18
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)1) 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 1998
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 1998
Annual Meeting of Shareholders. The meeting will be held in the
Presidents' Room, third floor north of the University of
Oklahoma, Oklahoma Memorial Union in Norman, Oklahoma, beginning
at 2:00 p.m., local time, on Friday, June 26, 1998. A copy of
our Annual Report to Shareholders for the fiscal year ended
January 31, 1998 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,
Rebecca P. Casey
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 26, 1998
TO OUR SHAREHOLDERS:
The 1998 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 26, 1998, 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 30, 1998 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, 1998
HAROLD'S STORES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 26, 1998
The following information is furnished in connection with the
1998 Annual Meeting of Shareholders of Harold's Stores, Inc., an
Oklahoma Corporation, (the "Company") which will be held on
Friday, June 26, 1998, 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 29,1998 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 30, 1998. On that date, the Company
had 6,054,226 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 January 31, 1998 ("fiscal 1998"), 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
30, 1998 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 288,356 (2)(3) 4.7%
Rebecca Powell Casey 817,067 (3)(4)(5) 13.4%
4525 McKinney, Dallas TX 75205
H. Rainey Powell 509,814 (3)(6) 8.4%
765 Asp., Norman, OK 73609
Kenneth C. Row 24,461 (3) *
Janet F. Firth 14,322 (3) *
James R. Agar 15,339 (3) *
Michael T. Casey 371,870 (3)(4)(7) 6.1%
4525 McKinney, Dallas ,TX 75205
Robert B. Cullum, Jr. 12,327 (3) *
Lisa Powell Hunt 395,191 (3)(8) 6.5%
3940 Marquette, Dallas, TX 75225
W. Howard Lester 8,438 (3) *
Gary C. Rawlinson 14,210 (3) *
William F. Weitzel 13,651 (3) *
All directors and Executive Officers 2,507,373 (9) 39.7%
as a Group (17 persons)
Other Beneficial Owners Of More than
5% of the Common Stock;
The Security National Bank and Trust 492,795 (10) 8.1%
Company of Norman,
as Trustee
200 East Main, Norman, OK 73069
Inter-Him N.V. 418,878 6.9%
Prof. Kernkampweg 8a, Post Office
Box 3361
Curacao, Netherlands Antilles
Laifer Capital Management, Inc. 513,541 8.5%
Hilltop Partners, L.P.
45 West 45th Street
New York, NY 10036
SAFECO Asset Management Company 712,771 11.8%
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 90,298 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 402,497 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) Includes shares that 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 - 51,534; Rebecca
Powell Casey - 56,052; H. Rainey Powell - 44,152; Kenneth C. Row
- - 19,577; Janet F. Firth - 11,436; James R. Agar - 8,438; Michael
T. Casey - 8,438; Robert B. Cullum, Jr. - 8,438; Lisa Powell Hunt
- - 8,438; W. Howard Lester - 8,438; Gary C. Rawlinson - 8,438; and
William F. Weitzel - 8,103.
(4) 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.
(5) Included in this amount are 105,123 shares which are held by
Ms. Casey as custodian for the benefit of her minor children.
(6) Included in this amount are 72,182 shares which are held by
Mr. Rainey Powell as custodian for the benefit of his minor
children. Not included are 66,875 shares of Common Stock held by
Mr. Rainey Powell's wife, over which Mr. Rainey Powell disclaims
beneficial ownership.
(7) Included in this amount are 42,000 shares held by Michael T.
Casey as Trustee of the H. Rainey and Mary U. Powell Family 1997
Irrevocable Trust Agreement.
(8) Included in this amount are 85,656 shares which are held by
Ms. Hunt as custodian for the benefit of her minor children. Not
included are 35,041 shares of Common Stock held by Ms. Hunt's
husband, over which Ms. Hunt disclaims beneficial ownership.
(9) Includes 257,713 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, 90,298 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
1998, all directors attended at least 75% of the meetings of the
Board of Directors and the committees on which they served, other
than W. Howard Lester, who due to illness only attended 25% of
the meetings. 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 74 1987
Rebecca Powell Casey 46 1987
H. Rainey Powell 44 1987
Kenneth C. Row 33 1993
James R. Agar 66 1987
Michael T. Casey 49 1988
Robert B. Cullum, Jr. 49 1993
Lisa Powell Hunt 42 1987
W. Howard Lester 62 1995
Gary C. Rawlinson 56 1987
William F. Weitzel, 61 1989
Ph.D.
The following is certain biographical information relating to
each nominee-director:
Harold G. Powell founded the Company in 1948 and was named
Chairman Emeritus in 1998. Mr. Powell was Chairman of the Board
since its reorganization in 1987 and 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 Chairman of the Board in 1998
and has been Chief Executive Officer of the Company since 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 was appointed President and Chief Operating
Officer in 1992. Mr. Powell has previously served as Chief
Financial Officer. 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 owned bank, since 1989,
and is President of Casey Bancorp, Inc., a privately owned 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 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., a retailer of specialty cooking equipment
and home furnishings and accessories 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 and Compensation Committees.
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 WISE Corporation,
a management consulting organization. Mr. Weitzel serves as
Chairman of the Compensation Committee and the Strategic Planning
and Compensation Committees, 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. The Strategic Planning and
Special Real Estate Committees are comprised of three outside
directors while the Audit and Compensation Committees are
comprised of four 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 1998.
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 twice during fiscal
1998.
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 1998.
The Special Real Estate Committee's functions include the review
and analysis of any related party real estate leasing or purchase
transactions. The Special Real Estate Committee met twice during
fiscal 1998.
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 meeting 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, 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 1998, to the Company's
knowledge all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners during
fiscal 1998 were complied with on a timely basis, except H.
Rainey Powell was inadvertently late in filing one report with
respect to one transaction; Curtis Elliott, Vice-President,
Director of Planning and General Merchandise Manager and Henry F.
James, Vice-President, Men's Merchandise were inadvertently late
in filing initial reports of ownership after election to such
offices.
OFFICER COMPENSATION AND OTHER INFORMATION
Officers
The officers of the Company are as follows:
Name Principal
Position
Harold G. Powell Chairman Emeritus
Rebecca Powell Casey Chairman of the Board and Chief
Executive Officer
H. Rainey Powell President and Chief Operating
Officer
Kenneth C. Row Executive Vice President
Jodi L. Taylor Chief Financial Officer
Linda L. Daugherty Vice President and Controller
Curtis E. Elliott Vice President - Planning and
Merchandise
Janet F. Firth Vice President - Ladies
Merchandise
Henry F. James Vice President - Men's Merchandise
Jeffrey T. Morrell Vice President - Human Resources
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."
Jodi L. Taylor was appointed as Chief Financial Officer in March
1998. Prior to that time, she served as Chief Financial Officer,
Secretary and Treasurer of Baby Superstore, Inc. In 1997, Baby
Superstore was acquired by Toys "R" Us, Inc., and Ms. Taylor
remained as an executive involved with the merger and transition
until joining Harold's Stores, Inc. in 1998. Ms. Taylor is a CPA
who worked for Deloitte Haskins and Sells (now Deloitte & Touche)
for 2 1/2 years, before joining Baby Superstore in 1986.
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.
Curtis E. Elliott has served as Vice President - Planning and
Merchandise since 1997. Prior to that time, he worked for
Comshare Retail, Incorporated as Project Manager and Senior
Retail Consultant before joining Charming Shoppes, Inc. as the
Division Director of Planning for the Men's and Kids Division in
1995.
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.
Henry F. James has served as Vice President - Men's Division
since 1997. Mr. James served as Men's Merchandise Manager from
1996 to 1997, and prior to that time was a sportswear buyer since
1992.
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.
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 1998 exceeded $100,000 ("named executive officers").
Summary Compensation Table
Long-Term
Annual Compensation Compensati
on
Securities
Name and Fiscal Underlying All Other
Principal Year Salary(1) Bonus(2) Options Compensation
Position Ended (#)(3) (4)
Rebecca Powell 1998 $220,000 $0 10,500 $2,462
Casey 1997 220,000 70,000 17,089 1,731
Chief Executive 1996 220,000 90,000 - 1,990
Officer
Harold G. Powell 1998 $180,000 $0 10,500 $27,375
Chairman of the 1997 180,000 29,000 12,128 27,583
Board 1996 180,000 40,000 - 27,120
H. Rainey Powell 1998 $160,000 $0 10,500 $2,375
President, Chief 1997 160,000 48,000 12,404 2,834
Operating Officer 1996 160,000 65,000 - 2,855
and Secretary
Kenneth C. Row 1998 $145,000 $6,000(5) 5,775 $779
Executive Vice 1997 135,000 31,000(5) 7,994 954
President 1996 125,000 25,000 - 719
Janet F. Firth 1998 $110,000 $2,000(5) 5,250 $3,299
Vice President - 1997 $100,000 12,000(5) - 3,305
Ladies' 1996 91,500 10,000 - 2,949
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) The bonus compensation earned is based upon the results of
operations of the Company during the fiscal year.
(3) 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 and ten
percent stock dividends paid by the Company subsequent to the
date of grant of the options.
(4) 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.
(5) 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 1996, 1997 and 1998 consisted of shares having a market
value on the date of the award of $4,000, $6,000, and $6,000,
respectively. The stock bonus paid to Janet F. Firth during
fiscal 1996, 1997 and 1998 consisted of shares having a market
value on the date of the award of $3,000, $4,000, and $2,000,
respectively.
Option Grants In Fiscal 1998
The following table provides information with respect to the
named executive officers who received grants of options in
fiscal 1998.
Individual Option Grants In Last Fiscal Year (1)
Percent
of Total
Options Potential
Number Granted Realizable Value
of to at
Securities Employees Assumed Annual
Underlying in Rates of Stock
Options Fiscal Exercise Expiration Price
Name Granted(#) year 1998 Price Date Appreciation
for Option Term(2)
5% 10%
Harold G. 10,500 11.11% $9.048 May 15, $ 59,747 $151,411
Powell 2007
Rebecca P. 10,500 11.11% 9.048 May 15, 59,747 151,411
Casey 2007
H. Rainey 10,500 11.11% 9.048 May 15, 59,747 151,411
Powell 2007
Kenneth C. 5,775 6.11% 9.048 May 15, 32,860 83,276
Row 2007
Janet F. 5,250 5.56% 9.048 May 15, 29,873 75,705
Firth 2007
(1) All options granted to the named executive officers during
fiscal 1998 are non-qualified with an exercise price of $9.048
(closing price on date of grant), a ten-year term, and become
vested and exercisable in annual installments of 20% of the
total number of shares covered by the option, beginning on the
grant date, and on each annual anniversary date of the grant
date, an additional 20% of the shares will vest and become
exercisable.
(2) These amounts are calculated based on certain assumed
rates of appreciation and annual compounding from the date of
grant to the end of the option term. Actual gains, if any, on
stock option exercises and common stockholdings are dependent on
the future performance of the common stock and overall stock
market condition. There can be no assurance that the amounts
reflected in this table will be achieved.
The following table provides information with respect to the
named executive officers concerning the exercise of options
during fiscal 1998 and unexercised options held as of January 31,
1998.
Option Exercises And Year-End Valuation Table
Shares
Acquired Number of Securities
on Value Underlying Unexercised Value of Unexercised
Exercise Realized Options at Fiscal In-The-Money Options At
Name (#) ($) Year End(#) Fiscal Year End ($)
Exercisable Unexercisable Exercisable Unexercisable
Rebecca - - 52,716 29,804 $ 0 $ 0
P. Casey
Harold - - 49,109 26,217 0 0
G.
Powell
H. - - 41,671 24,497 0 0
Rainey
Powell
Kenneth - - 17,978 27,755 584 0
C. Row
Janet F. - - 11,436 17,679 584 0
Firth
Employment Agreements
The Company has an employment agreement with Harold G. Powell,
Chairman Emeritus of the Company, which continues until January
31, 1999. Pursuant to this agreement, Mr. Powell is paid an
annual salary of $125,000, deferred annual compensation of
$25,000 and 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. 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 Officer of the Company.
These agreements were entered into effective as of the beginning
of fiscal 1999 and establish their base salaries as constant
through the duration of the agreements which terminate on January
31, 2003. Rebecca Powell Casey's agreement provides annual
compensation of $220,000 plus an annual performance bonus. H.
Rainey Powell's agreement provides for annual compensation of
$180,000 plus an annual performance bonus. The annual
performance bonus is determined by the Compensation Committee
after the results of operations covered by the employment
contract have been calculated. 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 1998, 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. None of the members of the Compensation Committee have
ever been an officer of the Company or its subsidiaries. During
fiscal 1998, 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 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 1998 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.
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. 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 Compensation Committee's objective of establishing levels of
executive compensation designed to motivate, reward and retain
creative management talent was furthered during fiscal 1998
primarily through a combination of basic salary and cash bonus
payments. During fiscal 1999, 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. As a result of the Company's profitability for fiscal
1998, the executive officers including the Company's Chairman of
the Board, Chief Executive Officer, and President did not receive
cash bonuses. Aggregate bonuses to executive officers for fiscal
1997 and fiscal 1996 approximated 3% and 5% respectively of the
Company's net earnings before taxes during each of such years.
The Compensation 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. 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.
Gary C. Rawlinson
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 MG Industry Group Index -Apparel and Accessories Stores ("the
Industry Index"). The Industry Index includes The Gap, Inc., The
Limited, Inc., Talbot's and other apparel and accessories stores.
The graph assumes an investment of $100 at the beginning of the
five-year period on January 29, 1993, and that any dividends were
invested.
Fiscal Year Ending
Company 1993 1994 1995 1996 1997 1998
Harold's 100.00 112.50 150.00 181.95 204.91 106.59
Stores Inc.
Industry Index 100.00 85.51 68.99 71.09 91.36 142.36
Broad Market 100.00 119.40 104.21 133.57 143.76 163.98
RELATED PARTY TRANSACTIONS
The Company leases its original 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 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 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 1998,
the Company made aggregate rental payments of approximately
$131,000, pursuant to the prior leases and the master lease.
The Company leases certain Dallas, Texas office space, a Norman,
Oklahoma distribution center facility and retail space (Norman
Outlet) from a limited partnership whose partners are
stockholders and directors of the Company. The term of the
Dallas, Texas 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, and amended December 30, 1997 with a
retroactive date of January 1, 1997, with annual rental payments
of $84,106 plus percentage rent equal to four percent of sales
plus insurance, utilities, and property taxes.
The limited partnership also owns a 50,000 square foot facility
in Dallas, Texas. The Company is currently negotiating with the
limited partnership to lease the facility for anticipated
occupancy in the second half of fiscal 1999. The Company intends
to use approximately 31,000 square feet as a new Dallas buying
office with the remainder to be utilized for storage and
expansion. The present Dallas Buying Office will either be
subleased or sold. The Company is currently engaged in
negotiations with a potential sublessee but there is no assurance
that a sublease will be consummated on terms favorable to the
Company.
In the opinion of management, the terms of these 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. These 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 1998 for which
he was paid $67,500.00. 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 January 30, 1999. 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
1999 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, 1999.
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 Drawer 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 L.
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 30,
1998, 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 Union in Norman, Oklahoma at
2:00 p.m. on Friday, June 26, 1998, 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, Rebecca Powell Casey, H. Rainey Powell, Kenneth
C. Row, James R. Agar,
Michael T. Casey, Robert B. Cullum, Jr., Lisa Powell Hunt, W.
Howard Lester, Gary C. Rawlinson, William F. Weitzel
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.
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. If a limited liability
company please sign name by authorized person.
Date:__________________________, 1998
___________________________Signature
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
