Proffitt's, Inc.
Midland Shopping Center
115 North Calderwood
Alcoa, Tennessee 37701
May 2, 1995
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of the
Shareholders to be held at 8:30 a.m. Eastern Daylight Time on
Thursday, June 15, 1995, at Proffitt's Foothills Mall Store
(Women's Building), 173 Foothills Mall, Maryville, Tennessee 37801.
The notice of the meeting and proxy statement accompanying this
letter describe the specific business to be acted upon. Your vote
is very important, and your cooperation in completing, signing, and
returning your proxy promptly in the enclosed return
envelope will be appreciated.
At the meeting, there will be a report on the progress of the
Company and an opportunity to ask questions of general interest to
the shareholders.
Shareholders attending the meeting are invited to shop at our
Foothills Mall Store and will be given a special discount on the
day's purchases.
I hope you will be able to join us, and I look forward to seeing
you.
Sincerely,
R. Brad Martin
Chairman of the Board and Chief Executive Officer
<PAGE>
Proffitt's, Inc.
Midland Shopping Center
115 North Calderwood
Alcoa, Tennessee 37701
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Proffitt's, Inc.:
Notice is hereby given that the Annual Meeting of the Shareholders
of Proffitt's, Inc. (the "Company") will be held at 8:30 a.m.
Eastern Daylight Time on Thursday, June 15, 1995, at Proffitt's
Foothills Mall Store (Women's Building), 173 Foothills Mall,
Maryville, Tennessee 37801, for the following purposes:
1. To elect nine Directors to hold office until the next
Annual Meeting of the Shareholders or until their
respective successors have been elected and qualified;
2. To adopt the Proffitt's, Inc. 1994 Employee Stock
Purchase Plan;
3. To approve an amendment to the Company's Charter, as
permitted by the Tennessee Business Corporation Act, to
add a provision requiring the demand of the holders of at
least 25% of all the votes entitled to be cast on an
issue in order to call a special meeting of shareholders
(the "Special Meeting Proposal");
4. To consider and act upon a proposal to ratify the
appointment of the firm of Coopers & Lybrand as
independent accountants for the current fiscal year
ending February 3, 1996; and
5. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Shareholders of record at the close of business on April 24, 1995
are entitled to notice of, and to vote at, the meeting.
Shareholders are cordially invited to attend the meeting in person.
By order of the Board of Directors,
/s/ Julia Bentley
Julia Bentley
Secretary
May 2, 1995
Whether or not you intend to be present at the meeting, you are
urged to mark, sign, and date the enclosed proxy and return
it promptly in the envelope provided.
Proffitt's, Inc.
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This proxy statement is furnished in connection with the
solicitation of proxies to be used at the Annual Meeting of the
Shareholders (the "Annual Meeting") of Proffitt's, Inc. (the
"Company"), a Tennessee corporation, to be held on June 15, 1995.
The solicitation of proxies in the enclosed form is made on behalf
of the Board of Directors of the Company.
The cost of preparing, assembling, and mailing the proxy material
and of reimbursing brokers, nominees, and fiduciaries for
out-of-pocket and clerical expenses of transmitting copies of the
proxy material to the beneficial owners of shares held of record by
such persons will be borne by the Company. The Company does not
intend to solicit proxies otherwise than by use of the mails, but
certain officers and regular employees of the Company, without
additional compensation, may use their personal efforts, by
telephone or otherwise, to obtain proxies. The proxy materials are
first being mailed to shareholders on May 2, 1995.
A shareholder signing and returning a proxy on the enclosed form
has the power to revoke it at any time before the shares subject to
it are voted by notifying the Secretary of the Company in writing.
Attendance at the Annual Meeting by a shareholder who has given a
proxy will not have the effect of revoking it unless he gives such
written notice of revocation to the Secretary before the proxy is
voted. Votes cast by proxy or in person at the Annual Meeting will
be tabulated by the election inspectors appointed for the meeting
and will determine whether or not a quorum is present. The election
inspectors will treat abstentions as shares that are presented and
entitled to vote for purposes of determining the presence of a
quorum. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present
and entitled to vote with respect to that matter. The nominees for
Director receiving a plurality of the votes cast at the meeting in
person or by proxy shall be elected. Abstentions and broker
non-votes have no affect on the plurality vote for the election of
Directors. All other matters will be approved if the votes cast
favoring the action exceed the votes opposing the action.
OUTSTANDING VOTING SECURITIES
Only shareholders of record at the close of business on April 24,
1995 are entitled to vote at the Annual Meeting. On that day, there
were issued and outstanding 10,218,624 shares of Common Stock. Each
share has one vote.
Listed in the following table are the beneficial owners as of March
29, 1995 of more than 5% of the Company's outstanding Common Stock
who are known to the Company. The table below also includes the
number of shares owned by each Director, each nominee for Director,
certain executive officers, and all Directors and officers of the
Company as a group.
NAME OF BENEFICIAL OWNER TOTAL SHARES PERCENTAGE
(AND ADDRESS IF "BENEFICIAL BENEFICIALLY COMMON STOCK
OWNERSHIP" EXCEEDS 5%) OWNED OUTSTANDING
Apollo Specialty Retail
Partners, L.P.
Two Manhattanville Road
Purchase, New York 1,421,801 (1) 12.21%
Bernard E. Bernstein 16,201 (2) *
Edmond D. Cicala 17,889 (3) *
James A. Coggin 83,000 (3) *
Ronald de Waal
Terbekehofdreef 75
B-2610 Wilrijk, Belgium 1,000,513 (3) 9.79%
James E. Glasscock 52,500 (3) *
Michael S. Gross 2,000 (3)(4) *
Gary L. Howard 52,000 (3) *
R. Brad Martin
5810 Shelby Oaks Drive
Memphis, Tennessee 1,324,399 (5) 12.69%
Richard D. McRae 57,407 (3) *
Frederick J. Mershad 52,000 (3) *
C. Warren Neel 7,250 (3) *
Harwell W. Proffitt 7,500 (3) *
RCM Capital Management
Four Embarcadero Center
San Francisco, California 579,200 (6) 5.67%
Stein Roe & Farnham
One South Wacker Drive
Chicago, Illinois 778,575 (6) 7.57%
Gerald Tsai, Jr. 5,000 (3) *
All Directors and officers
as a group (19 persons) 2,936,005 26.95%
_____________________________________
* Owns less than 1% of the total outstanding Common Stock of the
Company.
(1) Represents shares issuable upon conversion of the Company's
Series A Preferred Stock.
(2) Includes options to purchase 5,500 shares of Company Common
Stock and 3,000 shares owned by the Bernard E. Bernstein
Defined Benefit Pension Plan.
(3) Includes 2,000, 80,000, 2,000, 50,000, 1,000, 50,000, 1,000,
50,000, 5,500, 4,500, and 2,000 shares of stock options with
respect to Cicala, Coggin, de Waal, Glasscock, Gross, Howard,
McRae, Mershad, Neel, Proffitt, and Tsai.
(4) Total does not include shares held by Apollo Specialty Retail
Partners, L.P. ("Apollo Specialty"). Mr. Gross is one of the
founding principals of Apollo Advisors, L.P., the managing
general partner of Apollo Investment Fund, L.P., the general
partner of Apollo Specialty. Mr. Gross disclaims beneficial
ownership of all securities held by Apollo Specialty.
(5) Includes: (i) 2,000 shares held by Mr. Martin as custodian for
his minor children, (ii) 1,300 shares owned by RBM Venture
Company, a company of which Mr. Martin is sole shareholder,
(iii) 75,000 shares held by the R. Brad Martin 1994-1
Qualified Annuity Trust, (iv) 4,250 shares owned by the R.
Brad and Jean L. Martin Family Foundation, and (v) options to
purchase 220,000 shares of Common Stock.
(6) Based solely on information provided by the beneficial owner.
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Board of Directors proposes the election of nine Directors,
each to hold office until the next Annual Meeting of the
Shareholders or until a successor has been elected and qualified.
Unless otherwise instructed by the shareholder, the persons named
in the enclosed form of proxy intend to vote for the election of
the persons listed in this proxy statement. If any nominee becomes
unavailable for any reason or should a vacancy occur before the
election (which events are not anticipated), the proxies will be
voted for the election of a substitute nominee to be selected by
the persons named in the proxy.
Certain information is given below for each nominee for Director.
NAME, PRINCIPAL OCCUPATION, DIRECTOR
AND DIRECTORSHIP AGE SINCE
R. Brad Martin 43 1984
Chief Executive Officer of the
Company since July 1989, Chairman
of the Board of the Company since
February 1987, and President from
July 1989 until March 1994 and from
September 1994 to March 1995. Mr.
Martin serves on the Board of
Directors of Delta Life Corporation,
First Tennessee National Corporation,
Pilot Corporation, and Sports &
Recreation, Inc.
Bernard E. Bernstein 64 1987
Partner in the Knoxville, Tennessee
law firm of Bernstein, Stair &
McAdams since 1959.
Edmond D. Cicala 69 1987
President of Edmond Enterprises, Inc.
Retired Chairman and Chief Executive
Officer of the Goldsmith's Division
of Federated Department Stores. Mr.
Cicala is a Director of National
Commerce Bancorporation.
Ronald de Waal 43 1985
Chairman of We International, B.V.,
a Netherlands corporation, which
operates more than 250 fashion
specialty stores in Belgium, the
Netherlands, Switzerland, and Germany.
Michael S. Gross 33 1994
Vice President of Apollo Capital
Management, Inc., the general partner
of Apollo Advisors, L.P. Mr. Gross
serves on the Board of Directors of
Buster Brown Apparel, Inc., Cole
National Corporation, Converse, Inc.,
Florsheim Shoe Company, and Interco
Incorporated and on the Supervisory
Board of Directors of Memorex Telex, N.V.
Richard D. McRae 74 1994
Former Chairman, President, and Chief
Executive Officer of McRae's, Inc.
C. Warren Neel 56 1987
Dean of the College of Business
Administration at the University of
Tennessee, Knoxville. Dr. Neel serves
on the Board of Directors of American
Healthcorp, Inc., Clayton Homes, Inc.,
O'Charley's, Inc., and The Promus
Companies, Inc.
Harwell W. Proffitt 77 1971
Former Chairman, President, and Chief
Executive Officer of Proffitt's, Inc.
Gerald Tsai, Jr. 66 1993
Chairman, President, and Chief
Executive Officer of Delta Life
Corporation. Mr. Tsai serves on the
Board of Directors of Meditrust, Rite
Aid Corporation, Sequa Corporation,
Triarc Companies, Inc., Zenith National
Insurance Corporation.
The Board recommends the shareholders vote "FOR" the election as
Directors the above listed nominees.
FURTHER INFORMATION CONCERNING DIRECTORS
DIRECTORS' FEES
Directors who are not officers of the Company each receive an
annual fee of $12,000 and $750 for attendance at each board meeting
or meeting of a committee of which he is a member. Directors not
employed by the Company may elect to participate in the Company's
Deferred Compensation Plan for Non-Employed Directors of
Proffitt's, Inc. and defer all such compensation in lieu of
immediate cash payments. The deferred compensation is tied to the
value of the Company's Common Stock.
Pursuant to the Company's 1994 Long-Term Incentive Plan (the
"Plan"), each non-employee Director of the Company annually is
granted a nonqualified stock option to purchase 1,000 shares of
Company Common Stock. Options are priced at fair market value at
the date of grant and vest in one-fifth installments commencing on
the date of grant. In addition, pursuant to the Plan, each
non-employee Director has been awarded 1,000 shares of restricted
Common Stock which vest in one-tenth installments commencing on the
first anniversary of the award date.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board met five times during the last fiscal year. The Board of
Directors has established Audit, Compensation, Stock Option, and
Nominating Committees.
The Audit Committee includes C. Warren Neel (Chairman), Harwell W.
Proffitt, and Richard D. McRae. The Committee met once during the
last fiscal year. The Audit Committee recommends engagement of the
independent accountants, reviews the fee arrangement and scope of
the audit, reviews the financial statements and the report of
independent accountants, reviews the activities and recommendations
of the Company's internal auditors, and considers comments made by
the independent accountants with respect to the Company's system of
internal accounting control.
The Compensation Committee includes Bernard E. Bernstein
(Chairman), Edmond D. Cicala, and C. Warren Neel. Mr. Cicala
replaced R. Brad Martin, who served until September 1994 on the
Committee. The Committee met twice during the last fiscal year. The
purpose of this Committee is to review compensation of Company
officers and employees and any other compensation related plan,
other than the stock option and long-term incentive plans.
The Stock Option Committee consists of Ronald de Waal (Chairman),
Edmond D. Cicala, and Michael S. Gross and administers the
Company's 1987 Stock Option Plan and the 1994 Long-Term Incentive
Plan. This Committee met once during the last fiscal year.
The Nominating Committee includes Gerald Tsai, Jr. (Chairman),
Bernard E. Bernstein, and R. Brad Martin. The functions of the
Committee are to screen and recommend candidates for the Company's
Board of Directors. The Nominating Committee does not consider
nominees for Director recommended by shareholders.
Because of the death of a family member, Mr. Proffitt attended only
71% of the combined total of the Board of Directors and Audit
Committee meetings during the last fiscal year.
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the years ended January 28,
1995, January 29, 1994, and January 30, 1993, the cash compensation
paid by the Company, as well as other compensation paid or accrued
for these years, as to the Company's Chief Executive Officer and to
each of the other four highest compensated executive officers
("Named Officers").
ANNUAL COMPENSATION
OTHER
ANNUAL
SALARY BONUS COMPENSATION
NAME & PRINCIPAL POSITION YEAR ($) ($) (1) ($)
R. Brad Martin 1994 383,334 293,438(2) 27,700(3)
Chairman of the Board 1993 175,000 92,500(5) 36,900(3)
and Chief Executive 1992 132,500 100,000 46,450(3)
Officer
James A. Coggin (6) 1994 270,833 208,125(2)
President and Chief
Operating Officer
James E. Glasscock (6) 1994 166,667 98,750
Executive Vice President,
Chief Financial Officer,
and Treasurer
Gary L. Howard (6) 1994 241,667 80,040
President, McRae's
Stores Division
Frederick J. Mershad (6) 1994 173,077 75,000
President, Proffitt's
Stores Division
________________________________
(TABLE CONTINUED)
LONG-TERM
COMPENSATION AWARDS
RESTRICTED SECURITIES ALL
STOCK UNDERLYING OTHER
NAME AND PRINCIPAL AWARD(S) OPTIONS COMPENSATION
POSITION YEAR ($) GRANTED(#) ($)
R. Brad Martin 1994 95,000 7,140(4)
Chairman of the 1993 100,000
Board and Chief 1992
Executive Officer
James A. Coggin(6) 1994 60,000
President and Chief
Operating Officer
James E. Glasscock(6) 1994 23,000(7) 35,000
Executive Vice
President, Chief
Financial Officer,
and Treasurer
Gary L. Howard(6) 1994 23,000(7) 50,000
President, McRae's
Stores Division
Frederick J. Mershad(6) 1994 23,000(7) 35,000
President, Proffitt's
Stores Division
________________________________
(1) Amounts awarded under the Incentive Compensation Plan for the
respective fiscal years, even if deferred.
(2) Includes stock grants to Martin and Coggin of 5,000 and 2,500
shares of Proffitt's Common Stock, respectively, which was
granted at the market price of $21.50 as of the date of grant.
(3) In February 1989, the Company entered into a compensation
agreement with R. Brad Martin which provides for a $500,000
interest-free loan due January 31, 1999 or upon Mr. Martin's
termination of employment with the Company. Other Annual
Compensation represents imputed interest on that interest-free
loan.
(4) Economic benefit of split dollar life insurance policy.
(5) Represents a stock grant of 5,000 shares of Proffitt's Common
Stock which was granted at the market price of $18.50 as of
the date of grant.
(6) The hire date for Coggin, Glasscock, and Howard is April 1,
1994 and for Mershad is May 23, 1994.
(7) Represents a stock grant of 1,000 shares of Proffitt's Common
Stock which was granted at the market price of $23.00 as of
the date of grant. These grants vest in equal one-third
installments with full vesting occurring on the second
anniversary of the date of grant.
EMPLOYMENT CONTRACTS
All of the Named Officers have employment agreements with the
Company. All agreements fix the Named Officers' minimum base
compensation for the fiscal year and provide for participation by
such officers in employment benefit plans as the Company may adopt.
The term for Mr. Martin's agreement ends March 28, 2000. The
remainder of the Named Officers' agreements are for three year
terms ending March 28, 1998. Under the terms of each agreement,
each Named Officer is entitled to receive his base salary for the
remainder of his employment period in the event he is terminated
without cause. If the termination is involuntary and due to a
change in control or a potential change in control, he is entitled
to receive his base salary for the greater of the remaining term of
his agreement or twenty-four months. In such event, the Company
would be obligated to pay the following monthly amounts (assuming
no change in current salaries) to these individuals: R. Brad
Martin, $37,500; James A. Coggin, $30,417; James E. Glasscock,
$17,917; Gary L. Howard, $25,833; and Frederick J. Mershad,
$22,917. A "Change in Control" is defined as: (i) the acquisition
of 25% or more of the combined voting power of the Company's
outstanding securities, (ii) a tender offer, merger, sale of
assets, or other business combination which results in the transfer
of a majority of the combined voting power of the Company or any
successor entity, or (iii) during any two consecutive year period,
the failure to elect a majority of the individuals constituting the
Board of Directors of the Company prior to the commencement of such
period, unless the election or nomination of any replacement
Directors was approved by vote of at least two-thirds of the
Directors of the Company then still in office who were Directors of
the Company at the beginning of such period.
A "Potential Change in Control" is defined as: (i) the approval by
the shareholders of the Company of an agreement which, if
consummated, will result in a change of control or (ii) the
acquisition of 5% or more of the outstanding voting securities of
the Company and the adoption by the Company's Directors of a
resolution to the effect that a potential change in control of the
Company has occurred.
STOCK OPTIONS
The following table contains information concerning the grant of
stock options under the Proffitt's, Inc. 1994 Long-Term Incentive
Plan ("Plan") to the Named Officers as of fiscal year end.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
% OF EXERCISE
TOTAL OPTIONS OR BASE
OPTIONS GRANTED TO PRICE
GRANTED EMPLOYEES IN ($/SHARE) EXPIRATION
NAME (#)(1)(2) FISCAL YEAR (3) DATE
R. Brad Martin 95,000 14.4 24.50 4/1/04
James A. Coggin 50,000 7.6 24.50 4/1/04
10,000 1.5 24.50 9/13/04
James E. Glasscock 35,000 5.3 24.50 4/1/04
Gary L. Howard 50,000 7.6 24.50 4/1/04
Frederick J. Mershad 35,000 5.3 24.50 5/23/04
__________________________
<PAGE>
(TABLE CONTINUED)
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
FOR OPTION TERM (4)
NAME 5%($) 10%($)
R. Brad Martin 1,463,752 3,709,436
James A. Coggin 770,396 1,952,335
154,079 390,467
James E. Glasscock 539,277 1,366,634
Gary L. Howard 770,396 1,952,335
Frederick J. Mershad 539,277 1,366,634
__________________________
(1) All options granted in 1994 are exercisable in cumulative
one-fifth installments commencing on the date of grant with
full vesting occurring on the fourth anniversary of the date
of grant.
(2) Under the terms of the Plan, the Stock Option Committee
retains discretion, subject to Plan limits, to modify the
terms of outstanding options and to reprice the options.
(3) All options were granted at $24.50, which was above the market
closing price on the date of grant. No incentive stock options
were granted. The exercise price and tax withholding
obligations related to exercise may be paid by delivery of
already owned shares, subject to certain conditions.
(4) Potential gains are reported net of the option exercise price
but before taxes associated with exercise. These amounts
represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the
future performance of the Common Stock of the Company, overall
stock conditions, as well as the optionholder's continued
employment through the vesting period. The amounts reflected
in this table may not necessarily be achieved.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the
Named Officers concerning the exercise of options during 1994 and
unexercised options held at fiscal year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR END
AND FISCAL YEAR END OPTION VALUES
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED (#)
R. Brad Martin 0 0
James A. Coggin 0 0
James E. Glasscock 0 0
Gary L. Howard 0 0
Frederick J. Mershad 0 0
____________________________
(TABLE CONTINUED)
NUMBER OF UNEXERCISED
OPTIONS HELD AT
FISCAL YEAR END (#)
NAME EXERCISABLE/UNEXERCISABLE
R. Brad Martin 64,000/136,000
James A. Coggin 12,000/48,000
James E. Glasscock 7,000/28,000
Gary L. Howard 10,000/40,000
Frederick J. Mershad 7,000/28,000
____________________________
(TABLE CONTINUED)
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS AT
FISCAL YEAR END ($)(1)
NAME EXERCISABLE/UNEXERCISABLE
R. Brad Martin 76,250/0
James A. Coggin 0/0
James E. Glasscock 0/0
Gary L. Howard 0/0
Frederick J. Mershad 0/0
____________________________
(1) Represents the difference between the closing price of the
Company's Common Stock on January 28, 1995 and the exercise
price of the options.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* (PERFORMANCE GRAPH)
Among Proffitt's, Inc., the NASDAQ Stock Market-US Index, and the
NASDAQ Retail Index
NASDAQ STOCK
MEASUREMENT PERIOD PROFFITT'S, INC. MARKET - U.S.
2/3/90 100 100
2/2/91 88 102
2/1/92 208 156
1/30/93 371 176
1/29/94 327 200
1/28/95 388 193
(TABLE CONTINUED)
MEASUREMENT PERIOD NASDAQ RETAIL
2/3/90 100
2/2/91 119
2/1/92 205
1/30/93 185
1/29/94 197
1/28/95 177
*$100 invested on 2/3/90 in stock or index-including reinvestment
of dividends.
COMPENSATION COMMITTEE
Report of the Compensation Committee of the Board of Directors on
Executive Compensation
The Compensation Committee of the Board of Directors (the
"Committee") is composed of three Directors: Mr. Bernstein,
Chairman of the Committee; Dr. Neel; and Mr. Cicala. Mr. Martin
served on the Compensation Committee until September 1994, when he
was replaced by Mr. Cicala. The Committee makes recommendations to
the Board of Directors as to the amount and form of officer
compensation. The Committee at least annually evaluates the
Company's performance and executive officers' compensation compared
with results of the Company. The Committee reviews the key
performance standards of the executives of the corporation and
measures individual and corporate achievement of these standards.
The Committee also annually meets to evaluate the performance of
the Chief Executive Officer. While he served on the Committee, Mr.
Martin did not participate in any action of the Committee with
respect to his compensation.
The compensation programs of the Company are designed to align
compensation with business objectives and performance and to enable
the corporation to attract, retain, and reward executives who
contribute to the long-term success of the Company. The Board of
Directors believes that executive pay should be linked to level of
responsibility and performance. Therefore, the Company provides an
executive compensation program which includes base pay, cash
bonuses, and long-term incentive opportunities through the use of
stock options and stock grants. Individual executive performance is
evaluated by reviewing organization and management development
progress against the established objectives. Consistent with the
compensation philosophy of the corporation, salaries for executives
are established at or below market levels for comparable positions
in the department store and specialty retailing industry.
Generally, executive cash bonus programs provide the opportunity
for executives to earn from 30% to 50% of annual base compensation.
Bonuses are earned as the result of the achievement of specific
corporate and/or division objectives and individual objectives.
Long-term incentives are provided through grants of stock options
and stock grants to the named executives and other key employees
pursuant to the Proffitt's, Inc. 1994 Long-Term Incentive Plan.
This component is intended to provide added incentive to secure,
retain, and reward those responsible for the successful leadership
of the Company. Stock options are granted at or above the
prevailing market value and will only have value if the Company's
stock price increases. Currently, options vest in five equal
installments, and executives must be employed by the Company at the
time of vesting in order to exercise the option grants. The Stock
Option Committee of the Board of Directors recommends to the Board
options to be granted.
R. Brad Martin has served as Chairman and Chief Executive Officer
of the corporation since July 1989. While serving in this capacity,
the Company's revenues have grown from $94.8 million for the year
ended February 3, 1990 ("1989") to $617.4 million for the year
ended January 28, 1995 ("1994"). Net income has increased from $.8
million in 1989 to $16.1 million in 1994. Shareholders' equity has
grown from $20.2 million in 1989 to $180.5 million in 1994. The
price of the Company's Common Stock has increased from $6.00 at
February 3, 1990 to $23.25 at January 28, 1995.
The compensation of the Chairman and Chief Executive Officer of the
corporation is set forth in an Employment Agreement ("Agreement")
dated April 1, 1994, approved by the Committee and the Board of
Directors. The terms of this Agreement provide for an annual base
salary of not less than $425,000. The Chief Executive Officer may
earn an annual cash bonus of up to 50% of base salary based upon
the achievement of specific annual objectives. For 1994, 75% of the
potential bonus award was based on achievement of targeted earnings
per share of the corporation; 25% of the potential bonus award was
based upon the achievement by the Chief Executive Officer of
certain objectives in his personal plan. These objectives included
specified improvements in cash flow, customer service, and internal
and external communications. For 1994, Mr. Martin was awarded
approximately 88% of his total bonus potential of $212,500. Mr.
Martin earned 100% of his total bonus potential for the achievement
of the targeted earnings per share, and he was awarded
approximately 50% of his bonus potential for the achievement of the
specified objectives within his personal plan. For 1994, Mr.
Martin's cash compensation totaled $569,272 which was comprised of
$383,334 in base salary and $185,938 in bonus.
Pursuant to the terms of the Agreement, the Chief Executive Officer
is also eligible for an annual award of up to 5,000 shares of
Company Common Stock, based upon the achievement of annual targeted
growth in intrinsic value of the corporation. For 1994, Mr. Martin
was awarded 5,000 shares of Common Stock of the corporation
pursuant to this provision, valued at $107,500 on the February 6,
1995 grant date.
Concurrent with the acquisition of the common stock of McRae's,
Inc. on March 31, 1994, the Chief Executive Officer was granted the
option to purchase 95,000 shares of Company Common Stock under the
1994 Long-Term Incentive Plan. These options were priced above the
market price on the date of grant.
In 1993, the Internal Revenue Code was amended to limit the
deductibility of certain compensation expenses in excess of $1
million. This was not applicable to Proffitt's, Inc. for the fiscal
year ended January 28, 1995. However, the Company and the Committee
intend to monitor executive compensation levels and adopt policies,
as necessary, to obtain maximum deductibility of executive
compensation while providing motivational and competitive
performance-based compensation. The Committee will continue to
monitor the tax regulations to determine if any executive
compensation program changes are necessary.
Compensation Committee
Bernard E. Bernstein, Chairman
Dr. C. Warren Neel
Edmond D. Cicala
March 21, 1995
<PAGE>
CERTAIN TRANSACTIONS
Effective March 31, 1994, the Company acquired the business of
McRae's, Inc. ("McRae's"), a specialty retail department store
company headquartered in Jackson, Mississippi. Richard D. McRae was
named to the Company's Board of Directors at that time. Prior to
its combination with Proffitt's, Inc. McRae's was a private company
which was owned and operated by the McRae family. As a result of
Mr. McRae joining the Board of Directors, the following
transactions with the McRae family are disclosed in this Proxy
Statement.
TRANSACTIONS WITH THE MCRAE FAMILY.
On March 31, 1994, the Company acquired in a business combination
(the "Business Combination") all of the outstanding common stock of
Macco Investments, Inc. ("Macco"), the holding company of McRae's.
The consideration paid in the Business Combination was
approximately $208 million and consisted of approximately $176
million in cash and the issuance of (i) 436,200 shares of Company
Common Stock, (ii) the Company's 7.5% Junior Subordinated
Debentures due March 31, 2004 in the aggregate principal amount of
$17.5 million ("Junior Debentures"), (iii) 32,962 shares of the
Company's Series B Cumulative Junior Perpetual Preferred Stock (the
"Series B Preferred Stock"), and (iv) the Company's promissory
notes (the "Buyer Notes") to certain of the Macco shareholders in
the aggregate principal amount of $2 million, which notes were
secured by a first deed of trust on the McRae's store in Vicksburg,
Mississippi. In addition and as part of the Business Combination,
McRae's purchased four regional mall stores owned by McRae family
partnerships and leased to McRae's (collectively, the "Stores") for
approximately $18.5 million.
In connection with the Business Combination, Richard D. McRae, a
Director, received approximately $15.9 million in cash, 40,796
shares of Company Common Stock, 3,083 shares of Series B Preferred
Stock, approximately $1.6 million principal amount of Junior
Debentures and a Buyer Note in the principal amount of $200,000.
Richard D. McRae, Jr., the son of Richard D. McRae, his spouse, and
a family partnership received in the aggregate approximately $51.4
million in cash, 132,053 shares of Company Common Stock, 9,979
shares of Series B Preferred Stock, approximately $5.3 million of
Junior Debentures and a Buyer Note in the principal amount of
$600,000. Susan McRae Shanor, the daughter of Richard D. McRae, her
spouse, and a family partnership received in the aggregate
approximately $51.1 million in cash, 131,298 shares of Company
Common Stock, 9,922 shares of Series B Preferred Stock,
approximately $5.3 million of Junior Debentures, and a Buyer Note
in the principal amount of $600,000. Vaughan W. McRae, the son of
Richard D. McRae, his spouse, and a family partnership received in
the aggregate approximately $51.4 million in cash, 132,053 shares
of Company Common Stock, 9,978 shares of Series B Preferred Stock,
approximately $5.3 million in Junior Debentures, and a Buyer Note
in the principal amount of $600,000.
On July 12, 1994, the 32,962 shares of the Series B Preferred Stock
were converted into 156,213 shares of Company Common Stock. Upon
conversion, Richard D. McRae received 14,611 shares of Company
Common Stock; Richard D. McRae, Jr. and a family partnership
received in the aggregate 47,292 shares; Susan McRae Shanor, her
spouse, and a family partnership received in the aggregate 47,022
shares; and Vaughan W. McRae and a family partnership received in
the aggregate 47,288 shares.
The Buyer Notes totaling an aggregate of $2 million were paid in
full as of January 28, 1995. Interest paid on these notes totaled
approximately $74,000 for the year.
On April 1, 1994, McRae's purchased the McRae's store in the
Singing River Mall, Gautier, Mississippi, from Arvey Real Estate
Company ("Arvey"), a general partnership comprised of Richard D.
McRae, Richard D. McRae, Jr., and Vaughan W. McRae, for a purchase
price of approximately $2.6 million. The consideration paid by
McRae's was the assumption of a bank promissory note of
approximately $2.0 million and the issuance of a McRae's promissory
note (the "Gautier Note") in the principal amount of approximately
$600,000, bearing interest at an annual rate of 6.5%. The Gautier
Note is payable in five installments, the first four of which are
equal to 10% of the original principal amount, plus accrued
interest, and are due April 1, 1995, April 1, 1996, April 1, 1997,
and April 1, 1998, and the final installment of the remaining
principal and interest is due April 1, 1999. The Gautier Note is
secured by a second deed of trust on the Gautier store. No
principal or interest payments were made for the year ended January
28, 1995.
On April 1, 1994, McRae's purchased the McRae's store in the Barnes
Crossing Mall, Tupelo, Mississippi, from Green's Crossing Real
Estate Company ("Green's Crossing"), a general partnership
comprised of a trust for Richard D. McRae, Jr.'s children, a trust
for Vaughan W. McRae's children, and Ms. Shanor, for a purchase
price of approximately $4.3 million. The consideration paid was the
assumption of a bank promissory note of approximately $2.9 million
and the issuance of a McRae's promissory note (the "Tupelo Note")
in the principal amount of approximately $1.5 million, bearing
interest at an annual rate of 6.5%. The terms of the Tupelo Note
are identical to the terms of the Gautier Note, and the Tupelo Note
is secured by a second deed of trust on the Tupelo store. No
principal or interest payments were made for the year ended January
28, 1995.
On April 1, 1994, McRae's purchased the leasehold interest in the
McRae's store in the Sawmill Square Shopping Center, Laurel,
Mississippi, from Arvey for a purchase price of approximately $2.9
million. The consideration paid was the assumption of a bank
promissory note of approximately $1.1 million and the issuance of
a McRae's promissory note (the "Laurel Note") in the principal
amount of $1.8 million, bearing interest at an annual rate of 6.5%.
In addition, the personal guarantees of the bank note by the
individual general partners of Arvey were released at closing. The
terms of the Laurel Note are identical to the terms of the Gautier
Note, and the Laurel Note is secured by a second leasehold deed of
trust on the Laurel store. No principal or interest payments were
made for the year ended January 28, 1995.
On April 1, 1994, McRae's purchased the McRae's store in the
Northpark Mall, Ridgeland, Mississippi, from Park Real Estate
Company ("Park"), a general partnership comprised of Richard D.
McRae, Richard D. McRae, Jr., Susan McRae Shanor, and Vaughan W.
McRae, for a purchase price of approximately $8.6 million. The
consideration paid was the assumption of a bank promissory note of
approximately $4.7 million and the issuance of a McRae's promissory
note (the "Northpark Note") in the principal amount of
approximately $3.9 million, bearing interest at an annual rate of
6.5%. In addition, the personal guarantees of the bank note by the
individual general partners were released at closing. The terms of
the Northpark Note are identical to the terms of the Gautier Note,
and the Northpark Note is secured by a second deed of trust on the
Ridgeland Store. No principal or interest payments were made for
the year ended January 28, 1995.
The Stores were purchased by McRae's as part of the Business
Combination. The Company believes that the terms of the purchases
of the Stores were fair, reasonable, and consistent with the terms
that would have been available to the Company if purchased from
unaffiliated parties. Prior to acquisition of the Stores by McRae's
on April 1, 1994, McRae's leased the Stores pursuant to lease
agreements which were terminated effective April 1, 1994. Under
such lease agreements, McRae's paid during the fiscal year ended
January 28, 1995, approximately $115,000, $107,000, $136,000, and
$297,000 to Arvey, Green's Crossing, Arvey, and Park with respect
to leases relating to the Gautier, Tupelo, Laurel, and Ridgeland
stores, respectively.
McRae's leases an office building (the "Heritage Building") in
downtown Jackson, Mississippi pursuant to an eighteen year lease
agreement dated December 23, 1981 (the "Heritage Building Lease")
from Richard D. McRae, Jr., Susan McRae Shanor, and Vaughan W.
McRae (collectively, the "Lessors"). Under the terms of the
Heritage Building Lease, McRae's must pay all maintenance, repairs,
insurance, utilities, taxes, improvements, and modifications to the
building. During the fiscal year ended January 28, 1995, McRae's
paid the Lessors approximately $325,000 under the Heritage Building
Lease. McRae's subleases office space in the Heritage Building to
unrelated tenants. During the fiscal year ended January 28, 1995,
McRae's received rents from sublessees of approximately $1.0
million.
McRae's has purchased executive life insurance policies insuring
the lives of Richard D. McRae ($1.5 million and $8.5 million),
Richard D. McRae, Jr. ($1.5 million), and Vaughan W. McRae ($1.5
million). Each of Messrs. McRae has the right to purchase said
policies from McRae's for a purchase price equal to the policy's
cash value.
TRANSACTIONS WITH RICHARD D. MCRAE.
In connection with the redemption of McRae's common stock owned by
Mr. McRae's spouse on January 25, 1983, McRae's issued its
promissory note (the "McRae's Note") in the principal amount of
approximately $1.3 million, bearing 13% interest annually. Interest
only on the McRae's Note was payable through January 1, 1993, and
beginning February 1, 1993, principal and interest was payable in
60 monthly installments of $30,635. The final installment on the
McRae's Note is due January 1, 1998, and McRae's has no prepayment
rights thereunder. The principal amount outstanding under the
McRae's Note at January 28, 1995 was approximately $900,000.
Interest paid on this note totaled approximately $108,000 for the
year.
McRae's and Richard D. McRae entered into a Retirement Income
Agreement dated July 23, 1982 which provided for annual retirement
payments of $200,000 to Mr. McRae. Upon the death of Mr. McRae,
payments of $175,000 are to be made to Mr. McRae's spouse, should
she survive him, and terminate at her death. The payments are
reduced by any payments made to Mr. or Mrs. McRae pursuant to the
McRae's Pension Plan and are adjusted annually based on the
Consumer Price Index. During the fiscal year ended January 28,
1995, McRae's paid Mr. McRae approximately $158,000 under this
Agreement.
TRANSACTIONS WITH MICHAEL S. GROSS.
Director Michael S. Gross is one of the founding principals of
Apollo Advisors, L.P., the managing general partner of Apollo
Investment Fund, L.P., the general partner of Apollo Specialty
Retail Partners, L.P. ("Apollo Specialty"), the holder of the
Company's Series A Preferred Stock. Proffitt's paid Apollo
Specialty approximately $1.6 million in dividends for the fiscal
year ended January 28, 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
Mr. Bernard E. Bernstein, Chairman of the Compensation Committee,
is a partner in Bernstein, Stair & McAdams, which serves, on
occasion, as legal counsel for the Company.
Mr. Martin, the Chairman and Chief Executive Officer of the
Company, served on the Compensation Committee of the Board of
Directors until September 1994. Mr. Martin did not participate in
the Compensation Committee's deliberations and actions with respect
to his compensation.
<PAGE>
ADOPTION OF PROFFITT'S, INC. 1994 EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL NO. 2)
On November 12, 1994, the Board of Directors of the Company adopted
the Proffitt's, Inc. 1994 Employee Stock Purchase Plan (the "Stock
Purchase Plan"). The Stock Purchase Plan provides that an aggregate
of 350,000 shares of the Company's Common Stock is available for
purchase. A copy of the Stock Purchase Plan is attached as Exhibit
A.
Under the Stock Purchase Plan, an eligible employee may elect to
participate by authorizing payroll deductions of not more than
$2,400 per year to be applied toward the purchase of the Company's
Common Stock. One offering to purchase shares is made under the
Stock Purchase Plan in each fiscal year, beginning on February 1 of
each year ("Grant Date") and ending on January 31 of the following
year ("Exercise Date"). The purchase price per share is the lesser
of (i) 85% of the closing bid price per share of the Common Stock
as listed on the NASDAQ National Market System on the last business
day preceding the Grant Date or (ii) 85% of the closing bid price
per share of the Common Stock as listed on the NASDAQ National
Market System on the first business day preceding the Exercise
Date.
Purchases of shares under the Stock Purchase Plan are made
automatically on the Exercise Date. A participant may withdraw from
the Stock Purchase Plan at any time and cannot rejoin thereafter
until the next offering period. Appropriate adjustments in the
number of shares reserved under the Stock Purchase Plan and to the
price and number of shares available for purchase by a participant
shall be made in the event of any future stock dividends, stock
splits, or corporate reorganizations.
The Board of Directors believes that the Stock Purchase Plan is an
important employee benefit, provides the employees an incentive to
increase shareholder value, and is in the best interests of the
Company and its shareholders. There are currently approximately 275
employees participating in the Stock Purchase Plan.
The affirmative vote of a majority of the votes cast on this
proposal shall constitute approval.
The Board of Directors recommends a vote "FOR" the approval of the
Proffitt's, Inc. 1994 Employee Stock Purchase Plan.
<PAGE>
SPECIAL MEETING PROPOSAL
(PROPOSAL NO. 3)
The Board of Directors has recommended that the Company's
shareholders approve an amendment to the Company's Charter, as
permitted by the Tennessee Business Corporation Act (the "Act"), to
add a provision requiring the demand of the holders of at least 25%
of all the votes entitled to be cast on an issue in order to call
a special meeting of shareholders (the "Special Meeting Proposal").
The text of the proposed amendment is set out in full below.
The Charter is amended by adding the new ARTICLE XIV to read as
follows:
ARTICLE XIV. Special Meeting of Shareholders. No special
meeting of shareholders shall be held upon the demand of
shareholders of the Corporation unless the holders of at
least twenty-five percent (25%) of all the votes entitled
to be cast on each issue proposed to be considered at the
special meeting shall have signed, dated and delivered to
the corporation's Secretary one or more written demands
for the meeting describing the purpose or purposes for
which it is to be held.
Under the Act, a special meeting of shareholders of the Company may
be called by the Board of Directors or the person or persons
authorized to do so by the Charter or Bylaws. Under the Company's
Bylaws, a special meeting of shareholders may be called by the
Board of Directors, the Chairman or the President, or by the
holders of not less than 10% of the total outstanding capital stock
of the Company entitled to vote. Prior to its revision in 1989, the
Act mandated that 10% of the shareholders could call a special
meeting. The Act now provides that the Charter can require a higher
percentage of holders required to demand a special meeting. The
Special Meeting Proposal provides that a call for a special meeting
will require the demand of the holders of at least 25% of the votes
entitled to be cast on any proposal to be considered at the special
meeting. The Special Meeting Proposal, which will add a new ARTICLE
XIV to the Charter, is being proposed to ensure that only those
matters that enjoy substantial support among shareholders will
become the subject of consideration at special meetings. If the
Special Meeting Proposal is adopted, the Company's Bylaws will be
revised accordingly.
The Special Meeting Proposal will make it more difficult for
shareholders who collectively hold small percentages of voting
stock to call special meetings for the purpose of approving such
matters as mergers or other proposed business combinations,
amendments to the Charter, election of Directors, removal of
Directors and other matters. The Special Meeting Proposal, however,
will not affect the ability of shareholders to make proposals for
consideration at the Company's annual or other meetings. The
Special Meeting Proposal is not intended to deter a shareholder or
group of shareholders who may own a significant amount of the
Company's shares from making any proposal, including proposals
leading to a change in control of the Company through a business
combination or a change in the composition of the Board. The
overall effect of the Special Meeting Proposal, if adopted, may,
however, discourage a third party from making a partial tender
offer or otherwise attempting to obtain a substantial position in
the Company's stock before commencing a tender offer, proxy contest
or other takeover action because of the need for 25% rather than
10% to call a special meeting. To the extent any potential
acquirers are deterred by the Special Meeting Proposal, the
amendment may have the effect of preserving the incumbent
management in office. The Board of Directors believes that the
advantages of the Special Meeting Proposal outweigh any
disadvantage of discouraging such actions. Those advantages
include: (i) the Board's ability to protect the business operations
of the Company from disruptions caused by special meetings called
by shareholders with small equity stakes and (ii) the Board's
positioning itself as the effective entity responsible for
protecting and increasing shareholder value in important areas,
including any possible change in control. The Special Meeting
Proposal further ensures that matters will be brought to a vote of
shareholders only after they have developed significant support
among shareholders. The Board of Directors, in recommending this
amendment, considered comparable charter provisions in other public
retail companies and concluded that the proposed amendment is well
within the mainstream of such provisions.
The Board of Directors recommends a vote "FOR" the approval of the
Amendment to the Company's Charter enacting the special meeting
proposal.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 4)
Subject to ratification by the shareholders, the Board of Directors
has reappointed Coopers & Lybrand as independent accountants to
audit the financial statements of the Company for the fiscal year
ending February 3, 1996. Coopers & Lybrand has examined the
financial statements of the Company since 1991.
Representatives of Coopers & Lybrand will be present at the Annual
Meeting and will have an opportunity to make a statement, if they
so desire, and will be available to respond to appropriate
questions.
The Audit Committee and the Board of Directors recommend the
shareholders vote "FOR" such ratification.
<PAGE>
SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
In 1994, Messrs. Bernstein, Cicala, de Waal, Gross, McRae, Neel,
Proffitt, and Tsai filed, but did not timely file, a Form 5 Annual
Statement with respect to the grant of 1,000 shares of restricted
Common Stock to each Director pursuant to the Company's 1994
Long-Term Incentive Plan. None of those shares vested in 1994, but
when it was determined the restricted stock grants should be
reported on Form 5, each Director did file a corrected Form 5.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters
that may come before the meeting. However, if any other matters
should properly come before the meeting or any adjournment thereof,
it is the intention of the persons named in the proxy to vote the
proxy in accordance with their best judgement.
SHAREHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING
Proposals for shareholder action which eligible shareholders wish
to have included in the Company's proxy mailed to shareholders in
connection with the Company's 1996 Annual Meeting must be received
by the Company at its corporate headquarters on or before January
2, 1996.
LISTING OF SHAREHOLDERS
A complete list of the shareholders entitled to vote at the Annual
Meeting of the Shareholders, to be held on June 15, 1995, will be
available for inspection during normal business hours at the
principal office of the Company for a period of at least 10 days
prior to the meeting, upon written request to the Company by a
shareholder, and at all times during the Annual Meeting at the
place of the meeting.
ANNUAL REPORT
The Company's annual report for the year ended January 28, 1995 is
being mailed with this proxy statement but is not to be considered
as a part hereof.
A copy of the Company's annual report on Form 10-K, including the
financial statements and schedules thereto, required to be filed
with the Securities and Exchange Commission, may be obtained
without charge by any shareholder whose proxy is solicited upon
written request to:
Senior Vice President of Investor Relations
Proffitt's, Inc.
P.O. Box 9388
Alcoa, Tennessee 37701-9388
By order of the Board of Directors,
/s/ Julia Bentley
Julia Bentley
Secretary
Alcoa, Tennessee
May 2, 1995
<PAGE>
EXHIBIT A
PROFFITT'S, INC. 1994
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
The purpose of the Proffitt's, Inc. 1994 Employee Stock Purchase
Plan (the "Plan") is to provide a method whereby employees of
Proffitt's, Inc. and its subsidiaries have an opportunity to
purchase shares of Common Stock of the Corporation. The Plan is
intended to qualify as an Employee Stock Purchase Plan under
Section 423 of the Internal Revenue Code of 1986, as amended, and
all provisions of the Plan shall be construed in a manner to effect
that intent.
2. DEFINITIONS.
As used in this Plan, the following words shall have the following
meanings:
(a) "Code" shall mean the Internal Revenue Code of 1986, as
amended. Reference to a section of the Code shall include
that section and any comparable section of any future
legislation that amends, supplements, or supersedes that
section.
(b) "Common Stock" shall mean the Common Stock of the
Corporation.
(c) "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors, to which the
administrative duties and responsibilities under the Plan
are delegated.
(d) "Corporation" shall mean Proffitt's, Inc., a Tennessee
corporation.
(e) "Employee" shall mean any individual who is employed by
the Corporation or a subsidiary on a full-time or
part-time basis and who is regularly scheduled to work
more than 20 hours per week.
(f) "Offering" shall mean any opportunity to purchase Common
Stock granted to Participants, the terms and conditions
of which have been established by the Compensation
Committee pursuant to the Plan.
(g) "Offering Commencement Date" shall mean the date on which
any Offering commences.
(h) "Offering Termination Date" shall mean the date on which
any Offering ends.
(i) "Option" shall mean any opportunity to purchase Common
Stock granted to a Participant pursuant to an Offering.
(j) "Participant" shall mean each employee who becomes a
participant as provided in Section 5.
(k) "Plan" shall mean the Proffitt's, Inc. 1994 Employee
Stock Purchase Plan.
(l) "Subsidiary" shall mean McRae's, Inc., McRae's of
Alabama, Inc., and any present or future corporation
which: (i) would be a "subsidiary corporation" of the
Company as that term is defined in Section 424 of the
Code and (ii) is designated as a participant in the Plan
by the Board of Directors.
3. ADMINISTRATIVE.
(a) Appointment. The Plan shall be administered by the
Compensation Committee. The Compensation Committee may,
from time to time, delegate nondiscretionary
administrative responsibilities under the Plan to
Employees who shall continue to be eligible to
participate in accordance with Section 4(a).
(b) Powers. The Compensation Committee shall determine: (i)
the time or times when Options shall be granted, (ii) the
number of shares subject to the Offering, and (iii) the
limitations, restrictions, and conditions applicable to
any Options.
(c) Interpretations. Subject to the express provisions of the
Plan, the Compensation Committee may interpret the Plan,
prescribe, amend, and rescind rules and regulations
relating to it, determine the terms and conditions of the
Options, and make all other determinations it deems
necessary or advisable for the administration of the
Plan.
(d) Determinations. The determinations of the Compensation
Committee on all matters regarding the Plan shall be
conclusive. No member of the Compensation Committee shall
be liable for any action taken or determination made in
good faith.
4. ELIGIBILITY.
(a) Initial Eligibility. Each Employee as defined in Section
2(e) who shall have completed twelve (12) months of
employment and is employed by the Corporation or a
Subsidiary on the date his or her participation in the
Plan is to become effective shall be eligible to
participate in Offerings under the Plan that commence on
or after such twelve (12) month period has concluded.
(b) Restrictions on Participation. Notwithstanding any
provisions of the Plan to the contrary, no Employee shall
be granted an Option under the Plan:
(i) if, immediately after the grant, such Employee
would own stock, and/or hold outstanding
Options to purchase stock, possessing 5% or
more of the total combined voting power or
value of all classes of stock of the
Corporation (for purposes of this paragraph,
the rules of Section 423 of the Code shall
apply in determining stock ownership of any
Employee); or
(ii) which permits the Employee's rights to
purchase stock under all employee stock
purchase plans, within the meaning of Section
423 of the Code, to accrue at a rate that
exceeds $25,000 in fair market value of the
stock (determined at the time such Options are
granted) for each year in which such Options
are outstanding.
5. COMMENCEMENT OF PARTICIPATION.
(a) Participation. An eligible Employee may become a
Participant by completing an authorization for payroll
deductions on the form provided by the Corporation and
delivering it to an authorized representative of the
Corporation. Payroll deductions for a Participant shall
commence on the applicable Offering Commencement Date and
shall end on the applicable Offering Termination Date
unless sooner terminated by the Participant. All such
Participant contributions shall be credited to the
Participant's account.
(b) Participant Elections. Each Participant is required to
sign a written participation form (hereinafter referred
to as the "Participation Agreement") for each Offering.
The terms of the Participation Agreement shall provide
that the Participant elects to have payroll deductions
credited to the Participant's account, subject to the
limitations hereinafter described, that will in no event
exceed two thousand four hundred dollars ($2,400) during
the initial Offering. The Compensation Committee retains
the right to adjust this amount for subsequent offerings.
Elections to participate hereunder shall be made no later
than 10 days prior to an Offering Commencement Date.
Contributions may be increased or decreased for
subsequent Offerings.
6. STOCK OPTIONS.
The Compensation Committee may from time to time, and subject to
provisions of the Plan and such other terms and conditions as the
Compensation Committee may prescribe, grant to Participants of the
Plan one or more opportunities to purchase shares of Common Stock.
Each such Offering shall be upon such terms and conditions as the
Compensation Committee shall determine, subject to the limitations
of Code Section 423, the Plan's eligibility requirements, and the
maximum number of shares available for grant. The Plan will
initially be implemented with an Offering during the 1995 fiscal
year. The 1995 Offering will commence on February 1, 1995, and
will end on January 31, 1996.
(a) Number of Option Shares. On the initial Offering
Commencement Date, each Participant shall be granted an
Option to purchase the number of shares of Common Stock
equal to the number determined by dividing two thousand
four hundred dollars ($2,400) by 85% of the fair market
value of the Common Stock. The Compensation Committee
retains the discretion to adjust this amount for
subsequent offerings.
(b) Option Price. The price to purchase Common Stock subject
to the Option shall be an amount not less than the lower
of:
(i) 85% of the closing bid price per share of the
Common Stock as listed on the NASDAQ National
Market System on the last business day
preceding grant of such Option; or
(ii) 85% of the closing bid price per share of the
Common Stock as listed on the NASDAQ National
Market System on the first business day
preceding exercise thereof.
(c) Maximum Option Limitations. The total number of Options
to buy shares of Common Stock available for grant under
the Plan is 350,000, subject to adjustments pursuant to
Section 9. Shares of Common Stock issued pursuant to the
Plan may be either authorized but unissued shares or
shares held in the treasury of the Corporation. In the
event that any Option under the Plan expires unexercised
or is terminated without being exercised, in whole or in
part, for any reason, the number of shares theretofore
subject to such Option or the unexercised or terminated
portion thereof, shall be added to the remaining number
of shares of Common Stock available for grant as an
Option under the Plan upon such terms and conditions as
the Compensation Committee shall determine, which terms
may be more or less favorable than those applicable to
such former Option.
7. EXERCISE OF OPTION.
(a) Automatic Exercise. Unless a Participant gives written
notice of withdrawal to the Corporation, the
Participant's Option for the purchase of Common Stock
with payroll deductions made during any Offering will be
deemed to have been exercised automatically on the
Offering Termination Date applicable to such Offering,
for the purchase of the number of full shares of Common
Stock that the accumulated payroll deductions credited to
his or her account at that time will purchase at the
applicable Option price (but not in excess of the number
of shares for which Options have been granted to the
Employee), and any excess in his account at that time
will be returned to him. An Option may be exercised only
by a Participant during his or her lifetime or by a
designated beneficiary within 90 days of the date of
death.
(b) Withdrawal from Account. A Participant who is not subject
to Section 16 of the Securities Exchange Act may withdraw
from the Plan, in whole but not in part, at any time
prior to the Offering Termination Date applicable to any
Offering by delivering written notice to the
Corporation's authorized representative indicating such
Participant's intent to withdraw. A Participant subject
to Section 16 of the Securities Exchange Act may not
voluntarily withdraw during an Offering. Upon withdrawal
by a Participant, the Corporation will promptly refund
the entire balance of a Participant's deductions
accumulated during the year. A Participant who withdraws
from the Plan may reenter for a subsequent Offering by
filing a new authorization at least ten (10) days prior
to an Offering Commencement Date.
(c) Fractional Shares. Fractional shares will not be issued
under the Plan and any accumulated payroll deductions
that would have been used to purchase fractional shares
will be returned to any Employee promptly following the
termination of an Offering, without interest.
(d) Delivery of Stock. As soon as practicable after the
Offering Termination Date of each Offering, the
Corporation will deliver to each Participant, as
appropriate, certificates representing the stock
purchased upon exercise of the Option.
8. TRANSFERABILITY.
No Option may be transferred, assigned, pledged or hypothecated
(other than by the laws of descent and distribution), and no Option
shall be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other
disposition of an Option or levy of attachment or similar process
upon the Option not specifically permitted herein shall be null and
void and without effect.
9. ADJUSTMENT PROVISIONS.
The aggregate number of shares of Common Stock with respect to
which Options may be granted, the aggregate number of shares of
Common Stock subject to each outstanding Option, and the Option
price per share of each such Option, may all be appropriately
adjusted as the Compensation Committee may determine for any
increase or decrease in the number of shares of issued Common Stock
resulting from a subdivision or consolidation of shares, whether
through reorganization, recapitalization, stock split, stock
distribution, combination of shares, or the payment of a share
dividend or other increase in the number of such shares outstanding
effected without receipt of consideration by the Corporation.
Adjustments under this Section 9 shall be made in the sole
discretion of the Compensation Committee, and its decision shall be
binding and conclusive.
10. DISSOLUTION, MERGER, AND CONSOLIDATION.
Upon the dissolution or liquidation of the Corporation, or upon a
merger or consolidation of the Corporation in which the Corporation
is not the surviving corporation, each Option granted hereunder
shall expire as of the effective date of such transaction;
provided, however, that the Compensation Committee shall give at
least 30 days prior written notice of such event to each
Participant during which time he or she shall have a right to
exercise his or her wholly or partially unexercised Option and,
subject to prior expiration pursuant to Section 12(a) or (b), each
Option shall be exercisable after receipt of such written notice
and prior to the effective date of such transaction.
11. EFFECTIVE DATE AND CONDITIONS SUBSEQUENT TO EFFECTIVE DATE.
The Plan shall become effective on the date of the approval of the
Plan by the majority of the shareholders of the Corporation, and
the Plan shall be null and void and of no effect if such condition
is not fulfilled, and in such event each Option granted hereunder
shall, notwithstanding any of the preceding provisions of the Plan,
be null and void and of no effect.
12. TERMINATION OF EMPLOYMENT.
Notwithstanding anything contained herein to the contrary, each
Option shall expire on the earlier of:
(a) the expiration of 90 days commencing with the death of
the Participant;
(b) the expiration of 90 days commencing with the date that
the employment of the Participant with the Corporation
terminates for any reason; or
(c) the Offering Termination Date.
Upon expiration of any Option prior to the applicable Offering
Termination Date, any payroll deductions credited to the
Participant under the Plan shall be promptly returned to the
participant or his designated beneficiary in the event of his
death, without interest.
13. MISCELLANEOUS.
(a) Legal and Other Requirements. The obligations of the
Corporation to sell and deliver Common Stock under the
Plan shall be subject to all applicable laws,
regulations, rules and approvals, if deemed necessary or
appropriate by the Corporation. Certificates for shares
of Common Stock issued hereunder may contain a legend as
the Compensation Committee deems appropriate.
(b) No Obligation to Exercise Options. The granting of an
Option shall impose no obligation upon a Participant to
exercise such Option.
(c) Termination and Amendment of Plan. The Compensation
Committee, without further action on the part of the
shareholders of the Corporation, may from time to time
alter, amend or suspend the Plan or any Option granted
hereunder or may at any time terminate the Plan, except
that, unless approved by the shareholders in accordance
with Section 11 hereof, it may not: (i) change the total
number of shares of Common Stock authorized to be issued
under the Plan; or (ii) change the class of employees
eligible to be granted Options under the Plan. No action
taken by the Compensation Committee under this Section
may materially and adversely affect any outstanding
Option without the consent of the holder thereof.
(d) Application of Funds. The proceeds received by the
Corporation from the sale of Common Stock pursuant to
Options will be used for general corporate purposes.
(e) Right to Terminate Employment. Nothing in the Plan or any
agreement entered into pursuant to the Plan shall confer
upon any Employee or Participant the right to continue in
the employment of the Corporation or affect any right
which the Corporation may have to terminate the
employment of such Employee or Participant.
(f) Rights as a Shareholder. No Participant shall have any
rights or privileges as a shareholder in Common Stock
covered by an Option until such Option has been
exercised.
(g) Leaves of Absence and Disability. A Participant shall
continue to be treated as an Employee for all purposes of
the Plan during the first 90 days of any leave of
absence, whether such leave is with or without pay. Upon
expiration of such 90 day period, unless a Participant
has resumed employment, his employment for purposes of
this Plan shall be deemed to terminate on such date.
During the first 90 days of a leave of absence, the
Participant shall continue to have all rights otherwise
provided pursuant to the Plan and the additional right to
supplement the payroll deductions (if any) made during
such period with out-of-pocket payments to the extent
necessary to continue his Plan election in effect for the
applicable Offering.
(h) Fair Market Value. Whenever the fair market value of
Common Stock is to be determined under the Plan as of a
given date, such fair market value shall be determined as
the closing bid price per share as listed on the NASDAQ
National Market System on the last business day preceding
the valuation.
(i) Notices. Every direction, revocation, or notice
authorized or required by the Plan shall be deemed
delivered to the Corporation: (a) on the date it is
personally delivered to the Secretary of the Corporation
at its principal executive offices or (b) three business
days after it is sent by registered or certified mail,
postage prepaid, addressed to the Secretary at such
offices; and shall be deemed delivered to a Participant:
(a) on the date it is personally delivered to him or her
or (b) three business days after it is sent by registered
or certified mail, postage prepaid, addressed to him or
her at the last address shown for him or her on the
records of the Corporation.
(j) Applicable Law. All questions pertaining to the validity,
construction, and administration of the Plan granted
hereunder shall be determined in conformity with the laws
of the State of Tennessee.
(k) Elimination of Fractional Shares. If under any provision
of the Plan that requires a computation of the number of
shares of Common Stock subject to an Option, the number
so computed is not a whole number of shares, such number
of shares of Common Stock shall be rounded down to the
next whole number.
(l) Limitations on Sale of Stock Purchased Under the Plan.
The Plan is intended to provide Common Stock for
long-term investment. The Corporation does not, however,
intend to restrict or influence any Employee in the
conduct of his or her own affairs. An Employee may,
therefore, sell stock purchased under the Plan at any
time he or she chooses; provided, however, that because
of certain federal income tax requirements each Employee
will agree by entering the Plan to give the Corporation
prompt notice of any such stock disposed of within two
years after the date of grant of the applicable Option
showing the number of such shares disposed of, and an
appropriate legend requiring such notice shall be placed
on the certificate of Common Stock issued hereunder. The
Employee assumes the risk of any market fluctuations in
price of such stock.
Officers and Directors should note that, pursuant to federal
securities laws, certain restrictions apply to the number of shares
they may sell, the manner of sale, and the timing of sales with
respect to the resale of shares acquired under the Plan; therefore,
officers and Directors must consult with the office of the Senior
Vice President of Investor Relations prior to any such sales.
IN WITNESS WHEREOF, the Corporation has adopted the foregoing
instrument on the 12th day of November 1994.
PROFFITT'S, INC. ATTEST:
/s/ R. Brad Martin /s/ Julia Bentley
R. Brad Martin Julia Bentley
Chairman of the Board Secretary
<PAGE>
PROXY CARD
PROFFITT'S, INC.
P.O. Box 9388
Alcoa, Tennessee 37701
This proxy is solicited on behalf of the Board of Directors. The
undersigned hereby appoints R. Brad Martin, James A. Coggin, and
Julia A. Bentley as Proxies, each with the power to appoint his or
her substitute, and hereby authorizes them to represent and vote as
designated below, all the shares of Common Stock of Proffitt's,
Inc. held of record by the undersigned on April 24, 1995 at the
Annual Meeting of the Shareholders to be held on June 15, 1995 or
any adjournment thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below
(Except as marked to the contrary below) ____
WITHHOLD AUTHORITY
to vote for all nominees listed below ____
(INSTRUCTIONS: To withhold authority to vote for any
individual nominee, strike a line through the nominee's name
on the list below.)
Bernard E. Bernstein Edmond D. Cicala Ronald de Waal
Michael S. Gross R. Brad Martin Richard D. McRae
C. Warren Neel Harwell W. Proffitt Gerald Tsai, Jr.
2. PROPOSAL TO APPROVE THE ADOPTION OF THE PROFFITT'S, INC. 1994
EMPLOYEE STOCK PURCHASE PLAN.
____ FOR ____ AGAINST ____ ABSTAIN
3. PROPOSAL TO APPROVE THE SPECIAL MEETING PROPOSAL, amending the
Company's Charter to require the demand of at least 25% of all
votes entitled to be case on an issue in order to call a
special meeting of the shareholders.
____ FOR ____ AGAINST ____ ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND as the
independent accountants of the Company.
____ FOR ____ AGAINST ____ ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned stockholder. IF NO
ELECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSALS 1, 2,
3, AND 4.
Please sign exactly as name appears below. When shares are
held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, or guardian,
please give full title as such. If a corporation, please sign
full corporate name by President or other authorized officer.
If a partnership, please sign in partnership name by
authorized person.
DATED: __________________, 1995 ___________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. ___________________________
Signature if held jointly
