<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
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FEDERATED DEPARTMENT STORES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FEDERATED DEPARTMENT STORES, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/ / 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:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
FEDERATED DEPARTMENT STORES, INC.
151 West 34th Street
New York, New York 10001
and
7 West Seventh Street
Cincinnati, Ohio 45202
April 20, 1995
To the Stockholders:
You are cordially invited to attend the 1995 Annual Meeting of the
stockholders of Federated Department Stores, Inc., to be held on Friday, May 19,
1995, at 11:00 a.m., Eastern Daylight Time, at the Registry Hotel, 475 Seagate
Drive, Naples, Florida 33940. The official Notice of Meeting, Proxy Statement
and form of proxy are enclosed with this letter. The matters listed in the
Notice of Meeting are described in the attached Proxy Statement.
The vote of every stockholder is important and your cooperation in
completing, signing and returning your proxy promptly will be appreciated.
We hope to see you at the Annual Meeting.
Sincerely,
ALLEN QUESTROM
Chairman of the Board
and Chief Executive
Officer
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
FEDERATED DEPARTMENT STORES, INC.
151 West 34th Street, New York, New York 10001
and
7 West Seventh Street, Cincinnati, Ohio 45202
---------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------------------------------------------------------------
To the Stockholders:
Notice is hereby given that the Annual Meeting of stockholders of Federated
Department Stores, Inc. will be held at 11:00 a.m., Eastern Daylight Time, on
Friday, May 19, 1995, at the Registry Hotel, 475 Seagate Drive, Naples, Florida
33940, for the following purposes, all as more fully described in the attached
Proxy Statement:
1. To elect four Class I members of the Board of Directors;
2. To ratify the appointment of KPMG Peat Marwick LLP as the independent
accountants of Federated Department Stores, Inc. for the fiscal year
ending February 3, 1996; and
3. To act upon such other business as may properly come before the Annual
Meeting or any postponements or adjournments thereof.
Stockholders of record at the close of business on April 7, 1995 are
entitled to vote at the Annual Meeting or any postponements or adjournments
thereof.
DENNIS J. BRODERICK
Secretary
April 20, 1995
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
FEDERATED DEPARTMENT STORES, INC.
151 West 34th Street, New York, New York 10001
and
7 West Seventh Street, Cincinnati, Ohio 45202
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation, by
and on behalf of the Board of Directors (the "Board") of Federated Department
Stores, Inc. (the "Company"), of proxies for use at the Annual Meeting of the
stockholders of the Company to be held at 11:00 a.m., Eastern Daylight Time, on
Friday, May 19, 1995, at the Registry Hotel, 475 Seagate Drive, Naples, Florida
33940 and at any postponements or adjournments thereof (the "Annual Meeting"),
for the purposes set forth in the accompanying Notice of Meeting. This Proxy
Statement, the Notice of Meeting and accompanying proxy are being mailed to
stockholders on or about April 20, 1995.
Unless the context otherwise requires, references herein to the "Company"
are to Federated Department Stores, Inc. ("Federated") and its subsidiaries, the
predecessors thereof and the surviving corporation following the merger (the
"Merger") of Federated and R.H. Macy & Co., Inc. ("Macy's") on December 19, 1994
(the "Merger Date"), pursuant to the terms of the Agreement and Plan of Merger,
dated as of August 16, 1994 (the "Merger Agreement").
GENERAL
The holders of record of shares of common stock of the Company ("Common
Stock") at the close of business on April 7, 1995 (the "Record Date") are
entitled to vote such shares at the Annual Meeting. As of the Record Date, there
were outstanding 182,711,734 shares of Common Stock, excluding shares held in
the treasury of the Company or by subsidiaries of the Company. Each share of
Common Stock, exclusive of treasury shares and shares held by the Company's
subsidiaries, is entitled to one vote on each of the matters listed in the
Notice of Meeting.
The holders of a majority of outstanding shares as of the Record Date will
constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes will be included in determining the number of
shares present or represented at the Annual Meeting for purposes of determining
whether a quorum exists. However, abstentions and broker non-votes with respect
to any matter brought to a vote at the Annual Meeting will be treated as shares
not voted for purposes of determining whether the requisite vote has been
obtained, and therefore will have no effect on the outcome of the vote on any
such matter. If the persons present or represented by proxy at the Annual
Meeting constitute the holders of less than a majority of the outstanding shares
of Common Stock as of the Record Date, the Annual Meeting may be adjourned to a
subsequent date for the purpose of obtaining a quorum.
The Board has adopted a policy under which, subject to the following
provisions, all stockholder proxies, ballots and other voting materials
(collectively, "Voting Materials") that identify the votes of specific
stockholders will be kept confidential and will not be disclosed to officers,
directors or employees of the Company or third parties except where disclosure
is required by applicable law or as otherwise permitted by the policy. However,
(i) employees and others serving as voting tabulators, inspectors of election or
proxy solicitors or otherwise engaged in the receipt, counting, tabulation or
solicitation of proxies who have agreed to maintain stockholder confidentiality
as provided in this policy will be permitted such access to Voting
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<PAGE> 5
Materials as may be necessary to facilitate their participation in the foregoing
activities and (ii) access to Voting Materials will not be restricted (a) in
those instances in which stockholders write comments on their proxy cards or
otherwise consent to the disclosure of their vote to the Company's management,
(b) in the event of a proxy contest or a solicitation of proxies in opposition
to the voting recommendations of the Board, (c) in respect of a stockholder
proposal that the Company's Board Organization and Corporate Governance
Committee (the "BOCG Committee") after having allowed the proponent of the
proposal an opportunity to present its views, determines is not in the best
interests of the Company and its stockholders, or (d) in the event that
representatives of the Company determine in good faith that a bona fide dispute
exists as to the authenticity or tabulation of Voting Materials. The foregoing
policy will apply to the Annual Meeting and each subsequent stockholders'
meeting in respect of which the Board determines, after considering the matters
to be acted upon thereat, that such policy (as the same may from time to time be
modified by the Board) would be in the best interests of the Company and its
stockholders. See "Stockholder Proposals" for additional information regarding
the background of this policy.
All shares of Common Stock represented at the Annual Meeting by properly
executed proxies received prior to or at the Annual Meeting, unless such proxies
previously have been revoked, will be voted at the Annual Meeting in accordance
with the instructions on the proxies. If no instructions are indicated, such
shares will be voted FOR the nominees for director identified below and FOR the
ratification of the appointment of the Company's independent accountants.
A proxy may be revoked by filing with the Secretary of the Company, prior
to the exercise of the proxy, either a written instrument revoking the proxy or
an executed subsequent proxy or by voting in person at the Annual Meeting.
Attendance at the Annual Meeting will not, in itself, constitute revocation of a
proxy.
STOCK OWNERSHIP
5% Beneficial Owner. According to information set forth in a Schedule 13G,
dated January 17, 1995 (the "FMR Schedule 13G"), filed with the Securities and
Exchange Commission (the "SEC") by FMR Corp. ("FMR"), 82 Devonshire Street,
Boston, Massachusetts 02109, FMR was the beneficial owner as of December 31,
1994 of 26,047,874 shares of Common Stock (approximately 14.28% of the total
number of shares of Common Stock then outstanding), including 2,120,154 shares
purchasable upon the exercise of warrants. According to the FMR Schedule 13G,
(i) 23,994,953 of such shares (approximately 13.12% of the total number of
shares of Common Stock then outstanding), including 1,608,976 shares purchasable
upon the exercise of warrants, were beneficially owned by Fidelity Management &
Research Company, a wholly owned subsidiary of FMR, as a result of acting as
investment advisor to several investment companies and (ii) the balance of such
shares were beneficially owned by Fidelity Management Trust Company, a wholly
owned subsidiary of FMR, as a result of its serving as investment manager of
institutional accounts. The FMR Schedule 13G also discloses that Edward C.
Johnson 3d, Chairman of FMR, and Abigail P. Johnson each own 24.9% of the
outstanding voting common stock of FMR and that various Johnson family members
and various trusts for the benefit of Johnson family members, through their
ownership of FMR's voting common stock and related agreements, form a
controlling group with respect to FMR.
Stock Ownership of Directors and Executive Officers. The following table
sets forth the shares of Common Stock beneficially owned (or deemed to be
beneficially owned pursuant to the rules of the SEC) as of April 1, 1995 by each
director of the Company and each of the Named Executives (defined below) and by
directors and executive officers of the Company as a group. Each such person
(and all Directors and Executive
2
<PAGE> 6
Officers as a group) beneficially owns less than 1% of the outstanding shares of
Common Stock. The business address of each of the individuals named in the table
is 7 West Seventh Street, Cincinnati, Ohio 45202.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES
- - ------------------------------------------------ ----------------
<S> <C>
Robert A. Charpie............................... 9,757
Lyle Everingham................................. 5,000
Meyer Feldberg.................................. 2,000
Earl G. Graves.................................. 600
George V. Grune................................. 4,000
Gertrude G. Michelson........................... 1,000
G. William Miller............................... 8,030
Joseph Neubauer................................. 6,000
Allen I. Questrom............................... 5,000
Laurence A. Tisch............................... 12
Ronald W. Tysoe................................. 287,361
Myron E. Ullman, III............................ 1,100
Paul W. Van Orden............................... 1,014
Karl M. von der Heyden.......................... 6,000
Marna C. Whittington............................ 1,000
James M. Zimmerman.............................. 135,000
Thomas G. Cody.................................. 33,007
Dennis J. Broderick............................. 11,170
All Directors and Executive Officers as a
Group......................................... 537,541
</TABLE>
ITEM 1 -- ELECTION OF DIRECTORS
The Company's Certificate of Incorporation (the "Certificate of
Incorporation") and By-Laws (the "By-Laws") provide that the directors of the
Company are to be classified into three classes, with the directors in each
class serving for three-year terms and until their successors are elected,
except that the initial term of the directors in Class I will expire at the
Annual Meeting, the initial term of the directors in Class II will expire at the
Company's 1996 annual meeting of stockholders and the initial term of the
directors in Class III will expire at the Company's 1997 annual meeting of
stockholders.
In accordance with the recommendation of the BOCG Committee, the Board has
nominated Joseph Neubauer, Allen I. Questrom, Paul W. Van Orden and Karl M. von
der Heyden, each of whom is currently a member of the Board, for election as
Class I Directors for a three-year term to expire at the annual meeting in 1998,
or until their successors are duly elected and qualified. In accordance with the
retirement policy adopted by the Board, Mr. G. William Miller, a Class I
Director, will not stand for re-election. Mr. Myron E. Ullman, III, also a Class
I Director, will not stand for reelection. Information regarding the foregoing
nominees, as well as the other persons who will continue to serve on the Board,
is set forth below.
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<PAGE> 7
A plurality of all votes cast at the Annual Meeting is required to elect
each nominee as a director. The Board has no reason to believe that any of the
nominees will not serve if elected, but if any nominee should subsequently
become unavailable to serve as a director, the persons named as proxies may, in
their discretion, vote for a substitute nominee designated by the Board or,
alternatively, the Board may reduce the number of directors to be elected.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF THE
NOMINEES. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED EXCEPT WHERE AUTHORITY
HAS BEEN WITHHELD.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS -- TERM EXPIRES AT THE 1998 ANNUAL
MEETING
JOSEPH NEUBAUER
Mr. Neubauer, age 53, has been Chairman and Chief Executive Officer of The
ARAMARK Corporation (formerly known as The ARA Group) since 1984. He is also a
member of the boards of directors of ARAMARK Corporation, Bell of Pennsylvania,
a subsidiary of Bell Atlantic, First Fidelity Bankcorporation and Penn Mutual
Life Insurance Company. Mr. Neubauer is a member of the BOCG and Compensation
Committees of the Board. Mr. Neubauer has been a director since 1992.
ALLEN I. QUESTROM
Mr. Questrom, age 55, has been Chairman of the Board and Chief Executive
Officer of the Company since February 1990. Prior thereto he was President and
Chief Executive Officer of the Neiman-Marcus division of the Neiman-Marcus
Group, Inc. from September 1988 to February 1990. Mr. Questrom is a member of
the Executive and Finance Committee of the Board. Mr. Questrom has been a
director since 1990 and previously served as a director in 1988.
PAUL W. VAN ORDEN
Mr. Van Orden, age 67, has been Executive in Residence (since July 1990)
and Executive Director, The Jerome A. Chazan Institute of International
Business, Columbia University, Graduate School of Business (since January 1992).
Prior thereto, he was Executive Vice President, Corporate Executive Office of
General Electric Company from 1986 to 1991. Mr. Van Orden is also a member of
the boards of directors of GNA Life Insurance Company of New York and
Sunbeam-Oster Company, Inc., a member of the Advisory Board of the Columbia
University School of International and Public Affairs and a member of the Board
of Overseers of the Columbia University Graduate School of Business. Mr. Van
Orden is a member of the Compensation and BOCG Committees of the Board. Mr. Van
Orden has been a director since the Merger Date and prior thereto served as a
director of Macy's since 1987.
KARL M. VON DER HEYDEN
Mr. von der Heyden, age 58, has been affiliated with The Clipper Group, a
merchant banking firm, since August 1994. Prior to joining The Clipper Group, he
was President and Chief Executive Officer of Metallgesellschaft Corp. from
December 1993 until July 1994. He was previously Co-Chairman and Chief Executive
Officer of RJR Nabisco, Inc. from March to June 1993 and was Executive Vice
President and Chief Financial Officer of RJR Nabisco from 1989 to 1993. Mr. von
der Heyden is also a member of the board of directors of Trizec Corporation,
Ltd., a Canadian company. Mr. von der Heyden is a member of the Audit Review,
BOCG and Public Policy Committees of the Board. Mr. von der Heyden has been a
director since 1992.
4
<PAGE> 8
CLASS II DIRECTORS -- TERM EXPIRES AT THE 1996 ANNUAL MEETING
LYLE EVERINGHAM
Mr. Everingham, age 68, was Chief Executive Officer of The Kroger Co. from
1978 and Chairman of the Board thereof from 1979 until his retirement in 1991.
He is also a member of the boards of directors of Cincinnati Milacron, Inc.,
Providian Corporation and The Kroger Co. Mr. Everingham is a member of the BOCG,
Compensation, Executive and Finance and Public Policy Committees of the Board.
Mr. Everingham has been a director since 1992.
MEYER FELDBERG
Professor Feldberg, age 53, has been Dean of the Columbia Business School
at Columbia University since 1989. He is also a member of the boards of
directors of AMSCO International, Inco Homes, PaineWebber Group Funds and New
World Communications Group, Inc. Professor Feldberg is a member of the Audit
Review, BOCG and Public Policy Committees of the Board. Professor Feldberg has
been a director since 1992.
LAURENCE A. TISCH
Mr. Tisch, age 71, has been Co-Chairman of the Board of Directors (since
1994) and Co-Chief Executive Officer (since 1988) of Loews Corporation, a
diversified financial corporation. He served as Chairman (from 1960 to 1994) and
Chief Executive Officer of Loews Corporation from 1960 to 1988. Mr. Tisch is
also a director (since 1985), Chairman (since 1990), and President and Chief
Executive Officer (since January 1987) of CBS, Inc. Mr. Tisch is also Chief
Executive Officer and a director of CNA Financial Corporation and a director of
the Bulova Corporation, which corporations are subsidiaries of Loews
Corporation. Mr. Tisch is member of the boards of directors of Automatic Data
Processing, Inc. and Petrie Stores Corporation. Mr. Tisch is Chairman of the
Board of Trustees of New York University, a trustee of the Metropolitan Museum
of Art, the Carnegie Corporation of New York and The New York Public Library,
and a member of the New York City Mayor's Committee for Public-Private
Partnership. Mr. Tisch is a member of the Audit Review and Executive and Finance
Committees of the Board. Mr. Tisch has been a director since the Merger Date and
prior thereto served as a director of Macy's since 1986.
RONALD W. TYSOE
Mr. Tysoe, age 42, has been Vice Chairman and Chief Financial Officer of
the Company since April 1990. Prior thereto he was President and Treasurer of
Federated Stores, Inc., the former indirect parent of Federated ("FSI"), from
1987 to 1992, Chief Financial Officer of FSI from April 1990 to February 1992,
and President of Campeau Corporation from April 1989 to January 1990. Mr. Tysoe
has been a director since 1988.
MARNA C. WHITTINGTON
Dr. Whittington, age 47, is a partner with the private investment firm of
Miller, Anderson & Sherrerd, LLP, where she has been employed since 1992. Prior
thereto, she was executive vice president of the University of Pennsylvania
since 1988. Dr. Whittington is also a member of the boards of directors of IM&D
Group, Ltd. and Rohm & Haas Company. In addition, she is a member of the board
of trustees of MAS Pooled Trust Fund. Dr. Whittington is a member of the Audit
Review, BOCG and Compensation Committees of the Board. Dr. Whittington has been
a director since 1993.
5
<PAGE> 9
CLASS III DIRECTORS -- TERM EXPIRES AT THE 1997 ANNUAL MEETING.
ROBERT A. CHARPIE
Mr. Charpie, age 69, has been Chairman of Ampersand Ventures, a specialty
venture capital firm, since 1988. Prior thereto, he was Chairman of the Board of
Cabot Corporation from February 1986 until his retirement in September 1988. Mr.
Charpie is also a member of the boards of directors of Ashland Coal, Inc., Cabot
Corporation, Champion International Corporation, Ceramic Process Systems
Corporation and Daniel Products Co. Mr. Charpie is a member of the Audit Review,
BOCG, Compensation and Executive and Finance Committees of the Board. Mr.
Charpie has been a director since 1992 and previously served as a director from
1984 to 1989.
EARL G. GRAVES, SR.
Mr. Graves, age 60, has been President and Chief Executive Officer of Earl
G. Graves, Ltd., a multifaceted communications company, since 1970, and is the
Publisher of "Black Enterprise" magazine, which he founded. Additionally, since
1990, Mr. Graves has served as Chairman and Chief Executive Officer of
Pepsi-Cola of Washington, D.C., L.P., a Pepsi-Cola bottling franchise. Mr.
Graves is also a member of the boards of directors of Aetna Life & Casualty
Company, Chrysler Corporation, Rohm & Haas Corporation and AMR Corporation. He
is a member of the Audit Review and Public Policy Committees of the Board. Mr.
Graves has been a director since 1994.
GEORGE V. GRUNE
Mr. Grune, age 65, has been Chairman of the Board of The Reader's Digest
Association, Inc. since August 1, 1994. From 1984 until that date, he was
Chairman of the Board and Chief Executive Officer of The Reader's Digest
Association, Inc. Mr. Grune is also a member of the boards of directors of Avon
Products, Inc., CPC International, Inc. and Chemical Banking Corporation. He is
a member of the Audit Review, Compensation, Executive and Finance and Public
Policy Committees of the Board. Mr. Grune has been a director since 1992.
GERTRUDE G. MICHELSON
Mrs. Michelson, age 69, served as Senior Advisor to Macy's from September
1992 until December 23, 1994. Prior thereto, she was Senior Vice
President -- External Affairs of Macy's from October 1980 until her retirement
in September 1992 and director of Macy's from July 1986. Mrs. Michelson is also
a member of the boards of directors of The Chubb Corporation, General Electric
Company, The Goodyear Tire & Rubber Company, The Quaker Oats Company, The
Stanley Works and the American Stock Exchange. Mrs. Michelson is a member of the
Audit Review and Public Policy Committees of the Board. Mrs. Michelson has been
a director since the Merger Date and previously served as a director of Macy's
since 1986.
JAMES M. ZIMMERMAN
Mr. Zimmerman, age 51, has been President and Chief Operating Officer of
the Company since May 1988. Mr. Zimmerman is a member of the Public Policy
Committee of the Board. Mr. Zimmerman has been a director since 1988.
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<PAGE> 10
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
ATTENDANCE AT MEETINGS
The Board held 22 meetings during the fiscal year ending January 28, 1995
("Fiscal 1994"). No director attended fewer than 75% of the total number of
meetings of the Board and Board Committees on which such director served.
COMMITTEES OF THE BOARD
The Board has established the following standing committees: the Executive
and Finance Committee, the Public Policy Committee, the Audit Review Committee,
the BOCG Committee and the Compensation Committee. The By-Laws require that the
latter three committees be composed solely of non-employee directors and that a
majority of the members of the Executive and Finance Committee be non-employee
directors. The By-Laws define "non-employee director," in general, to mean a
director of the Company who is not a full-time employee of the Company or any of
its subsidiaries. The By-Laws further require that all of the members of the
Audit Review Committee, the BOCG Committee and the Compensation Committee, and a
majority of the members of the Executive and Finance Committee, the Public
Policy Committee and each other directorate committee that the Board may from
time to time establish, be independent directors, except to the extent that a
majority of the independent directors then serving as members of the Board
determines in a specific instance that it would be in the best interests of the
Company and its stockholders that the By-Laws not operate to preclude the
service of one or more individuals on one or more of such committees. The By-
Laws define "independent director," in general, to mean a director of the
Company who (i) is not (and has not been within the preceding 60 months) an
employee of the Company or any of its subsidiaries, (ii) is not (and has not
been within the preceding 60 months) an executive officer, partner or principal
in or of any corporation or other entity that is or was a paid advisor,
consultant or provider of professional services to, or a substantial supplier
of, the Company or any of its subsidiaries, (iii) is not a party to any contract
pursuant to which such director provides personal services (other than as a
director) to the Company or any of its subsidiaries, (iv) is not employed by an
organization that received, within the preceding 60 months, grants or endowments
from the Company or any of its subsidiaries in excess of $250,000 in any fiscal
year of the Company, (v) is not a relative of any other director or executive
officer of the Company, (vi) is not a party to any agreement binding him or her
to vote, as a stockholder of the Company, in accordance with the recommendations
of the Board, and (vii) is not a director of any corporation or other entity
(other than the Company) of which the Company's Chairman or Chief Executive
Officer is also a director. The Board believes that, except for the three
members of the Board who are also senior executives of the Company, the
remaining members of the Board who are expected to continue to serve on the
Board after the Annual Meeting are "independent directors" within the meaning of
the foregoing definition. See "Stockholder Proposals" below for additional
information regarding the foregoing requirements.
Executive and Finance Committee. The Executive and Finance Committee is
composed of Messrs. Charpie, Everingham, Grune, Miller, Questrom and Tisch. This
Committee has all authority, consistent with the Delaware General Corporation
Law, granted to it by the Board. Accordingly, the Executive and Finance
Committee may exercise all the powers and authority of the Board in the
oversight of the management of the business and affairs of the Company, except
that the Executive and Finance Committee does not have the power to amend the
By-Laws or the Certificate of Incorporation (except, to the extent authorized by
a resolution of the Board, to fix the designations, preferences and other terms
of any preferred stock of the Company), adopt an agreement of merger and
consolidation, authorize the issuance of stock, declare a
7
<PAGE> 11
dividend or recommend to the stockholders of the Company the sale, lease or
exchange of all or substantially all of the Company's assets, a dissolution of
the Company or a revocation of a dissolution. The Executive and Finance
Committee met two times during Fiscal 1994.
Public Policy Committee. The Public Policy Committee is composed of Mrs.
Michelson and Messrs. Everingham, Feldberg, Graves, Grune, Miller, von der
Heyden and Zimmerman. This Committee establishes, when necessary or appropriate,
policies involving the Company's role as a corporate citizen, reviews, evaluates
and monitors the policies, programs and practices in public policy areas and
maintains an awareness of public affairs developments and trends. The Public
Policy Committee met three times during Fiscal 1994.
Audit Review Committee. The Audit Review Committee is composed of Dr.
Whittington, Mrs. Michelson and Messrs. Charpie, Feldberg, Graves, Grune, Tisch
and von der Heyden. This Committee reviews the professional services provided by
the Company's independent accountants and the independence of such firm from the
management of the Company. This Committee also reviews the scope of the audit by
the Company's independent accountants, the annual financial statements of the
Company, the Company's systems of internal accounting controls and such other
matters with respect to the accounting, auditing and financial reporting
practices and procedures of the Company as it may find appropriate or as may be
brought to its attention, and meets from time to time with members of the
Company's internal audit staff. The Audit Review Committee met seven times
during Fiscal 1994.
Board Organization and Corporate Governance Committee. The BOCG Committee
is composed of Dr. Whittington and Messrs. Charpie, Everingham, Feldberg,
Neubauer, Van Orden and von der Heyden. This Committee (i) considers and
recommends criteria for the selection of nominees for election as directors of
the Company and from time to time may select candidates for director for
recommendation to the full Board and (ii) considers and makes recommendations
with respect to (a) such proposals as may from time to time be made in
accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, by stockholders of the Company and (b) such other matters as may from
time to time be presented for consideration of the Board relating to the rights
of stockholders and the role of the Board in respect of the direction of the
management of the business and affairs of the Company (other than, as to
stockholder rights, in respect of the conduct of the Company's ordinary business
operations or in the context of an extraordinary transaction involving the
Company or any of its subsidiaries or any securities thereof). In addition, the
BOCG Committee will consider and make a recommendation to the Board (in a
timeframe that will permit the Board to announce publicly its determination with
respect thereto no later than November 23, 1995) with respect to whether (i) the
Share Purchase Rights Agreement, dated as of December 19, 1994 (the "Rights
Plan"), between the Company and The Bank of New York should continue in effect
in its present form or be amended, (ii) the Rights (as defined in the Rights
Plan) issued thereunder should be redeemed, and (iii) one or more of the
foregoing or any related issues should be submitted to the Company's
stockholders for their consideration. The full Board may also from time to time
select such director candidates and in all events will act in respect of (i) the
filling of any vacancies on the Board, (ii) the recommendations of candidates
for nomination for election by the stockholders of the Company, and (iii) the
composition of all Board Committees. The BOCG Committee met six times during
Fiscal 1994. See "Stockholder Proposals" below for additional information
regarding this Committee.
The BOCG Committee will consider nominees for director recommended by
stockholders of the Company. Stockholders wishing to make such recommendations
should write to the BOCG Committee, c/o Dennis J. Broderick, Secretary,
Federated Department Stores, Inc., 7 West Seventh Street, Cincinnati, Ohio
45202. Persons making submissions should include the full name and address of
the recommended nominee, a
8
<PAGE> 12
description of the proposed nominee's qualifications and other relevant
biographical information. See "Director Nomination Procedures" for a discussion
of nomination procedures under the By-Laws.
Compensation Committee. The Compensation Committee is composed of Dr.
Whittington and Messrs. Charpie, Everingham, Grune, Neubauer and Van Orden. This
Committee reviews executive salaries, administers the bonus, incentive and stock
option plans of the Company and approves the salaries and other benefits of the
executive officers of the Company. In addition, this Committee advises and
consults with the Company's management regarding pension and other benefit plans
and compensation policies and practices of the Company. The Compensation
Committee met eleven times during Fiscal 1994.
DIRECTOR NOMINATION PROCEDURES
The By-Laws provide that nominations for election of directors by the
stockholders will be made by the Board or by any stockholder entitled to vote in
the election of directors generally. The By-Laws require that stockholders
intending to nominate candidates for election as directors deliver written
notice thereof to the Secretary of the Company not later than 60 calendar days
in advance of the meeting of stockholders; provided, however, that in the event
that the date of the meeting is not publicly announced by the Company by
inclusion in a report filed with the SEC or furnished to stockholders, or by
mail, press release or otherwise more than 75 days prior to the meeting, notice
by the stockholder to be timely must be delivered to the Secretary of the
Company not later than the close of business on the tenth calendar day following
the day on which such announcement of the date of the meeting was so
communicated. The By-Laws further require that the notice by the stockholder set
forth certain information concerning such stockholder and the stockholder's
nominees, including their names and addresses, a representation that the
stockholder is entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice, the class and number of shares of the Company's stock owned or
beneficially owned by such stockholder, a description of all arrangements or
understandings between the stockholder and each nominee, such other information
as would be required to be included in a proxy statement soliciting proxies for
the election of the nominees of such stockholder and the consent of each nominee
to serve as a director of the Company if so elected. The chairman of the meeting
may refuse to acknowledge the nomination of any person not made in compliance
with these requirements. Similar procedures prescribed by the By-Laws are
applicable to stockholders desiring to bring any other business before an annual
meeting of the stockholders.
DIRECTOR COMPENSATION
Non-employee directors receive an annual base retainer fee in the amount of
$30,000, and a fee of $1,250 for each Board or Board Committee meeting attended.
Each such director is also entitled to receive annual grants of stock options
under the Company's 1995 Executive Equity Incentive Plan, which became effective
on February 15, 1995 (the "1995 Equity Plan"). Directors who are also full-time
employees of the Company receive no additional compensation for services as
directors.
Under the terms of the Company's retirement plan for non-employee
directors, retired non-employee directors of the Company will receive an annual
retainer at a rate in effect as of the date of termination of service as a
director, payable in monthly installments. Full vesting will occur for
non-employee directors who have reached age 60 while serving on the Board
irrespective of years of service. Vesting will occur for non-employee directors
whose termination of Board service occurs before reaching age 60 as follows: 50%
vesting after five years of Board service and an additional 10% vesting for each
year of Board service after five years.
9
<PAGE> 13
Payments under the retirement plan will commence at age 60 and will continue for
the lesser of life or years of Board service. There are no survivor benefits
under the terms of the retirement plan.
Non-employee directors may defer all or a portion of their retainer and
meeting fees either as stock or cash credits. Six non-employee directors have
elected to have all their fees deferred as stock credits. Non-employee directors
also receive executive discounts on merchandise purchased.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Tisch, who has been a director of the Company since the Merger Date,
owns approximately 16% of the outstanding common stock of, is Co-Chairman and
Co-Chief Executive Officer of, Loews Corporation. The Company and/or its retail
subsidiaries entered into transactions, in the normal course of business, with
(i) CBS, Inc., approximately 17% of the outstanding common stock of which is
owned by Loews Corporation, relating to radio and television advertising,(ii)
Bulova Corporation, a subsidiary of Loews Corporation, for the purchase of
merchandise aggregating $1,826,459.71 in calendar year 1994 and (iii) CNA
Financial Corporation, a subsidiary of Loews Corporation, which provides certain
insurance to the Company at standard, non-material premiums.
See "Compensation Committee Interlocks And Insider Participation" below for
information regarding a related transaction with Mr. Neubauer.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and certain persons who
own more than 10% of the Common Stock outstanding, to file with the SEC and the
New York Stock Exchange, Inc. (the "NYSE") initial reports of ownership and
reports of changes in ownership of the Common Stock. Executive officers,
directors and greater than 10% stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. See "Stock
Ownership" above.
To the Company's knowledge, based solely on a review of the copies of
reports furnished to the Company and written representations signed by all
directors and executive officers that no other reports were required with
respect to their beneficial ownership of Common Stock during Fiscal 1994, the
directors and executive officers and all beneficial owners of more than 10% of
the Common Stock outstanding complied with all applicable filing requirements
under Section 16(a) of the Exchange Act with respect to their beneficial
ownership of the Common Stock during Fiscal 1994, except that a report of a
change in ownership resulting from a purchase by Mr. Questrom was filed six days
after the due date therefor.
ITEM 2 -- APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Review
Committee, has appointed the firm of KPMG Peat Marwick LLP independent public
accountants, to audit the books, records and accounts of the Company and its
subsidiaries for the fiscal year ending February 3, 1996, subject to
ratification of such appointment by the Company's stockholders. KPMG Peat
Marwick LLP and its predecessors have served as independent accountants for the
Company since 1988, and are considered well qualified. Representatives of KPMG
Peat Marwick LLP are expected to be present at the Annual Meeting and will have
the opportunity to make a statement if they desire to do so. It is also expected
that they will be available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR SUCH RATIFICATION.
PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY IN
THEIR PROXIES A CONTRARY CHOICE.
10
<PAGE> 14
EXECUTIVE COMPENSATION
THREE-YEAR COMPENSATION SUMMARY
The following table summarizes the compensation of the five most highly
compensated executive officers of the Company (the "Named Executives") for the
Company's last three fiscal years for services rendered in all capacities to the
Company and its subsidiaries.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- -------------------------- -------
OTHER RESTRICTED SECURITIES ALL OTHER
ANNUAL STOCK UNDERLYING LTIP COMPEN-
NAME AND COMPEN- AWARD(S) OPTIONS/ PAYOUTS SATION
PRINCIPAL POSITION YEAR SALARY BONUS SATION ($)(1) SARS(#) ($)(2) (3)
- - ------------------------- ----- --------- ------- --------- ----------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A. Questrom 1994 1,200,000 0 130,916(4) 0 0 800,000 2,072
Chairman & Chief 1993 1,200,000 0 191,354 0 0 800,000 2,631
Executive Officer 1992 1,200,000 0 191,162 0 0 800,000 2,410
J. Zimmerman 1994 1,000,000 319,600 72,008(5) 1,396,875 382,000 310,400 2,072
President & Chief 1993 1,000,000 232,800 42,129 0 100,000 0 2,631
Operating Officer 1992 1,000,000 310,400 1,960,224 1,012,500 70,000 0 2,410
R. Tysoe 1994 687,500 255,200 48,888(6) 4,620,000 61,000 247,600 2,072
Vice Chairman 1993 650,000 185,700 50,910 0 72,000 0 2,631
& Chief Financial 1992 650,000(7) 247,600 609,683 843,750 60,000 0 2,410
Officer
T. Cody 1994 543,750 255,200 106,736(8) 0 37,000 247,600 2,072
Executive Vice 1993 518,750 185,700 67,960 0 25,000 0 2,631
President 1992 500,000 247,600 68,297 675,000 50,000 0 2,410
D. Broderick 1994 273,500 113,300 41,870(9) 0 6,000 89,200 2,072
Senior Vice 1993 257,500 88,500 20,210 0 5,000 0 2,631
President, General 1992 250,000 83,300 15,641 202,500 10,000 0 2,410
Counsel & Secretary
- - ---------------
<FN>
(1) At January 28, 1995, the aggregate number of shares of restricted stock
held by each of the Named Executives and the aggregate value thereof (based
on the closing market price of the Common Stock on January 27, 1995) were
as follows: Mr. Questrom: 0 shares, $0; Mr. Zimmerman: 86,000 shares,
$1,601,750; Mr. Tysoe: 270,000 shares, $5,028,750; Mr. Cody: 24,000 shares,
$447,000; and Mr. Broderick: 7,200 shares, $134,100. Shares of restricted
stock reflected in the table were awarded to each of the Named Executives
other than Mr. Questrom on February 7, 1992, to Mr. Zimmerman (75,000
shares) on December 9, 1994, and to Mr. Tysoe (240,000 shares) on January
2, 1995. For the February 7, 1992 awards, the restrictions lapsed, or will
lapse, as to 20% of such shares as of each of the first two anniversaries
of the award, 15% of such shares as of each of the next two anniversaries
of the award and 30% of such shares as of the fifth anniversary of the
award. For Mr. Zimmerman's December 9, 1994 award, restrictions lapsed as
to one-third of such shares immediately following the grant of the award
and will lapse as to the remaining two-thirds of such shares on the fourth
anniversary of the award. For Mr. Tysoe's January 2, 1995 award,
restrictions will lapse as to 25% of such shares on each of the first four
anniversaries of the award. Holders of restricted stock are entitled to all
rights and benefits of share ownership, except the right to dispose of or
pledge such shares.
11
<PAGE> 15
(2) Consists of value-added payments to Mr. Questrom under his prior employment
agreement, and payments to other executive officers pursuant to the
Company's long-term cash incentive plan. The prior employment agreement with
Mr. Questrom provided for him to serve as Chairman of the Board and Chief
Executive Officer for a term beginning on February 2, 1990 and expiring on
February 2, 1995 (the "Contract Period"). The agreement also provided that
Mr. Questrom would be entitled to receive a value-added payment upon
completion of the Contract Period based on appreciation in the aggregate
market value of the common stock of the Company and Allied Stores
Corporation ("Allied") (which was merged into the Company pursuant to a
joint plan of reorganization of the Company and Allied (the "Federated Plan
of Reorganization")) during the Contract Period (adjusted to reflect the
restructuring of the debt of the Company and Allied and their respective
subsidiaries pursuant to the Federated Plan of Reorganization and the sale
of equity). The value-added payment is equal to the amount determined by the
following formula: 0.75% of the first $500.0 million of equity appreciation,
1.5% of all equity appreciation between $500.0 and $1,000.0 million and 2.0%
of any equity appreciation in excess of $1,000.0 million (less amounts
previously paid as described below). An initial, nonrefundable value-added
payment of $2.0 million was made upon commencement of the Contract Period
and subsequent nonrefundable value-added payments of $800,000 were made on
each of January 31, 1991, 1992, 1993, 1994 and 1995. These payments will be
credited against the contractual obligation to make any other payments under
the formula described above. The amount of the final value-added payment due
Mr. Questrom had not been determined as of the date of this Proxy Statement.
See "Compensation Committee Report on Executive Compensation -- Specific
Compensation Practices -- Employment Agreement with Chief Executive Officer"
for further information regarding this matter.
The payments to the Named Executive officers other than Mr. Questrom were
made pursuant to the Company's long-term cash incentive plan in respect of
the period encompassing the Company's fiscal years 1992 through 1994. See
"Compensation Committee Report on Executive Compensation -- Specific
Compensation Practices -- Long-Term Cash Incentive."
(3) Consists of contributions under the Company's Retirement Income and Thrift
Incentive Plan (the "RITI"). See "Retirement Programs."
(4) For 1994, the amount shown includes $114,289.77 for executive discount on
merchandise purchases.
(5) For 1994, the amount shown includes $22,294.01 for executive discount on
merchandise purchases and $22,374.94 for use of corporate aircraft.
(6) For 1994, the amount shown includes $17,347.73 for executive discount on
merchandise purchases.
(7) In addition to the salary amounts shown, Mr. Tysoe was paid $176,346 by FSI
in 1992.
(8) For 1994, the amount shown includes $77,926.13 for executive discount on
merchandise purchases.
(9) For 1994, the amount shown includes $12,702.55 for use of car and $22,351.78
for executive discount on merchandise purchases.
</TABLE>
12
<PAGE> 16
FISCAL 1994 STOCK OPTION GRANTS
The following table sets forth certain information regarding grants of
stock options made during Fiscal 1994 to the Named Executives pursuant to the
Company's 1992 Executive Equity Incentive Plan (the "1992 Equity Plan"). No
grants of stock appreciation rights were made during Fiscal 1994 to any of the
Named Executives.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR (1)
<CAPTION>
INDIVIDUAL GRANTS
- - -----------------------------------------------------------------------------
% OF TOTAL
OPTIONS MARKET POTENTIAL REALIZABLE VALUE OF ASSUMED
SECURITIES GRANTED TO PRICE ON ANNUAL RATES OF STOCK PRICE
UNDERLYING EMPLOYEES GRANT EXPIRA- APPRECIATION FOR OPTION TERM
OPTIONS IN FISCAL PRICE DATE TION -------------------------------------
NAME GRANTED(#) YEAR(1) $/SH. $/SH.(2) DATE 0%($) 5%($) 10%($)
- - ------------- ---------- ---------- ------ -------- -------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A. Questrom N/A N/A N/A N/A N/A N/A N/A N/A
J. Zimmerman 42,000(3) 1.17% 23.625 23.625 03/18/04 0 624,021 1,581,391
40,000(4) 1.12% 23.625 23.625 03/18/04 0 594,305 1,506,087
300,000(5) 8.39% 18.625 18.625 12/09/04 0 3,513,949 8,905,036
R. Tysoe 36,000(3) 1.01% 23.625 23.625 03/18/04 0 534,875 1,355,478
25,000(4) 0.70% 23.625 23.625 03/18/04 0 371,441 941,304
T. Cody 25,000(3) 0.70% 23.625 23.625 03/18/04 0 371,441 941,304
12,000(4) 0.34% 23.625 23.625 03/18/04 0 178,292 451,826
D. Broderick 6,000(3) 0.17% 23.625 23.625 03/18/04 0 89,146 225,913
- - ---------------
<FN>
(1) Total of options granted excludes an option for 450,000 shares granted to
Mr. Questrom on February 2, 1995 pursuant to an employment agreement which
was entered into during Fiscal 1994 and became effective on February 2,
1995.
(2) The "market price" shown is the closing price for shares of Common Stock on
the NYSE on the business day immediately preceding the grant date.
(3) One-half of the options vested and became exercisable on March 18, 1995 and
the remainder will vest and become exercisable on March 18, 1996.
(4) One-third of the options will vest and become exercisable on March 18, 1997,
one-third will vest and become exercisable on March 18, 1998 and the
remainder will vest and become exercisable on March 18, 1999.
(5) One-sixth of the options will vest and become exercisable on December 9,
1995, one-sixth will vest and become exercisable on December 9, 1996,
one-sixth will vest and become exercisable on December 9, 1997 and the
remainder will vest and become exercisable on December 9, 1998.
</TABLE>
See "Compensation Committee Report on Executive Compensation -- Specific
Compensation Practices -- Equity-Based Plans" for further information regarding
grants of stock options made during Fiscal 1994.
13
<PAGE> 17
FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding the total
number of stock options held by each of the Named Executives and the aggregate
value of such options at January 28, 1995.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT FISCAL
SHARES FISCAL YEAR-END YEAR-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(1)
- - ------------- ------------ ------------ --------------- ----------------
<S> <C> <C> <C> <C>
A. Questrom 0 0 N/A N/A
J. Zimmerman 0 0 87,500/464,500 122,500/0
R. Tysoe 0 0 75,000/118,000 105,000/0
T. Cody 0 0 62,500/49,500 87,500/0
D. Broderick 0 0 12,500/8,500 17,500/0
- - ---------------
<FN>
(1) In-the-money options are options having a per share exercise price below the
closing price of shares of Common Stock on the NYSE on January 27, 1995 (the
last trading day in Fiscal 1994). The dollar amounts shown represent the
amount by which the product of such closing price and the number of shares
purchasable upon the exercise of such in-the-money options exceeds the
aggregate exercise price payable upon such exercise.
</TABLE>
FISCAL 1994 LONG-TERM INCENTIVE PLAN AWARD OPPORTUNITIES
The following table sets forth certain information with respect to award
opportunities of the Named Executives under the Company's long-term cash
incentive plan for the fiscal 1994-1996 measurement period. The cash payment
under this program is scheduled to occur in 1997.
<TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS
OR OTHER UNDER NON-STOCK PRICE-BASED
PERIOD PLANS(1)
UNTIL -----------------------------------
MATURATION THRESHOLD TARGET MAXIMUM
NAME OR PAYOUT ($) ($) ($)
- - --------------- ----------- --------- --------- -------
<S> <C> <C> <C> <C>
A. Questrom(2) N/A N/A N/A N/A
J. Zimmerman 1996 79,900 199,800 319,600
R. Tysoe 1996 63,800 159,500 255,200
T. Cody 1996 63,800 159,500 255,200
D. Broderick 1996 28,800 72,000 115,200
- - ---------------
<FN>
(1) See "Compensation Committee Report on Executive Compensation -- Specific
Compensation Practices -- Long-Term Cash Incentive" for further information
regarding the Company's long-term cash incentive plan.
14
<PAGE> 18
(2) See "Compensation Committee Report on Executive Compensation -- Specific
Compensation Practices -- Employment Agreement with Chief Executive Officer"
for further information regarding Mr. Questrom's incentive arrangements.
</TABLE>
CHANGE-IN-CONTROL AGREEMENTS
The Company has entered into a change-in-control agreement
("Change-in-Control Agreement") with each of its executive officers and certain
other officers and key employees. Under the Change-in-Control Agreements, if,
prior to November 1, 1998 (February 2, 1999 in the instance of Mr. Questrom), a
change in control (as defined in the Change-in-Control Agreements) occurs and
within three years thereafter the Company or, in certain circumstances, the
executive, terminates the executive's employment and, in the case of a
termination by the Company, cause (as defined in the Change-in-Control
Agreements) therefor does not exist, the executive would be entitled to a cash
severance benefit equal to two times the sum of his or her current base salary
(or, if higher, the executive's highest salary received for any year in the
three full calendar years preceding the Change in Control) and target annual
bonus (or, if higher, the executive's highest bonus received for any year in the
three full calendar years preceding the Change in Control), payment of any
awards under the Company's long-term cash incentive plan at target (if
applicable, and prorated to the executive's participation during each
performance period), the continuation of welfare benefits for two years
(subject, but only as to welfare benefits, to early termination on the date the
executive secures other full-time employment) and two years of retirement plan
credits. The cash severance benefit payable under the Change-in-Control
Agreements would be reduced by all amounts actually paid to the executive
pursuant to any other employment or severance agreement or plan to which the
executive and the Company are parties or in which the executive is a
participant. In addition, the severance benefits under the Change-in-Control
Agreements are subject to reduction in certain circumstances if the excise tax
imposed under 280G of the Internal Revenue Code would reduce the net after-tax
amount received by the executive.
RETIREMENT PROGRAM
The retirement program established by the Company prior to the Merger (the
"Federated Program") and the retirement program established by Macy's prior to
the Merger (the "Macy's Program") are the primary programs for providing
retirement benefits to the Company's employees. Each program consists of at
least one defined benefit plan and a defined contribution plan. As of January 1,
1995, approximately 42,500 employees participated in the Federated Program, and
approximately 30,000 employees participated in the Macy's Program. The executive
officers of the Company are participants in the Federated Program. Accordingly,
the Federated Program is described below.
To allow the Federated Program to provide benefits based on a participant's
total compensation, the Company adopted a Supplementary Executive Retirement
Plan (the "SERP") when it adopted its defined benefit plan. The SERP, which is a
nonqualified unfunded plan, provides to eligible executives retirement benefits
on compensation and benefits in excess of Internal Revenue Code maximums, as
well as amounts deferred under the Company's Executive Deferred Compensation
Plan ("EDCP"), effective November 1, 1993, in each case based on the same
formula contained in the Federated defined benefit plan under the Federated
Program. As of January 1, 1995, approximately 400 employees were eligible to
receive benefits under the terms of the SERP. The Company has reserved the right
to suspend or terminate supplemental payments as to any category of employee or
former employee, or to modify or terminate any other element of the Federated
Program in accordance with applicable law.
15
<PAGE> 19
Under the Federated Program, a participant retiring at normal retirement
age is eligible to receive monthly benefit payments calculated using a plan
formula that is based on the participant's years of credited service and final
average compensation, taking into consideration the participant's Retirement
Profit Sharing Credits (as defined below).
Prior to the adoption of the defined benefit plan under the Federated
Program, the Company's primary means of providing retirement benefits to
employees was through the RITI, which is a defined contribution profit sharing
plan. With the defined benefit plan under the Federated Program in place, the
Company continued, and presently expects to continue, to make contributions to
the thrift incentive portion of the RITI as described below. An employee's
accumulated retirement profit sharing interests ("Retirement Profit Sharing
Credits") in the retirement income portion of the RITI, which accrued prior to
January 1, 1984, continue to be maintained and invested until retirement, at
which time they are distributed. It is impractical to estimate the accrued
benefits upon retirement of any participant or group of participants in the
thrift incentive portion of the RITI because the amount, if any, that will be
contributed by the Company and credited to a participant in any year is
determined by such variable factors, among others, as the amount of income of
the Company, the number of participants in the plan, their annual contributions
to the plan, the amount of the matching contributions of the Company and the
earnings on participants' accounts.
The following table shows the estimated hypothetical annual benefits
payable pursuant to the defined benefit plan and the SERP to persons retiring at
their normal retirement age in 1995 in specified eligible compensation and years
of service classifications, assuming that a retiring participant under the
Federated Program elects a single life annuity distribution of his or her
Retirement Profit Sharing Credits and the annual payments under such
distribution would not exceed the level set forth below. Eligible compensation
for this purpose includes amounts reflected in the Annual Compensation portion
of the Summary Compensation Table under the headings "Salary" and "Bonus" and
amounts deferred under the EDCP that are not so reflected, but excludes amounts
reflected in such portion of such table under the heading "Other Annual
Compensation." Mr. Questrom's eligible compensation for 1994 was $1,200,000; the
eligible compensation for 1994 of each of the other Named Executives did not
vary by more than 10% from the total amount of such executive's compensation for
Fiscal 1994 reflected in the Annual Compensation portion of the Summary
Compensation Table.
<TABLE>
PENSION PLAN TABLE
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE ----------------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- - ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 250,000 50,312 67,083 83,853 100,624 100,624
300,000 60,812 81,083 101,353 121,624 121,624
350,000 71,312 95,083 118,853 142,624 142,624
400,000 81,812 109,083 136,353 163,624 163,624
450,000 92,312 123,083 153,853 184,624 184,624
500,000 102,812 137,083 171,353 205,624 205,624
750,000 155,312 207,083 258,853 310,624 310,624
1,000,000 207,812 277,083 346,353 415,624 415,624
1,250,000 260,312 347,083 433,853 520,624 520,624
1,500,000 312,812 417,083 521,353 625,624 625,624
</TABLE>
16
<PAGE> 20
Messrs. Questrom, Zimmerman, Tysoe, Cody and Broderick have completed 27,
26, 7, 12 and 7 years of credited service, respectively, and their estimated
annual retirement benefits at normal retirement age from the Company's defined
benefit plan under the Federated Program and the SERP, assuming their present
eligible compensation remains unchanged, would be $441,204, $505,848, $390,881,
$291,804 and $156,576, respectively.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW OF THE COMPANY'S EXECUTIVE COMPENSATION POLICIES AND PRACTICES
The Company's basic compensation policies and practices were established in
connection with the Federated Plan of Reorganization, including the
implementation of a comprehensive executive compensation program principally
intended to: (i) provide appropriate incentives designed to aid in assuring the
accomplishment of the Company's performance and financial objectives; (ii) help
ensure that the Company is able to attract and retain top-quality management
personnel; and (iii) ensure that an appropriate portion of executive
compensation is variable and dependent upon the accomplishment of specific short
and long-term performance and financial objectives, as well as increases in
stockholder value.
This program was developed with the assistance of independent compensation
and other advisors, reviewed in detail with representatives of creditor
constituencies during the course of the development of the Federated Plan of
Reorganization and approved in connection therein. The key guiding principle of
the program is that total compensation opportunities -- which include annual
cash compensation and the value of long-term stock and cash incentives -- should
be positioned at competitive levels, should lead the industry when annual and
long-term performance exceeds expectations and should lag behind the industry
when performance falls short. The program consists of the following components:
(i) Base Salary--targeted at competitive levels for comparable-sized firms
within the retail industry; (ii) Performance-Based Annual Cash Incentive--based
on attainment of specific financial objectives for the total corporation,
operating unit or individual; (iii) Performance-Based Long-Term Cash
Incentive--based on Company-wide performance against three-year financial
performance objectives, as well as performance against peers; and (iv)
Equity--in the form of stock options, which tie any executive gain directly to
value creation and stock price appreciation, and limited use of restricted
stock, the ultimate value of which is, also, directly tied to creation of
stockholder value. The companies to which comparisons are made for purposes of
determining competitive positioning are primarily department store retailers,
many of which are included in the graph set forth in the section under the
caption "Comparison of Total Stockholder Return." For purposes of measuring the
Company's performance against peers, the peer group contains all of the
companies set forth under the caption "Comparison of Total Stockholder Return,"
as well as a few additional companies. Information relating to each of the
foregoing components is set forth below.
During 1994, the Compensation Committee (the "Committee"), with the
assistance of executive compensation consultants from KPMG Peat Marwick LLP,
reviewed the total compensation provided to executives to ensure that it is
consistent with the Company's performance-driven policies. Based upon this
review, the Committee has reaffirmed the program's key guiding principles and
has continued, with some minor changes, the programs established and approved in
connection with the Federated Plan of Reorganization. In addition, it is the
Committee's general policy to consider whether particular payments and awards
are deductible for federal income tax purposes, along with such other factors as
may be relevant in the circumstances, in reviewing executive compensation
programs. Consistent with this policy, and in response to the final Treasury
regulations regarding the deductibility of executive compensation under Section
162(m) of
17
<PAGE> 21
the Internal Revenue Code, the Committee has taken what it believes to be
appropriate steps to maximize the future deductibility of cash payments under
the Company's annual cash incentive plan and the long-term cash incentive plan,
and of stock options awarded under the 1995 Equity Plan.
The Company's overall executive compensation program and each of its
components are administered by the Committee, based on authority delegated by
the Board. All of the members of the Committee are nonemployee directors and, in
the opinion of the Board, are independent of any relationships with any officer
or other person that would prevent such directors from making independent
judgments with respect to matters pertaining to executive compensation generally
or as applied to any specific officer. No executive officer of the Company
serves on any other boards of directors with any member of the Board or the
Committee.
SPECIFIC COMPENSATION PRACTICES
EMPLOYMENT AGREEMENT WITH CHIEF EXECUTIVE OFFICER. Mr. Questrom became the
Chairman of the Board and Chief Executive Officer of the Company and Allied in
February 1990, following the initiation of reorganization proceedings under
chapter 11 of the United States Bankruptcy Code in January 1990. His initial
compensation arrangements were set forth in an employment agreement that was
approved by the Bankruptcy Court and that expired on February 2, 1995. The
Committee has subsequently established new compensation arrangements with Mr.
Questrom, which are set forth in an employment agreement approved by the
Committee in June 1994. The new agreement became effective on February 2, 1995,
and expires on February 2, 1998.
The initial employment agreement with Mr. Questrom provided for him to
serve as Chairman of the Board and Chief Executive Officer of the Company and
Allied and provided for annual base compensation of $1.2 million. The agreement
also provided that Mr. Questrom would be entitled to receive a value-added
payment upon completion of the Contract Period based on appreciation in the
aggregate market value of the common stock of the Company and Allied (which was
merged into the Company pursuant to the Federated Plan of Reorganization) during
the Contract Period (adjusted to reflect the restructuring of the debt of the
Company and Allied and their respective subsidiaries pursuant to the Federated
Plan of Reorganization and the sale of equity) over a base value to be
determined by a third-party investment banking firm in accordance with the terms
of the agreement. The value-added payment is to equal the amount determined by
the following formula: 0.75% of the first $500.0 million of equity appreciation,
1.5% of all equity appreciation between $500.0 and $1,000.0 million and 2.0% of
any equity appreciation in excess of $1,000.0 million (less amounts previously
paid as described below). An initial, non-refundable value-added payment of $2.0
million was made upon commencement of the Contract Period and subsequent
non-refundable value-added payments of $800,000 were made on each of January 31,
1991, 1992, 1993, 1994 and 1995.
The investment banking firm selected by the Board to determine the amount
of appreciation during the Contract Period (J. P. Morgan Securities Inc.)
determined that the base value for purposes of Mr. Questrom's employment
agreement was $1,627.4 million, subject to adjustment for changes in equity. The
same firm was also selected by the Board to determine whether the public trading
price of the Common Stock as of the final valuation date (January 28, 1995)
accurately reflected the market value of the Company without minority discount.
If such trading price is determined not to have accurately reflected the market
value of the Company without minority discount, such firm will undertake to
determine such value based upon the market value of similar businesses taking
into account net income, cash flow, capital structure and such other factors as
such firm deems relevant in establishing such value.
18
<PAGE> 22
The aggregate amount of value-added payments to which Mr. Questrom is
entitled pursuant to his employment agreement has not been determined as of the
date of this Proxy Statement. It is anticipated that any remaining value-added
payment due to Mr. Questrom will be made promptly following such determination.
All payments to Mr. Questrom under his initial employment agreement are tax
deductible.
In light of the substantial total compensation opportunity otherwise made
available to Mr. Questrom under the terms of his initial employment agreement,
and the substantial portion thereof that was variable and dependent upon
increases in stockholder value, the Committee determined that it would not be
appropriate for Mr. Questrom to participate in the performance-based or
equity-related components of the Company's compensation program during Fiscal
1994.
Effective February 2, 1995, the Company and Mr. Questrom entered into a new
employment agreement which provides for Mr. Questrom to serve as Chairman of the
Board and Chief Executive Officer of the Company for a term expiring on February
2, 1998. The agreement provides for a base salary of $1.25 million per year, and
specifically includes Mr. Questrom as a participant in the Company's annual and
long-term cash incentive plans described hereinafter. In addition, pursuant to
the agreement, on February 2, 1995, Mr. Questrom was granted an option to
purchase 450,000 shares of Common Stock at an exercise price of $19.00 per
share. Such option vests in its entirety on February 2, 1998. In light of the
substantial option granted upon the commencement of the term of the agreement,
Mr. Questrom is not expected to receive any further stock option awards during
the term of the agreement. Pursuant to section 162(m) of the Internal Revenue
Code, annual compensation accrued to Mr. Questrom that is in excess of $1.0
million (excluding Mr. Questrom's annual and long-term cash bonus, as well as
any gains from the stock options awarded) will not be deductible by the Company
for Federal income tax purposes.
Termination of Mr. Questrom's employment agreement other than for "cause"
or termination of the agreement by Mr. Questrom for "good reason" would entitle
Mr. Questrom to receive a lump-sum payment of all salary and targeted annual
bonuses for each year until February 2, 1998. The term "cause" is defined
generally to include (i) willful and material breaches of duties, (ii) habitual
neglect of duties, or (iii) the final conviction of a felony, but generally does
not include bad judgment or negligence, any act or omission believed by Mr.
Questrom in good faith to have been in or not opposed to the interests of the
Company or any act or omission in respect of which a determination could
properly have been made by the Board that Mr. Questrom met the applicable
standard of conduct prescribed for indemnification or reimbursement under the
By-Laws or the laws of the state of Delaware. The term "good reason" is defined
generally to include (a) the assignment to Mr. Questrom of any duties materially
inconsistent with his position, authority, duties or responsibilities as
contemplated in the agreement, or any other action by the Company which results
in a material diminution in such position, authority, duties or
responsibilities, (b) any material failure by the Company to comply with any of
the provisions of the agreement, (c) failure of Mr. Questrom to be reelected
Chairman of the Board and Chief Executive Officer of the Company or to be
reelected to membership on the Board, or (d) any purported termination by the
Company of Mr. Questrom's employment otherwise than as expressly permitted by
the agreement.
EMPLOYMENT AGREEMENTS WITH OTHER EXECUTIVE OFFICERS. Each of the Company's
other executive officers, along with a number of other key employees, is a party
to an employment agreement with the Company. Most of these agreements have a
three-year term, although several are for two years or four years, and all
incorporate non-compete and mitigation clauses. The agreements with Messrs.
Zimmerman, Tysoe, Cody and Broderick presently specify the following respective
annual base salary rates and expiration dates: $1.0 million, December 9, 1998;
$700,000, January 2, 1999; $600,000, June 30, 1997; and $330,000, June 30, 1997
respectively.
19
<PAGE> 23
The Committee reviews the compensation levels and other terms of employment
of each of the Company's executive officers against the performance of such
officers and other factors determined to be appropriate by the Committee on a
continuing basis. While the Committee expects the Company will continue its
historical practice of entering into employment agreements with its executive
officers and other key employees, it reserves the right to modify or terminate
that practice generally or in a specific instance upon the expiration of any
such agreements.
ANNUAL CASH INCENTIVE. Since fiscal 1992, the Company's executive officers
(other than Mr. Questrom until fiscal 1995) have participated in an annual cash
bonus plan that was tied directly to Company performance. The annual cash bonus
opportunity for Messrs. Zimmerman, Tysoe and Cody (and Questrom, beginning in
fiscal 1995) is based 100% upon the Company's performance against specific
"EBIT" (Earnings Before Interest and Taxes) targets established by the Committee
consistent with the Company's annual business plan, while 75% of Mr. Broderick's
incentive opportunity is based upon the Company's EBIT performance, with the
remaining 25% based upon his performance compared to specific individual
objectives. Following full Board approval of the Company's annual business plan,
the Committee establishes minimum, target and maximum EBIT levels, and a minimum
targeted ratio of EBIT-to-sales. Failure to attain the minimum EBIT-to-sales
objective results in reduction of the bonus otherwise earned based upon earnings
performance. The Company's actual earnings and earnings rate for Fiscal 1994
exceeded the maximum earnings and earnings rate performance levels approved by
the Board. Accordingly, Messrs. Zimmerman, Tysoe, Cody and Broderick earned
bonuses which reflected the maximum (or near maximum) annual bonus opportunity
which the Committee assigned to their positions at the beginning of the year.
The Committee has reviewed and approved the 1995 annual cash incentive EBIT and
EBIT-to-sales performance targets for the executive group and the corresponding
annual cash bonus opportunities.
LONG-TERM CASH INCENTIVE. The long-term cash incentive plan for the
Company's executive officers is based on the Company's three-year performance
against specified financial objectives established in connection with the
Company's long-term business plan. The Company's performance against a
cumulative EBIT target and an EBIT rate target provides the basis for 60% of the
incentive opportunity under each of the 1993-1995, the 1994-1996 and the
1995-1997 programs. The remaining 40% of the incentive opportunity is based upon
the Company's performance compared to a designated group of peer companies under
the 1993-1995 and the 1994-1996 programs and upon an objective ranking of the
Company versus a defined peer group with respect to both cumulative comparable
store sales and cumulative earnings per share growth under the 1995-1997
program.
Consistent with the Company's long-term business plan approved by the full
Board, the Committee annually establishes new three-year minimum, target and
maximum EBIT objectives and a minimum EBIT rate objective, which generally
remain unchanged for each three-year measurement period. Failure to attain the
minimum earnings rate objective results in reduction of the bonus otherwise
earned based upon earnings performance. For the 1992-1994 performance period,
EBIT performance exceeded maximum objectives, resulting in a maximum payout for
the portion of the incentive based upon EBIT performance. With respect to
Company performance against peers, the Company exceeded the overall performance
objectives, also resulting in a maximum payout for the portion of the incentive
based upon performance against peers. The Committee has reviewed and approved
the 1995-1997 long-term cash incentive cumulative EBIT and EBIT rate performance
targets for the executive group, the specific factors and the peer group to
which Company performance will be compared, and the corresponding long-term cash
bonus incentive opportunity for each participant.
20
<PAGE> 24
EQUITY-BASED PLANS. Stock option awards were granted in Fiscal 1994 by the
Committee to each of the Named Executives (other than Mr. Questrom) pursuant to
the 1992 Equity Plan. In addition, restricted stock awards were made to both
Messrs. Zimmerman and Tysoe in Fiscal 1994.
Stock option awards made in Fiscal 1994 were based on the organizational
level of the executive, and provided recognition of the contributions made by
the executive in the current year, as well as the future contributions to the
Company each is anticipated to make. These include awards made in Fiscal 1994 to
a number of key Macy executives after the Merger. In granting these
performance-based awards, the Named Executives and other key employees were
provided with an immediate financial interest in increasing stockholder value.
Options granted prior to the Merger were generally granted at 100% of fair
market value (based upon market prices at the time of the grant), have a 10-year
term and typically vest over two years, although a limited number of awards were
made which vest over five years and whereby one-third of the shares vest in each
of the third, fourth and fifth years following the grant, and a special award
was made to Mr. Zimmerman, which vests 25% on each of the first four
anniversaries of the grant (See "Executive Compensation -- Fiscal 1994 Stock
Option Grants"). Awards granted to Macy's executives were also granted at 100%
of fair market value and have a 10-year term, but vest as to 25% of the shares
subject to the option on each of the first four anniversaries of the award. For
restricted stock awards, the restrictions typically lapse over a five-year
period, although the restrictions on awards to Messrs. Zimmerman and Tysoe in
Fiscal 1994 lapse over four years (and, in the case of one-third of such shares
awarded to Mr. Zimmerman, lapsed immediately following the grant).
Individual awards under the 1992 Equity Plan during Fiscal 1994, including
those made to executive officers, reflected individual as well as Company
performance. In addition, to provide key employees in the Company's Macy's
divisions an immediate financial interest in increasing stockholder value as
well as to recognize a limited number of Federated executives whose
responsibilities changed significantly as a result of the Merger, the Committee
authorized awards of options to purchase 2,005,300 shares of Common Stock to 439
persons, and awards of 24,500 shares of restricted stock to seven persons,
shortly after the Merger.
As part of the 1994 review of executive total compensation conducted by the
Committee with the assistance of outside compensation experts from KPMG Peat
Marwick LLP, the Committee approved new guidelines for stock option awards to
executives. The new guidelines feature the use of a range of annual stock option
award opportunities for each eligible position within the Company, with the
range of opportunity reflecting competitive levels of awards as compared to
other department store retailers and with individual awards reflecting
individual performance within the Company. The awards will typically be granted
with an exercise price equal to 100% of fair market value at the time of grant,
have a 10-year term and provide for vesting over four years. Options awarded
after February 15, 1995, will be granted under the 1995 Equity Plan approved by
the Company's stockholders at the November 29, 1994 special stockholders
meeting. The 1995 Equity Plan authorizes stock option awards covering an
additional 10 million shares of Common Stock, and also provides that the
remaining balance of shares authorized for stock option and restricted stock
awards under the 1992 Equity Plan will be available for such awards under the
1995 Equity Plan.
21
<PAGE> 25
CONCLUSION
The Committee believes that the compensation policies and arrangements made
or adopted in connection with the Federated Plan of Reorganization, such as the
Company's employment agreement with Mr. Questrom, were critical to the Company's
ability to successfully deleverage itself. The Committee intends to seek to
continue to operate under, and to adjust where necessary, these
performance-driven compensation policies and practices to assure that they are
consistent with the goals and objectives of the Company, and with the primary
mission of the full Board of increasing long-term stockholder value.
Respectfully submitted,
Robert A. Charpie, Chairperson
Lyle Everingham
George V. Grune
Joseph Neubauer
Paul W. Van Orden
Marna C. Whittington
COMPARISON OF TOTAL STOCKHOLDER RETURN
The following graph compares the cumulative total stockholder return on the
Common Stock with the Standard & Poor's 500 Composite Index and the Standard &
Poor's Retail Department Store Index for the period from February 5, 1992 (the
date on which trading in the Common Stock on the NYSE commenced) through January
27, 1995, assuming an initial investment of $100 and the reinvestment of all
dividends.
22
<PAGE> 26
<TABLE>
FEDERATED DEPARTMENT STORES VS. S&P 500 VS.
S&P RETAIL DEPARTMENT STORE INDEX
<CAPTION>
Total Compounded Market Return
Weekly: 2/5/92 to 1/27/95
Closing Stock Prices:
Federated Department Stores S&P 500 S&P Retail Dept. Store Index
------------------------------ ------------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C>
2/5/92 17.250 100.00% 379.535 100.00% 1110.647 100.00%
2/7/92 15.625 90.58% 377.013 99.34% 1157.884 104.25%
2/14/92 15.625 90.58% 378.274 99.67% 1178.713 106.13%
2/21/92 15.875 92.03% 377.357 99.43% 1145.422 103.13%
2/28/92 15.500 89.86% 378.475 99.72% 1200.195 108.06%
3/6/92 15.625 90.58% 370.909 97.73% 1180.137 106.26%
3/13/92 15.375 89.13% 372.199 98.07% 1133.435 102.05%
3/20/92 14.500 84.06% 377.214 99.39% 1138.894 102.54%
3/27/92 14.625 84.78% 370.049 97.50% 1094.032 98.50%
4/3/92 14.625 84.78% 370.948 97.74% 1123.406 101.15%
4/10/92 13.500 78.26% 373.459 98.40% 1056.527 95.13%
4/17/92 13.875 80.43% 384.342 101.27% 1099.551 99.00%
4/24/92 11.625 67.39% 377.847 99.56% 1072.906 96.60%
5/1/92 13.375 77.54% 381.080 100.41% 1063.174 95.73%
5/8/92 13.000 75.36% 384.342 101.27% 1076.407 96.92%
5/15/92 12.375 71.74% 378.828 99.81% 1058.604 95.31%
5/22/92 12.625 73.19% 382.466 100.77% 1066.556 96.03%
5/29/92 12.875 74.64% 383.678 101.09% 1053.857 94.89%
6/5/92 12.500 72.46% 381.946 100.64% 1070.235 96.36%
6/12/92 12.250 71.01% 378.511 99.73% 1056.112 95.09%
6/19/92 12.250 71.01% 372.882 98.25% 1029.111 92.66%
6/26/92 12.625 73.19% 372.708 98.20% 1013.208 91.23%
7/3/92 12.875 74.64% 383.425 101.02% 1041.929 93.81%
7/10/92 12.625 73.19% 386.073 101.72% 956.091 86.08%
7/17/92 13.250 76.81% 387.004 101.97% 995.227 89.61%
7/24/92 13.500 78.26% 383.250 100.98% 992.794 89.39%
7/31/92 13.875 80.43% 395.006 104.08% 1027.984 92.56%
8/7/92 14.000 81.16% 390.030 102.77% 1041.336 93.76%
8/14/92 14.500 84.06% 390.991 103.02% 1016.353 91.51%
8/21/92 13.750 79.71% 386.277 101.78% 1005.909 90.57%
8/28/92 13.750 79.71% 386.277 101.78% 996.948 89.76%
9/4/92 14.000 81.16% 388.372 102.33% 1013.386 91.24%
9/11/92 14.000 81.16% 390.700 102.94% 1002.526 90.27%
9/18/92 14.250 82.61% 393.813 103.76% 1029.171 92.66%
9/25/92 13.625 78.99% 385.811 101.65% 1040.149 93.65%
10/2/92 13.625 78.99% 385.160 101.48% 1042.048 93.82%
10/9/92 15.000 86.96% 377.829 99.55% 1057.833 95.24%
10/16/92 16.000 92.75% 384.925 101.42% 1067.209 96.09%
10/23/92 15.750 91.30% 388.561 102.38% 1147.321 103.30%
10/30/92 16.875 97.83% 392.872 103.51% 1155.629 104.05%
11/6/92 17.125 99.28% 391.846 103.24% 1165.005 104.89%
11/13/92 17.125 99.28% 396.391 104.44% 1199.483 108.00%
11/20/92 17.375 100.72% 400.349 105.48% 1212.657 109.18%
11/27/92 18.875 109.42% 403.634 106.35% 1252.475 112.77%
12/4/92 19.125 110.87% 405.422 106.82% 1228.442 110.61%
12/11/92 18.125 105.07% 406.976 107.23% 1195.863 107.67%
12/18/92 18.500 107.25% 414.073 109.10% 1197.287 107.80%
12/25/92 19.500 113.04% 412.665 108.73% 1214.081 109.31%
1/1/93 19.750 114.49% 411.596 108.47% 1242.446 111.87%
1/8/93 20.625 119.57% 405.407 106.82% 1222.639 110.08%
1/15/93 21.375 123.91% 413.054 108.83% 1207.067 108.68%
1/22/93 20.625 119.57% 412.080 108.57% 1192.271 107.35%
1/29/93 20.375 118.12% 414.589 109.24% 1214.942 109.39%
2/5/93 21.125 122.46% 424.186 111.76% 1286.595 115.84%
2/12/93 20.875 121.01% 420.082 110.68% 1263.686 113.78%
2/19/95 19.875 115.22% 410.279 108.10% 1181.532 106.38%
2/26/93 18.875 109.42% 418.930 110.38% 1200.385 108.08%
3/5/93 20.000 115.94% 421.528 111.06% 1221.028 109.94%
3/12/93 21.375 123.91% 425.042 111.99% 1271.024 114.44%
3/19/93 20.000 115.94% 425.367 112.08% 1258.913 113.35%
3/26/93 20.500 118.84% 423.093 111.48% 1256.347 113.12%
4/2/93 20.000 115.94% 419.836 110.62% 1298.195 116.89%
4/9/93 20.000 115.98% 420.282 130.74% 1244.878 112.09%
4/16/93 18.625 107.97% 427.030 112.51% 1225.326 110.33%
4/23/93 18.625 107.97% 415.704 109.53% 1186.763 106.85%
4/30/93 19.750 114.49% 418.707 110.32% 1180.526 106.29%
5/7/93 19.375 112.32% 420.728 110.85% 1217.410 109.61%
5/14/93 21.875 126.81% 418.112 110.16% 1248.416 112.40%
5/21/93 24.500 142.03% 424.087 111.74% 1275.884 114.88%
5/28/93 23.000 133.33% 428.219 112.83% 1266.288 114.01%
6/4/93 23.750 137.68% 428.100 112.80% 1291.417 116.28%
6/11/93 22.875 132.61% 425.425 112.09% 1250.815 112.62%
6/18/93 22.250 128.99% 422.036 111.20% 1259.391 113.39%
6/25/93 23.000 133.33% 425.752 112.18% 1187.543 106.92%
7/2/93 24.125 139.86% 427.196 112.56% 1246.142 112.20%
7/9/93 24.375 141.30% 429.382 113.13% 1215.250 109.42%
7/16/93 24.125 139.86% 427.106 112.53% 1266.838 114.06%
7/23/93 22.625 131.16% 428.394 112.87% 1216.517 109.53%
7/30/93 23.000 133.33% 429.382 113.13% 1229.791 110.73%
8/6/93 22.750 131.88% 429.921 113.28% 1282.224 115.45%
8/13/93 21.750 126.09% 431.298 113.64% 1278.241 115.09%
8/20/93 21.500 124.64% 437.077 115.16% 1284.456 115.65%
8/27/93 20.000 115.94% 441.269 116.27% 1311.246 118.06%
9/3/93 20.375 118.12% 442.048 116.47% 1260.623 113.50%
9/10/93 19.875 115.22% 442.407 116.57% 1215.370 109.43%
9/17/93 19.250 111.59% 439.652 115.84% 1255.675 113.06%
9/24/93 20.125 116.67% 438.484 115.53% 1307.988 117.77%
10/1/93 18.375 106.52% 445.083 117.27% 1342.279 120.86%
10/8/93 18.625 107.97% 444.148 117.02% 1356.294 122.12%
10/15/93 19.625 113.77% 453.013 119.36% 1329.902 119.74%
10/22/93 20.500 118.84% 447.013 117.78% 1350.469 121.59%
10/29/93 19.750 114.49% 451.415 118.94% 1400.644 126.11%
11/5/93 19.500 113.04% 443.425 116.83% 1418.117 127.68%
11/12/93 21.250 123.19% 449.033 118.31% 1441.961 129.83%
11/19/93 21.250 123.19% 446.350 117.60% 1469.020 132.27%
11/26/93 21.875 126.81% 446.802 117.72% 1421.029 127.95%
12/3/93 21.375 123.91% 448.551 118.18% 1442.931 129.92%
12/10/93 20.750 120.29% 447.646 117.95% 1439.412 129.60%
12/17/93 20.750 120.29% 449.998 118.57% 1398.278 125.90%
12/24/93 20.000 115.94% 450.963 118.82% 1372.917 123.61%
12/31/93 20.750 120.29% 453.046 119.37% 1374.942 123.80%
1/7/94 22.125 128.26% 456.415 120.26% 1369.453 123.30%
1/14/94 22.125 128.26% 461.271 121.54% 1370.124 123.36%
1/21/94 21.625 125.36% 461.089 121.49% 1360.182 122.47%
1/28/94 21.000 121.74% 464.944 122.50% 1336.761 120.36%
2/4/94 21.500 124.64% 456.324 120.23% 1383.420 124.56%
2/11/94 21.750 126.09% 456.688 120.33% 1367.684 123.14%
2/18/94 22.000 127.54% 454.260 119.69% 1371.588 123.49%
2/25/94 24.375 141.30% 452.681 119.27% 1461.368 131.58%
3/4/94 24.625 142.75% 451.407 118.94% 1467.284 132.11%
3/11/94 24.500 142.03% 453.046 119.37% 1478.568 133.13%
3/18/94 23.875 138.41% 457.538 120.55% 1502.964 135.32%
3/25/94 23.500 136.23% 447.370 117.87% 1492.474 134.38%
4/1/94 22.000 127.54% 436.055 114.89% 1418.018 127.67%
4/8/94 24.125 139.86% 437.339 115.23% 1494.938 134.60%
4/15/94 22.750 131.88% 436.453 115.00% 1494.938 134.60%
4/22/94 22.625 131.16% 437.859 115.37% 1391.724 125.31%
4/29/94 21.375 123.91% 441.069 116.21% 1427.089 128.49%
5/6/94 21.000 121.74% 438.042 115.42% 1442.902 129.92%
5/13/94 21.250 123.19% 434.435 114.47% 1401.899 126.22%
5/20/94 21.750 126.09% 444.981 117.24% 1397.670 125.84%
5/27/94 22.000 127.54% 447.366 117.87% 1383.083 124.53%
6/3/94 22.000 127.54% 450.086 118.59% 1371.805 123.51%
6/10/94 21.625 125.36% 448.650 118.21% 1333.008 120.02%
6/17/94 21.375 123.91% 448.436 118.15% 1380.876 124.33%
6/24/94 19.500 113.04% 433.151 114.13% 1366.840 123.07%
7/1/94 20.250 117.39% 439.803 115.88% 1394.786 125.58%
7/8/94 20.250 117.39% 443.130 116.76% 1372.524 123.58%
7/15/94 19.625 113.77% 447.658 117.95% 1343.417 120.96%
7/22/94 20.625 119.57% 446.641 117.68% 1344.157 121.02%
7/29/94 20.375 118.12% 451.693 119.01% 1352.914 121.81%
8/5/94 19.000 110.14% 450.553 118.71% 1347.980 121.37%
8/12/94 20.250 117.39% 455.328 119.97% 1320.292 118.88%
8/19/94 19.750 114.49% 457.053 120.42% 1327.075 119.49%
8/26/94 20.625 119.57% 467.033 123.05% 1387.570 124.93%
9/2/94 22.750 131.88% 464.261 122.32% 1417.726 127.65%
9/9/94 23.250 134.78% 461.488 121.59% 1429.936 128.75%
9/16/94 23.125 134.06% 464.446 122.37% 1428.517 128.62%
9/23/94 22.250 128.99% 453.079 119.38% 1380.602 124.31%
9/30/94 23.000 133.33% 459.336 121.03% 1351.002 121.64%
10/7/94 21.875 126.81% 451.798 119.04% 1348.890 121.45%
10/14/94 22.375 129.71% 465.696 122.70% 1360.556 122.50%
10/21/94 20.750 120.29% 461.508 121.60% 1380.848 124.33%
10/28/94 20.500 118.84% 470.350 123.93% 1341.257 120.76%
11/4/94 20.000 115.94% 458.933 120.92% 1368.933 123.26%
11/11/94 20.625 119.57% 458.995 120.94% 1354.474 121.95%
11/18/94 20.000 115.94% 458.126 120.71% 1347.338 121.31%
11/25/94 19.250 111.59% 449.006 118.30% 1292.730 116.39%
12/2/94 19.500 113.04% 450.029 118.57% 1310.974 118.04%
12/9/94 18.375 106.52% 443.732 116.91% 1212.244 109.15%
12/16/94 18.875 109.42% 455.489 120.01% 1224.593 110.26%
12/23/94 19.000 110.14% 456.513 120.28% 1226.331 110.42%
12/30/94 19.250 111.59% 459.281 121.01% 1193.690 107.48%
1/6/95 18.875 109.42% 460.688 121.38% 1206.500 108.63%
1/13/95 18.125 105.07% 465.969 122.77% 1220.188 109.86%
1/20/95 18.750 108.70% 464.781 122.46% 1235.250 111.22%
1/27/95 18.625 107.97% 470.375 123.93% 1228.563 110.62%
</TABLE>
On 1/27/95:
Federated Department Stores: $107.97
S&P 500: $123.93
S&P Retail Dept. Store Index:* $110.62
* According to published sources, the entities included in the Index are Dillard
Department Stores, Inc., The May Department Stores Company, Mercantile Stores
Company, Inc., Nordstorm, Inc., and J.C. Penney Company, Inc.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Neubauer, a director of the Company and a member of the Committee, is
Chairman and CEO of ARAMARK Corporation ("ARAMARK"), which has entered into an
agreement with The Bon, Inc., a wholly owned subsidiary of the Company ("The
Bon"), to operate food and beverage services on a limited profit and loss basis
for nine Bon Marche stores. In Fiscal 1994, the sales revenues of The Bon
attributable to ARAMARK's operations were approximately $3,724,500.
STOCKHOLDER PROPOSALS
Proposals for 1996 Annual Meeting. Any proposal of a shareholder intended
to be presented at the Company's 1996 annual meeting of shareholders must be
received in writing by the Secretary of the Company by December 23, 1995 for
inclusion in the Company's proxy, notice of meeting and proxy statement relating
to the 1996 annual meeting. Stockholder proposals submitted in accordance with
applicable SEC rules will be considered by the BOCG Committee, which will make
proposals to the full Board in respect thereof. Such
23
<PAGE> 27
proposals may be accompanied by reasonable supporting materials in addition to
the 500-word supporting statement contemplated by applicable SEC rules.
Other. In December 1994, the Company received stockholder proposals in
respect of the Annual Meeting relating to (i) confidential voting, (ii) the
establishment of a directorate committee comprised solely of independent
directors to evaluate management proposals and (iii) the Company's Rights Plan.
Following discussions with the stockholder proponents, the Board took various
actions, including the adoption of the confidential voting policy described
under the caption "Introduction," the inclusion of certain corporate governance
matters within the charter of the BOCG Committee (and the direction that the
BOGC Committee consider certain matters relating to the Rights Plan) and the
requirements as to the composition of directorate committees as described under
the caption "Further Information Concerning the Board of Directors -- Committees
of the Board". As a result thereof, the above-described stockholder proposals
were withdrawn.
OTHER MATTERS
The Board knows of no business which will be presented for consideration at
the Annual Meeting other than that shown above. However, if any business shall
properly come before the Annual Meeting, the persons named in the enclosed form
of proxy or their substitutes will vote said proxy in respect of any such
business in accordance with their best judgment pursuant to the discretionary
authority conferred thereby. The affirmative vote of the holders of a majority
of the shares of Common Stock represented at the Annual Meeting and actually
voted would be required with respect to any such matter brought to a stockholder
vote.
The cost of preparing, assembling and mailing the proxy material will be
borne by the Company. The Annual Report of the Company for Fiscal 1994, which is
being mailed to the stockholders together herewith, is not to be regarded as
proxy soliciting material. The Company may solicit proxies otherwise than by the
use of the mails, in that certain officers and regular employees of the Company,
without additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies. The Company will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
which are beneficially owned by others, to send proxy material to and obtain
proxies from such beneficial owners and will reimburse such holders for their
reasonable expenses in so doing. In addition, the Company has engaged the firm
of Georgeson & Company, Inc. ("Georgeson"), of New York City, to assist in the
solicitation of proxies on behalf of the Board. Georgeson will solicit proxies
with respect to the Common Stock of the Company held by brokers, bank nominees,
other institutional holders and certain individuals, and will perform related
services. It is anticipated that the cost of the solicitation service to the
Company will not substantially exceed $15,000.
DENNIS J. BRODERICK
Secretary
April 20, 1995
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT IN
THE ENCLOSED ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
24
<PAGE> 28
<TABLE>
<S> <C>
DIRECTORS RECOMMEND A VOTE "FOR" ALL NOMINEES LISTED IN ITEM 1 AND "FOR" ITEMS 2 AND 3.
1. Election of Directors FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] EXCEPTIONS [ ]
listed below for all nominees listed below
Nominees for a three-year term: Joseph Neubauer, Allen I. Questrom, Paul W. Van Orden, Karl M von der Heyden
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name in
the space provided below.)
Exceptions__________________________________________________________________________________________________________________________
2. Ratify the Selection of KPMG Peat Marwick LLP as the 3. In their discretion, the proxies are authorized
Company's independent accountants for the fiscal to vote upon such other matters as may properly come
year ending February 3, 1996. before the meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN [ ]
For purposes of the 1995 Annual Meeting, proxies will be held in
confidence (subject to certain exceptions as set forth in the Address Change
Proxy Statement) unless the undersigned checks the following box: [ ] Mark Here [ ]
This proxy should be dated, signed by the shareholder as his or her name
appears hereon, and returned promptly in the enclosed envelope. Joint
owners should each sign personally, and trustees and others signing in
a representative capacity should indicate the capacity in which they
sign.
Dated ____________________________________________________, 1995
_________________________________________________________________
Signature of Shareholder
_________________________________________________________________
Signature of Shareholder
RETURN THIS PROXY CARD PROMPTLY, USING THE ENVELOPE PROVIDED. Votes must be indicated (x) in Black or Blue ink. [ ]
</TABLE>
<PAGE> 29
FEDERATED DEPARTMENT STORES, INC.
PROXIES SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS ON MAY 19, 1995
The undersigned holder of shares of Common Stock of Federated
Department Stores, Inc. (the "Company") hereby appoints Lyle Everingham, Karl
M. von der Heyden and Ronald W. Tysoe, and each of them, as proxies of the
undersigned, with full power of substitution, to act and to vote for and in the
name, place and stead of the undersigned at the Annual Meeting of Shareholders
of the Company to be held at the Registry Hotel, 475 Seagate Drive, Naples,
Florida 33940, at 11:00 a.m., Eastern Daylight Time, on Friday, May 19, 1995,
and at any and all postponements and adjournments thereof, according to the
number of votes and as fully as the undersigned would be entitled to vote if
personally present at such meeting, and particularly with respect to the
proposals listed on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED,
THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2 AND IN THE DISCRETION OF THE PROXIES
IN RESPECT OF ITEM 3.
(Continued, and to be dated and signed, on other side)
FEDERATED DEPARTMENT STORES, INC.
P.O. BOX 11107
NEW YORK, N.Y. 10203-0107
