<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
<TABLE>
<S> <C>
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
</TABLE>
<TABLE>
<S> <C>
GOTTSCHALKS INC.
- ------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required
/ / 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 transactions
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:
------------------------------------------------------------
(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:
------------------------------------------------------------
</TABLE>
<PAGE>
GOTTSCHALKS INC.
7 River Park Place East
Fresno, California 93720
(559) 434-4800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: JUNE 22, 2000
TIME: 10:00 A.M., PACIFIC DAYLIGHT TIME
PLACE: GOTTSCHALKS INC. CORPORATE HEADQUARTERS LOCATED AT 7 RIVER PARK
PLACE EAST,
FRESNO, CALIFORNIA
MATTERS TO BE VOTED ON:
1. Election of eleven directors.
2. Any other matters properly brought before the stockholders at the meeting.
By order of the Board of Directors,
[SIGNATURE]
Joe Levy
Chairman
Fresno, California
May 22, 2000
PROXY STATEMENT
Your vote at the annual meeting is important to us. Please vote your shares
of common stock by completing the enclosed proxy card and returning it to us in
the enclosed envelope. This proxy statement has information about the annual
meeting and was prepared by the Company's management for the Board of Directors.
This proxy statement and the accompanying proxy card are being first mailed to
stockholders on or about May 22, 2000.
<PAGE>
GENERAL INFORMATION ABOUT VOTING
WHO CAN VOTE?
You can vote your shares of common stock if our records show that you owned
the shares on April 27, 2000. A total of 12,596,837 shares of common stock can
vote at the annual meeting. You get one vote for each share of common stock. The
enclosed proxy card shows the number of shares you can vote.
HOW DO I VOTE BY PROXY?
Follow the instructions on the enclosed proxy card to vote on each proposal
to be considered at the annual meeting. Sign and date the proxy card and mail it
back to us in the enclosed envelope. The proxyholders named on the proxy card
will vote your shares as you instruct. If you sign and return the proxy card but
do not vote on a proposal, the proxyholders will vote for you on that proposal.
Unless you instruct otherwise, the proxyholders will vote for each of the eleven
director nominees.
WHAT IF OTHER MATTERS COME UP AT THE ANNUAL MEETING?
The matters described in this proxy statement are the only matters we know
will be voted on at the annual meeting. If other matters are properly presented
at the meeting, the proxyholders will vote your shares as they see fit.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. At any time before the vote on a proposal, you can change your vote
either by giving the Company's secretary a written notice revoking your proxy
card or by signing, dating and returning to us a new proxy card. We will honor
the proxy card with the latest date. You also may attend the annual meeting and
revoke your proxy card at that meeting. Your attendance alone does not
automatically revoke your proxy card.
WHAT DO I DO IF MY SHARES ARE HELD IN "STREET NAME"?
If your shares are held in the name of your broker, a bank, or other
nominee, that party should give you instructions for voting your shares.
HOW ARE VOTES COUNTED?
We will hold the annual meeting if holders of a majority of the shares of
common stock entitled to vote either sign and return their proxy cards or attend
the meeting. If you sign and return your proxy card, your shares will be counted
to determine whether we have a quorum even if you abstain or fail to vote on any
of the proposals listed on the proxy card.
Broker nonvotes will be counted as present to determine if a quorum exists
but will not be counted as present and entitled to vote on any nonroutine
proposal.
The election of directors will be determined by a plurality of votes cast.
Your vote for or against a candidate will be counted, but if you abstain or fail
to vote on a director, your proxy will be counted as present to determine if a
quorum exists but will not be counted as present and entitled to vote on the
election of directors. Broker nonvotes on the election of directors will be
treated the same way.
WHO PAYS FOR THIS PROXY SOLICITATION?
We do. In addition to sending you these materials, some of our employees may
contact you by telephone, by mail or in person. None of these employees will
receive any extra compensation for doing this. We also have asked registered
banks and brokers to forward copies of these materials to shareholders for whom
they act as nominees at our expense.
-1-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the number of shares of common stock beneficially
owned (as of May 22, 2000) by:
- each person who we know beneficially owns more than 5% of the common
stock;
- each director;
- each executive officer named in the Summary Compensation Table on page 12
(the "Named Officers"); and
- the directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership(1)
--------------------------------------------
Currently
Shares of Exercisable Total as
Name and Address Present Position Common Stock Percent of
of Beneficial Owner With the Company Stock(#)(2) Options(#)(3) Class(4)
------------------- ------------------------------------------- --------------- ------------- ----------
<S> <C> <C> <C> <C>
The Harris Company N/A 2,095,900(5) 0 16.4%
P.O. Box 20
Redlands, CA 92373
Gerald H. Blum Consultant 1,531,003(6) 0 12.0%
9 River Park Place East
Fresno, CA 93720
Joe Levy Chairman 1,272,629(7)(8) 38,750 10.3%
P.O. Box 28920
Fresno, CA 93729
Dimensional Fund Advisors N/A 915,900(9) 0 7.2%
1299 Ocean Avenue, 11th Fl.
Santa Monica, CA 90401
Joseph L. Harrosh N/A 665,600(10) 0 5.2%
40900 Grimmer Blvd.
Fremont, CA 94538
James R. Famalette President, Chief Executive Officer and 3,152 28,750 *
Director
Bret W. Levy Vice President, Treasurer and Director 363,140(11) 11,875 2.9%
Max Gutmann Director 12,000 8,000 *
Sharon Levy Director 0(8) 0 *
Joseph J. Penbera Director 5,000 8,000 *
Frederick R. Ruiz Director 9,550 8,000 *
O. James Woodward III Director 3,000 8,000 *
William Smith Director 5,500 3,000 *
Isidoro Alvarez Alvarez Director 0 0 *
Jorge Pont Sanchez Director 0 0 *
Gary L. Gladding Executive Vice President and General 4,982 23,500 *
Merchandise Manager
Michael J. Schmidt Senior Vice President and Director of 10,504 23,500 *
Stores
Michael S. Geele Senior Vice President and Chief Financial 0 7,500 *
Officer
Alan A. Weinstein N/A (Former Senior 0 0 *
Vice President and Chief Financial Officer)
Directors and Executive N/A 1,689,457 168,875 14.6%
Officers as a Group
(14 Persons)
</TABLE>
-2-
<PAGE>
- ------------------------
* Holdings represent less than 1% of all common shares outstanding.
(1) Unless otherwise indicated, (i) beneficial ownership is direct and
(ii) the person indicated has sole voting and investment power over the
shares of Common Stock indicated.
(2) Includes shares of common stock held in the Gottschalks Inc. Retirement
Savings Plan, as follows: Joe Levy (16,467 shares); James R. Famalette
(1,039 shares); Bret W. Levy (1,340 shares); Gary L. Gladding (3,832
shares) and Michael J. Schmidt (5,006 shares).
(3) Shares that may be acquired pursuant to options exercisable within 60 days
of May 22, 2000.
(4) Assumes that only those options of the particular person or group listed
that are exercisable within 60 days of May 22, 2000 have been exercised and
no others.
(5) The information with respect to The Harris Company was reported on a
Schedule 13D filed by Mr. Joe Levy, Mr. Bret Levy, El Corte Ingles and
Harris with the SEC on August 28, 1998, a copy of which was received by the
Company and relied upon in making this disclosure. The Harris Company
exercised, as of August 28, 1998, sole voting power and sole dispositive
power with respect to 2,095,900 shares.
(6) Includes an aggregate of 975,000 shares beneficially owned as trustee of
the trust established by the Will of Gertrude H. Klein. Does not include
other shares owned by Mr. Blum's adult children, over which shares
Mr. Blum disclaims beneficial ownership.
(7) Does not include the aggregate of 1,141,700 shares held by Joseph Levy's
adult children, Jody Levy-Schlesinger, Felicia Levy-Weston and Bret Levy
and their spouses and children, over which shares Joseph Levy disclaims
beneficial ownership. Does not include 580,000 shares in which Joe Levy has
a pecuniary interest as a beneficiary of the trust established by the Will
of Gertrude H. Klein.
(8) Sharon Levy shares beneficial ownership of the shares attributed to Joe
Levy, her husband, as community property.
(9) The information with respect to Dimensional Fund Advisors Inc. was reported
on a Schedule 13G filed by Dimensional Fund Advisors Inc. with the SEC on
February 4, 2000, a copy of which was received by the Company and relied
upon in making this disclosure. Dimensional Fund Advisors Inc. exercised,
as of February 4, 2000, sole voting power and sole dispositive power with
respect to 915,900 shares.
(10) The information with respect to Joseph L. Harrosh, was reported on a
Schedule 13G filed by Joseph L. Harrosh with the SEC on February 15, 2000,
a copy of which was received by the Company and relied upon in making this
disclosure. Joseph L. Harrosh exercised, as of February 15, 2000, sole
voting power and sole dispositive power with respect to 665,600 shares.
(11) Includes 79,400 shares owned by Mr. Bret Levy's children, for which
Mr. Levy serves as custodian. Does not include 18,700 shares owned by Bret
Levy's spouse.
As of May 22, 2000, other than as indicated above, there was no person or
group known by the Company to own beneficially more than 5% of the outstanding
Common Stock of the Company.
-3-
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
An entire board of directors, consisting of eleven members, will be elected
at the annual meeting. The directors elected will hold office until their
successors are elected, which should occur at the next annual meeting.
VOTE REQUIRED. The eleven nominees receiving the highest number of votes
will be elected.
NOMINATIONS. At the annual meeting, we will nominate the persons named in
this proxy statement as directors. Although we know of no reason why one of
these nominees might not be able to serve, the board of directors will propose a
substitute nominee if any nominee is not available for election.
Stockholders can also nominate persons to be directors. If you want to
nominate a person, you must follow the procedures set forth in the Company's
bylaws. You must deliver a notice to the Company's secretary at the Company's
principal executive offices before the close of business on June 1, 2000. That
notice must contain the information required by the bylaws about you and your
nominees. Unless you have complied with these bylaw provisions, your nominee
won't be accepted and cannot be voted on by the shareholders.
NOMINEES FOR ELECTION AS DIRECTOR
All of the nominees are currently directors of the Company. Each has agreed
to be named in this proxy statement and to serve as a director if elected. The
ages listed for the nominees are as of May 22, 2000.
JOE LEVY Director since 1986
Joe Levy, 69, has been the Chairman of the Board of the Company since 1986
and has served the Company and its predecessor and former subsidiary since 1956.
From 1986 until June 25, 1999, he was also Chief Executive Officer of the
Company. Prior to taking on his current role with the Company, Mr. Joe Levy
served the Company's predecessor and former subsidiary as Chairman and Chief
Executive Officer from 1982 through 1986 and as Executive Vice President from
1972 through 1982. Mr. Joe Levy serves on the board of directors of the National
Retail Federation and the Executive Committee of Frederick Atkins, Inc. He was
formerly chairman of the California Transportation Commission and served on the
board of directors of Community Hospitals of Central California. He has also
served on numerous other state and local commissions and public service
agencies. Mr. Joe Levy is the husband of Mrs. Sharon Levy and the father of
Mr. Bret Levy.
JAMES R. FAMALETTE Director since 1997
James R. Famalette, 48, became President and Chief Executive Officer of the
Company on June 25, 1999 after serving as President and Chief Operating Officer
since 1997. Prior to joining the Company, Mr. Famalette was President and Chief
Executive Officer of Liberty House, a department and specialty store chain based
in Honolulu, Hawaii, from 1993 through 1997. Mr. Famalette served in a variety
of other positions with Liberty House from 1987 through 1993, including Vice
President, Stores and Vice President, General Merchandise Manager. From 1982
through 1987, he served first as Vice President, General Merchandise Manager and
then as President of Village Fashions/Cameo Stores in Philadelphia,
-4-
<PAGE>
Pennsylvania. From 1975 through 1982, Mr. Famalette served as a Divisional
Merchandise Manager for Colonies, a specialty store chain based in Allentown,
Pennsylvania.
BRET W. LEVY Director since 1986
Bret Levy, 36, was a director of the Company's predecessor and former
subsidiary from 1982 until the time the Company was formed in 1986. He has been
an employee of the Company since 1989 and presently serves as Vice President,
Treasurer. Prior to joining the Company, Mr. Bret Levy served as a management
consultant with Price Waterhouse and a lecturer on microeconomics at the
University of Southern California. He also serves on the Advisory Counsel of the
National Retail Federation and serves as a director of the Fresno Merchants
Association and the California Retailers' Association. Mr. Bret Levy is a
certified public accountant and obtained his MBA from the University of Chicago.
Mr. Bret Levy is the son of Mr. Joe Levy and Mrs. Sharon Levy.
MAX GUTMANN Director since 1992
Max Gutmann, 77, is currently retired. Mr. Gutmann served as Chairman and
Chief Executive Officer of Elder-Beerman Stores Corporation, a regional
department and specialty store chain, during the period from 1995 through 1998
and from 1974 through 1991. He was retired during the period from 1991 through
1995. Mr. Gutmann was also Executive Vice President and subsequently President
of Elder-Beerman from 1961 through 1973. He is a former chairman and/or director
of numerous companies and trade associations.
SHARON LEVY Director since 1986
Sharon Levy, 67, was a director of the Company's predecessor and former
subsidiary from 1982 until the time the Company was formed in 1986. She has
served as an elected member of the Board of Supervisors of Fresno County since
1975, serving as Chairman of the Board of Supervisors in 1980, 1985, 1990, 1995
and 1999. Mrs. Levy also serves on numerous other public service agencies.
Mrs. Levy is the wife of Mr. Joe Levy and the mother of Mr. Bret Levy.
JOSEPH J. PENBERA Director since 1986
Joseph Penbera, 53, is an Eaton Fellow and Professor of Business at
California State University, Fresno, where he formerly served as Dean of The
Craig School of Business. He also serves as chairman of The AgZone, an
electronic commerce firm. Dr. Penbera is President of the Consortium for
Economic Research and is a former Chief Economist for Regency Bank, as well as
other financial institutions. Dr. Penbera is also a director of Rug Doctor, L.P.
and has served in that capacity since 1986.
FREDERICK R. RUIZ Director since 1992
Frederick Ruiz, 56, is the Chairman and co-founder of Ruiz Food Products,
Inc., a privately held frozen food company based in Dinuba, California. He has
held the position of Chairman for at least the last five years. Mr. Ruiz serves
on the Boards of Directors of McClatchy Newspapers, Inc., The AgZone, The
California Endowment and The Hispanic College Fund. Mr. Ruiz is a member of the
Business Advisory Council of California State University, Fresno.
O. JAMES WOODWARD III Director since 1992
O. James Woodward III, 64, has been an attorney in the private practice of
law in Fresno, California since 1992. Since 1995, he has also been Chairman of
the Board of Directors of Mission Homes. He has
-5-
<PAGE>
served as corporate counsel for several public corporations and was Executive
Vice President of Glenfed, Inc. from 1988 through 1991. In addition to a private
law practice, Mr. Woodward has had experience with financial institutions and in
real estate development in California. He currently serves on the Board of
Directors of The AgZone, the Board of Governors of the California State
University, Fresno Foundation, the Business Advisory Council of California State
University, Fresno and the Board of Trustees of the University of California,
Merced Foundation.
WILLIAM SMITH Director since 1998
William Smith, 53, is a private investor. Mr. Smith was formerly a Senior
Vice President of Peter B. Cannell & Co., New York City from 1996 through 1998
and was a senior retail analyst at Neuberger & Berman, New York City from 1994
through 1995. From 1983 through 1994, Mr. Smith was with the investment firm of
Smith Barney, reaching the level of Managing Director and heading their retail
trade analyst group. Mr. Smith is the past president of the New York Retail
Analysts Society and is a Chartered Financial Analyst.
ISIDORO ALVAREZ ALVAREZ Director since 1998
Isidoro Alvarez Alvarez, 64, is the Chairman of El Corte Ingles, S.A., a
Spanish retail conglomerate operating in Spain and Portugal. He has held that
position for at least the last five years. From 1982 through 1998, Mr. Alvarez
was a director of The Harris Company, a department store chain which formerly
operated nine stores located throughout Southern California. The Harris Company
is a wholly-owned subsidiary of El Corte Ingles, S.A.
JORGE PONT SANCHEZ Director since 1998
Jorge Pont Sanchez, 62, has been the International Division Director of El
Corte Ingles, S.A. since 1997. With the exception of the period from 1997
through 1998, he has also been the President and Chief Executive Officer of The
Harris Company since 1982.
AGREEMENTS WITH NOMINEES
MR. FAMALETTE. Under the terms of Mr. Famalette's employment agreement, the
Company must cause Mr. Famalette to continue to be elected as a member of the
Board of Directors during his term of employment. See "Employment and Severance
Agreements--Employment Agreement."
MR. ALVAREZ AND MR. PONT. The Company, Mr. Joseph Levy, Mr. Bret Levy, El
Corte Ingles and The Harris Company are parties to a Stockholders' Agreement
(described below). Pursuant to that Stockholder's Agreement, El Corte Ingles and
The Harris Company nominated Mr. Alvarez and Mr. Pont to the Gottschalks Board.
On August 20, 1998, the Company acquired substantially all of the assets and
business of The Harris Company pursuant to an Asset Purchase Agreement entered
into with The Harris Company and El Corte Ingles. Mr. Alvarez is a former
Director of The Harris Company and is the Chairman of El Corte Ingles. Mr. Pont
is the President and Chief Executive Officer of The Harris Company and is the
International Division Director of El Corte Ingles. As consideration for such
assets and business, Gottschalks issued to The Harris Company 2,095,900 shares
of Gottschalks common stock and an 8% Non-Negotiable, Extendable, Subordinated
Note, and assumed certain liabilities. As a condition to closing the
acquisition, on the same day:
-6-
<PAGE>
- Gottschalks, The Harris Company, El Corte Ingles, Joseph Levy and Bret
Levy entered into a Stockholders' Agreement (described below),
- Gottschalks and The Harris Company entered into a Registration Rights
Agreement granting The Harris Company certain rights to participate in a
registration statement filed by Gottschalks with the Securities and
Exchange Commission and
- Gottschalks and El Corte Ingles entered into a Standstill Agreement
restricting El Corte Ingles' activities as an owner (through The Harris
Company) of Gottschalks common stock.
In the Stockholders' Agreement, El Corte Ingles, The Harris Company, Joseph
Levy and Bret Levy agreed (among other things) to do the following for the term
of the agreement:
- Initially, cause two El Corte Ingles nominees to be added to the
Gottschalks Board. As a result, Mr. Alvarez and Mr. Pont were added to the
Gottschalks Board during fiscal 1998.
- Cause the Gottschalks Board to be structured to consist of eleven members,
of which two members will be El Corte Ingles nominees and the remaining
nine members will be management nominees and independent nominees. Joseph
Levy (or Bret Levy under certain circumstances) chooses the management
nominees from management or persons affiliated with management.
- Vote all Gottschalks common stock they own or have the power to vote in
favor of the El Corte Ingles nominees, the management nominees and the
independent nominees. Gottschalks also agreed to solicit proxies in favor
of such nominees.
The Stockholders' Agreement provides for the El Corte Ingles nominees to be
increased or decreased as a result of changes in the amount of Gottschalks
common stock that El Corte Ingles owns (through The Harris Company) as follows:
<TABLE>
<CAPTION>
Impact of Changes In Ownership of
Gottschalks' Outstanding Common
Stock or Disposal of Common Stock Change to Number of
(in Either Case Fully Diluted) El Corte Ingles Nominees Change to Size of Board
------------------------------ ------------------------ -----------------------
<S> <C> <C>
El Corte Ingles, directly or indirectly, Increased to 3 Increased to 12
beneficially owns at least 30% of common
stock
El Corte Ingles disposes of more than 700,000 Decreased to 1 Decreased by number of El Corte
shares of common stock or El Corte Ingles and Ingles nominees that must
its affiliates beneficially own less than 10% resign
of common stock
El Corte Ingles disposes of more than Decreased to 0 Decreased by number of El Corte
1,350,000 shares of common stock or El Corte Ingles nominees that must
Ingles and its affiliates beneficially own resign
less than 5% of common stock
</TABLE>
The Stockholders' Agreement also
- provides for proportional adjustments to the number of El Corte Ingles,
S.A. nominees in the event of an increase in the Board size (other than as
the result of an acquisition transaction approved by the Board),
- contains restrictions on the transfer by The Harris Company of the
Gottschalks common stock,
-7-
<PAGE>
- contains other agreements between the parties regarding voting on change
in control transactions and participation by Mr. Levy's family in a
Gottschalks registration statement, and
- includes a non-compete agreement from The Harris Company and El Corte
Ingles, S.A.
The Stockholders' Agreement term (other than the provisions relating to
restrictions on transfer by The Harris Company of its shares, which have a
different termination date) lasts until the earlier of (1) the date El Corte
Ingles, S.A. is no longer entitled to nominees on the Gottschalks Board and
(2) the expiration of the Standstill Agreement other than as the result of an
Early Standstill Termination Event (as such term is defined in the Standstill
Agreement). Gottschalks has previously filed the Stockholders' Agreement, the 8%
Non-Negotiable Subordinated Note, the Registration Rights Agreement and the
Standstill Agreement with the Securities and Exchange Commission.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE FOR THE
NOMINEES LISTED ABOVE. IF YOU SEND IN YOUR PROXY, IT WILL BE VOTED IN FAVOR OF
THESE NOMINEES UNLESS YOU SPECIFY OTHERWISE.
MEETINGS OF THE BOARD OF DIRECTORS. During the fiscal year ended January 29,
2000, the board of directors held 5 meetings. With the exception of
Messrs. Alvarez and Pont, each director attended, either in person or
telephonically, at least 75% of the Board meetings and meetings of Board
Committees that he or she was eligible to attend.
COMMITTEES OF THE BOARD. The board of directors has three principal
committees. The following chart describes the function and membership of each
committee and the number of times it met in the fiscal year ended January 29,
2000.
AUDIT COMMITTEE--3 MEETINGS
<TABLE>
<CAPTION>
FUNCTION MEMBERS
- -------- -------
<S> <C>
- Review auditor's report with the independent Joseph J. Penbera, Chairman
auditors Max Gutmann
- Review scope of annual audit and quarterly review Frederick R. Ruiz
by independent auditors William Smith
- Nominate independent auditors to be selected by the O. James Woodward III
board of directors
- Evaluate independence of independent auditors
- Oversee internal accounting and control systems
- Review accounting and financial reporting
requirements and practices affecting the Company
- Evaluate and oversee internal audit staff
</TABLE>
-8-
<PAGE>
COMPENSATION COMMITTEE--4 MEETINGS
<TABLE>
<CAPTION>
FUNCTION MEMBERS
- -------- -------
<S> <C>
- Review and approve executive compensation and O. James Woodward III, Chairman
employment agreements Max Gutmann
- Review and approve bonuses, incentive stock option Joseph J. Penbera
awards and stock option grants Frederick R. Ruiz
William Smith
</TABLE>
NOMINATING COMMITTEE--1 MEETING
<TABLE>
<CAPTION>
FUNCTION MEMBERS
- -------- -------
<S> <C>
- Review qualifications of and nominate independent Max Gutmann, Chairman
candidates for board of directors (other than those Joseph J. Penbera
nominated by stockholders) Frederick R. Ruiz
William Smith
O. James Woodward III
</TABLE>
-9-
<PAGE>
COMPENSATION OF DIRECTORS
The following table sets forth amounts paid to each of the non-employee
directors during fiscal 1999.
DIRECTOR COMPENSATION FOR FISCAL YEAR 1999
<TABLE>
<CAPTION>
Cash Compensation Security Grants
-------------------------------------------- --------------------------
Securities
Consulting Underlying
Annual Retainer Meeting Fees Fees/Other Number of Options
Name Fees($)(1) ($)(2) Fees($)(3) Shares(#)(4) (SAR)(#)(4)
---- --------------- ------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Sharon Levy -- 5,000 -- 0 0
Joseph J. Penbera 12,000 5,500 -- 2,000 0
Frederick R. Ruiz 12,000 6,000 -- 2,000 0
O. James Woodward III 12,000 6,500 -- 2,000 0
Max Gutmann 12,000 5,500 4,335(3) 2,000 0
William Smith 12,000 6,000 6,304(3) 2,000 0
Isidoro Alvarez Alvarez -- -- -- 0 0
Jorge Pont Sanchez -- 2,000(3) 6,689(3) 0 0
</TABLE>
- ------------------------
(1) The five outside directors who are neither officers nor an affiliate of the
Company receive an annual stipend of $12,000, payable monthly.
(2) The eight non-employee directors receive $1,000 for each meeting of the
Board attended and $500 for each Committee meeting attended and held on a
separate date.
(3) The Company reimburses directors who reside outside the Fresno area for
costs incurred in attending meetings of the Board and in performing Board
duties. Such expense reimbursements typically include meals and
transportation costs and, when required, overnight hotel expenses. Amounts
indicated for Mr. Pont are paid directly to El Corte Ingles.
(4) The five outside directors who are neither officers nor affiliates of the
Company received grants of options in fiscal 1999 under the 1998 Stock
Option Plan. There were no individual grants of options in tandem with stock
appreciation rights ("SARS") or freestanding SARS made during fiscal 1999.
-10-
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following table lists the executive officers of the Company:
<TABLE>
<CAPTION>
Name Age(1) Position
---- ------ --------
<S> <C> <C>
Joe Levy(2) 69 Chairman
James R. Famalette(2) 48 President and Chief Executive Officer and Director
Gary L. Gladding 60 Executive Vice President and General Merchandise Manager
Michael S. Geele 50 Senior Vice President and Chief Financial Officer
Michael J. Schmidt 58 Senior Vice President and Director of Stores
</TABLE>
- ------------------------
(1) As of May 22, 2000.
(2) Information with respect to Joe Levy and James R. Famalette is included in
the "Election of Directors" portion of this Proxy Statement.
GARY L. GLADDING has been Executive Vice President of the Company since
1987, and joined E. Gottschalk, the Company's predecessor, as Vice
President/General Merchandise Manager in 1983. From 1980 to 1983, he was Vice
President and General Merchandise Manager for Lazarus Department Stores, a
division of Federated Department Stores, Inc., and he previously held
merchandising manager positions with the May Department Stores Co.
MICHAEL S. GEELE became Senior Vice President and Chief Financial Officer of
the Company on January 19, 1999. Prior to joining the Company, Mr. Geele was
Chief Financial Officer of Southwest Supermarkets in Phoenix, Arizona from 1995
to 1998. From 1991 to 1995, Mr. Geele served as Vice President of Finance for
Smitty's Super Valu in Phoenix, Arizona, and from 1981 to 1991 served in various
financial positions with Smitty's, including Senior Director and Corporate
Controller. Mr. Geele is a certified public accountant.
MICHAEL J. SCHMIDT became Senior Vice President/Director of Stores of E.
Gottschalk, the Company's predecessor, in 1985. Prior to joining the Company's
predecessor in 1983, he held management positions with Liberty House, Allied
Corporation and R.H. Macy & Co., Inc.
-11-
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION. The materials set forth below contain information on
certain cash and non-cash compensation provided to Mr. Joe Levy and Mr. Jim
Famalette, who both served in the capacity of Chief Executive Officer for the
Company in fiscal 1999, and the four other current and former executive officers
of the Company who were the most highly compensated executive officers (or
former executive officers) for fiscal year 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards(1)
----------------------------------------------- -------------
Securities All Other
Name and Fiscal Base Other Annual Underlying Compensation
Principal Position Year Salary($)(2) Bonus($)(3) Compensation($)(4) Options(#)(5) ($)(6)
------------------ ------ ------------ ----------- ------------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Joe Levy 1999 336,101(7) 66,000 -- 15,000 5,387
Chairman 1998 327,600 28,125 -- 40,000 3,453
1997 327,600 -- -- -- 6,669
James R. Famalette 1999 392,269(8) 70,000 -- 55,000 3,644
President, Chief Executive 1998 356,192 127,902 -- 40,000 3,267
Officer and Director 1997 262,500(9) -- 68,803(10) 20,000 168
Gary L. Gladding 1999 291,600 40,000 -- 10,000 4,484
Executive Vice President 1998 284,354 24,056 -- 4,000 1,754
and General Merchandise 1997 276,508 -- -- -- 5,057
Manager
Michael S. Geele 1999 178,461 -- -- 10,000 582
Senior Vice President and 1998 6,731(11) -- -- 20,000 --
Chief Financial Officer 1997 -- -- -- -- --
Michael J. Schmidt 1999 210,938 32,000 -- 10,000 4,135
Senior Vice President and 1998 201,081 16,429 -- 4,000 2,677
Director of Stores 1997 187,672 10,000(12) -- -- 4,155
Alan A. Weinstein 1999 122,269(13) -- -- -- --
Former Senior Vice 1998 199,227 16,054 -- -- 2,083
President and Chief 1987 183,307 -- -- -- 3,793
Financial Officer
</TABLE>
- ------------------------
(1) The Company did not make any payments or awards that would be classified
under the "Restricted Stock Award" and "LTIP Payout" columns otherwise
required to be included in the Table by the applicable SEC disclosure
rules.
(2) Includes compensation earned but deferred pursuant to the Gottschalks Inc.
Retirement Savings Plan and a cafeteria plan established pursuant to
Internal Revenue Code Section 125.
(3) Bonus amounts paid in fiscal 1999 were paid under the 1998 Bonus Plan (the
"Bonus Plan"). The bonus paid to Mr. Famalette in fiscal 1998 also includes
$100,000 payable under his employment
-12-
<PAGE>
agreement. Except as indicated at footnote (12) below, no bonus
compensation was earned by the Named Officers in fiscal year 1997.
(4) Except as indicated at footnote (10) below, the amounts included in this
column for each of the Named Officers do not include the value of certain
perquisites in which the aggregate did not exceed the lesser of $50,000 or
10% of the Named Officer's aggregate salary and bonus compensation for
fiscal 1997, 1998 or 1999, as applicable.
(5) Represents shares of stock underlying options granted under the Company's
various stock option plans. There were no individual grants of options in
tandem with SARS or freestanding SARS made during fiscal years 1997, 1998
or 1999 to the Named Officers.
(6) Represents contributions made by the Company on behalf of the Named
Officers to the Gottschalks Inc. Retirement Savings Plan in the form of
Common Stock of the Company and amounts paid for term life insurance
premiums.
(7) Mr. Joe Levy was Chairman and Chief Executive Officer through June 25, 1999
and relinquished the title of Chief Executive Officer to Mr. James
Famalette on that date. His base salary has remained unchanged.
(8) Mr. Famalette became President and Chief Executive Officer on June 25,
1999, after serving as President and Chief Operating Officer since
April 14, 1997. This amount represents his base salary as President and
Chief Operating Officer from the beginning of fiscal 1999 through June 24,
1999, and as President and Chief Executive Officer from June 25, 1999
through the remainder of fiscal 1999. (See the "Employment and Severance
Agreements" portion of this Proxy Statement for a description of amounts to
be paid to Mr. Famalette pursuant to his employment agreement.)
(9) Mr. Famalette was employed by the Company on April 14, 1997. This
represents base salary paid for a partial year in fiscal 1997.
(10) Represents amounts paid as reimbursement for actual relocation expenses
incurred.
(11) Mr. Geele was employed by the Company on January 19, 1999. This amount
represents base salary paid for a partial year in fiscal 1998.
(12) Mr. Schmidt received a discretionary bonus payment in fiscal 1997.
(13) Mr. Weinstein's employment with the Company was terminated on
September 27, 1998. Pursuant to his written termination notice,
Mr. Weinstein received the continuing payment of his base salary, totaling
$187,000, over the twelve month period following his termination on
September 27, 1998, and the right to continuing coverage in the Company's
group medical plan at the Company's expense for one year. Upon his
termination, Mr. Weinstein also received payment for all accrued vacation
and holiday pay.
-13-
<PAGE>
OPTION GRANTS. Shown below is information with respect to grants of stock
options to the officers named in the Summary Compensation Table above during the
last fiscal year under the 1998 Stock Option Plan. In addition to options
granted to the Named Officers below, in fiscal 1999 a total of 99,000 options
were also granted to 23 other officers and key employees of the Company under
the 1998 Stock Option Plan.
OPTION GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation for Option
Individual Grants Term
--------------------------------------------------------- ---------------------------
Number of
Securities Percent of
Underlying Total Options
Options Granted to
Granted Employees in Exercise Price Expiration
Name (#)(1) Fiscal Year ($/Share)(2) Date 5% 10%
- ---- ---------- ------------- -------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Joe Levy 15,000 7.5% 9.21 6/14/09 $ 98,000 $256,000
James R. Famalette 15,000 7.5% 8.38 6/14/09 89,000 217,000
James R. Famalette 40,000 20.1% 8.88 6/25/09 252,000 658,000
Gary L. Gladding 10,000 5.0% 8.38 6/14/09 59,000 155,000
Michael S. Geele 10,000 5.0% 8.38 6/14/09 59,000 155,000
Michael J. Schmidt 10,000 5.0% 8.38 6/14/09 59,000 155,000
Alan A. Weinstein 0 0% N/A N/A N/A N/A
</TABLE>
- ------------------------
(1) These options first become exercisable on the first anniversary of the grant
date, with 25% of the underlying shares becoming exercisable at that time,
an additional 25% of the option shares becoming exercisable on each
successive anniversary date and full vesting on the fourth anniversary date.
(2) Represents the fair market value of the Company's Common Stock (110% of fair
market value for options granted to Mr. Joe Levy) based on its closing price
on the New York Stock Exchange as of the date of the grant of the options.
OPTION EXERCISES. Shown below is information with respect to the exercise
of stock options during the last fiscal year by the Named Officers and the value
of unexercised options held by each of them as of the end of the last fiscal
year.
-14-
<PAGE>
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 1999 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options Options at Fiscal
at Fiscal Year-End Year-End(1)
------------------- -----------------
Shares Exercisable/ Exercisable/
Name Acquired(#) Value Realized($) Unexercisable(#) Unexercisable($)
- ---- ----------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Joe Levy 0 0 38,750/41,250 0/0
James R. Famalette 0 0 28,750/86,250 11,200/11,200
Gary L. Gladding 0 0 23,500/10,500 0/0
Michael S. Geele 0 0 7,500/22,500 0/0
Michael J. Schmidt 0 0 23,500/10,500 0/0
Alan A. Weinstein 0 0 0/0 0/0
</TABLE>
- ------------------------
(1) The exercise price of the options range from $5.38 to $10.87 per share. The
closing price of the Company's Common Stock on the New York Stock Exchange
as of January 29, 2000 was $6.50 per share.
EMPLOYMENT AND SEVERANCE AGREEMENTS
EMPLOYMENT AGREEMENT. The Company has an employment agreement with James R.
Famalette as President and Chief Executive Officer. Under the agreement,
Mr. Famalette's employment as President and Chief Executive Officer began on
June 24, 1999 and is initially to continue for three years through July 2, 2002.
The terms of the agreement may extended by mutual written consent.
Mr. Famalette had formerly served as President and Chief Operating Officer since
April 14, 1997. The agreement provides that Mr. Famalette shall be a member of
the Board of Directors during his term of employment. In has capacity as
President, Chief Executive Officer and Director, the agreement provides for the
payment of an annual base salary of $420,000 in the first year of the contract
(June 24, 1999 through June 23, 2000), $460,000 in the second year of the
contract (June 24, 2000 through June 23, 2001) and $500,000 in the third year of
the contract (June 24, 2001 through July 2, 2001). The agreement also provides
for the payment of an annual bonus under the Company's Management Bonus Plan,
under which Mr. Famalette will have the ability to earn an annual bonus of at
least 30% of Base Salary if specific goals and objectives adopted by the Board
are achieved. Mr. Famalette received a grant of 40,000 options under the
Company's 1998 Stock Option Plan (with 25% of such options vesting on each
anniversary of the option grant at an exercise price equal to the fair market
value of the Company's Common Stock on the date of the grant) upon entering into
his employment agreement. Mr. Famalette also receives a car allowance and
receives other benefits typically offered to all employees of the Company. The
compensation payable pursuant to the agreement shall be terminated if
Mr. Famalette terminates his employment with the Company through retirement,
disability or death, if Mr. Famalette is terminated for cause (as defined) or
the Company sells all or part of its business and Mr. Famalette is able to
continue his employment with the buyer at or above his then base salary. With
the exception of
-15-
<PAGE>
the employment agreement with Mr. Famalette, the Company has no employment
agreements with any of the other Named Officers, including the Chairman.
SEVERANCE AGREEMENTS. The Company has Severance Agreements with each of the
officers named in the Summary Compensation Table above, including the Chief
Executive Officer. Such agreements provide for the continuing payment of the
officer's base salary for a period of twelve months, except for Messrs. Levy and
Famalette, whose severance benefits will be payable for a period of twenty-four
months, and in the case of Mr. Famalette, less the period remaining under his
employment agreement. The agreements also provide for continuing coverage in the
Company's group medical plan at the Company's expense for one year in the event
the officer is terminated by written notice by the Company for other than cause
(as defined). The agreements require the officer to continue to report to work
and perform the duties of his or her employment until the date set forth as the
officer's date of termination in order to receive such continuing payments. The
officer is not entitled to receive a severance benefit under certain conditions
including: (i) the termination of employment occurs by other than written notice
of termination by the Company; (ii) if the Company sells all or part of its
business and the officer has the opportunity to continue his or her employment
with the buyer at or above the officer's base rate of pay; and (iii) the
termination of employment for cause (as defined). In the event of a change in
control, the severance benefits are extended to a period of twenty-four months
in the case of Mr. Joe Levy and Mr. Famalette, and to a period of eighteen
months in the case of Messrs. Gladding, Geele and Schmidt.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Gottschalks is indebted to The Harris Company, a stockholder owning more
than 5% of the Gottschalks common stock. As described under the heading
"Agreements With Nominees," on August 20, 1998 the Company acquired
substantially all of the assets and business of The Harris Company. As
consideration for the purchase, Gottschalks issued to The Harris Company
2,095,900 shares of Gottschalks common stock and an 8% Non-Negotiable,
Extendable, Subordinated Note and assumed certain other liabilities. The
Subordinated Note is due August 20, 2003 in the principal amount of $22,179,598.
Interest on the Subordinated Note is payable semi-annually, with the principal
portion due and payable upon its maturity date, unless such payment would result
in a default on any of the Company's other credit facilities, whereby the
maturity date of the Subordinated Note would be extended by three years to
August 2006. Mr. Alvarez and Mr. Pont are directors of Gottschalks and are also
directors and/or executive officers of The Harris Company and its parent, El
Corte Ingles, S.A. Mr. Alvarez is a former Director of The Harris Company and is
the Chairman of El Corte Ingles, S.A. Mr. Pont is the President and Chief
Executive Officer of The Harris Company and is the International Division
Director of El Corte Ingles, S.A.
Mr. Blum's Consulting Agreement provides for Mr. Blum to perform certain
consulting services for the Company during the period of June 1, 1994 through
May 31, 2001 in return for annual fees of $200,000 payable monthly. The
Consulting Agreement, entered into on May 27, 1994, also provides for the
payment of an annual office allowance and continuation of certain insurance and
retirement benefits. The Company paid Mr. Blum a total of $221,381 under the
Consulting Agreement in fiscal 1999.
-16-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
THE FOLLOWING REPORT AND THE PERFORMANCE GRAPH ON PAGE 19 DO NOT CONSTITUTE
SOLICITING MATERIALS AND ARE NOT CONSIDERED FILED OR INCORPORATED BY REFERENCE
INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES EXCHANGE ACT OF 1934, UNLESS WE SPECIFICALLY STATE OTHERWISE.
The policy of the Compensation Committee of the Board of Directors is that
the compensation of the executives of the Company should be closely aligned with
the interests of the stockholders of the Company and linked with the Company's
overall financial performance and the executive's individual performance. The
Compensation Committee generally believes compensation should be limited to
amounts that are deductible under present income tax law. However, under certain
circumstances, the Compensation Committee may authorize the payment of
compensation that is not deductible. Such policies have been incorporated into a
performance-based compensation program developed and implemented by the
Compensation Committee for the senior executive officers of the Company.
COMPENSATION PROGRAM
The Company's executive compensation program consists primarily of three
components: (1) a base salary that is designed to attract and retain qualified
employees for the Company; (2) annual incentives which are tied to the
performance of the Company; and (3) stock options.
BASE SALARY. The base salary of the Chief Executive Officer was originally
determined by the Compensation Committee based on factors such as scope of
responsibility, current performance and the overall financial performance of the
Company for the most recent fiscal year. In such determination, the Compensation
Committee also considered salary ranges of chief executive officers of certain
competitors of the Company. The annual base salary paid to Mr. James Famalette,
as President and Chief Executive Officer for fiscal 1999 was $392,269. This
amount represents base salary paid to him as President and Chief Operating
Officer from the beginning of fiscal 1999 and through June 24, 1999 and as
President and Chief Executive Officer from June 25, 1999 through the remainder
of fiscal 1999. (See Employment and Severance Agreements--Employment Agreement.)
The Chief Executive Officer, in turn, recommends an original annual base salary
for the senior executive officers of the Company based on factors such as the
scope of responsibility and base salary ranges of similarly positioned
executives of the Company. Annual adjustments to such base salaries are
determined based on factors including, but not limited to, the executive's
individual performance, the performance of areas within the executive's scope of
responsibility and the overall performance of the Company. The Compensation
Committee reviews and passes on the Chief Executive Officer's recommendations
for such officers' annual base salary levels.
ANNUAL INCENTIVES. The Company's bonus plan in effect for fiscal 1999 (the
"Bonus Plan") provides for a bonus to be paid to the Chief Executive Officer and
key executives of the Company, based on the Company's performance. The Board of
Directors established a goal at the beginning of the fiscal year to achieve a
targeted earnings per share ("EPS") amount. If the Company achieves its EPS
goal, then the key executives will have the opportunity to earn a bonus ranging
from 10% to 30% of their base
-17-
<PAGE>
salary. The actual payment for each individual is determined by analyzing the
Company's actual performance and the individual's performance. 50% of the
potential bonus is based solely on the Company's performance, 30% of the
potential bonus is based on a subjective evaluation of the key executive's
performance and 20% of the potential bonus is based on the key executive's
performance measured against the key executive goals. No bonuses are to be paid
if the Company does not achieve its EPS goal. The maximum bonus to be paid to
any key executive is 30% of a key executive's base salary.
STOCK OPTIONS. Stock options are granted to the senior executive officers
and other employees of the Company at the discretion of the Compensation
Committee. The Compensation Committee believes the grant of stock options
reinforces the importance of improving stockholder value over the long term, and
encourages and facilitates executive and key employee stock ownership of the
Company. The determination to grant options is also based on factors such as the
current number of unexercised options held by the senior executive officers and
employees, the expiration dates of those options and the current financial
performance of the Company. Option grants for the Chief Executive Officer are
determined by the Compensation Committee. Option grants for the senior
executives and other employees of the Company are recommended by the Chief
Executive Officer and reviewed and passed upon by the Compensation Committee. In
fiscal 1999, 100,000 options were granted to the Named Officers under the 1998
Stock Option Plan at exercise prices ranging from $8.38 to $9.21 per share. In
fiscal 1999, a total of 99,000 options were also granted to 23 officers and
other employees of the Company under the 1998 Stock Option Plan at exercise
prices ranging from $8.38 to $8.88 per share. All options granted under the 1998
Stock Option Plan are granted at the fair market value of the Company's common
stock on the dates of the grants, with the exception of options granted to
Mr. Joe Levy, which are granted at an exercise price of 110% of fair market
value on the date of the grant. Such options vest at a rate of 25% per year
beginning on the first anniversary after the date of the grant and expire in ten
years.
OTHER. Compensation for other officers and managers of the Company was paid
during fiscal 1999 based upon an evaluation of such individuals' performance,
responsibilities and the level of compensation of similarly positioned managers
at the Company and its competitors. Excluding amounts paid to the Named
Officers, bonuses in the aggregate amount of $606,000 were paid to 106 store
managers, merchandising and operations personnel of the Company during 1999
based primarily upon the performance of the particular individual's unit,
department, division or store.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. No member of
the current Compensation Committee is a former or current officer or employee of
the Company or any of its subsidiaries, or is employed by a company whose board
of directors includes a member of management of the Company.
O. James Woodward III, Chairman Max Gutmann Joseph J. Penbera
Frederick R. Ruiz William Smith
-18-
<PAGE>
STOCK PRICE PERFORMANCE
The graph below compares the cumulative total return of the Company's Common
Stock with the cumulative total return of (i) the S&P 600 SmallCap Index and
(ii) four companies described in the footnote to the graph. Except as described,
the comparison covers the five-year period from close of market on the last
trading day prior to the beginning of the 1995 fiscal year to the last day of
the Company's 1999 fiscal year and assumes that $100 was invested at the
beginning of the period in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends.
The past stock price performance for the Company's Common Stock is not
necessarily indicative of future price performance.
GOTTSCHALKS INC. STOCK PRICE PERFORMANCE
FIVE YEAR CUMULATIVE TOTAL STOCKHOLDERS' RETURN (1)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GOTTSCHALKS INC. NEW PEER GROUP OLD PEER GROUP S & P SMALLCAP 600
<S> <C> <C> <C> <C>
1/95 100.00 100.00 100.00 100.00
1/96 79.31 65.45 65.45 132.11
1/97 72.41 69.92 69.92 162.59
1/98 100.86 151.83 151.83 196.93
1/99 108.62 80.36 51.65 203.73
1/00 91.38 40.28 23.81 224.73
</TABLE>
- ------------------------
(1) Assumes $100 is invested on January 30, 1995 in the Company's Common Stock,
the S&P 600 SmallCap Index and a composite index, weighted by market
capitalization. The dollar amounts shown at each year-end are as of the last
trading day prior to the end of the Company's fiscal year. This year the
Company elected to change its peer group index from the prior year.
Accordingly, the graph presented below includes comparisons with both last
year's index of three competing companies (Bon-Ton Stores, Inc., Jacobson
Stores, Inc. and Stage Stores, Inc. ("Stage")) and the new competing peer
group which consist of four competing companies (Bon-Ton Stores, Inc.,
Jacobson Stores, Inc., Stage and Elder-Beerman Corp.("Elder-Beerman")). The
Company has elected to add one company to its peer group as it believes the
companies included in the new peer group are more reflective of the
Company's business and therefore provide a more meaningful comparison of
stock performance. The composite index includes data for Stage beginning in
the fiscal year ended January 31, 1997, during which time Stage became
traded on the NYSE. The composite index also includes data for Elder-Beerman
beginning with the fiscal year ended January 31, 1999, during which time
Elder-Beerman became traded on the NYSE.
-19-
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our directors and executive officers, as well as persons owning more than
10% of the Company's outstanding shares of stock, must file reports with the
Securities and Exchange Commission indicating the number of shares of the
Company's common stock they beneficially own and any changes in their beneficial
ownership. Copies of these reports must be provided to us. Based solely on our
review of these reports and written representations from our directors and
officers, we believe each of our directors and executive officers, as well as
each of the persons owning more than 10% of our outstanding shares of stock,
filed all the required reports during fiscal year 1999.
INDEPENDENT AUDITORS
Upon recommendations by the Audit Committee, the Board selected Deloitte &
Touche LLP as the Company's independent auditors for fiscal 2000.
Representatives of Deloitte & Touche LLP are expected to be present at the 2000
Annual Meeting and will be available to answer appropriate questions and to make
any statement they may desire. While it is presently anticipated that
Deloitte & Touche LLP will continue to serve as the Company's independent
auditors during fiscal 2000, and in that capacity will report on the Company's
2000 annual financial statements, the Board, upon recommendation by Audit
Committee, reserves the right to select different independent auditors at any
time.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
If you want to include a stockholder proposal in the proxy statement for the
2001 Annual Stockholders' Meeting, it must be delivered to the Company's
secretary at the Company's principal office located at 7 River Park Place East,
Fresno, California 93720 before the close of business on January 23, 2001. If
you intend to present a proposal at our 2001 Annual Meeting and do not request
timely inclusion of the proposal in our proxy statement, then we must receive
notice of such proposal no earlier than March 23, 2001 and no later than the
close of business on May 22, 2001. If we do not receive notice by that date, no
discussion of your proposal is required to be included in our 2001 proxy
statement and we may use our discretionary authority to vote on the proposal if
you do present it at our annual meeting.
OTHER MATTERS
At the date of mailing of this proxy statement, we are not aware of any
business to be presented at the annual meeting other than the proposals
discussed above. If other proposals are properly brought before the meeting, any
proxies returned to us will be voted as the proxyholders see fit.
You can obtain a copy of the Company's Annual Report on Form 10-K for the
year ended January 29, 2000 at no charge by writing to the Company at 7 River
Park Place East, Fresno, California 93720, Attention: Michael S. Geele, Senior
Vice President and Chief Financial Officer.
By order of the Board of Directors,
[SIGNATURE]
Joe Levy
Chairman
May 22, 2000
-20-
<PAGE>
P
R GOTTSCHALKS INC.
O
X ANNUAL MEETING OF STOCKHOLDERS, JUNE 22, 2000
Y
The undersigned hereby appoints Joe Levy and O. James Woodward III and
each of them, each with full power of substitution, as proxy of the
undersigned to attend the Annual Stockholders' Meeting of Gottschalks Inc.,
to be held on June 22, 2000 at 10:00 a.m., and any adjournment thereof, and
to vote the number of shares the undersigned would be entitled to vote if
personally present as follows with respect to the following matters which are
more fully described in the Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated May 22, 2000, receipt of which is hereby
acknowledged by the undersigned.
COMMENTS/ADDRESS CHANGE: Please Mark Comment/Address Box on Reverse Side
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
- FOLD AND DETACH HERE -
<PAGE>
Please mark
your votes as
indicated in
this example / X /
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE NOMINEES ON PROPOSAL 1.
WITHHELD
FOR FOR ALL
1. ELECTION OF DIRECTORS. / / / /
Joe Levy, James R. Famalette, Bret W. Levy,
Max Gutmann, Sharon Levy,
Joseph J. Penbera, Frederick R. Ruiz,
O. James Woodward III, William Smith,
Isidoro Alvarez Alvarez and Jorge Pont Sanchez
WITHHELD FOR: (Write that nominee's name in the space provided below.)
- ---------------------------------------------------------------------
2. Such other matters as may properly come before the meeting or any
adjournment thereof. As to such other matters the undersigned hereby confers
discretionary authority.
I PLAN TO ATTEND MEETING / /
COMMENTS/ADDRESS CHANGE
Please mark this box if you have written comments/address change
on the reverse side. / /
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR EACH OF THE NOMINEES FOR DIRECTOR. THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS OF GOTTSCHALKS INC.
Signature(s) Dated , 2000
------------------------------------ ---------
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME IS PRINTED. EACH JOINT TENANT SHOULD
SIGN. EXECUTIVES, ADMINISTRATORS, TRUSTEES OR GUARDIANS SHOULD GIVE FULL
TITLES WHEN SIGNING. PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
- FOLD AND DETACH HERE -
