23
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X} Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11 (c) or 240.14a-
12
HAROLD'S STORES, INC.
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement if Other Than
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125.00 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on the table below per Exchange Act Rules 14a-
6(i)4) and 0-11.
1) Title of each class securities to which transaction
applies:_________________.
2) Aggregate number of securities to which transaction
applies:________________.
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule
0-11:______________.
4) Proposed maximum aggregate value of
transaction:_______________.
5) Total fee paid:________________.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or Schedule
and the date of its filing.
1) Amount Previously Paid:____________.
2) Form, Schedule or Registration Statement
No:_________________.
3) Filing Party:_____________________.
4) Date filed:_______________________.
NOTICE OF 1997
ANNUAL MEETING OF
SHAREHOLDERS AND
PROXY STATEMENT
Dear Harold's Shareholder:
On behalf of the Board of Directors and management of Harold's
Stores, Inc., I am pleased to invite you to attend the 1997
Annual Meeting of Shareholders. The meeting will be held in the
Presidents' Room of the University of Oklahoma Memorial Student
Union in Norman, Oklahoma, beginning at 2:00 p.m., local time, on
Friday, June 20, 1997. A copy of our Annual Report to
Shareholders for the fiscal year ended February 1, 1997 is
enclosed.
The attached Notice of Annual Meeting and Proxy Statement
describe the business to be conducted at the meeting, including
the election of eleven directors. During the meeting, there will
also be a report by management on the Company's business, as well
as a discussion period during which you will be able to ask
questions.
Whether or not you plan to attend in person, please mark your
proxy in the space provided. It is important that your shares be
represented by a proxy, even if you cannot be present. Take a
moment now to sign, date and return your proxy in the envelope
provided. If you have multiple accounts and received more than
one set of this material, please be sure to return each proxy.
I look forward to greeting you at this year's Annual Meeting.
Sincerely,
Harold G. Powell
Chairman of the Board
HAROLD'S STORES, INC., 765 ASP, POST OFFICE DRAWER 2970
NORMAN, OKLAHOMA 73070 (405) 329-4045
HAROLD'S STORES, INC.
765 Asp
Norman, Oklahoma 73069
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 20, 1997
TO OUR SHAREHOLDERS:
The 1997 Annual Meeting of Shareholders of Harold's Stores, Inc.
("the Company") will be held in the Presidents' Room of the
University of Oklahoma Memorial Student Union in Norman,
Oklahoma, on Friday, June 20, 1997, at 2:00 p.m., local time, for
the following purposes:
1. To elect eleven (11) directors to hold office until the next
annual meeting of the shareholders and until their respective
successors shall have been elected and qualified.
2. To transact such other business as may properly be brought
before the Annual Meeting or any adjournment thereof.
The Annual Meeting may be adjourned from time to time and, at any
reconvened meeting, action with respect to the matters specified
in the notice may be taken without further notice to the
shareholders unless required by the Bylaws.
Shareholders of record of Common Stock at the close of business
on April 29, 1997 are entitled to notice of, and to vote on all
matters at, the Annual Meeting. A list of such shareholders will
be available for examination by any shareholder for any purpose
germane to the Annual Meeting, during normal business hours, at
the principal office of the Company, 765 Asp, Norman, Oklahoma
for a period of ten days prior to the Annual Meeting and at the
Annual Meeting.
BY THE ORDER OF THE BOARD OF DIRECTORS
H. RAINEY POWELL
Secretary
DATED: May 27, 1997
HAROLD'S STORES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 20, 1997
The following information is furnished in connection with the
1997 Annual Meeting of Shareholders of Harold's Stores, Inc. (the
"Company") which will be held on Friday, June 20, 1997, at 2:00
p.m., local time, in the Presidents' Room of the University of
Oklahoma, and at any adjournment or adjournments thereof, and
will be mailed on or about May 29,1996 to the holders of record
of Common Stock as of the record date.
The record date for determining shareholders entitled to notice
of ,and to vote at, the Annual Meeting has been fixed as the
close of business on April 29, 1997. On that date, the Company
had 5,720,760 shares of Common Stock outstanding. Each
outstanding share of Common Stock is entitled to one vote on all
matters presented at the Annual Meeting.
The enclosed proxy for the Annual Meeting is being solicited by
the Company's Board of Directors and is revocable at any time
prior to the exercise of the powers conferred thereby. The cost
of the solicitation of proxies in the enclosed form will be borne
by the Company. In addition to the use of the mail, proxies may
be solicited by personal interview, telephone, or facsimile, and
by banks, brokerage houses and other institutions. Nominees or
fiduciaries will be requested to forward the solicitation
material to their principals and to obtain authorization for the
execution of proxies. The Company will, upon request, reimburse
banks, brokerage houses and other institutions, nominees and
fiduciaries for their reasonable expenses in forwarding proxy
material to their principals.
Unless otherwise directed in the accompanying form of proxy, the
persons named therein will vote FOR the election of the eleven
director nominees. Any shareholder returning the accompanying
proxy may revoke such proxy at any time prior to its exercise by
(a) giving written notice to the Company of such revocation, (b)
voting in person at the Annual Meeting or (c) executing and
delivering to the Company a later dated proxy. Written
revocations and later dated proxies should be sent to Harold's
Stores, Inc., Post Office Drawer 2970, Norman, Oklahoma 73070.
ANNUAL REPORT
The Company's Annual Report to Shareholders, covering the fiscal
year ended February 1, 1997 ("fiscal 1997"), including audited
financial statements, is enclosed. No part of the Annual Report
is incorporated in this Proxy Statement or is deemed to be a part
of the material for the solicitation of proxies.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April
29, 1997 by (i) each nominee for election as a director, (ii) the
Company's chief executive officer and its four other most highly
compensated executive officers, (iii ) all executive officers and
directors of the Company as a group, and (iv) all those known by
the Company to be beneficial owners of more than five percent of
the Company's Common Stock.
Beneficial Ownership
Beneficial Owner Number Percentage
of Shares of Class
Directors and Certain Executive
Officers:
Harold G. Powell 260,278 (2)(3)(4) 4.5%
Rebecca Powell Casey 760,521 (3)(4)(5)(6) 13.2%
4525 McKinney, Dallas TX 75205
H. Rainey Powell 508,587 (3)(4)(7) 8.8%
765 Asp., Norman, OK 73609
Kenneth C. Row 16,943 (4) *
Janet F. Firth 9,783 (4) *
James R. Agar 13,109 (4) *
Michael T. Casey 312,66 (3)(4)(5) 5.5%
4525 McKinney, Dallas ,TX 75205 2
Robert B. Cullum, Jr. 8,814 (4) *
Lisa Powell Hunt 374,87 (3)(4)(8) 6.6%
3940 Marquette, Dallas, TX 75225 5
W. Howard Lester 6,536 (4) *
Gary C. Rawlinson 12,034 (4) *
William F. Weitzel 11,501 (4) *
All directors and Executive Officers 2,310, (9) 39.2%
as a Group (14 people) 314
Other Beneficial Owners Of More than
5% of the Common Stock;
The Security National Bank and Trust 483,698 (10) 8.5%
Company of Norman,
as Trustee
200 East Main, Norman, OK 73069
Inter-Him N.V. 398,932 6.9%
Prof. Kernkampweg 8a, Post Office
Box 3361
Curacao, Netherlands Antilles
Laifer Capital Management, Inc. 472,208 8.3%
Hilltop Partners, L.P.
45 West 45th Street
New York, NY 10036
SAFECO Asset Management Company 664,529 11.6%
SAFECO Plaza, Seattle, Washington
98185
_____________________
* Less than one percent.
(1) This table is based upon information supplied by officers,
directors and principal shareholders and applicable Schedules 13D
and 13G filed with the Securities and Exchange Commission.
Unless otherwise indicated in the footnotes to this table and
subject to community property laws where applicable, the Company
believes that each of the shareholders named in this table has
sole voting and investment power with respect to the shares
indicated as beneficially owned. The percentage of ownership for
each person is calculated in accordance with rules of Securities
and Exchange Commission without regard to shares of Common Stock
issuable upon exercise of outstanding stock options, except that
any shares a person is deemed to own by having a right to acquire
by exercise of an option are considered outstanding solely for
purposes of calculating such person's percentage ownership.
(2) Included in this amount are 100,367 shares held by The
Security National Bank and Trust Company of Norman ("Security"),
as Trustee of the Elizabeth M. Powell Trust A, over which Harold
G. Powell possesses a general power of appointment exercisable at
his death. Such shares are also included in the beneficial
ownership of Security. See footnote (10) below. Mr. Powell may
also be deemed to have shared voting power over 383,331 shares
held by Security, as trustee of Elizabeth M. Powell Trust B,
which are not included in the number of shares indicated as
beneficially owner by Mr. Powell.
(3) Pursuant to a Shareholder's Agreement, effective August 18,
1987, Harold G. Powell, Rebecca Powell Casey, H. Rainey Powell,
Lisa Powell Hunt, Michael T. Casey and Security have agreed to
vote the Common Stock held by them in accordance with the
decision of those holding a majority of the shares of Common
Stock subject to the Agreement. Such group of shareholders may
be treated as the beneficial owners of 2,600,254 shares, or
approximately 44.6% of the outstanding Common Stock. Except as
otherwise stated above, each named person's beneficial ownership
set forth above excludes the ownership of other members of such
group.
(4) Includes shares with the named individuals have the right to
acquire by exercise of stock options granted under the Company's
1993 Performance and Equity Incentive Plan, which are currently
exercisable as follows: Harold G. Powell - 34,732, Rebecca
Powell Casey - 37,742, H. Rainey Powell - 29,447, Kenneth C. Row
- - 13,110, Janet F. Firth - 7,752, James R. Agar - 6,536, Michael
T. Casey - 6,536, Robert B. Cullum, Jr. - 6,536, Lisa Powell Hunt
- - 6,536, W. Howard Lester - 6,536, Gary C. Rawlinson - 6,536, and
William F. Weitzel - 6,217.
(5) Michael T. Casey and Rebecca Powell Casey are husband and
wife. The beneficial ownership of each spouse excludes the
shares held by the other. Mr. and Mrs. Casey disclaim beneficial
ownership of the other's shares.
(6) Included in this amount are 100,119 shares which are held by
Ms. Casey as custodian for the benefit of her minor children.
(7) Included in this amount are 66,746 shares which are held by
Mr. Rainey Powell as custodian for the benefit of his minor
children. Not included are 63,691 shares of Common Stock held by
Mr. Rainey Powell's wife, over which Mr. Rainey Powell disclaims
beneficial ownership.
(8) Included in this amount are 81,579 shares which are held by
Ms. Hunt as custodian for the benefit of her minor children. Not
included are 33,373 shares of Common Stock held by Ms. Hunt's
husband, over which Ms. Hunt disclaims beneficial ownership.
(9) Includes 178,503 shares which the directors and the executive
officers as a group have the right to acquire by exercise of
stock options granted under the Company's 1993 Performance and
Equity Incentive Plan which are currently exercisable.
(10) All shares are held in its capacity as trustee. Of such
total, 100,367 shares are also included in Harold G. Powell's
beneficial ownership. See footnote (2) above.
PROPOSAL 1:
ELECTION OF DIRECTORS
The Board of Directors of the Company, pursuant to the provisions
of the Company's Certificate of Incorporation and Bylaws, has
established an eleven-member Board of Directors, and has
nominated all of the current eleven directors for re-election by
the shareholders at the Annual Meeting. If elected, the director
nominees will hold office until the next annual shareholders'
meeting and until their successors are duly elected and
qualified.
The Company's Board of Directors meets quarterly. During fiscal
1997, all directors attended at least 75% of the meetings of the
Board of Directors and the committees on which they served. All
of the nominees for re-election named below have indicated their
intent to serve if elected. If any nominee for a position on the
Board of Directors of the Company is unable to stand for election
for any reason, the proxy holders named in the proxy are expected
to vote for the substitute nominee in that position designated by
the Board of Directors or, if one is not so designated, are
expected to consult with the Board of Directors of the Company in
determining how to vote the shares they represent.
Nominees
The nominees for election as directors of the Company are as
follows:
Name Age Director
Since
Harold G. Powell 73 1987
Rebecca Powell 45 1987
Casey
H. Rainey Powell 43 1987
Kenneth C. Row 32 1993
James R. Agar 65 1987
Michael T. Casey 48 1988
Robert B. Cullum, 48 1993
Jr.
Lisa Powell Hunt 41 1987
W. Howard Lester 61 1995
Gary C. Rawlinson 55 1987
William F. 60 1989
Weitzel, Ph.D.
The following is certain biographical information relating to
each nominee-director:
Harold G. Powell founded the Company in 1948 and has been
Chairman of the Board since its reorganization in 1987. He was
Chairman and Chief Executive Officer from 1987 to 1992. Mr.
Powell opened the first Harold's clothing store at the Norman,
Oklahoma location in 1948.
Rebecca Powell Casey was appointed Chief Executive Officer of the
Company in 1992, and prior to that time had been President from
1987 to 1988, and Executive Vice President - Merchandise and
Product Development from 1989 to 1991. Ms. Casey has been
employed by the Company in various managerial positions since
1977. Ms. Casey is a daughter of Harold G. Powell and the wife
of Michael T. Casey.
H. Rainey Powell has been Chief Financial Officer of the Company
since 1987. Mr. Powell was appointed President and Chief
Operating Officer in 1992. Mr. Powell has been employed by the
Company and its predecessors in various managerial positions
since 1978. Mr. Powell is the son of Harold G. Powell.
Kenneth C. Row was appointed Executive Vice President of the
Company in 1992. Prior to that time and since 1988, Mr. Row was
Vice President - Marketing of the Company. Mr. Row has been
employed by the Company and its predecessors in various
managerial positions since 1986.
James R. Agar is President of Partners in 30/30, Inc., a cattle
raising and feeding operation and a director of North American
Insurance, Inc., an insurance company. He serves as Chairman of
the Special Real Estate Committee and serves on the Audit,
Strategic Planning and Compensation Committees.
Michael T. Casey has served as Chairman of the Board of Grand
Prairie State Bank, Texas, a privately held bank, since 1989, and
is President of Casey Bancorp, Inc., a privately held bank
holding company. Prior to and since that time, Mr. Casey has
been engaged in investments and banking. He previously served as
a Senior Vice President of the Company from 1989 until 1991. Mr.
Casey currently serves on the board of directors of several other
privately held banking organizations in metropolitan Dallas,
Texas, including North American Bancshares and American Bank of
Texas. Mr. Casey is the husband of Rebecca Powell Casey.
Robert B. Cullum, Jr. is a Partner of Fairway Capital Partners,
Ltd and Wayfair Capital Partners, Ltd, both of which are
privately held real estate investment partnerships based in
Dallas, Texas. Mr. Cullum was involved for 30 years in the
supermarket industry with Cullum Co., Inc. Presently, he is
actively engaged in real estate development with Wayfair Capital
Partners, Ltd. and Fairway Capital Partners, Ltd. He also serves
on the Board of Directors of Randall Food Markets, Inc., a
privately held corporation. He serves on the special Real Estate
Committee and the Audit Committee.
Lisa Powell Hunt is engaged in investments and was formerly
employed by The First Boston Corporation as a registered
institutional sales executive from 1980 to 1984. Ms. Hunt is the
daughter of Harold G. Powell.
W. Howard Lester has been Chairman and Chief Executive Officer of
Williams-Sonoma, Inc. since 1978 and is a director of The Good
Guys, Inc., an electronics retailer; CKE (Carl's), a food service
company; and Il Fornaio, U.S.A., a restaurant/bakery company
which he brought to the U.S. from Italy.
Gary C. Rawlinson is a shareholder-director of the law firm of
Crowe & Dunlevy, A Professional Corporation and has been
affiliated with such firm and its predecessor since 1968, which
firm serves as general counsel to the Company. Mr. Rawlinson
serves as Chairman of the Audit Committee and serves on the
Strategic Planning Committee.
William F. Weitzel, Ph.D. is Professor Emeritus of Business
Administration at the University of Oklahoma, having served there
from 1978 to 1996. Mr. Weitzel is President of William Weitzel,
Inc., a management consulting organization. Mr. Weitzel serves
as Chairman of the Compensation Committee and the Strategic
Planning Committee, and serves on the Audit Committee and Special
Real Estate Committee.
Committees
The Company's Board of Directors has an Audit Committee,
Compensation Committee, Strategic Planning Committee and a
Special Real Estate Committee. Each of these committees is
comprised of three outside directors.
The Audit Committee's functions include reviewing internal
controls and recommending to the Board of Directors the
engagement of the Company's independent certified public
accountants, reviewing with such accountants the plan for and
results of their audit of the Company's consolidated financial
statements and determining the independence of such accountants.
The Audit Committee met twice during fiscal 1997.
The Compensation Committee's function is to evaluate and
recommend changes in compensation for all executive officers and
certain other key personnel, and the creation and implementation
of employee benefit plans and special employment and consulting
agreements. The Compensation Committee met once during fiscal
1997.
The Strategic Planning Committee's function is to review the
comprehensive plan developed by management stating how the
Company will accomplish its mission and objectives. The
Strategic Planning Committee did not hold any meetings during
fiscal 1997.
The Special Real Estate Committee's functions include the review
and analysis of any significant real estate leasing or purchase
transactions. The Special Real Estate Committee met twice during
fiscal 1997.
The Board of Directors does not have a nominating committee. The
entire Board performs this function and evaluates and recommends
nominees for election to the Board of Directors.
Director Compensation
Non-employee directors of the Company receive $1,000 for each
full Board and $500 for each standing committee meeting attended.
In addition, under the Company's 1993 Performance and Equity
Incentive Plan, each incumbent non-employee director received on
the date of the Company's 1995 Annual Meeting of Shareholders an
option grant to purchase 4,500 shares of Common Stock of the
Company and, while serving as a director, will receive additional
option grants to purchase 1,500 shares of Common Stock as of the
date of each subsequent annual meeting of shareholders. Any new
non-employee director will receive under the Company's 1993
Performance and Equity Incentive Plan an initial option grant to
purchase 4,500 shares of Common Stock upon election to the Board
of Directors and, while serving as a director, will receive
additional option grants to purchase 1,500 shares of Common Stock
as of the date of each subsequent annual meeting of shareholders.
All directors of the Company are entitled to a discount on their
clothing purchases off the retail price before markdowns and
promotional discounts.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who
beneficially own more than 10% of the Company's Common Stock to
file with the Securities and Exchange Commission and the American
Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Stock of the Company. Officers,
directors and greater than 10% beneficial owners are required by
regulation to furnish to the Company copies of all Section 16(a)
reports they file. Based solely on review of the copies of such
reports furnished to the Company and written representations that
no other reports were required during fiscal 1997, to the
Company's knowledge all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10%
beneficial owners during fiscal 1997 were complied with on a
timely basis, except that Cary Curtis, Vice-President - Stores,
did not file an initial report of ownership after her election to
such office in October, 1996.
OFFICER COMPENSATION AND OTHER INFORMATION
Officers
The officers of the Company are as follows:
Name Principal
Position
Harold G. Powell Chairman of the Board of Directors
Rebecca Powell Casey Chief Executive Officer
H. Rainey Powell President and Chief Operating and
Financial Officer
Kenneth C. Row Executive Vice President
Janet F. Firth Vice President - Ladies Merchandise
Manager
Linda L. Daugherty Vice President and Controller
Jeffrey T. Morrell Vice President - Human Resources
Cary Curtis Vice President - Stores
The officers of the Company are elected by the Board of Directors
and serve as its discretion. The following is a brief
description of the business background of each of the officers
who are not also directors of the Company. For biographical
information concerning Harold G. Powell, Rebecca Powell Casey, H.
Rainey Powell, and Kenneth C. Row, see "Election of Directors -
Nominees."
Janet F. Firth has served as Vice President - Ladies Merchandise
Manager of the Company since 1987. Prior to that time Ms. Firth
was employed by the Company and its predecessors in various
managerial capacities since 1984.
Linda L. Daugherty has served as Vice President and Controller of
the Company since 1994. Prior to that time, Ms. Daugherty was
employed by the Company and its predecessors in various
managerial capacities since 1980.
Jeffrey T. Morrell has served as Vice President - Human Resources
of the Company since 1996. Mr. Morrell served as Vice-President
- - Stores from 1993 to 1996, and prior to that time was employed
in various managerial capacities since 1990.
Cary Curtis has served as Vice-President - Stores of the Company
since 1996.
Compensation
The following table sets forth information with respect to the
chief executive officer and the other four most highly
compensated executive officers of the Company and its
subsidiaries as to whom the total annual salary and bonuses for
fiscal 1997 exceeded $100,000 ("named executive officers").
Summary Compensation Table
Long-Term
Annual Compensatio
Compensation n
Securities
Name and Fiscal Underlying All Other
Principal Year Salary(1) Bonus Options Compensation
Position Ended (#)(2) (3)
Rebecca Powell 1997 $220,000 $90,000 16,275 $1,731
Casey 1996 220,000 90,000 - 1,990
Chief 1995 180,000 70,000 52,315 1,416
Executive Officer
Harold G. Powell 1997 $180,000 $40,000 11,550 $27,583
Chairman of 1996 180,000 40,000 - 27,120
the Board 1995 180,000 29,000 50,188 26,110
H. Rainey Powell 1997 $160,000 $65,000 11,813 $2,834
President, Chief 1996 160,000 65,000 - 2,855
Operating Officer 1995 140,000 48,000 41,204 1,898
and Secretary
Kenneth C. Row 1997 $135,000 $25,000 7,613 $954
Executive Vice 1996 125,000 24,000(4) - 719
President 1995 100,000 26,000(4) 29,160 752
Janet F. Firth 1997 $100,000 $10,000 - $3,305
Vice President - 1996 91,500 17,000(4) - 2,949
Ladies' 1995 83,500 11,000 21,393 2,249
Merchandise
Manager
(1) Personal benefits provided by the Company to each of the
named executive officers do not exceed 10% of total annual salary
and bonus reported for the named executive officer and are not
included in this total.
(2) Reflects adjustments made to the number of securities
underlying the options pursuant to the antidilution provisions of
the applicable option agreements as a result of a five percent
and a ten percent stock dividend paid by the Company subsequent
to the date of grant of the options.
(3) Includes contributions made by the Company to the Tax Savings
Retirement Thrift Plan and Employee Stock Purchase Plan on behalf
of the named executive officer and deferred compensation of
$25,000 per year payable to Harold G. Powell
(4) Includes bonus awards of Common Stock granted to the named
executive officer pursuant to the Company's 1993 Performance and
Equity Incentive Plan. The stock bonuses paid to Kenneth C. Row
in fiscal 1995, 1996 and 1997 consisted of shares having a market
value on the date of the award of $2,000, $4,000, and $6,000,
respectively. The stock bonus paid to Janet F. Firth during
fiscal 1996 and 1997 consisted of shares having a market value on
the date of the award of $3,000 and $4,000, respectively.
Option Grants In Fiscal 1997
The following table provides information with respect to the
named executive officers who received grants of options in fiscal
1997.
Individual Option Grants In Last Fiscal Year (1)
Number
of Percent Potential
Securit of Realizable Value
ies Total at
Name Underly Options Exercise Expiration Assumed Annual
ing Granted Price Date Rates of
Options to Stock Price
Granted Employe Appreciation
(#)(2) es in for Option Term
Fiscal (3)
year
1997
5% 10%
Harold G. 11,550 19.82% $17.5480 April 29, $97,436 $275,205
Powell 2006
Rebecca P. 582 1.00% 15.9530 April 29,
Casey 2006 5,838 14,795
15,693 26.93% 17.5480 April 29,
2006 132,387 373,922
H. Rainey 11,813 20.27% 17.5480 April 29,
Powell 2006 99,655 281,472
Kenneth C. 7,613 13.06% 15.9530 April 29,
Row 2006 76,366 193,540
(1) Except for Incentive Stock Options granted to employees who
are deemed to own 10% or more of the Company's Common Stock
(Harold G. Powell, Rebecca P. Casey and H. Rainey Powell own more
than 10% directly or by attribution) all options have an exercise
price of $15.9530 (closing price on date of grant), a ten-year
term, and become vested and exercisable in annual installments of
10% of the total number of shares covered by the option,
beginning on the grant date, and on each annual anniversary date
of the grant date, an additional 10% of the shares will vest and
become exercisable. In the case of grantees who are deemed to
own 10% or more of the Company's Common Stock, under the terms of
the 1993 Plan, any Incentive Stock Option granted to such grantee
will have an exercise price of $17.548 per share (110% of the
closing price on date of grant). In addition, such options will
have a ten-year period with the options becoming vested and
exercisable beginning on the grant date in installments at the
annual rate of 10% of the total number of shares covered by the
Incentive Stock Options, and on each annual anniversary date of
the grant date an additional 10% of the shares will vest and
become exercisable.
(2) The options granted to Harold G. Powell, Rebecca P. Casey
and H. Rainey Powell reflect the information contained in
footnote (1) above.
(3) These amounts are calculated based on certain assumed
rates of appreciation and annual compounding from the date of
grant to the end of the option term. Actual gains, if any, on
stock option exercises and common stockholdings are dependent on
the future performance of the common stock and overall stock
market condition. There can be no assurance that the amounts
reflected in this table will be achieved.
The following table provides information with respect to the
named executive officers concerning the exercise of options
during fiscal 1997 and unexercised options held as of February 1,
1997.
Option Exercises And Year-End Valuation Table
Shares Number of Securities Value of Unexercised
Acquire Value Underlying Unexercised In-The-Money Options
Name d on Realize Options at Fiscal Year- At
Exercis d ($) End(#) Fiscal Year End ($)
e (#)
Exercisab Unexercisab Exercisab Unexercisa
le le le ble
Rebecca P. - - 34,565 34,025 $123,620 $82,419
Casey
Harold G. - - 32,422 29,316 118,596 79,068
Powell
H. Rainey - - 27,084 25,933 97,367 64,914
Powell
Kenneth C. - - 11,587 26,467 46,415 88,452
Row
Janet F. - - 7,752 14,976 36,374 65,010
Firth
Employment Agreements
The Company has an employment agreement with Harold G. Powell,
the Chairman of the Board of the Company, which continues until
January 31, 1998. Pursuant to this agreement, Mr. Powell is paid
an annual salary of $180,000 plus a performance bonus in an
annual amount to be determined by the Compensation Committee
after the results of operations covered by the employment
contract have been calculated and deferred annual compensation of
$25,000. Subject to certain terms, at the end of the agreement,
Mr. Powell's employment will be converted to that of part-time
consultant for a period of ten years at an annual salary of
$50,000.
The Company also has employment agreements with Rebecca Powell
Casey, the Chief Executive Officer of the Company, and H. Rainey
Powell, the President and Chief Operating and Financial Officer
of the Company, which terminate on January 31, 1998. Rebecca
Powell Casey's agreement provides annual compensation of $220,000
plus an annual performance bonus. H. Rainey Powell's provides
for annual compensation of $160,000 plus an annual performance
bonus. Neither of these contracts provide for deferred
compensation or part-time consultant positions after the
termination dates of such contracts.
Compensation Committee Interlocks and Insider Participation
During fiscal 1997, the Compensation Committee of the Board of
Directors was composed of four non-employee directors, James R.
Agar, Robert B. Cullum, Jr., Gary C. Rawlinson and William F.
Weitzel. Mr. Rawlinson resigned from the Committee in September,
1996. None of the members of the Compensation Committee have
ever been an officer of the Company or its subsidiaries. During
fiscal 1997, none of the Company's executive officers served as a
director or member of the compensation committee of another
entity in which any member of the Company's Compensation
Committee or any other director of the Company was an executive
officer.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the
"Committee") establishes the general compensation policies of the
Company, including specific compensation levels for the Company's
executive officers, and administers the Company's 1993
Performance and Equity Incentive Plan and other employee
incentive plans. The components of the Company's executive
officer compensation program and the basis on which fiscal 1997
compensation determinations were made by the Compensation
Committee with respect to the executive officers of the Company,
including the named executive officers, are discussed below.
The Compensation Committee generally believes that the total cash
compensation of its executive officers should be similar to the
total cash compensation of similarly-situated executives of peer
group public companies within the apparel and accessories stores
industry. Further, a significant portion of the complete
compensation package should be tied to the Company's success in
achieving profit, cash flow, and Company growth.
A competitive base salary is considered vital to support the
continuity of management. The Compensation Committee has
established the base salaries of the Company's executive officers
based in part on a survey of executive compensation paid by local
and national retail companies. This survey was compiled for the
Compensation Committee by The Wyatt Company and others in fiscal
1995. The Compensation Committee also considers the experience,
capability and overall performance of the each executive officer,
as well as the competitive marketplace for executive talent in,
establishing base salaries.
The Compensation Committee's objective of establishing levels of
executive compensation designed to motivate, reward and retain
creative management talent was furthered during fiscal 1997
primarily through a combination of basic salary and cash bonus
payments. During fiscal 1997, certain executive officers
received an increase in their base salary, increases ranging from
approximately 8% to 9% of base salary for the previous fiscal
year. The executive officers received cash bonuses during fiscal
1997 based on discretionary allocations by the Compensation
Committee of cash bonuses to the executive officers from a bonus
pool. The size of the bonus pool was established with reference
to a formula approved by the Compensation Committee that takes
into account, among other factors, the Company's stockholders'
equity and net earnings before taxes during the fiscal year.
Company's management made recommendations concerning the
allocation of bonuses from the pool to the executive officers and
other employees. The Compensation Committee considered such
recommendations and established the actual bonus awards based on
the Compensation Committee's subjective views on the level of
profitability achieved by the Company during the fiscal year as
well as its subjective determination of each individual executive
officer's contribution to the Company's performance and
profitability. During fiscal 1997, the executive officers
received cash bonuses in the aggregate amount of $242,000,
including a bonus of $90,000 paid to the Company's chief
executive officer. Aggregate bonuses to executive officers for
fiscal 1997 and fiscal 1996 approximated 4% and 5%, respectively,
of the Company's net earnings before taxes during each of such
years.
As discussed elsewhere herein, the Company has employment
agreements with its three primary executive officers, Harold G.
Powell, Rebecca Powell Casey and H. Rainey Powell. These
agreements were entered into effective as of the beginning of
fiscal 1996 and establish their base salaries as constant through
the duration of the agreements which terminate on January 31,
1998. The base salary of the other named executive officers was
established based primarily upon analysis of the surveys
described above and the Company's historical profitability. The
Company believes that the officers' cash bonuses should be tied
to the Company's success in achieving near-term results. Cash
bonuses are based on a bonus pool determined by the Compensation
Committee. The Compensation Committee's primary goal is to tie
bonus awards to the performance of the Company.
The Committee intends to reward long-term strategic management
practices and enhancement of shareholder value through the award
of stock options and other stock based awards under the Company's
1993 Performance and Equity Incentive Plan. The objective of
equity based compensation is to more closely align the interest
of the executive officers with those of the shareholders. The
ultimate value of the awards will depend on the continual success
of the Company, thereby creating a continuing incentive for
executive officers to perform long after the initial grant. No
stock options were awarded to executive officers during fiscal
1997. However, the Compensation Committee believes that total
executive compensation in future years will include equity-based
incentive compensation, such as stock options and stock bonuses.
We believe that the Company has an appropriate compensation
structure which properly rewards and motivates its executive
officers to build stockholder value.
William F. Weitzel, Chairman
James R. Agar
Robert B. Cullum, Jr.
Shareholder Return Performance Graph
The following graph presented in accordance with the requirements
of the Securities and Exchange Commission shows the cumulative
total stockholder return on the Company's Common Stock over the
last five fiscal years as compared to the returns of the American
Stock Exchange Market Value Index (the "Broad Market Index") and
the peer group selected by the Company (the "Peer Group"). This
peer group includes The Gap, Inc., The Limited, Inc., Merry-Go-
Round and other apparel and accessories stores.
The graph assumes an investment of $100 at the beginning of the
five-year period on February 2, 1992. No reinvestments of
dividends is shown because the Company has never paid cash
dividends.
Fiscal Year Ending
Company 1992 1993 1994 1995 1996 1997
Harold's Stores 100 157.96 177.71 236.95 287.41 323.69
Inc.
Industry Index 100 95.50 81.66 65.88 67.89 87.24
Broad Market 100 98.21 117.27 102.35 131.19 141.19
RELATED PARTY TRANSACTIONS
The Company leases its Norman, Oklahoma store and certain related
facilities from a corporation, the shareholders of which consist
of Harold G. Powell and his spouse. The lease has a term of 12
years ending on April 30, 2008 and provides for annual rental
equal to 4% of gross sales with no fixed minimum rental, plus
utilities and certain property taxes. Prior to May 1, 1996, the
Company leased these facilities under several related leases from
a corporation, the shareholders of which include the wife of
Harold G. Powell, and from certain trusts, the beneficiaries of
which are Mr. Powell, his children and other members of his
family. These prior leases were restructured effective May 1,
1996 following the death of the mother of Harold G. Powell into
the master lease described above. The prior leases contained
"percentage rent" provisions similar to the provision described
above in connection with the current master lease, and the
restructuring did not result in any increase in the percentage of
gross sales payable by the Company as rent. During fiscal 1997,
the Company made aggregate rental payments of approximately
$137,000, pursuant to the prior leases and the master lease.
The Company leases certain office space, a distribution center
facility and retail space from a limited partnership whose
partners are stockholders and directors of the Company. The term
of the office space lease is sixteen years commencing April 1,
1996, with annual rent payments of $158,000 plus insurance,
utilities, and property taxes until April, 2000, at which time
the rent will be $180,000 plus insurance, utilities and property
taxes, increasing $2,500 each year thereafter. The term of the
distribution center lease is sixteen years commencing July 1,
1996 with annual rental payments of $338,438 plus insurance,
utilities and property taxes until July, 2001, at which time the
annual rent will increase annually on a fixed scale up to a
maximum of $419,951 during the final year of the lease. The term
of the retail space lease is twelve years commencing June 4,
1996, with payment of percentage rent equal to four percent of
sales plus insurance, utilities, and property taxes.
In the opinion of management, the terms of the lease agreements
are fair and reasonable and at least as favorable to the Company
as would be reasonably expected from an unrelated third party
operating properties of equal quality in similar locations at the
time of their execution. The above lease agreements were
approved by the Special Real Estate Committee, comprised of three
outside directors, and the Board of Directors of the Company
prior to the execution of such leases.
Michael T. Casey, a director of the Company, provided real estate
consulting services to the Company during fiscal 1997 for which
he was paid $56,500. These consulting services included the
evaluation of prospective new retail store locations and lease
negotiations.
VOTING
The election of each director at the Annual Meeting will be by
plurality vote. Any other matters properly brought before the
Annual Meeting will be decided by a majority of the votes cast on
the matter, unless otherwise required by law.
The office of the Company's Secretary appoints an inspector of
election to tabulate all votes and to certify the results of all
matters voted upon at the Annual Meeting. Neither the corporate
law of the State of Oklahoma, the state in which the Company is
incorporated, nor the Company's Certificate of Incorporation or
Bylaws, have any specific provisions regarding the treatment of
abstentions and broker non-votes. It is the Company's policy to
count abstentions or broker non-votes for the purpose of
determining the presence of a quorum at the meeting. Abstentions
will be treated as shares represented at the Annual Meeting for
determining results on actions requiring a majority vote but will
not be considered in determining results of plurality votes.
Shares represented by proxies returned by brokers where the
broker's discretionary authority is limited by stock exchange
rules will be treated as represented at the Annual Meeting only
as to such matter or matters voted on in the proxy. Shares
represented by limited proxies will be treated as represented at
the meeting only as to such matter or matters for which authority
is granted in the limited proxy.
Because directors are elected by a plurality vote rather than a
majority of the shares entitled to vote or a majority of the
shares present in person or represented by proxy at the Annual
Meeting, proxies marked "withhold authority" with respect to any
one or more nominees will not affect the outcome of the nominee's
election unless the nominee receives no affirmative votes or
unless other candidates are nominated for election as directors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors, as recommended by the Audit Committee,
has selected KPMG Peat Marwick LLP to serve as the Company's
independent certified public accountants for the fiscal year
ending February 1, 1998. It has been the auditors of the
accounts of the Company since 1987. Representatives of KPMG Peat
Marwick LLP are expected to be present at the Annual Meeting,
with the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
PROPOSALS OF SHAREHOLDERS
The Board of Directors will consider proposals of shareholders
intended to be presented for action at the Annual Meeting of
Shareholders. According to the rules of the Securities and
Exchange Commission, such proposals shall be included in the
Company's Proxy Statement if they are received in a timely manner
and if certain requirements are met. For a shareholder proposal
to be included in the Company's Proxy Statement relating to the
1998 Annual Shareholders' Meeting, a written proposal complying
with the requirements established by the Securities and Exchange
Commission must be received at the Company's principal executive
offices located at 765 Asp, Norman, Oklahoma 73069 no later than
January 29, 1998.
OTHER MATTERS
The Company does not know of any matters to be presented for
action at the meeting other than those listed in the Notice of
Meeting and referred to herein. If any other matters properly
come before the Annual Meeting, it is intended that the proxy
solicited hereby will be voted in accordance with the
recommendation of the Board of Directors.
Copies of the Annual Report of Harold's Stores, Inc. to the
Securities and Exchange Commission on Form 10-K may be obtained,
without charge to shareholders, by writing Harold's Stores, Inc.,
Shareholder Relations, Post Office Box 2970, Norman, Oklahoma
73070-2970.
PROXY HAROLD'S STORES, INC.
765 Asp Avenue, Norman, Oklahoma 73069
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF HAROLD'S STORES, INC.
The undersigned hereby appoints H. Rainey Powell and Linda
Daugherty, or any one of them, each with the power to appoint his
or her substitute, as proxies, and hereby appoints and authorizes
them to represent and vote as designated below, all the shares of
Common Stock, held of record by the undersigned on April 29,
1997, at the Annual Meeting of Shareholders of Harold's Stores,
Inc. (the "Company") to be held in the Presidents' Room of the
University of Oklahoma Memorial Student Union in Norman, Oklahoma
at 2:00 p.m. on Friday, June 20, 1997, and at any adjournment
thereof.
1. ELECTION OF DIRECTORS
________FOR all nominees listed below
_____WITHHOLD AUTHORITY
(except for the Nominee(s) lined out below)
to vote for all nominees below
Harold G. Powell, Michael T. Casey, Rebecca Powell Casey, H.
Rainey Powell, Gary C. Rawlinson, Lisa Powell Hunt, James R.
Agar, William F. Weitzel, Kenneth C. Row, Robert B. Cullum, Jr.,
W. Howard Lester
2. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting or
any adjournment thereof.
IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS
PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF THE
BOARD OF DIRECTORS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED IN ITEM 1 AND FOR THE PROPOSAL DESCRIBED
IN ITEM
2.
Please sign exactly as name appears below. When shares are held
as joint tenants, both should sign. When signing as attorney, as
executor, administrator, trustee, or guardian, please give full
titles as such. If a corporation, please sign full corporate
name by President or other authorized officer. If a partnership,
please sign partnership name by authorized person.
Date:__________________________, 1997
___________________________Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
