the aggregate of (1) the meetings of the Board
during the year and (2) the total number of meetings of all committees of the
Board on which he served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for their service as directors. During the fiscal year ended
September 30, 1999, each of Messrs. Baker, Lester, Martin, Solomon and Schulze
received 9,846 shares of restricted Common Stock, Gary M. Lawrence received
3,312 shares of restricted Common Stock and Messrs. Clayton and Schell each
received 2,526 shares of restricted Common Stock under the Company's 1994 Stock
Incentive Plan (determined by dividing $40,000 or a prorata portion thereof
(based upon time of service) by the fair market value of the Company's Common
Stock on that date) as full compensation for the year that commenced on the date
of the last annual meeting of stockholders, with such stock to vest one year
after such date, or, if earlier, on the death or disability of the director.
Under the Company's 1994 Stock Incentive Plan, each person who is not an
employee of the Company, upon becoming a member of the Board of Directors for
the first time, is awarded a non-qualified option to purchase shares of common
stock of the Company. Based upon recommendations of management, the Plan was
amended in September 1999 to increase the number of shares covered by such grant
from 5,000 to 20,000 and to reduce the vesting period to one year. As a result
of that amendment Messrs. Clayton and Schell received options covering 20,000
shares in September 1999 and each of Messrs. Baker, Solomon, Lester, Martin,
Schulze and Lawrence were granted make-up options covering 15,000 shares.
Directors are reimbursed for expenses incurred in attending meetings.
3
<PAGE> 6
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows specific compensation information, for the fiscal
years ending September 30, 1999, 1998 and 1997, for the individuals who served
as Chief Executive Officer during the year and the next four most highly
compensated executive officers as of September 30, 1999, and two former
executive officers who would have been included among the four most highly
compensated officers had they remained in the employ of the Company through
September 30, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------------------- ------------
RESTRICTED SHARES
STOCK UNDERLYING
OTHER ANNUAL AWARDS OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) ($) (NUMBER)(2)
--------------------------- ---- -------- ------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Unkefer................. 1999 $125,005 $ 0 $ 0 $ 0 0
Chief Executive Officer(3)
Robert A. Gunst................... 1999 $377,682 $ 0 $311,881 $ 0 501,500
President and Chief 1998 $500,000 $ 0 $ 36,615 $ 0 50,000
Executive Officer(4) 1997 $500,000 $ 0 $ 21,673 $ 0 50,000
Jayne Spiegelman.................. 1999 $233,231 $ 0 $ 4,028 $ 0 50,000
Senior Vice President, 1998 $300,000 $ 0 $ 895 $ 0 30,000
Merchandising and 1997 $ 11,538 $ 0 $ 0 $ 0 20,000
Marketing(5)
John G. Duken..................... 1999 $201,442 $ 0 $ 22,089 $ 0 49,000
Vice President, 1998 $190,000 $ 0 $ 3,442 $ 0 7,500
Operations(6) 1997 $164,682 $ 0 $ 3,431 $ 0 7,500
Cathy A. Stauffer................. 1999 $185,994 $ 0 $ 19,619 $60,000 17,500
Vice President, 1998 $170,925 $ 0 $ 0 $ 0 0
Merchandising 1997 $ 15,481 $ 0 $ 0 $ 0 10,000
Paul N. Erickson.................. 1999 $ 55,900 $ 0 $ 0 $ 0 0
Chief Financial Officer(7)
Vance R. Schram................... 1999 $155,637 $ 0 $ 0 $90,000 20,500
Vice President, Finance 1998 $ 91,852 $20,000 $ 0 $ 0 7,500
and Secretary(8)
</TABLE>
- - ---------------
(1) Consists of perquisites and other personal benefits, including long term
disability, life insurance premiums paid by the Company, accrued vacation
for terminated employees, and includes for Mr. Gunst $229,844 of severance
payments.
(2) By reason of the repricing of options that occurred in November 1998, the
options shown as having been granted in fiscal 1999 to Robert A. Gunst,
Jayne Spiegelman, John G. Duken, Cathy A. Stauffer, and Vance R. Schram
include options granted to them prior to fiscal 1999. The actual options
granted to them in fiscal 1999 were 0, 15,000, 15,000, 7,500 and 13,000,
respectively.
(3) Mr. Unkefer became Chief Executive Officer of the Company on July 1, 1999.
(4) Mr. Gunst resigned as President and Chief Executive Office of the Company,
effective June 30, 1999.
(5) Ms. Spiegelman became an employee of the Company in September 1997 and her
employment terminated in June 1999.
(6) Mr. Duken's employment with the Company terminated in August 1999.
(7) Mr. Erickson became interim Chief Financial Officer in July 1999 under an at
will agreement with a company that provides interim executives.
(8) Mr. Schram became Vice President of Finance in September 1999.
4
<PAGE> 7
STOCK OPTION TABLES
The following table shows information concerning stock options granted to
the individuals named in the Summary Compensation Table above during the fiscal
year ended September 30, 1999.
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------ POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(2)(3)
OPTIONS IN PRICE EXPIRATION ---------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ----------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Unkefer.................. -- 0% -- -- -- --
Robert A. Gunst.................... 10,000 .47% $5.0938 2/1/00 $ 3,140 $ 6,337
60,000 2.79% $5.0938 3/30/00 $ 21,392 $ 43,366
60,000 2.79% $5.0938 5/21/00 $ 23,678 $ 48,155
52,000 2.42% $5.0938 11/9/00 $ 27,070 $ 55,449
30,000 1.40% $5.0938 11/12/01 $ 24,112 $ 50,637
32,500 1.51% $5.0938 11/13/02 $ 35,732 $ 76,964
7,000 .33% $5.0938 2/24/03 $ 8,308 $ 18,050
50,000 2.33% $5.0938 11/11/03 $ 70,366 $155,491
50,000 2.33% $5.0938 11/14/04 $ 86,806 $197,003
50,000 2.33% $5.0938 11/21/05 $104,224 $243,125
50,000 2.33% $5.0938 12/20/06 $123,665 $297,244
50,000 2.33% $5.0938 11/17/07 $140,797 $347,007
Jayne Spiegelman................... 20,000 .93% $5.0938 9/15/07 $ 55,012 $134,992
30,000 1.40% $5.0938 5/29/08 $ 90,467 $225,552
15,000 .70% $5.0938 11/12/08 $ 48,052 $120,270
John G. Duken...................... 5,000 .23% $5.0938 9/8/03 $ 6,765 $ 14,895
4,000 .19% $5.0938 11/11/03 $ 5,629 $ 12,439
5,000 .23% $5.0938 6/25/04 $ 8,047 $ 18,100
10,000 .47% $5.0938 11/14/04 $ 17,361 $ 39,401
10,000 .47% $5.0938 11/21/05 $ 20,845 $ 48,625
7,500 .35% $5.0938 11/19/06 $ 18,310 $ 43,891
7,500 .35% $5.0938 11/17/07 $ 21,119 $ 52,051
15,000 .70% $5.0938 11/12/08 $ 48,052 $104,071
Cathy A. Stauffer.................. 10,000 .47% $5.0938 8/27/07 $ 27,272 $ 66,703
7,500 .35% $5.0938 11/12/08 $ 24,026 $ 50,622
Paul N. Erickson................... -- 0% -- -- -- --
Vance R. Schram.................... 7,500 .35% $5.0938 2/23/08 $ 21,875 $ 54,237
3,000 .14% $5.0938 11/12/08 $ 9,610 $ 24,355
10,000 .47% $6.0000 8/26/09 $ 37,734 $ 12,560
</TABLE>
- - ---------------
(1) By reason of the repricing of options that occurred in November 1998, the
options shown as having been granted to Robert A. Gunst, Jayne Spiegelman,
John G. Duken, Cathy A. Stauffer, and Vance R. Schram include options
granted to them prior to fiscal 1999. All options granted in fiscal 1999
were granted under the 1994 Stock Incentive Plan. The options are
non-qualified stock options that were granted at 100% of the fair market
value of the Common Stock on the date of grant. The options expire ten years
from the date of grant, unless otherwise earlier terminated upon the
occurrence of certain events related to termination of employment. Options
granted prior to August 26, 1999 vest 25% per year on each of the first four
anniversaries of the option grant date. Effective August 26, 1999, the 1994
Stock
5
<PAGE> 8
Incentive Plan was amended to provide that options vest 33.3% per year on
the first three anniversaries of the option grant date. Additional vesting
of the right to exercise the options ceases when the optionee's employment
terminates.
(2) The 5% and the 10% assumed rates of appreciation applied to the option
exercise price over the ten-year option term are prescribed by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future price of Common Stock. If the Company's
Common Stock does not appreciate relative to the exercise price, the named
executive officers will receive no benefit from the options.
(3) At assumed annual rates of appreciation of 5% and 10%, the aggregate
potential realizable increase in value for shares held by all stockholders
as of September 30, 1999 for the ten-year period from November 12, 1998 to
November 12, 2008 would be $62,887,095 and $159,368,246, and for the
ten-year period from August 26, 1999 to August 26, 2009 would be $74,074,869
and $187,720,263.
(4) All information given in this table and the following table as to exercise
prices and values is as of September 30, 1999.
The following table shows the number of shares covered by both exercisable
and non-exercisable stock options held by the individuals named in the Summary
Compensation Table above as of September 30, 1999 and the value of unexercised
options as of that date.
<TABLE>
<CAPTION>
VALUE(1) OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT 9/30/99 9/30/99
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Unkefer..... -- -- -- -- -- --
Robert A. Gunst....... -- -- 426,500 -- $546,432 --
Jayne Spiegelman...... -- -- 12,500 -- $ 16,015 --
John G. Duken......... -- -- 37,125 -- $ 47,565 --
Cathy A. Stauffer..... -- -- 5,000 12,500 $ 6,406 $16,015
Paul N. Erickson...... -- -- -- -- -- --
Vance R. Schram....... -- -- 1,875 18,625 $ 2,402 $14,800
</TABLE>
- - ---------------
(1) The value of unexercised options is calculated by multiplying the number of
options outstanding by the difference between the option exercise price and
the September 30, 1999 closing price of $6.375 per share of the Company's
Common Stock as reported on the Nasdaq National Market. Options with an
exercise price in excess of the September 30, 1999 closing price were not
included in this calculation.
Options held by the following executive officers named above were repriced
in fiscal year 1999 as set forth below.
TEN YEAR OPTIONS REPRICED IN FISCAL 1999
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE OPTIONAL OPTION
UNDERLYING OF STOCK AT EXERCISE PRICE TERM
OPTIONS/SARS TIME OF AT TIME OF REMAINING
REPRICED OR REPRICING OR REPRICING OR AT DATE OF
AMENDED AMENDMENT AMENDMENT NEW EXERCISE REPRICING OR
NAME DATE (#) ($) ($) PRICE($) AMENDMENT
---- -------- ------------ ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Gunst....... 11/12/98 10,000 $5.0938 $ 8.125 $5.0938 15 months
11/12/98 60,000 $5.0938 $ 6.9375 $5.0938 17 months
11/12/98 18,442 $5.0938 $ 9.625 $5.0938 18 months
11/12/98 41,558 $5.0938 $ 9.625 $5.0938 18 months
11/12/98 52,000 $5.0938 $ 6.50 $5.0938 24 months
11/12/98 30,000 $5.0938 $ 26.25 $5.0938 36 months
11/12/98 32,500 $5.0938 $ 11.25 $5.0938 48 months
11/12/98 7,000 $5.0938 $ 13.00 $5.0938 51 months
11/12/98 50,000 $5.0938 $ 15.00 $5.0938 60 months
11/12/98 50,000 $5.0938 $ 12.00 $5.0938 72 months
11/12/98 50,000 $5.0938 $ 10.375 $5.0938 84 months
11/12/98 50,000 $5.0938 $ 7.125 $5.0938 97 months
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE OPTIONAL OPTION
UNDERLYING OF STOCK AT EXERCISE PRICE TERM
OPTIONS/SARS TIME OF AT TIME OF REMAINING
REPRICED OR REPRICING OR REPRICING OR AT DATE OF
AMENDED AMENDMENT AMENDMENT NEW EXERCISE REPRICING OR
NAME DATE (#) ($) ($) PRICE($) AMENDMENT
---- -------- ------------ ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Jayne Spiegelman...... 11/12/98 20,000 $5.0938 $ 8.625 $5.0938 106 months
11/12/98 30,000 $5.0938 $12.6875 $5.0938 115 months
John G. Duken......... 11/12/98 5,000 $5.0938 $ 9.75 $5.0938 58 months
11/12/98 4,000 $5.0938 $ 15.00 $5.0938 60 months
11/12/98 5,000 $5.0938 $ 11.75 $5.0938 67 months
11/12/98 10,000 $5.0938 $ 12.00 $5.0938 72 months
11/12/98 10,000 $5.0938 $ 10.375 $5.0938 84 months
11/12/98 7,500 $5.0938 $ 7.50 $5.0938 96 months
11/12/98 7,500 $5.0938 $ 6.625 $5.0938 108 months
Cathy A. Stauffer..... 11/12/98 10,000 $5.0938 $ 7.50 $5.0938 106 months
Vance R. Schram....... 11/12/98 7,500 $5.0938 $ 6.9375 $5.0938 111 months
</TABLE>
EMPLOYMENT ARRANGEMENTS
Pursuant to the employment arrangement entered into between the Company and
Robert A. Gunst in 1990, Mr. Gunst became entitled at the time of termination of
his employment on June 30, 1999 to the amount of $937,500, somewhat less than
two times his salary at the time of termination. That amount is being paid in
installments.
On June 2, 1999, the Company entered into an Employment Agreement with
Ronald A. Unkefer, providing for his appointment to the Company's Board of
Directors and his election as Chairman and Chief Executive Officer of the
Company, effective as of July 1, 1999. The Agreement provides for a minimum
annual base salary of $500,000, an annual cash incentive bonus in an amount of
up to 100% of Mr. Unkefer's annual base pay as reasonably determined by the
Board of Directors, and for the payment of relocation expenses for Mr. Unkefer
and his family. Either party may terminate the Agreement upon 30 days written
notice to the other party for any reason whatsoever. There is no provision in
the Agreement for any severance payments in the event of termination of Mr.
Unkefer's employment by the Company.
Cathy A. Stauffer, Vice President/Merchandising, and Vance Schram, Vice
President/Finance, Controller and Secretary, have severance agreements that
provide for the payment of 12 months severance in the event of their termination
without cause by the Company or termination by them for good reason following a
change in control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company are Stanley R.
Baker, W. Howard Lester, John E. Martin and Russell M. Solomon, all of whom are
outside directors. None of the members of the Committee is or was an officer of
the Company or any of its subsidiaries, with the exception of Stanley R. Baker
who resigned as an officer and employee in August 1991. See Certain
Relationships and Related Transactions with regard to the business relationship
between the Company and MTS Incorporated (dba Tower Records), the Chairman of
which is Russell M. Solomon.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION OVERVIEW AND
PHILOSOPHY
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for establishing the Company's policies and administering the
Company's programs governing stock incentive plans and executive compensation,
including annual salaries, bonuses (if any), and awards under stock and
long-term cash incentive plans.
7
<PAGE> 10
The Committee has engaged a nationally recognized compensation and benefits
consulting firm to assist the Committee and the Company in reviewing the
compensation program of the Company's executive officers.
The objectives of the Company's executive compensation program are to
provide the following:
- Overall compensation opportunities that are competitive within the
Company's executive labor markets and that enable the Company to attract
and retain highly talented, experienced executives capable of furthering
the Company's objectives;
- Annual cash incentive compensation tied primarily to the overall
financial performance of the Company, but also recognizing business unit,
and individual performance as appropriate; and
- Long term incentives which directly align the financial interests of
management with those of the shareholders and which provide an incentive
to remain in the Company's employ.
To achieve compensation opportunities that are competitive, the Company
focuses on compensation survey data for retailers of comparable size. Although
not determinative, the Company takes into consideration the percentile
competitive executive pay levels and average annual percentage increases in
executive compensation granted by comparable companies.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation, long-term incentive compensation in
the form of stock options, and various other common benefits.
BASE SALARY
Base salary levels for the Company's executive officers are competitively
set relative to companies in the Company's industry and other comparable
companies. In determining salaries, the Committee also takes into account the
Company's financial performance and the executive's demonstrated skill,
experience and performance.
ANNUAL INCENTIVE COMPENSATION
The Company's system of annual cash incentive compensation for its
executive officers for fiscal 1999, 1998 and 1997 took the form of cash bonuses
that were determined by overall Company performance as measured by earnings per
share in relation to budgeted earnings per share, and, where appropriate,
individual performance. The target bonus for an executive officer (other than
the Chief Executive Officer) determined by earnings per share was multiplied by
a percentage, ranging from zero to 125%, that can be adjusted by the Chief
Executive Officer based on his assessment of the officer's job performance. For
officers with responsibility for sales, merchandising, real estate and store
operations, a portion of their annual bonus was directly tied to the achievement
of specific financial or other goals developed at the beginning of the year. No
bonuses were paid under the Company's plans in the event the Company did not
achieve at least 75% of its budgeted earnings per share, which was the case in
fiscal 1997, 1998 and 1999. A cash incentive compensation plan for fiscal 2000
has not to date been established.
STOCK OPTION PROGRAM
The stock option program is the Company's principal long-term incentive
plan for executive officers and key managers. The objectives of the program are
to align executive and shareholder long-term interests by creating a strong and
direct link between executive compensation and shareholder return, and to enable
executives to develop and maintain a significant long-term ownership position in
the Company's Common Stock. The Committee attempts to grant options sufficient
to deliver competitive gains assuming the Company's stock price performance is
competitive, but the Committee also considers the dilutive impact of options
granted.
8
<PAGE> 11
Stock options are granted at an option price equal to the fair market value
of the Company's Common Stock on the date of grant, have ten-year terms and vest
ratably over a three-year period (vesting was over a four year period prior to
August 26, 1999).
In November 1998, the Committee concluded that the Company's stock price
did not necessarily reflect the quality of the efforts of the key employees of
the Company. In order to insure that options fulfilled their purpose of helping
the Company attract and retain key employees and return to profitability, the
Committee determined that it was in the best interests of the Company and its
shareholders to lower the exercise price for all of the Company's outstanding
stock options granted between February 1990 and August 1998, other than those
granted to non-employee directors, to an exercise price equal to the fair market
value of the Company's stock on the date that the determination to reprice was
made, namely, $5.0938 per share.
BENEFITS
The Company provides benefits to the executive officers that are generally
available to Company employees.
CHIEF EXECUTIVE OFFICER COMPENSATION
After reviewing Robert A. Gunst's and the Company's performance during
fiscal 1998 and the other factors discussed above relative to determining
salaries, it was concluded that Mr. Gunst's salary should remain at the annual
rate of $500,000 for fiscal 1999. In addition, after reviewing the option grants
to Mr. Gunst in the past and his stockholdings, Mr. Gunst was not granted any
additional options.
Robert A. Gunst's employment terminated as of June 30, 1999 and Ronald A.
Unkefer's employment as Chairman and Chief Executive Officer commenced on July
1, 1999. Mr. Unkefer's annual salary and bonus were negotiated prior to the
commencement of his employment and are described under Employment Arrangements
above.
The Committee has reviewed the total compensation of all executive officers
in fiscal 1999 and has concluded that their compensation is reasonable and
consistent with the Company's compensation philosophy and industry practice.
Section 162(m) of the Internal Revenue Code, enacted in 1993, limits the
amount of compensation a corporation may deduct as a business expense. Section
162(m) generally disallows deductions for compensation in excess of $1 million
to a company's Chief Executive Officer or to any of its four other most highly
compensated executive officers. Compensation that is "performance-based" is not
subject to that limit if certain requirements are met. The Committee does not
contemplate that there will be any nondeductible compensation for 1999 or for
2000 for any of the five executive positions in question.
The foregoing report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Proxy Statement into any filing under the Securities Act of 1933 or 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
OF THE BOARD OF DIRECTORS
Stanley R. Baker
W. Howard Lester
John E. Martin
Russell M. Solomon
9
<PAGE> 12
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
returns for the Company's Common Stock, the Nasdaq Stock Market (US) Index and
the Nasdaq-Retail Trade Index, each of which assumes reinvestment of dividends.
<TABLE>
<CAPTION>
NASDAQ RETAIL TRADE
THE GOOD GUYS! STOCK NASDAQ STOCK MARKET STOCKS
-------------------- ------------------- -------------------
<S> <C> <C> <C>
1994 100 100 100
1995 92 138 110
1996 65 164 132
1997 60 225 151
1998 47 229 130
1999 52 372 158
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has opened five WOW!, Multimedia Superstores, one in Nevada and
four in California. The WOW! Multimedia Superstores, which range in size from
40,500 to 61,350 square feet, are jointly operated with Tower Records under an
Operating Agreement between the Company and Tower Records. The Company and Tower
Records have separate leases for their respective stores, and the Operating
Agreement governs the joint operation of the facilities. The Company and Tower
Records share equally certain expenses in connection with operation of these
facilities, but do not share any profits on their respective sales. Russell M.
Solomon, Chairman of MTS Incorporated (dba Tower Records) is a member of the
Company's Board of Directors. The Company also subleases a portion of one of its
other stores to MTS Incorporated and the income received by the Company from
that sublease during the fiscal year ended September 30, 1999 was $318,938. Gary
M. Lawrence is a member of a law firm that has been retained from time to time
by the Company to provide services to the Company.
AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors in November 1999 approved an increase by 400,000 in
the number of shares covered by the Employee Stock Purchase Plan (the "Purchase
Plan"). Approval of the increase in the number of shares covered by the Purchase
Plan by the holders of at least a majority of the shares of Common Stock present
and entitled to vote at the meeting is required.
10
<PAGE> 13
Through December 13, 1999, there have been 2,825,142 shares purchased under
the Purchase Plan, in which all of the Company's full-time employees may
participate (approximately 795 employees are participating) and if the proposed
amendment to the Purchase Plan is adopted, 774,858 shares will remain available
for purchase under the Purchase Plan.
The continued success of the Company depends upon its ability to attract
and retain highly qualified and competent employees. The Purchase Plan enhances
that ability and provides additional incentive to such personnel to advance the
interests of the Company and its shareholders.
The Purchase Plan is described below.
GENERAL
All employees (except any employee who owns 5% or more of the stock of the
Company or whose customary employment by the Company is for five months or less
in any calendar year or for an average of less than 20 hours per week) are
eligible to participate in the Purchase Plan commencing on the first enrollment
date (January 1, April 1, July 1, or October 1) following the commencement of
their employment. Each employee enrolling in the Purchase Plan elects to make
contributions by payroll deductions of any whole integer amount ranging from 1%
to 15% of monthly gross pay. The rate of contribution may be either increased or
decreased to such amounts on any subsequent enrollment date. No employee may
purchase stock under the Purchase Plan exceeding $25,000 in fair market value in
any calendar year, and no employee may make contributions for any period during
which he or she is not receiving pay from the Company or its subsidiaries.
Employee contributions are credited to each participant's individual account
and, on March 31, June 30, September 30 and December 31 of each year, the funds
then in the participant's account are applied to the purchase of whole shares of
Common Stock, unless the member has previously advised the Company that he or
she does not wish shares purchased for his or her account. Shares purchased must
be held by its members for a period of one year from the last day of the
three-month period with respect to which the shares were purchased.
The cost to each participant's account for the shares so purchased will be
not less than 85% of the lower of the closing price on (a) the first trading day
of each three-month period or (b) the last trading day of each three-month
period. If the number of shares members desire to purchase at the end of any
three-month period exceeds the number of shares then available under the
Purchase Plan, the shares available will be allocated among such members in
proportion to their contributions during the three-month period.
No rights of any members are assignable by operation of law or otherwise,
except to the extent that there has been a designation of a beneficiary or
except as permitted by the laws of descent and distribution if a beneficiary is
not designated.
Membership in the Purchase Plan will be terminated when the member (a)
voluntarily elects to withdraw his or her entire account, (b) resigns or is
discharged from the Company or one of its subsidiaries, (c) dies, or (d) does
not receive pay from the Company or one of its eligible subsidiaries for 12
consecutive months, unless this period is due to illness, injury or for other
reasons approved by the person or persons appointed by the Company to administer
the Purchase Plan. Upon termination of membership, the terminated member will
not be entitled to rejoin the Purchase Plan until the first day of the
three-month period immediately following the three-month period in which the
termination occurs. Upon termination of membership, the member will be entitled
to the amount of his or her individual account within 15 days after termination.
ADMINISTRATION
The Purchase Plan is administered by Vance Schram, the Company's Vice
President Finance and Secretary. The Purchase Plan may be terminated or amended
at any time by the Board of Directors.
11
<PAGE> 14
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal Federal income tax
consequences of participation under the Purchase Plan under present law.
The Purchase Plan is intended to be a "qualified employee stock purchase
plan" under the Internal Revenue Code. The granting of the right to purchase
shares under the Purchase Plan has no tax effect on the participants of the
Company. No income is recognized to participants at the date shares are issued
under the Purchase Plan. If shares purchased under the Purchase Plan are held
for more than one year from the time they are received and for more than two
years from the date the rights to purchase are granted, amounts realized on a
sale of the shares are compensation to the employee taxable as ordinary income
only to the extent of the lesser of (a) the amount by which the fair market
value of the Common Stock at the date of such grant exceeds the price paid for
the shares or (b) the amount by which the sale price exceeds the purchase price.
Any further gain is treated as long-term capital gain. The same tax treatment is
applicable to shares acquired pursuant to the valid exercise of the right to
purchase subsequent to the death of an employee except that the holding period
requirements do not apply. If the shares are sold within the one-year or
two-year holding periods, the employee realizes compensation taxable as ordinary
income to the extent the fair market value of the shares at the date of purchase
was greater than the purchase price; the difference between the proceeds of sale
and the fair market value of the shares at the date of purchase is a capital
gain or loss (which will be long-term if the shares have been held for more than
one year). For purposes of determining the beginning of the two-year holding
period for shares, the date the rights to purchase are granted is deemed to be
the first day of that particular three-month period in which the shares are
purchased. To the extent the employee realizes ordinary income on a disposition
of the shares by reason of failing to meet the requisite holding periods, the
Company has a corresponding deduction.
PLAN BENEFITS
The following table sets forth the number of shares purchased under the
Purchase Plan during fiscal 1999 by each person named in the Summary
Compensation Table, all current executive officers as a group (including the
named executive officers who are currently executive officers), all current
directors who are not executive officers as a group, and all employees other
than executive officers as a group.
<TABLE>
<CAPTION>
PURCHASE PLAN
-----------------------------------
NUMBER OF
DOLLAR VALUE(1) SHARES PURCHASED
--------------- ----------------
<S> <C> <C>
Ronald A. Unkefer..................................... $ 0 0
Robert A. Gunst....................................... $ 6,835 4,000
Jayne Spiegelman...................................... $ 0 0
Paul N. Erickson...................................... $ 0 0
John G. Duken......................................... $ 0 0
Cathy A. Stauffer..................................... $ 317 328
Vance Schram.......................................... $ 0 0
Current Executive Officer Group....................... $ 7,152 4,328
Non-Executive Officer Director Group.................. $ 0 0
Non-Executive Officer Employee Group.................. $604,291 386,170
</TABLE>
- - ---------------
(1) The amounts in this column reflect the difference between the market value
of the shares purchased on the date of purchase and the purchase price under
the Purchase Plan and may not represent amounts actually realized by the
participants.
THE BOARD OF DIRECTORS RECOMMENDS THAT
THE SHAREHOLDERS VOTE "FOR" THE APPROVAL OF
THE AMENDMENT TO THE PURCHASE PLAN.
12
<PAGE> 15
RATIFICATION OF SELECTION OF AUDITORS
Touche Ross & Co. commenced service as the independent certified public
accountants for the Company in 1984. Deloitte, Haskins & Sells and Touche Ross &
Co. merged, effective December 3, 1989. Representatives of Deloitte & Touche LLP
are expected to be present at the shareholders' meeting with the opportunity to
make a statement if they desire to do so and are expected to be available to
respond to appropriate questions.
This matter is not required to be submitted for shareholder approval, but
the Board of Directors has elected to seek ratification of its selection of
independent public accountants by the affirmative vote of the holders of a
majority of the shares present and entitled to vote at the meeting. Management
has not determined what action it will take in the event the shareholders do not
ratify the selection of independent public accountants.
CERTAIN SHAREHOLDERS
The following table sets forth information as of December 17, 1999, unless
otherwise noted, regarding securities ownership by (i) each person who is known
by the Company to own beneficially more than five percent of the Company's
Common Stock, (ii) each current executive officer named in the Summary
Compensation Table, (iii) the directors and nominees individually, and (iv) all
executive officers and directors as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
----------------------
NAME NUMBER PERCENT
---- ---------- --------
<S> <C> <C>
Lord, Abbett & Co.(2)....................................... 2,144,575 10.8%
767 Fifth Avenue, 11th Floor
New York, NY 10153
First Pacific Advisors(2)................................... 2,053,000 10.3%
11400 West Olympic Blvd., Suite 1200
Los Angeles, CA 90064
Fidelity Management & Research(2)........................... 1,272,000 6.4%
One Federal Street
Boston, MA 02109
Dimensional Fund Advisors(2)................................ 1,018,100 5.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Ronald A. Unkefer(3)........................................ 1,450,000 7.3%
John E. Martin(4)........................................... 411,468 2.1%
Stanley R. Baker(5)......................................... 205,718 1.0%
Joseph M. Schell............................................ 102,526 *
W. Howard Lester(6)......................................... 91,468 *
Gary M. Lawrence............................................ 83,312 *
Russell M. Solomon(7)....................................... 66,000 *
Horst H. Schulze(8)......................................... 52,218 *
Cathy A. Stauffer(9)........................................ 34,168 *
Vance R. Schram(3)(10)...................................... 22,743 *
Joseph P. Clayton........................................... 2,526 *
Paul N. Erickson............................................ 0 *
All executive officers and directors as a group (12
persons)(11).............................................. 2,522,147 12.7%
</TABLE>
13
<PAGE> 16
- - ---------------
* Represents less than 1% of the outstanding shares.
(1) The stockholders named in the table have sole voting and investment power
with respect to all shares of stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in the footnotes to this table.
(2) As of September 30, 1999.
(3) Messrs. Unkefer and Schram are members of the administrative committees for
The Good Guys! Profit Sharing Plan, the trustee of which currently holds
520,705 shares on behalf of plan participants, and The Good Guys! Deferred
Pay Plan, the trustee of which currently holds 435,932 shares on behalf of
plan participants. If a participant fails to vote his or her shares under
either Plan, such shares will be voted in the manner determined by the
administrative committees.
(4) Includes 35,750 shares issuable upon the exercise of outstanding stock
options and warrants that are exercisable within 60 days.
(5) Includes 45,750 shares issuable upon the exercise of outstanding stock
options and warrants that are exercisable within 60 days.
(6) Includes 35,750 shares issuable upon the exercise of outstanding stock
options and warrants that are exercisable within 60 days.
(7) Includes 35,750 shares issuable upon the exercise of outstanding stock
options and warrants that are exercisable within 60 days.
(8) Includes 22,500 shares issuable upon the exercise of outstanding stock
options and warrants that are exercisable within 60 days.
(9) Includes 136 shares held by the trustee of The Good Guys! Profit-Sharing
Plan and allocated to Ms. Stauffer, as to which Ms. Stauffer has voting
power, 1,893 shares held by the trustee of The Good Guys! Deferred Pay Plan
and allocated to Ms. Stauffer's individual account, as to which Ms.
Stauffer has voting power, and 6,875 shares issuable upon exercise of
outstanding stock options that are exercisable within 60 days.
(10) Includes 118 shares held by the trustee of The Good Guys! Profit-Sharing
Plan and allocated to Mr. Schram's account, as to which Mr. Schram has
voting power; and 2,625 shares issuable upon exercise of outstanding stock
options that are exercisable within 60 days.
(11) Includes 254 shares held by the trustee of The Good Guys! Profit-Sharing
Plan and allocated to the individual accounts of members of the group, as
to which such individuals have voting power; 1,893 shares held by the
trustee of The Good Guys! Deferred Pay Plan and allocated to the individual
accounts of such members, as to which such individuals have voting power,
and 185,000 shares issuable upon exercise of outstanding stock options and
warrants that are exercisable within 60 days.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors and
executive officers, and any persons holding more than ten percent of the
Company's common stock, are required to report their initial ownership of the
Company's common stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose in this proxy statement
any failure to file by such dates of which it becomes aware during the fiscal
year. Subject to the foregoing, the Company believes that during the last fiscal
year its directors and officers filed on a timely basis all such reports
required to be filed.
PROPOSALS BY SHAREHOLDERS
Proposals by shareholders of the Company intended to be presented at the
next annual meeting must be received by the Company for inclusion in the
Company's proxy statement and form of proxy relating to that meeting by
September 1, 2000.
14
<PAGE> 17
EXPENSES OF SOLICITATION
The expense of preparing, assembling, printing and mailing the forms of
proxy and the material used in the solicitation of proxies will be paid by the
Company. In addition to the solicitation of proxies by use of the mails, some of
the officers, directors and regular employees of the Company, none of whom will
receive additional compensation therefor, may solicit proxies by telephone,
telegram or personal interview, the cost of which will be borne by the Company.
Arrangements will also be made for the forwarding of soliciting material by
nominees, custodians and fiduciaries to their principals.
OTHER MATTERS
Management knows of no other matters which will be brought before the
meeting, but if such matters are properly presented, the proxies solicited
hereby will be voted in accordance with the judgment of the persons holding such
proxies.
BY THE BOARD OF DIRECTORS
/s/ RONALD A. UNKEFER
----------------------------------
Ronald A. Unkefer
Chairman and Chief Executive Officer
Brisbane, California
December 28, 1999
15
<PAGE> 18
THE GOOD GUYS, INC.
PROXY/VOTING INSTRUCTIONS SOLICITED BY BOARD
OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
I appoint Ronald A. Unkefer and Vance R. Schram, and each of them, proxies
with full power of substitution, to vote all of my common stock of The Good
Guys, Inc. at the Annual Meeting of Shareholders to be held at the Ritz-Carlton
Hotel, 600 Stockton Street, San Francisco, California on Wednesday, January 26,
2000, at 11:00 a.m. (Pacific Time) and at any adjournment thereof, upon the
matters set forth on the reverse side and described in the accompanying Proxy
Statement and upon such other business as may properly come before the meeting
or any adjournment thereof.
This card also provides voting instructions to the trustees of The Good
Guys! Deferred Pay Plan and The Good Guys! Profit-Sharing Plan (the Plans) for
participants with shares allocated to their accounts. Your directions to vote
shares held in the Plans will be kept confidential.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY
ITEM. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED.
The Annual Meeting may be held as scheduled only if a majority of the
shares outstanding are represented at the meeting by attendance or proxy.
Accordingly, please complete this proxy and return it promptly in the enclosed
envelope.
- - --------------------------------
ADDRESS CHANGE
(Continued and to be signed on the other side)
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
INVESTOR INFORMATION
Additional Investor Information on the Company can be found on The Good Guys!
Internet home page @ http://www.thegoodguys.com.
Copies of recent quarterly financial press releases, along with other press
releases, also can be obtained by fax through Company News On Call, a division
of PR Newswire, at 1-800-758-5804. The Good Guys! extension number is 108403.
Or contact: The Good Guys, Inc.
Investor Relations
7000 Marina Boulevard
Brisbane, CA 94005-1840
(650) 615-5000
<PAGE> 19
<TABLE>
<S> <C>
Please mark
your votes as [X]
indicated in
this example.
The Board of Directors recommends a vote FOR all listed nominees for Director, FOR item 2 and FOR item 3.
WITHHOLD
FOR FOR ALL FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS [ ] [ ] 3. APPROVAL OF AUDITORS [ ] [ ] [ ]
Nominees: Ronald A. Unkefer, Stanley R. Baker, To ratify the selection of
Russell M. Solomon, W. Howard Lester, John E. Martin, Deloitte & Touche LLP as
Horst H. Schulze, Gary M. Lawrence, Joseph P. Clayton, independent Certified Public
Joseph M. Schell. Accountants for the Company.
WITHHELD FOR: To withhold authority for any individual I PLAN TO ATTEND THE MEETING. [ ]
nominee, cross out the nominee's name in the list above.
Receipt is hereby acknowledged of The Good Guys, Inc.
Notice of Annual Meeting of Shareholders and
FOR AGAINST ABSTAIN Proxy Statement.
2. EMPLOYEE STOCK PURCHASE PLAN [ ] [ ] [ ]
To approve an increase by 400,000 in the
number of shares covered by the Employee
Stock Purchase Plan.
Signature(s) ______________________________________________________________________________________ Dated: _________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
- - ------------------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
</TABLE>
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THE SHEET
AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
