SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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240.14a-12
Proffitt's, Inc.
(Name of Registrant as Specified in Its Charter)
Proffitt's, Inc.
(Name of Person(s) Filing Proxy Statement)
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0-11.
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computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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PRELIMINARY COPY
PROFFITT'S, INC.
Midland Shopping Center
115 North Calderwood
Alcoa, Tennessee 37701
May 1, 1997
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 19, 1997, at Proffitt s West Town Mall Store, 7600 Kingston Pike,
Knoxville, Tennessee 37919.
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 both our West
Town Mall Proffitt's and Parisian stores 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,
/s/ R. Brad Martin
R. Brad Martin
Chairman of the Board and
Chief Executive Officer
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 19, 1997, at Proffitt's West Town Mall
Store, 7600 Kingston Pike, Knoxville, Tennessee 37919, for the following
purposes:
1. To approve an amendment to the Company's Charter, as permitted
by the Tennessee Business Corporation Act, to divide the Board
of Directors into three classes;
2. To elect twelve Directors to hold office for the terms
specified or until their respective successors have been
elected and qualified;
3. 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 January 31, 1998; and
4. 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 21, 1997 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 1, 1997
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.
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. ("Proffitt's" or the "Company"),
a Tennessee corporation, to be held on June 19, 1997.
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 1, 1997.
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 present 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 21, 1997
are entitled to vote at the Annual Meeting. On that day, there were
issued and outstanding 28,128,846 shares of Common Stock. Each share has
one vote.
Listed in the following table are the number of shares owned by each
nominee for Director, certain executive officers, and all Directors and
officers of the Company as a group as of March 21, 1997. The table also
includes the beneficial owners as of March 21, 1997 of more than 5% of
the Company s outstanding Common Stock who are known to the Company.
<TABLE>
<CAPTION>
Name of Beneficial Owner Total Shares Percentage of
(and Address if "Beneficial Beneficially Common Stock
Ownership Exceeds 5%) Owned (1) Ownership
<S> <C> <C>
Director Nominees:
Bernard E. Bernstein 16,401 (2) *
Edmond D. Cicala 9,589 *
Ronald de Waal 1,250,713 4.45%
Gerard K. Donnelly 5,049 *
Donald F. Dunn 8,950 *
Michael S. Gross 2,200 (3) *
Donald E. Hess 407,664 (4) 1.45%
G. David Hurd 6,843 *
R. Brad Martin 1,327,423 (5) 4.69%
C. Warren Neel 7,450 *
Marguerite W. Sallee 2,200 *
Gerald Tsai, Jr. 5,200 *
Named Executive Officers:
James A. Coggin 85,129 *
Robert M. Mosco 131,527 (6) *
W. Thomas Gould 305,456 (7) 1.08%
Tom R. Amerman 16,886 (8) *
All Directors and Officers:
as a group (22 persons) 3,787,655 13.15%
Other 5% Owners (9):
Fidelity Management and
Research Corporation 1,698,206 6.04%
82 Devonshire Street
Boston, Massachusetts
Norwest Bank Minnesota,
as trustee 2,913,720 (10) 10.36%
Investors Building
733 Marquette
Minneapolis, MN
_____________________________________________
*Owns less than 1% of the total outstanding Common Stock of the Company.
(1) Includes shares that the following persons have a right to acquire
within sixty days after March 21, 1997 through the exercise of
stock options: Bernstein (3,200), Cicala (2,200), de Waal (2,200),
Donnelly (2,070), Dunn (2,070), Gross (1,200), Hurd (2,070), Martin
(173,000), Neel (3,200), Sallee (200), Tsai (2,200), Amerman
(8,333), Coggin (58,000), Gould (205,824), and Mosco (101,106).
(2) Includes 3,000 shares owned by the Bernard E. Bernstein Defined
Benefit Pension Plan.
(3) Does not include 1,211,801 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.
(4) Includes: (i) 180,908 shares owned directly by Mr. Hess, (ii)
174,222 shares held by Mr. Hess as trustee or co-trustee for his
children, and (iii) 52,534 shares held by him as trustee for the
children of his sister, Jo Ann H. Morrison. Does not include: (i)
2,290 shares owned directly by his wife, (ii) 7,330 shares held by
his wife as co-trustee for one of their children, and (iii) 88,058
shares held by another individual as trustee for Mr. Hess'
children, with respect to which shares Mr. Hess disclaims
beneficial ownership.
(5) Includes: (i) 2,000 shares held by Mr. Martin for his children,
(ii) 1,900 shares owned by RBM Venture Company, a company of which
Mr. Martin is sole shareholder, (iii) 100,000 shares held by Mr.
Martin as trustee or co-trustee for his children, (iv) 3,774 shares
owned by the R. Brad and Jean L. Martin Family Foundation, (v)
10,000 shares of restricted stock which will vest on January 31,
1998, and (vi) 25,000 shares of restricted stock, the restrictions
on which will lapse based on performance measurements and length of
service.
(6) Includes 3,158 shares held in a Company profit sharing and savings
plan for the account of Mr. Mosco. Excludes 16,282 shares reserved
by the Company for issuance to Mr. Mosco with respect to a deferred
compensation arrangement.
(7) Includes 3,577 shares owned by Mr. Gould's wife as to which he
disclaims beneficial ownership. Also includes 18,033 shares held in
a Company profit sharing and savings plan for the account of Mr.
Gould. Excludes 84,735 shares reserved by the Company for issuance
to Mr. Gould with respect to a deferred compensation arrangement.
Mr. Gould terminated his employment with the Company effective
April 1, 1997; see Mr. Gould's Employment Agreement.
(8) Mr. Amerman resigned on February 7, 1997. He has 90 days from that
date to exercise the vested portion of his stock options, which
total 8,333 shares.
(9) Based solely on information provided by the beneficial owner.
(10) Represents shares held in trust for the G.R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and Employee Stock Ownership
Plan.
</TABLE>
Proposal to Amend The Company s Charter to Provide for a Classified
Board of Directors
(Proposal No. 1)
Proposed Classified Board Amendment
Directors of the Company presently are elected annually by the
shareholders to serve until the next Annual Meeting and until their
successors are elected and qualified. The Board of Directors (the
"Board") has unanimously approved and recommends that the shareholders
adopt an amendment (the "Classified Board Amendment"), the text of which
is set forth below, to the Company's Charter that would divide the Board
into three classes of Directors. This new Charter provision is permitted
under the Tennessee Business Corporation Act.
The Board is recommending the adoption of the Classified Board Amendment
in order to increase continuity and stability in the leadership and
policies of the Company and to discourage certain types of tactics which
could involve threatened changes of control that are not in the best
interests of the shareholders. If the Classified Board Amendment is
adopted, the Company's Bylaws will also be revised accordingly.
The Classified Board Amendment provides for the Board to be divided into
three classes of Directors serving staggered three-year terms. If
adopted, the Classified Board Amendment would divide the Board into
three equal classes, designated Class I, Class II, and Class III. At the
1997 Annual Meeting, at which twelve Directors are to be elected, Class
I, consisting of four Directors, would be elected for a term expiring at
the 1998 Annual Meeting; Class II, consisting of four Directors, would
be elected for a term expiring at the 1999 Annual Meeting; and Class
III, consisting of four Directors, would be elected for a term expiring
at the 2000 Annual Meeting (and in each case until their respective
successors are duly elected and qualified). Commencing with the election
of Directors to Class I in 1998, each class of Directors elected at an
Annual Meeting would be elected to a three-year term with the
shareholders electing only one-third of the Directors at each Annual
Meeting. If the Classified Board Amendment is adopted, the shareholders
will not be able to amend or repeal or adopt any provisions inconsistent
with it unless holders of 80% or more of the voting power of the shares
of the then outstanding Voting Stock, voting as a single class, vote in
favor.
If the number of Directors constituting the Board is increased or
decreased, the resulting number would be apportioned by the Board among
the three classes so as to make all classes as nearly equal in number as
possible.
The Classified Board Amendment also provides that a vacancy on the Board
may be filled by the remaining Directors, acting by majority vote. This
is the current procedure under the Company's Bylaws. Any Director so
chosen to fill the vacancy will hold office until the next shareholders'
meeting at which Directors are elected and until his or her successor
shall have been elected and qualified.
Information concerning the current nominees for election as Directors at
the 1997 Annual Meeting and the terms for which they will serve if the
Classified Board Amendment is adopted is contained under the caption
Election of Directors. If the Classified Board Amendment is not
adopted, all Directors will be elected to serve until the 1998 Annual
Meeting and until their successors are elected and qualified. If
adopted, the provisions of the amendment would be applicable to every
election of Directors.
The Board of Directors believes adopting the Classified Board Amendment
is advantageous to the Company and its shareholders by facilitating
Director continuity and experience, because a majority of the Company's
Directors at any given time will have prior experience as Company
Directors. Thus, the likelihood of continuity in the policies formulated
by the Board will be enhanced.
The Board believes that the Classified Board Amendment will also
encourage persons who may seek to acquire control of the Company to
initiate such an acquisition through negotiations with the Board,
assuring sufficient time for the Board to review any such proposal and
recommend appropriate alternatives to such proposal. The Board believes
that a classified Board will therefore be in a better position to
protect the interests of all the shareholders.
The Classified Board Amendment would extend the time required to make
any change in composition of a majority of the Board and would tend to
discourage certain kinds of unsolicited takeover bids for the Company.
Presently, a change in control of the Board can be made by a majority of
the Company's shareholders at a single Annual Meeting. Under the
proposed amendment, it will take at least two annual meetings to effect
a change in the majority control of the Board, except in the event of
vacancies resulting from removal. Because of the additional time
required to change control of the Board, the Classified Board Amendment
may tend to perpetuate present management and to discourage certain
tender offers, perhaps including some tender offers which shareholders
may feel would be in their best interests. The Classified Board
Amendment will also make it more difficult for the shareholders to
change the composition of the Board even if a majority of the
shareholders believe such a change would be desirable.
The Board, in recommending approval of the Classified Board Amendment,
considered the experience of Younkers, Inc. ("Younkers"), which is now
affiliated with the Company. In 1994, Carson Pirie Scott & Co.
("Carson") commenced an unsolicited tender offer for the shares of
Younkers. Carson offered to exchange each share of Younkers Common Stock
for $17 per share. Carson also commenced a proxy fight to elect its own
three members to the Younkers board, which was a classified board.
Carson elected its three candidates to the Younkers board and also
raised its proposed price to $20 per share. The Younkers classified
board, a majority of which remained independent from Carson, rejected
Carson's hostile offer and then negotiated an agreement with Proffitt's
whereby each share of Younkers Common Stock was exchanged for .98 of a
share of Proffitt's Common Stock. On the date the merger agreement was
signed, the value of .98 of a share of Proffitt's Stock was $28.18.
Accordingly, the Younkers Board was able to negotiate a better
transaction for its shareholders because it was a classified board that
could not be entirely changed at one annual meeting. There is no
assurance that the Classified Board Amendment would have similar effects
with respect to an unsolicited takeover bid for Proffitt s Common Stock.
As discussed above, the Classified Board Amendment may discourage the
making of an unsolicited takeover bid.
The Classified Board Amendment will not change the current Charter
provision stating that Directors may be removed by shareholders only for
cause as defined in the Tennessee Business Corporation Act.
Upon adoption of the Classified Board Amendment by the shareholders, the
Board will direct the officers of the Company to execute and file with
the Secretary of State of Tennessee an amendment to the Charter of the
Company reflecting the Classified Board Amendment. The Board does not
currently contemplate recommending the adoption of any further
amendments to the Charter or Bylaws which would affect the ability of a
third party to take over or change control of the Company. Classified
board provisions are permitted under the Tennessee Business Corporation
Act and are consistent with applicable securities laws.
The Classified Board Amendment is not in response to any specific
efforts of which the Company is aware to accumulate shares or to obtain
control of the Company. The Directors of the Company who formerly served
as Directors of Younkers provided impetus for adoption of the amendment
at this time. Moreover, the department store industry is undergoing a
period of consolidation. Due to the time required to seek and obtain
shareholder approval of the Classified Board Amendment, it would be
impractical to complete such approval in the face of a hostile takeover
bid. Further, the expense of soliciting such approval would be greater
if for a shareholder meeting other than the Annual Meeting. Therefore,
the Board of Directors determined to seek approval of the Classified
Board Amendment at this time.
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, to provide for a classified Board of
Directors. The text of the proposed amendment is set out in full on page
7.
The Charter is amended by amending ARTICLE IX, Section 1, to read as
follows:
Article IX. Section 1. Number of Directors. The affairs of this
Corporation shall be managed by a Board of up to fifteen (15)
Directors.
Effective as of the Annual Meeting of Shareholders in 1997, the
Board shall be divided into three classes, designated as Class I,
Class II, and Class III, as nearly equal in number as possible. The
initial term of office of Class I shall expire at the Annual
Meeting of Shareholders in 1998, that of Class II shall expire at
the Annual Meeting in 1999, and that of Class III shall expire at
the Annual Meeting in 2000, and in all cases as to each Director
until his successor shall be elected and shall qualify, or until
his earlier resignation, removal from office, death, or incapacity.
Subject to the foregoing, at each Annual Meeting of Shareholders
the successors to the class of Directors whose term shall then
expire shall be elected to hold office for a term expiring at the
third succeeding Annual Meeting and until their successors shall be
elected and qualified. Vacancies on the Board, for any reason, and
newly created directorships resulting from any increase in the
authorized number of Directors may be filled by a vote of the
majority of the Directors then in office, although less than a
quorum, or by a sole remaining Director.
If the number of Directors is changed, the Board shall determine
the class or classes to which the increased or decreased number of
Directors shall be apportioned; provided that the Directors in each
class shall be as nearly equal in number as possible. No decrease
in the number of Directors shall have the effect of shortening the
term of any incumbent Director.
Notwithstanding any other provisions of this Charter or the bylaws
of the Corporation (and notwithstanding that a lesser percentage
may be specified by law, this Charter or the bylaws of the
Corporation), the affirmative vote of the holders of 80% or more of
the voting power of the shares of the then outstanding Voting
Stock, voting together as a single class, shall be required to
amend or repeal, or adopt any provisions inconsistent with, this
Article IX, Section 1 of this Charter.
Existing Provisions
The Company's Charter and Bylaws as currently in force contain the
following additional provisions which may also discourage unsolicited
takeover bids or make it more difficult to change control of the
Company: (i) Directors may be removed only for cause as defined in the
Tennessee Business Corporation Act; (ii) the Board of Directors may from
time to time create one or more series of Preferred Stock from the
Company's authorized and unissued shares of Preferred Stock and
determine the rights (including voting rights), preferences, and
limitations of each such series; (iii) as described further below,
certain business combinations may be approved only with affirmative vote
of holders of 80% or more of the voting power of Proffitt's Common
Stock, unless the business combination is approved by "continuing"
Directors or meets certain "fair price" conditions; (iv) shareholders of
the Company may not take action by written consent in lieu of a meeting;
(v) the provisions described in items (iii) and (iv) may be amended only
with the affirmative vote of holders of 80% or more of the outstanding
shares of Proffitt's Common Stock; and (vi) under the Company's Rights
Plan, as described below, shareholders may, in the event of an
unsolicited takeover bid and on certain conditions, purchase shares of
Proffitt's Common Stock at a price equal to one-half of the then current
market price of the Proffitt's Common Stock.
The Company's Charter requires that certain business combinations
(including mergers and certain sales of assets) may be approved only
with the affirmative vote of holders of 80% or more of the voting power
of Proffitt's Common Stock. Such provisions do not apply if either: (i)
the business combination is approved by "continuing" Directors or (ii)
the business combination meets certain "fair price" provisions.
"Continuing" Directors may not be affiliates of the person with whom the
Company is proposed to be combined and must have been Directors at the
time, if any, that such person became an "Interested Shareholder". An
"Interested Shareholder" generally is any person who, directly or
indirectly, beneficially owns 10% or more of the voting power of
Proffitt's Common Stock. The fair price provisions are designed to deter
coercive tender offers by requiring that all shareholders receive a
price in the business combination that is fair and at least as high as
the highest price paid for shares of Proffitt's Common Stock by the
"Interested Shareholder" in the two years preceding the business
combination.
On March 28, 1995, the Board of Directors of the Company declared a
dividend distribution of one right (a "Right") for each share of
Proffitt's Common Stock. Each Right entitles the holder to purchase from
Proffitt's one one-hundredth (1/100) of a share of Series C Preferred
Stock at a price of $85 per one one-hundredth (1/100) of a share.
Initially, the Rights are not exercisable but will become exercisable
upon the acquisition by any person of, or the announcement of the
intention of any person to commence a tender or exchange offer upon the
successful consummation of which such person would be the beneficial
owner of, 20% or more of the shares of Proffitt's Common Stock then
outstanding, without the prior approval of the Board of Directors. The
Rights are generally designed to deter coercive takeover tactics and to
encourage all persons interested in potentially acquiring control of the
Company to treat each shareholder on a fair and equal basis.
Effects of Tennessee Law
In addition to the foregoing, the laws of the State of Tennessee contain
certain provisions, summarized below, which have similar effects.
Tennessee s Business Combination Act (the "Combination Act") provides
that a party owning 10% or more of the stock in a "resident domestic
corporation" (such party is called an "interested stockholder") cannot
engage in a business combination with the resident domestic corporation
unless the combination (i) takes place at least five years after the
interested stockholder first acquired 10% or more of the resident
domestic corporation, and (ii) either (A) is approved by at least 2/3 of
the non-interested voting shares of the resident domestic corporation or
(B) satisfies certain fairness conditions as specified in the
Combination Act. These provisions apply unless one of two events occurs.
A business combination with an entity can proceed without delay when
approved by the target corporation s board of directors before that
entity becomes an interested stockholder, or the resident corporation
may enact a charter amendment or bylaw to remove itself entirely from
the Combination Act. This charter amendment or bylaw must be approved by
a majority of the stockholders who have held shares for more than one
year prior to the vote. It may not take effect for a least two years
after the vote. The Company has not adopted a provision in its Charter
or Bylaws removing it from coverage under the Combination Act.
The Tennessee Greenmail Act ("TGA") applies to any corporation chartered
under the laws of Tennessee which has a class of voting stock registered
or traded on a national securities exchangeor registered with the
Securities and Exchange Commission pursuant to Section 12(g) of the
Securities Exchange Act of 1934. The TGA provides that it is unlawful
for any corporation or subsidiary to purchase, either directly or
indirectly, any of its shares at a price above the market value, as
defined in the TGA, from any person who holds more than 3% of the class
of the securities purchased if such person has held such shares for less
than two years, unless either the purchase is first approved by the
affirmative vote of a majority of the outstanding shares of each class
of voting stock issued or the corporation makes an offer of at least
equal value per share to all holders of shares of such class.
Vote Required for Approval
The Classified Board Amendment will be approved by shareholders if a
quorum exists at the Annual Meeting and more votes are cast in favor of
the Classified Board Amendment than are cast against it. Abstentions and
broker non-votes will be counted for purposes of determining whether a
quorum is present but otherwise will not affect the number of votes cast
for or against the Classified Board Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSAL TO AMEND THE COMPANY'S CHARTER TO PROVIDE FOR A CLASSIFIED
BOARD OF DIRECTORS.
ELECTION OF DIRECTORS
(Proposal No. 2)
Subject to the amendment of the Charter as described above, twelve
Directors are to be elected at the Annual Meeting, each to hold office
for the term specified below and until his or her successor is elected
and qualified. Each Director nominee is currently a Director. 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.
Nominees for the term expiring in 1998 (Class I) are: Bernard E.
Bernstein, Gerard K. Donnelly, Donald F. Dunn, and Donald E. Hess.
Nominees for the term expiring in 1999 (Class II) are: Edmond D. Cicala,
Michael S. Gross, G. David Hurd, and Gerald Tsai, Jr.
Nominees for the term expiring in 2000 (Class III) are: Ronald de Waal,
R. Brad Martin, C. Warren Neel, and Marguerite W. Sallee.
Certain information, including Board memberships of other public
companies, is given below for each nominee for Director.
<TABLE>
<CAPTION>
Director
Name, Principal Occupation, and Directorship Age Since
<S> <C> <C>
Class I (terms expiring in 1998):
Bernard E. Bernstein 66 1987
Partner in the Knoxville, Tennessee law firm of
Bernstein, Stair & McAdams
Gerard K. Donnelly 63 1996
Chairman of Princeton Middletown Partners, Inc.,
a consulting company, since February 1994. From
1990 to January 1994, Mr. Donnelly was President,
Chief Executive Officer, and a director of H.C.
Prange Company, a specialty retailer. H.C. Prange
filed a petition for reorganization under the
Bankruptcy Code in September 1994.
Donald F. Dunn 71 1996
Retired Senior Vice President and director of
Allied Stores Corporation. Mr. Dunn serves on
the Board of Directors of Tech Data Corporation.
Donald E. Hess 48 1996
President and Chief Executive Officer of the
Parisian Division of Proffitt's, Inc. Mr. Hess
served as President and Chief Executive Officer
of Parisian, Inc. from 1986 to 1996. Mr. Hess
serves on the Board of Directors of AmSouth
Bancorporation.
Class II (terms expiring in 1999):
Edmond D. Cicala 71 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 Evans, Inc.
and National Commerce Bancorporation.
Michael S. Gross 35 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
Converse, Inc., Florsheim Group, Inc., Furniture
Brands International, Inc., and Urohealth, Inc.
G. David Hurd 67 1996
Chairman and Chief Executive Officer of The
Principal Financial Group, an insurance and
financial services company, from 1989 until his
retirement in December 1994. Mr. Hurd is the
Emeritus Chairman of The Principal
Financial Group.
Gerald Tsai, Jr. 68 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., and Zenith National Insurance
Corporation.
Class III (terms expiring in 2000):
Ronald de Waal 45 1985
Chairman of We International, B.V., a Netherlands
corporation, which operates more than 250 fashion
specialty stores in Belgium, the Netherlands,
Switzerland, Germany, and France
R. Brad Martin 45 1984
Chief Executive Officer of the Company'since
1989, Chairman of the Board of the Company
since 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, and Harrah s Entertainment, Inc.
C. Warren Neel 58 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.
Marguerite W. Sallee 51 1996
President and Chief Executive Officer of
Corporate Family Solutions. Ms. Sallee serves
on the Board of Directors of MagneTek, Inc., and
NationsBank of Tennessee and Kentucky.
________________________________________________________________________
The business association of the nominees as shown has been continued for
more than five years unless otherwise noted.
THE BOARD OF DIRECTORS RECOMMENDS THE SHAREHOLDERS VOTE FOR THE
ELECTION AS DIRECTORS THE ABOVE LISTED NOMINEES.
</TABLE>
Further Information Concerning Directors
Directors' Fees
Directors who are not officers of the Company each receive an annual fee
of $15,000 and $1,000 for attendance at each board meeting or meeting of
a committee of which he is a member (or $750 for participation in a
telephonic board or committee meeting). Committee chairpersons each
receive an additional annual fee ranging from $1,500 to $2,500,
depending upon the committee chaired. Directors are reimbursed for
expenses in connection with their services as Directors of the Company.
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 six months from the date of
grant (with each subsequent installment vesting on the anniversary date
of grant) with full vesting occurring on the fourth anniversary 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 six times during the last fiscal year. The Board of
Directors has established Audit, Human Resources/Compensation, Stock
Option, and Nominating Committees.
The Audit Committee includes C. Warren Neel (Chairman), Donald F. Dunn,
Richard D. McRae, and Harwell W. Proffitt. The Committee met three times
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 Human Resources/Compensation Committee includes Bernard E. Bernstein
(Chairman), Edmond D. Cicala, Gerard K. Donnelly, and C. Warren Neel.
The Committee met four times 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
twice during the last fiscal year.
The Nominating Committee includes Gerald Tsai, Jr. (Chairman), Bernard
E. Bernstein, G. David Hurd, and Marguerite W. Sallee. 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. This Committee met twice
during the last fiscal year.
No Director attended fewer than 75% of the aggregate number of meetings
of the Board of Directors and the committee(s) on which he or she
served. The overall average percentage for all Directors meeting
attendance was 95%.
<TABLE>
Executive Compensation
Summary Compensation Table
The following table sets forth, for the years ended February 1, 1997, February 3, 1996, and January 28, 1995,
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").
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------ -------------------------
Other Restricted Securities All
Annual Stock Underlying Other
Salary Bonus Compensation Award(s) Options Compensation
Name & Principal Position Year ($) ($)(1) ($) ($) Granted (#) ($)
---- ------- ------ ---------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Brad Martin 1996 536,031 609,382 (2) 27,700 (3) 683,321 (4)(5) 7,800 (6)
Chairman of the Board and 1995 445,833 233,250 (7) 27,700 (3) 312,000 (8) 20,000 7,140 (6)
Chief Executive Officer 1994 383,334 293,438 (9) 27,700 (3) 95,000 7,140 (6)
James A Coggin (10) 1996 450,000 376,450 (2) 373,750 (4)(5)
President and Chief 1995 358,333 108,600 (7) 20,000
Operating Officer 1994 270,833 208,125 (9) 60,000
Robert M. Mosco (10) 1996 450,000 229,167 160,430 (4) 60,000 37,500(11)
President and Chief 1995
Executive Officer of 1994
Proffitt's Merchandising Group
W. Thomas Gould (10) 1996 750,000 372,799(12) 100,000
Former Vice Chairman of 1995
Board and Chairman of 1994
the Younkers Division
Tom R. Amerman (10) 1996 300,000 87,750 25,000
Former Executive Vice
President 1995
of Special Projects 1994
_____________________________________________________
(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 are subject to pricing at a later date. These grants were valued at $192,500 and
$96,250 for Martin and Coggin, respectively, as of March 21, 1997 (at a market price of $38.50).
(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) In 1996, Martin, Coggin, and Mosco were granted 25,000, 15,000, and 12,500 shares of Company Common
Stock under a Restricted Stock Grant Agreement under the Company's 1994 Long-Term Incentive Plan.
Restrictions shall lapse as a function of the Company achieving certain performance goals. Shares
shall be earned ("Earned Shares") on the basis of achieving these goals for 1996, 1997, and 1998.
Restrictions shall be removed from 25% of such Earned Shares at the time they are earned, and
restrictions shall be removed from an additional 25% of such Earned Shares at the end of each of the
following three years. As of February 1, 1997, 8,333, 5,000, and 4,167 shares were Earned Shares for
Martin, Coggin, and Mosco, respectively, and 2,083, 1,250, and 1,042 shares were vested for Martin,
Coggin, and Mosco, respectively. These shares are subject to pricing at a later date. As of March 21,
1997, the market price of the Common Stock was $38.50, and the value of the Earned Shares was
$320,821, $192,500, and $160,430 for Martin, Coggin, and Mosco, respectively, as of that date. This
value of the Earned Shares is included in total Restricted Stock Awards.
(5) Includes restricted stock awards of 10,000 and 5,000 shares of Proffitt's Common Stock for Martin and
Coggin, respectively, which were granted at the market price of $36.25 on the January 31, 1997 date
of grant (valued at $362,500 and $181,250 for Martin and Coggin, respectively). The awards will fully
vest one year from the date of grant.
(6) Economic benefit of split dollar life insurance policy.
(7) Includes stock grants to Martin and Coggin of 5,000 and 1,500 shares of Proffitt's Common Stock,
respectively, which were granted at the market price of $32.25 on the March 21, 1996 date of grant
(valued at $161,250 and $48,375 for Martin and Coggin, respectively).
(8) Represents a restricted stock award of 13,000 shares of Proffitt's Common Stock which was granted at
the market price of $24.00 on the February 12, 1996 date of grant. The award fully vested one year
from the date of grant.
(9) Includes stock grants to Martin and Coggin of 5,000 and 2,500 shares of Proffitt's Common Stock,
respectively, which were granted at the market price of $21.50 on the February 6, 1995 date of grant
(valued at $107,500 and $53,750 for Martin and Coggin, respectively).
(10) The hire date for Coggin was April 1, 1994 and for Amerman, Gould, and Mosco was February 3, 1996.
Amerman resigned effective February 7, 1997. Gould terminated his employment effective April 1, 1997;
see Mr. Gould's Employment Agreement.
(11) One-time relocation bonus.
(12) Reimbursement payment of excise, federal, and Medicare taxes.
Note: As of February 1, 1997, the number and value (based on the $36.25 closing price of Common Stock as
of January 31, 1997) of shares of restricted stock held by each of the Named Officers were as follows:
Martin, 35,000 shares ($1,268,750); Coggin, 20,000 shares ($725,000); and Mosco, 12,500 shares ($453,125).
Gould and Amerman had no restricted stock holdings at that date.
</TABLE>
Employment Contracts
All of the Named Officers and certain other 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 agreements for Martin,
Coggin, and Mosco expire on October 11, 2001, October 11, 1999, and February 5,
2000, respectively. Amerman resigned on February 7, 1997, and his agreement
expired on that date. For terms of Mr. Gould's employment, see Mr. Gould's
Employment Agreement. Under the terms of each agreement, each Named Officer
(excluding Gould) 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 then in effect for
the greater of the remaining term of his agreement or twenty-four months.
Annual base salaries currently in effect are as follows: Martin, $625,000;
Coggin, $510,000; and Mosco, $500,000. 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, thefailure 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
Contro" 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.
The Company also entered into an employment agreement with Robert M. Mosco in
conjunction with the Company's February 3, 1996 business combination with
Younkers, Inc. Under the terms of that Employment Agreement, Mr. Mosco had the
right to terminate his employment with the Company in the 13th month after the
business combination. In such event, he would have received a lump sum
severance payment in an amount equal to (i) salary through the date of
termination and bonus for the then-current year, (ii) three times
Mr. Mosco's highest annual salary in effect during the 12-month period
prior to termination and three times Mr. Mosco's average bonus in respect
of the three immediately preceding fiscal years, (iii) any unvested
benefit under Younkers' defined benefit pension plan, and (iv) any unvested
employer contributions under Younkers' defined contribution plan.
In connection with Mr. Mosco's entering into a new Employment Contract
that expires on February 5, 2000, Mr. Mosco waived his right to terminate
employment and receive such compensation. In connection with that waiver, the
Company paid Mr. Mosco $1,064,387 on February 3, 1997.
Mr. Gould's Employment Agreement
The Company entered into the employment agreement with Mr. Gould in conjunction
with the Company's February 3, 1996 business combination with Younkers, Inc.
February 3, 1996 was the effective date of the agreement ("Effective Date"). Mr.
Gould's employment agreement, as amended ("Employment Agreement") has a
five year term and provides that Mr. Gould will be paid a minimum annual
base salary of $750,000. Mr. Gould's Employment Agreement provides that
each of Proffitt's and Mr. Gould may terminate Mr. Gould's Employment
Agreement prior to its expiration upon thirty days prior written notice;
provided, however, that such notice may not be provided for at least one
year from the Effective Date, and provided further that Mr. Gould's
payments thereunder are not terminated by virtue of his notice. Mr. Gould
terminated his employment with Proffitt's effective April 1, 1997. Under
the terms of the Employment Agreement, Proffitt's will continue to pay
Mr. Gould his annual salary and continue to provide Mr. Gould with medical
and life insurance coverage during the remaining term of the Employment
Agreement. In the event Mr. Gould's payments are subject to an excise tax under
Section 4999 of the Internal Revenue Code, he will receive a reimbursement
payment to offset such tax.
<TABLE>
Stock Options
The following table contains information concerning the grant of stock options under the
Proffitt's, Inc. 1994 Long-Term Incentive Plan ("Plan") to the Named Officers as of fiscal year
end.
<CAPTION>
Option Grants in Last Fiscal Year
Potentional
Realizable Value at
Assumed Annual Rates
of Stock Price
Appreciation
Individual Grants for Option Term (3)
---------------------------------------------------------- -----------------------------
Options % of Total Options Exercise or
Granted Granted to Employees Base Price Expiration
Name (#) (1) in Fiscal Year ($/share)(2) Date 5% ($) 10% ($)
------------ ---------- --------------- ----------- ---------- ------ -----
<S> <C> <C> <C> <C> <C>
R. Brad Martin - - - - - -
James A. Coggin - - - - - -
Robert M. Mosco 50,000 (4) 10.2 24.50 2/5/06 770,396 1,952,335
10,000 (4) 2.0 39.75 10/28/06 249,986 633,513
W. Thomas Gould 100,000 (4) 20.4 24.50 4/1/99 (5) 1,540,792 3,904,669
Tom R. Amerman 25,000 (6) 5.1 24.50 5/8/97 (7) 385,198 976,167
__________________________________________
(1) 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.
(2) All options were granted at 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.
(3) 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 and 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.
(4) Options are exercisable in cumulative one-fifth installments commencing six months from the
date of grant (with each subsequent installment vesting on the anniversary date of grant)
with full vesting occurring on the fourth anniversary of the date of grant.
(5) Gould resigned April 1, 1997. Under the terms of his Employment Agreement, all options fully
vest upon termination of employment, and he has two years from the termination date to
exercise the vested portion of these options.
(6) Options are exercisable in cumulative one-third installments commencing six months from the
date of grant (with each subsequent installment vesting on the anniversary date of grant)
with full vesting occurring on the second anniversary of the date of grant.
(7) Amerman resigned on February 7, 1997, and under terms of the Plan, he has 90 days from that
date to exercise the vested portion of these options.
</TABLE>
<TABLE>
Option Exercises and Holdings
The following table sets forth information with respect to the Named Officers concerning the
exercise of options during 1996 and unexercised options held at fiscal year end.
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year End and Fiscal Year-End Option Values
Value of
Unexercised Unexercised
Options Held at In-the-Money
Acquired on Value Year End (#) Year End ($) (1)
---------- -------- -------------- ---------------
Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
-------------- ----------- ---------- ---------------- --------------
<S> <C> <C> <C> <C>
R. Brad Martin 0 0 150,000/70,000 1,870,000/820,000
James A. Coggin 0 0 44,000/36,000 510,000/412,500
Robert M. Mosco 0 0 89,106/50,000 2,046,108/470,000
W. Thomas Gould 127,500 3,744,215 185,824/80,000 4,349,520/940,000
Tom R. Amerman 65,324 993,847 0/16,667 0/195,837
(1) Represents the difference between the closing price of the Company's Common Stock on January
31, 1997 and the exercise price of the options.
</TABLE>
<TABLE>
Comparison of Five Year Cumulative Total Return*
Among Proffitt's, Inc, the Nasdaq Stock Market -- US Index, and the Nasdaq Retail Index
<CAPTION>
2/01/92 1/30/93 1/29/94 1/28/95 2/03/96 2/01/97
<S> <C> <C> <C> <C> <C> <C> <C>
Proffitt's, Inc. PRFT 100 178 157 186 196 290
NASDAQ STOCK MARKET - US INAS 100 113 129 124 180 234
NASDAQ RETAIL TRADE INAR 100 90 96 86 97 120
</TABLE>
* $100 invested on 2/01/92 in stock or inex -- including reinvestment of
dividends. These comparisons are not intended to forecast or be indicative of
possible future performance of the Company's stock.
Report of the Human Resources Committee of
the Board of Directors on Executive Compensation
The Human Resources/Compensation Committee of the Board of Directors
(the "Committee") is composed of four independent Directors who are not
employees of the Company: Mr. Bernstein, Chairman of the Committee; Mr.
Cicala; Mr. Donnelly; and Dr. Neel. 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 ("CEO").
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 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
20% 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 Officers and other key employees pursuant to
the Proffitt's, Inc. 1994 Long-Term Incentive Plan ("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 administers
the Plan.
R. Brad Martin has served as Chairman and CEO 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
$1.9 billion for the year ended February 1, 1997 ("1996"). Net income
(before non-recurring and special charges) has increased from $.8
million in 1989 to $52.2 million in 1996. Shareholders' equity has grown
from $20.2 million in 1989 to $539.9 million in 1996. The price of the
Company's Common Stock has increased from $6.00 at February 3, 1990 to
$38.50 at March 21, 1997. Market capitalization of the Company has
increased from $22.8 million at February 3, 1990 to over $1.1 billion at
March 21, 1997.
The compensation of the Chairman and CEO of the corporation is set forth
in an Employment Agreement ("Agreement") dated October 11, 1996,
approved by the Committee and the Board of Directors. The terms of this
Agreement provide for an annual base salary of not less than $552,000.
Effective April 1, 1997, Mr. Martin's annual base salary was increased
to $625,000. The CEO may earn an annual cash bonus of up to 75% of base
salary based upon the achievement of specific annual objectives. For
1996, 50% of the potential bonus award was based on achievement of
targeted earnings per share of the corporation; 50% of the potential
bonus award was based upon the achievement by the CEO of certain
objectives in his personal plan. These objectives included specified
goals in such areas as corporate growth, human resources, acquisition
assimilation, merchandising, and shareholder relations. For 1996, Mr.
Martin was awarded 100% of his total bonus potential. For 1996, Mr.
Martin's cash compensation totaled $952,913 which was comprised of
$536,031 in base salary and $416,882 in bonus.
Pursuant to the terms of the Agreement, the CEO 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 1996, Mr. Martin was awarded 5,000 shares of Common
Stock of the corporation pursuant to this provision, valued at $192,500
as of March 21, 1997. These shares are subject to pricing at a later
date.
During 1996, the CEO was granted 25,000 additional restricted shares of
Company Common Stock under a Restricted Stock Grant Agreement under the
Plan. Restrictions shall lapse as a function of the Company achieving
certain performance goals. Shares shall be earned ("Earned Shares") on
the basis of achieving those goals for 1996, 1997, and 1998.
Restrictions shall be removed from 25% of such Earned Shares at the time
they are earned, and restrictions shall be removed from an additional
25% of such Earned Shares at the end of each of the following three
years. As of February 1, 1997, 8,333 shares were earned, with 2,083
(25%) vested. These shares are subject to future pricing; the Earned
Shares were valued at $320,821 on March 21, 1997.
In recognition of the extraordinary efforts of the CEO in completing the
business combinations with Parisian, Inc. and G.R. Herberger's, Inc.
during 1996, the CEO was granted 10,000 restricted shares of Company
Common Stock under the Plan. These shares were valued at $362,500 on the
January 31, 1997 grant date. These shares fully vest one year from the
date of grant.
Section 162(m) of the Internal Revenue Code (the "Code") limits the tax
deductibility of compensation in excess of $1 million paid to the Named
Officers, unless the payments are made under a performance-based plan as
defined in Section 162(m). The Committee believes the payments in 1996
under the Plan (as previously approved by the shareholders of the
Company) meet the requirements of deductibility as specified under the
applicable provisions of the Code. It is the Committee's intention to
continue to utilize performance-based compensation under the terms of
the Plan in order to obtain maximum deductibility of executive
compensation, while providing a compensation program that will attract,
retain, and reward the executive talent necessary to maximize
shareholder return. Nevertheless, it is the Committee's understanding
that all or some of the $1,064,387 payment to Mr. Mosco to waive his
rights under a prior employment agreement will not be deductible under
the Code.
Human Resources/Compensation Committee
Bernard E. Bernstein, Chairman
Edmond D. Cicala
Gerard K. Donnelly
Dr. C. Warren Neel
March 21, 1997
Certain Transactions
Transaction 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, which was converted into Common Stock in June 1996. Proffitt's
paid Apollo Specialty $.8 million in regular dividends and a one-time
$3.0 million payment for the early conversion of the Preferred Stock for
the fiscal year ended February 1, 1997.
Human Resources/Compensation Committee Interlocks and Insider
Participation.
Mr. Bernard E. Bernstein, Chairman of the Human Resources/Compensation
Committee, is a partner in Bernstein, Stair & McAdams, which serves, on
occasion, as legal counsel for the Company.
Ratification of Appointment of Independent Accountants
(Proposal No. 3)
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 January
31, 1998. 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.
Section 16(a) of the Securities Exchange Act of 1934
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors, executive officers, and persons who own more than
10% of the Company's Common Stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes
in ownership of stock of the Company.
To the Company's knowledge, based solely on a review of copies of
reports provided by such individuals to the Company and written
representations of such individuals that no other reports were required,
during the fiscal year ended February 1, 1997, all Section 16(a) filing
requirements applicable to its officers, Directors, and 10% or greater
beneficial owners were satisfied.
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 judgment.
Shareholders' Proposals for 1998 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 1998 Annual Meeting must be received by
the Company at its corporate headquarters on or before January 5, 1998.
Listing of Shareholders
A complete list of the shareholders entitled to vote at the Annual
Meeting of the Shareholders, to be held on June 19, 1997, 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 February 1, 1997 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 1, 1997
PRELIMINARY COPY
PROFFITT'S, INC.
P.O. Box 9388
Alcoa, TN 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 21, 1997 at the Annual
Meeting of the Shareholders to be held on June
19, 1997 or any adjournment thereof.
1. Proposal to AMEND THE COMPANY'S CHARTER, as permitted by the
Tennessee Business Corporation Act, to divide the Board of
Directors into three classes.
___ FOR ____ AGAINST _____ ABSTAIN
2. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
(Except as marked to the contrary below) _____ to vote for all
nominees listed below _____
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name on the list
below.)
CLASS I (term expiring in 1998): Bernard E. Bernstein, Gerard K.
Donnelly, Donald F. Dunn, Donald E. Hess
CLASS II (term expiring in 1999): Edmond D. Cicala, Michael S.
Gross, G. David Hurd, Gerald Tsai, Jr.
CLASS III (term expiring in 2000): Ronald de Waal, R. Brad Martin,
C. Warren Neel, Marguerite W. Sallee
(continued, and to be signed on other side)
(continued from other side)
3. Proposal to RATIFY THE APPOINTMENT OF COOPERS & LYBRAND as the
independent accountants of the Company.
_____ FOR _____ AGAINST _____ ABSTAIN
4. 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, AND 3.
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:_____________________________, 1997 _______________________________
Signature
_______________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
