<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [ ] 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 sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
THE NEIMAN MARCUS GROUP
(Name of Registrant as Specified In Its Charter)
ERIC P. GELLER
The Neiman Marcus Group, Inc.
27 Boylston Street
Chestnut Hill, MA 02167
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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:
- --------------------------------------------------------------------------------
<PAGE> 2
[LOGO] The Neiman Marcus Group, Inc.
27 Boylston Street
P.O. Box 9187
Chestnut Hill, MA 02167
(617) 232-0760
December 10, 1996
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 17, 1997
The Annual Meeting of Stockholders of The Neiman Marcus Group, Inc. will be
held at 10:00 a.m., Eastern Standard Time, on Friday, January 17, 1997, AT THE
FIRST NATIONAL BANK OF BOSTON, 100 FEDERAL STREET, BOSTON, MASSACHUSETTS, for
the following purposes:
1. To elect two Class III directors in accordance with the By-Laws of
the Company.
2. To consider and act on a proposal to approve the Company's 1997
Incentive Plan.
3. To consider and act on a proposal to ratify the appointment by the
Board of Directors of Deloitte & Touche LLP as the Company's independent
auditors for the current fiscal year.
4. To consider and act on a proposal submitted by a stockholder of
the Company concerning compensation disclosure.
5. To transact such other business as may properly come before the
meeting and any adjournments of the meeting.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
ERIC P. GELLER
Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE.
<PAGE> 3
[LOGO] The Neiman Marcus Group, Inc.
27 Boylston Street
P.O. Box 9187
Chestnut Hill, MA 02167
(617) 232-0760
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 17, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Neiman Marcus Group, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held at 10:00
a.m. on Friday, January 17, 1997, at THE FIRST NATIONAL BANK OF BOSTON, 100
FEDERAL STREET, BOSTON, MASSACHUSETTS, and at any adjournments thereof. All
shares will be voted in accordance with the instructions contained in the proxy,
but if the proxies which are signed and returned do not specify a vote on any
proposal, the proxies will be voted FOR the election of the nominees for
director named herein, FOR the proposal to approve the Company's 1997 Incentive
Plan, FOR the ratification of the appointment by the Board of Directors of
Deloitte & Touche LLP as the Company's independent auditors for the current
fiscal year and AGAINST the proposal submitted by a stockholder concerning
compensation disclosure. Any proxy may be revoked by a stockholder at any time
before it is exercised by providing written notice of revocation to the
Secretary of the Company (at the address set forth above), by executing a proxy
bearing a later date, or by voting in person at the Annual Meeting. The mailing
of this proxy statement and accompanying form of proxy is expected to commence
on or about December 10, 1996.
In addition to solicitations of proxies by mail, the Company's officers,
directors or employees may solicit proxies by telephone or personal
communication. All costs of soliciting proxies, including reimbursement of fees
of certain brokers, fiduciaries and nominees in obtaining voting instructions
from beneficial owners, will be borne by the Company.
Although stock transfer books will remain open, the Board of Directors has
fixed the close of business on December 6, 1996 as the record date for
determining the stockholders having the right to vote at the Annual Meeting. At
the close of business on December 6, 1996 there were 49,871,309 shares of Common
Stock outstanding and entitled to vote at the meeting. At the meeting, each
share of Common Stock is entitled to one vote. AS OF THE RECORD DATE, HARCOURT
GENERAL, INC. ("HARCOURT GENERAL") OWNED 26,429,502 SHARES OF COMMON STOCK,
REPRESENTING APPROXIMATELY 53.0% OF THE ISSUED AND OUTSTANDING SHARES OF COMMON
STOCK OF THE COMPANY.
Shares of Common Stock represented in person or by proxy at the Annual
Meeting (including abstentions and broker non-votes) will be tabulated by the
inspectors of election appointed for the meeting and will be counted in
determining that a quorum is present. Votes are counted using written ballots.
<PAGE> 4
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth information as of December 6, 1996 with
respect to the beneficial ownership of the Common Stock of the Company by (i)
each person known to the Company to own beneficially more than 5% of the
outstanding shares of Common Stock; (ii) each executive officer named in the
Summary Compensation Table; (iii) each director and nominee for director of the
Company; and (iv) all current directors and executive officers of the Company as
a group.
<CAPTION>
NAME OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES OWNED(1) COMMON STOCK
---------------- --------------- ------------
<S> <C> <C>
Harcourt General, Inc.(2).................... 26,429,502 53.0%
27 Boylston Street
Chestnut Hill, MA 02167
Gabelli Funds, Inc.(3)....................... 5,391,800 10.8%
One Corporate Center
Rye, NY 10580
Burton M. Tansky(4).......................... 70,900 *
Gerald A. Sampson(5)......................... 29,106 *
Stephen Elkin(6)............................. 77,559 *
Dawn Mello(7)................................ 8,000 *
Bernie Feiwus(8)............................. 29,784 *
Matina S. Horner............................. -- --
Walter J. Salmon............................. 8,942 *
Vincent M. O'Reilly.......................... -- --
Jean Head Sisco.............................. 1,134 *
Richard A. Smith(9).......................... -- --
Robert J. Tarr, Jr.(9)....................... -- --
All current executive officers and directors
as a group (19 persons)(10)................ 225,425 *
<FN>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated in the following footnotes, each stockholder
referred to above has sole voting and investment power with respect to the
shares listed.
(2) Richard A. Smith, Chairman of the Board of Directors of the Company and of
Harcourt General, his sister, Nancy L. Marks, and certain members of their
families may be regarded as controlling persons of Harcourt General, and
therefore of the Company. The shares of Harcourt General Class B Stock and
Harcourt General Common Stock beneficially owned by or for the benefit of
the Smith family constitute approximately 28% of the aggregate number of
outstanding equity securities of Harcourt General. Each share of Harcourt
General voting stock is entitled to one vote on all matters submitted to
Harcourt General's stockholders, except that each share of the Harcourt
General Class B Stock (virtually all of which is owned by the Smith family)
is entitled to ten votes on the election of directors at any Harcourt
General stockholders' meeting under certain circumstances. Accordingly, as
to any elections in which the Harcourt General Class B Stock would carry
ten votes per share at a Harcourt General stockholders' meeting, the Smith
family would have approximately 80% of the combined voting power of the
Harcourt General voting securities.
</TABLE>
2
<PAGE> 5
Under the definition of "beneficial ownership" in Rule 13d-3 of the Rules
and Regulations promulgated under the Securities Exchange Act of 1934, the
Smith family and the members of Harcourt General's Board of Directors may
be deemed to be the beneficial owners of the securities of the Company
beneficially owned by Harcourt General in that they may be deemed to share
with Harcourt General the power to direct the voting and/or disposition of
such securities. However, this information should not be deemed to
constitute an admission that any such person or group of persons is the
beneficial owner of such securities.
(3) The information reported is based on a Schedule 13D dated July 10, 1995
filed with the Securities and Exchange Commission (the "Commission") by the
Gabelli Funds, Inc. and its affiliates (collectively, the "Gabelli
Affiliates"). The Gabelli Affiliates have sole voting power with respect to
5,115,900 shares and sole dispositive power with respect to all of the
shares shown in the table.
(4) Includes 60,900 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of December 6, 1996. Also includes 8,000
shares of restricted stock over which Mr. Tansky has voting but not
dispositive power.
(5) Includes 8,400 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of December 6, 1996. Also includes 3,000
shares of restricted stock over which Mr. Sampson has voting but not
dispositive power.
(6) Includes 54,350 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of December 6, 1996. Also includes 6,000
shares of restricted stock over which Mr. Elkin has voting but not
dispositive power.
(7) Includes 4,500 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of December 6, 1996. Also includes 2,800
shares of restricted stock over which Ms. Mello has voting but not
dispositive power.
(8) Includes 6,500 shares of Common Stock which are subject to outstanding
options exercisable within 60 days of December 6, 1996. Also includes 4,000
shares of restricted stock over which Mr. Feiwus has voting but not
dispositive power.
(9) The members of the Board of Directors of Harcourt General, including
Messrs. Smith and Tarr, may be deemed to be the beneficial owners of the
securities of the Company owned by Harcourt General. However, this
information should not be deemed to be an admission that any such person or
group is the beneficial owner of such securities.
(10) Excludes the beneficial ownership of securities of the Company which may be
deemed to be attributed to Messrs. Smith and Tarr (see Notes 2 and 9
above). Includes 134,650 shares of Common Stock which are subject to
outstanding options exercisable within 60 days of December 6, 1996. Also
includes 23,800 shares of restricted stock over which individuals in the
group have voting but not dispositive power.
3
<PAGE> 6
1. ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of three
classes. At each Annual Meeting, a class of directors is elected for a full term
of three years.
Two Class III directors are to be elected for a three year term at the
Annual Meeting. The persons named in the accompanying proxy will vote each proxy
for the election of the nominees listed below, unless directed otherwise. Mrs.
Sisco is currently a member of the Board of Directors. Mr. O'Reilly is a nominee
for the first time. The Company has no reason to believe that the listed
nominees will become unavailable for election, but if for any reason that should
be the case, the proxies may be voted for substitute nominees. A plurality of
the votes cast at the Annual Meeting is required to elect each director. Proxies
withholding authority to vote for a nominee will be treated as votes cast
against the election of such nominee. Broker non-votes will not be treated as
votes cast and, therefore, will not be counted in calculating a plurality.
HARCOURT GENERAL WILL BE VOTING ITS COMMON STOCK, REPRESENTING APPROXIMATELY
53.0% OF THE VOTING POWER OF THE COMPANY, FOR THE ELECTION OF THE NOMINEES SET
FORTH BELOW.
NOMINEES FOR TERMS EXPIRING IN 2000 (CLASS III DIRECTORS)
JEAN HEAD SISCO, age 71, Director since 1987
Partner in Sisco Associates, international management consultants; Director
of Textron, Inc., Santa Fe Pacific Gold Corp., Washington Mutual Investors Fund,
Chiquita Brands International, Inc., The American Funds Tax-Exempt Series I and
K-Tron International, Inc.
VINCENT M. O'REILLY, age 59, Nominee for Director
Executive Vice Chairman of Coopers & Lybrand L.L.P. ("Coopers & Lybrand")
since October 1994, Chief Operating Officer or Deputy Chairman of Coopers &
Lybrand from 1988 to October 1994; Member of the Executive Committee of Coopers
& Lybrand since 1985; Member of the SEC Practice Section Executive Committee of
the American Institute of Certified Public Accountants since 1990 and Member of
the Financial Accounting Standards Advisory Council of the Financial Accounting
Foundation from 1992 to 1994; Chairman from 1986 to 1994 and Vice Chairman since
1995 of the Dana-Farber Cancer Institute.
DIRECTORS WHOSE TERMS EXPIRE IN 1998 (CLASS I DIRECTORS)
RICHARD A. SMITH, age 72, Director since 1987
Chairman of the Board of the Company and of Harcourt General; Chairman of
the Board, President (until November 1, 1995) and Chief Executive Officer of GC
Companies, Inc. since December 1993; Director of Harcourt General, GC Companies,
Inc., Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company,
Liberty Financial Companies, Inc., Bank of Boston Corporation and its principal
subsidiary, The First National Bank of Boston. Mr. Smith is the father of Robert
A. Smith, Group Vice President of the Company and a director of Harcourt
General.
ROBERT J. TARR, JR., age 53, Director since 1987
President, Chief Executive Officer and Chief Operating Officer of the
Company and of Harcourt General; Director of Harcourt General, Open Market, Inc.
and John Hancock Mutual Life Insurance Company.
4
<PAGE> 7
DIRECTORS WHOSE TERMS EXPIRE IN 1999 (CLASS II DIRECTORS)
MATINA S. HORNER, PH.D., age 57, Director since 1993
Executive Vice President of the Teachers Insurance and Annuity
Association-College Retirement Equities Fund (TIAA-CREF) and President Emerita
of Radcliffe College since 1989; President of Radcliffe College for 17 years
prior thereto; Director of Boston Edison Company.
WALTER J. SALMON, age 66, Director since 1987
Stanley Roth, Sr. Professor of Retailing, Graduate School of Business
Administration, Harvard University; Director of Hannaford Bros. Co., The Quaker
Oats Company, Circuit City Stores, Inc., Luby's Cafeterias, Inc. and Harrah's
Entertainment, Inc.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended August 3, 1996, the Board of Directors held
three meetings and acted by unanimous written consent on two other occasions.
During fiscal 1996, each director of the Company attended at least 75% of the
aggregate number of Board meetings and meetings held by committees of which he
or she is a member. The Board of Directors has designated five principal
standing committees. Set forth below are descriptions of the functions of such
committees and the names of their current members. It is anticipated that Mr.
O'Reilly will serve as a member of the Company's Audit, Special Review,
Compensation and Nominating Committees upon his election as a Class III
Director.
Audit Committee. The members of the Audit Committee, which met three times
during fiscal 1996, are Mrs. Sisco (Chairman), Dr. Horner and Mr. Salmon. The
functions of the Audit Committee include the review of the scope of the services
of the Company's independent auditors and the responsibilities of the Company's
internal audit department and a continuing review of the Company's internal
procedures and controls. The Audit Committee annually reviews the Company's
audited financial statements, considers the qualifications and fees of the
independent auditors of the Company and makes recommendations to the Board of
Directors as to the selection of the auditors and the scope of their audit
services.
Special Review Committee. The members of the Special Review Committee are
Mr. Salmon (Chairman), Dr. Horner and Mrs. Sisco. The Special Review Committee
met once during fiscal 1996. A continuing function of the Special Review
Committee is to give consideration to those matters requiring the approval of an
"Independent Committee" under the terms of the Intercompany Services Agreement
between the Company and Harcourt General, including the consideration of the
fees charged to the Company by Harcourt General pursuant to the Intercompany
Services Agreement. For information regarding the Intercompany Services
Agreement, see Note 1 to the Summary Compensation Table.
In October 1996 the Company completed a public offering of 8 million shares
of Common Stock and agreed to use the net proceeds therefrom (approximately $267
million), together with borrowings and Common Stock, to repurchase all of the
issued and outstanding shares of the Company's Preferred Stock from Harcourt
General. In connection with such repurchase, the Special Review Committee met
once in August 1996 and twice in September 1996 to consider and negotiate a
proposal, made by Harcourt General, to repurchase all of the issued and
outstanding shares of Preferred Stock of the Company. The Special Review
Committee relied upon the advice of an independent investment banking firm and
independent legal counsel in connection with such repurchase. The public
offering
5
<PAGE> 8
was completed on October 17, 1996, and the repurchase by the Company of its
Preferred Stock from Harcourt General occurred on November 12, 1996.
Compensation Committee. The members of the Compensation Committee, which
met once during fiscal 1996, are Mr. Salmon (Chairman), Dr. Horner and Mrs.
Sisco. The functions of the Compensation Committee are to review or determine
salaries, benefits and other compensation for officers and key employees of the
Company and its subsidiaries and to administer the Company's stock incentive
plans.
Nominating Committee. All of the directors of the Company serve on the
Nominating Committee, which met once during fiscal 1996. Mrs. Sisco is the
Chairman of the Nominating Committee. The functions of the Nominating Committee
are to nominate directors, make recommendations concerning the structure and
membership of the various committees of the Board of Directors, consider
questions of management, organization and succession and to act on such other
matters as from time to time may be requested by the Board of Directors. In
carrying out its responsibilities to nominate directors, the Nominating
Committee will consider candidates recommended by the Board of Directors and by
stockholders of the Company. All suggestions for candidates by stockholders must
be made in writing and received by the Company, c/o Secretary, P.O. Box 9187,
Chestnut Hill, Massachusetts 02167 no later than October 20, 1997 (see "Deadline
for Submission of 1998 Stockholder Proposals and Nominations"). Such writing
must set forth (i) the name and address of the stockholder who intends to make
the nomination and of each person to be nominated, (ii) a representation that
the stockholder is a holder of record of the Company's stock entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person named, (iii) a description of all arrangements or
understandings between the stockholder and each nominee and any other person
pursuant to which the nomination is to be made by the stockholder, (iv) the
consent of each proposed nominee to serve as a director of the Company if so
elected and (v) such other information regarding each proposed nominee as would
be required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission.
Executive Committee. The members of the Executive Committee, which did not
act during fiscal 1996, are Messrs. Smith (Chairman), Salmon and Tarr. The
By-Laws confer upon the Executive Committee the authority to manage the affairs
of the Company in the intervals between meetings of the Board of Directors,
except that the Committee may not effect certain fundamental corporate actions
such as (a) declaring a dividend, (b) amending the Restated Certificate of
Incorporation or the By-Laws, (c) adopting an agreement of merger or
consolidation or (d) imposing a lien on substantially all the assets of the
Company. In practice, the Executive Committee meets infrequently and does not
act except on matters which must be dealt with prior to the next scheduled Board
of Directors meeting and which are not sufficiently important to require action
by the full Board of Directors.
DIRECTORS COMPENSATION
Directors who are not affiliated with the Company or Harcourt General each
receive an annual retainer of $20,000 and a fee of $1,500 per Board of Directors
meeting attended, plus travel and incidental expenses (an aggregate of $3,348 in
fiscal 1996) incurred in attending meetings and carrying out their duties as
directors. They also receive a fee of $500 (the Chairmen receive $1,000) for
each committee meeting attended. If a director is unable to attend a meeting in
person but participates by telephone, he or she receives one-half of the fee
that would otherwise be payable.
6
<PAGE> 9
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of the Company's Common Stock to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. The Company believes that all filing requirements
applicable to its insiders were complied with during fiscal 1996.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE(1)
<TABLE>
The following table provides information on the compensation provided by
the Company during fiscal 1996, 1995 and 1994 to the Company's Chief Executive
Officer and the five most highly paid executive officers of the Company during
fiscal 1996.
<CAPTION>
LONG-TERM
COMPENSATION(2)
---------------------
AWARDS
ANNUAL COMPENSATION ---------------------
------------------------------------- RESTRICTED
OTHER ANNUAL STOCK ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(3) ($)(4) ($)(5) (#) ($)(6)
- ------------------------ ------ -------- -------- ------------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
R. J. Tarr, Jr.(1) 1996 -- -- -- -- -- --
President, Chief 1995 -- -- -- -- -- --
Executive Officer and 1994 -- -- -- -- -- --
Chief Operating Officer
B. Tansky 1996 $650,000 $292,500 -- $153,750 -- $16,866
Chairman and Chief 1995 $600,000 $230,640 $160,339 -- 25,000 $14,560
Executive Officer of 1994 $543,750 $122,640 -- -- 21,500 $10,647
Neiman Marcus Stores
G. Sampson 1996 $475,000 $190,000 -- -- 12,000 $12,854
President and Chief 1995 $450,000 $150,480 -- $ 71,875 -- $12,687
Operating Officer of 1994 $431,250 $172,500 -- -- 10,000 $ 6,421
Neiman Marcus Stores
S. Elkin 1996 $480,000 -- -- $115,313 -- $17,170
Chairman and Chief 1995 $450,000 $ 22,500 -- -- 20,000 $15,812
Executive Officer of 1994 $391,875 $ 65,262 -- -- 10,000 $ 9,650
Bergdorf Goodman
D. Mello(7) 1996 $350,000 $ 67,900 -- $ 53,813 -- $ 8,496
President of 1995 $325,000 $ 50,000 -- -- 15,000 $ 2,418
Bergdorf Goodman 1994 $ 50,416 $ 28,438 -- -- -- $ 612
B. Feiwus 1996 $325,000 $135,000 -- $ 76,875 10,000 $10,026
President and Chief 1995 $300,000 -- -- -- 10,000 $ 7,314
Executive Officer of NM 1994 $275,000 $ 88,000 -- -- 7,500 $ 5,883
Direct
<FN>
- ---------------
(1) Under the terms of an Intercompany Services Agreement, Harcourt General
provides certain management, accounting, financial, legal, tax, personnel
and other corporate services to the Company, including the services of
certain senior officers of Harcourt General who are also senior officers of
the Company, in consideration of a fee based on Harcourt General's direct
and indirect costs of providing the corporate services. The level of
services and fees are subject to the approval of the Special Review
Committee of the Board of Directors of the Company, which consists solely of
directors who are independent of Harcourt General. During fiscal 1996, 1995
and 1994, the
</TABLE>
7
<PAGE> 10
Company paid or accrued approximately $6.9 million, $6.5 million and $6.9
million, respectively, to Harcourt General for all of its services under the
Intercompany Services Agreement. With the exception of Mr. Tarr, the senior
officers of Harcourt General, who derive all of their compensation directly
from Harcourt General, are not included in this table. Mr. Tarr is also the
President and Chief Executive Officer of Harcourt General. All of Mr. Tarr's
cash and non-cash compensation is paid by Harcourt General pursuant to Mr.
Tarr's employment agreement with Harcourt General. Of the amounts paid by
the Company to Harcourt General under the Intercompany Services Agreement
for fiscal 1996, 1995 and 1994, approximately $2.3 million, $2.4 million and
$2.3 million, respectively, were attributable to Mr. Tarr's services. These
amounts include costs related to Mr. Tarr's base compensation, bonuses,
benefits and amounts necessary to fund his retirement benefits, all of which
are direct obligations of Harcourt General.
(2) The Company does not have a long-term compensation program that includes
long-term incentive payouts. No stock appreciation rights were granted to
any of the named executive officers during the years reported in the table.
During fiscal 1996, certain named executive officers surrendered vested
options to purchase shares of Common Stock in consideration of payments from
the Company representing the difference between the closing price of the
Common Stock on the New York Stock Exchange on the respective dates on which
the options were surrendered and the various option exercise prices. For
additional information concerning these transactions, see "Aggregated
Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR
Values," below.
(3) Bonus payments are reported with respect to the year in which the related
services were performed.
(4) No disclosure regarding items included in this category is required unless
the amounts in any year for any named executive officer exceed the lesser of
$50,000 or 10% of the annual salary and bonus for the named executive
officer. Of the $160,339 reported with respect to Mr. Tansky in this column
for fiscal 1995, $140,236 was attributable to relocation-related
reimbursements paid by the Company in fiscal 1995 in connection with his
position as Chairman and Chief Executive Officer of Neiman Marcus Stores
(Mr. Tansky previously was Chairman and Chief Executive Officer of Bergdorf
Goodman).
(5) Calculated by multiplying the closing price of the Common Stock on the New
York Stock Exchange on the date of grant by the number of shares awarded.
Twenty percent of an award of restricted Common Stock are freed from the
restrictions on transfer each year, commencing one year after the date of
grant, provided that the recipient continues to be employed by the Company
on the anniversary date of the grant. Holders of restricted stock are
entitled to vote their restricted shares. In the event of termination of
employment for any reason, other than death or permanent disability,
restricted shares are forfeited by the holders and revert to the Company. At
the end of fiscal 1996, the named executive officers' restricted stock
holdings and market values (based on the New York Stock Exchange closing
price of $27.375 for the Common Stock at fiscal year end) were as follows:
Mr. Tansky -- 10,000 shares ($273,750); Mr. Sampson -- 4,000 shares
($109,500); Mr. Elkin -- 8,500 shares ($232,688); Ms. Mello -- 3,500 shares
($95,813) and Mr. Feiwus -- 5,400 shares ($147,825). The restricted shares
held by Mr. Tansky and Ms. Mello were granted in fiscal 1996, the restricted
shares held by Mr. Sampson were granted in fiscal 1995, and the restricted
shares held by Messrs. Elkin and Feiwus were granted in fiscal 1996 and
fiscal 1992.
(6) The items accounted for in this column include the cost to the Company of
matching contributions under (a) the Company's Key Employee Deferred
Compensation Plan or the Employee Savings Plan (401(k) Plan) and (b) group
life insurance premiums. For fiscal 1996, such amounts for each of the named
executive officers were, respectively, as follows: Mr. Tansky -- $13,146 and
8
<PAGE> 11
$3,720; Mr. Sampson -- $9,351 and $3,503; Mr. Elkin -- $7,538 and $9,632;
Ms. Mello -- $6,000 and $2,496; and Mr. Feiwus -- $4,844 and $5,182.
(7) Ms. Mello rejoined the Company in May 1994. As a condition of employment,
Ms. Mello was guaranteed a minimum bonus of $50,000 for fiscal 1995.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
The following table provides information regarding options granted under
the Company's 1987 Stock Incentive Plan during the fiscal year ended August 3,
1996 to the executive officers named in the Summary Compensation Table.
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------
% OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION
OPTIONS EMPLOYEES OR BASE FOR OPTION TERM(2)
GRANTED IN FISCAL PRICE EXPIRATION ---------------------
NAME (#)(3) YEAR ($/SH) DATE 5%($) 10%($)
- ---- ---------- ---------- -------- ---------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
R. Tarr(4)......................... -- -- -- -- -- --
B. Tansky(5)....................... -- -- -- -- -- --
G. Sampson......................... 12,000 9.33% $15.375 9/09/05 $116,031 $294,045
S. Elkin(5)........................ -- -- -- -- -- --
D. Mello(5)........................ -- -- -- -- -- --
B. Feiwus(5)....................... 10,000 7.78% $15.375 9/09/05 $ 96,693 $245,038
<FN>
- ---------------
(1) No stock appreciation rights were granted to any named executive officer
during fiscal 1996.
(2) These potential realizable values are based on assumed rates of appreciation
required by applicable regulations of the Securities and Exchange
Commission.
(3) All option grants are non-qualified stock options having a term of 10 years
and one day. They become exercisable at the rate of 20% on each of the first
five anniversary dates of the grant.
(4) None of the executive officers of Harcourt General who are also officers of
the Company, including Mr. Tarr, participate in the Company's 1987 Stock
Incentive Plan.
(5) Each of Messrs. Tansky, Elkin and Feiwus, and Ms. Mello, received grants of
restricted stock in fiscal 1996. For details, see the Summary Compensation
Table and Note 5 thereto, above.
</TABLE>
9
<PAGE> 12
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
The following table provides information regarding the number and value of
stock options held at August 3, 1996 by the executive officers named in the
Summary Compensation Table.
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
AUGUST 3, 1996(#) AUGUST 3, 1996(3)
--------------------- ------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#)(1) REALIZED($)(2) UNEXERCISABLE UNEXERCISABLE(3)
- ---- ----------------- -------------- --------------------- ------------------
<S> <C> <C> <C> <C>
R. Tarr, Jr.(4)...... -- -- -- --
B. Tansky............ -- -- 46,600/39,900 $629,100/$531,462
G. Sampson........... -- -- 4,000/18,000 $ 51,500/$221,250
S. Elkin............. 4,649 $ 36,695 46,350/26,000 $570,900/$346,750
D. Mello............. 1,500 $ 18,000 1,500/12,000 $ 19,500/$156,000
B. Feiwus............ 16,711 $105,354 0/24,500 $ 0/$312,688
<FN>
- ---------------
(1) The number of shares listed in this column for each of the named executive
officers represents the surrender of vested options to purchase shares of
Common Stock at various exercise prices. The Company paid the executive
officers the respective amounts shown in the second column of this table in
connection with such surrenders. Those amounts were calculated based on the
difference between the closing price of the Common Stock on the New York
Stock Exchange on the respective dates on which the options were surrendered
and the various option exercise prices.
(2) Represents the difference between the closing price of the Common Stock on
the New York Stock Exchange on the date of surrender and the option exercise
price.
(3) The value of unexercised in-the-money options is calculated by multiplying
the number of underlying shares by the difference between the closing price
of the Common Stock on the New York Stock Exchange at fiscal year end
($27.375) and the option exercise price for those shares. These values have
not been realized. The closing price of the Common Stock on the New York
Stock Exchange on December 6, 1996 was $34.75.
(4) None of the executive officers of Harcourt General who are also officers of
the Company, including Mr. Tarr, participate in the Company's 1987 Stock
Incentive Plan.
</TABLE>
PENSION PLANS
The Company maintains a funded, qualified pension plan known as The Neiman
Marcus Group, Inc. Retirement Plan (the "Retirement Plan"). Most non-union
employees over age 21 who have completed one year of service with 1,000 or more
hours participate in the Retirement Plan, which pays benefits upon retirement or
termination of employment. The Retirement Plan is a "career-average" plan, under
which a participant earns each year a retirement annuity equal to 1% of his or
her compensation for the year up to the Social Security wage base and 1.5% of
his or her compensation for the year in excess of such wage base. Benefits under
the Retirement Plan become fully vested after five years of service with the
Company.
The Company also maintains a Supplemental Executive Retirement Plan (the
"SERP"). The SERP is an unfunded, non-qualified plan under which benefits are
paid from the Company's general assets to
10
<PAGE> 13
supplement Retirement Plan benefits and Social Security. Executive,
administrative and professional employees (other than those employed as
salespersons) with an annual base salary at least equal to a self-adjusting
minimum ($100,000 as of August 3, 1996) are eligible to participate. At normal
retirement age (age 65), a participant with 25 or more years of service is
entitled to payments under the SERP sufficient to bring his or her combined
annual benefit from the Retirement Plan and SERP, computed as a straight life
annuity, up to 50% of the participant's highest consecutive 60 month average of
annual pensionable earnings, less 60% of his or her estimated annual primary
Social Security benefit. If the participant has fewer than 25 years of service,
the combined benefit is proportionately reduced. In computing the combined
benefit, "pensionable earnings" means base salary, including any salary which
may have been deferred. Benefits under the SERP become fully vested after five
years of service with the Company.
<TABLE>
The following table shows the estimated annual pension benefits payable to
employees in various compensation and years of service categories. The estimated
benefits apply to an employee retiring at age 65 in 1996 who elects to receive
his or her benefit in the form of a straight life annuity. These benefits
include amounts attributable to both the Retirement Plan and the SERP and are in
addition to any retirement benefits that might be received from Social Security.
ESTIMATED ANNUAL RETIREMENT BENEFITS
UNDER RETIREMENT PLAN AND SERP(1)
<CAPTION>
AVERAGE TOTAL YEARS OF SERVICE
PENSIONABLE -------------------------------------------------------------
EARNINGS 5 10 15 20 25 OR MORE
- ----------- ------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
$300,000............................. $30,000 $ 60,000 $ 90,000 $120,000 $150,000
400,000............................. 40,000 80,000 120,000 160,000 200,000
500,000............................. 50,000 100,000 150,000 200,000 250,000
600,000............................. 60,000 120,000 180,000 240,000 300,000
700,000............................. 70,000 140,000 210,000 280,000 350,000
800,000............................. 80,000 160,000 240,000 320,000 400,000
<FN>
- ---------------
(1) The amounts actually payable will be lower than the amounts shown above,
since the above amounts will be reduced by 60% of the participant's
estimated primary Social Security benefit.
</TABLE>
11
<PAGE> 14
<TABLE>
The following table shows the pensionable earnings and credited years of
service for the executive officers named in the Summary Compensation Table as of
August 3, 1996 and years of service creditable at age 65. Credited service may
not exceed 25 years for the purpose of calculating retirement benefits under any
of the Company's retirement plans.
<CAPTION>
PENSIONABLE EARNINGS YEARS OF SERVICE
FOR YEAR ENDED -------------------------------
NAME AUGUST 3, 1996 AT AUGUST 3, 1996 AT AGE 65
---- -------------------- ----------------- ---------
<S> <C> <C> <C>
R. Tarr, Jr.(1)........................ -- -- --
B. Tansky.............................. $650,000 --(2) 20(2)
G. Sampson............................. 475,000 --(3) 20(3)
S. Elkin............................... 480,000 18 25
D. Mello............................... 350,000 15 15
B. Feiwus.............................. 325,000 16 25
<FN>
- ---------------
(1) Mr. Tarr does not participate in the Company's Retirement Plan or SERP.
(2) Under Mr. Tansky's employment agreement with the Company, for purposes of
determining his retirement benefits under the SERP, Mr. Tansky will be
credited with 5/3 times his years of service with the Company provided (i)
he remains continuously employed by the Company until his 65th birthday or
(ii) the Company fails to extend his employment beyond January 31, 2000, or
the Company and Mr. Tansky fail to agree upon mutually satisfactory terms of
continued employment beyond such date; otherwise, Mr. Tansky's accrued
service under the SERP will be calculated in the normal manner. Mr. Tansky
is 58 years old.
(3) For purposes of determining Mr. Sampson's retirement benefits under the
SERP, Mr. Sampson will be credited with 20/13 times his years of service
with the Company provided he remains continuously employed by the Company
until his 65th birthday; otherwise, Mr. Sampson's accrued service under the
SERP will be calculated in the normal manner. Mr. Sampson is 55 years old.
</TABLE>
EMPLOYMENT AND SEVERANCE AGREEMENTS
BURTON TANSKY. The Company and Mr. Tansky have entered into successive
employment agreements (effective May 1, 1994 and February 1, 1997) pursuant to
which Mr. Tansky is employed as Chairman and Chief Executive Officer of Neiman
Marcus Stores through January 31, 2000. In the event Mr. Tansky is terminated
without cause within 24 months of a change of control of the Company, or if
within 24 months of such a change of control Mr. Tansky resigns because he is
not permitted to continue in a position comparable in duties and
responsibilities to that which he held prior to the change of control, Mr.
Tansky will be entitled to receive his then-current base compensation for 18
months. If the Company terminates Mr. Tansky's employment during the term of the
Employment Agreement for any reason other than for cause or other than because
of his total disability or death, Mr. Tansky will continue to receive his base
compensation and benefits until January 31, 2001 or for 18 months following
termination, whichever is greater. If the Company determines not to extend Mr.
Tansky's employment beyond January 31, 2000, or if the Company and Mr. Tansky
fail to agree upon mutually satisfactory terms of continued employment beyond
such date, the Company will pay to Mr. Tansky his then-current base compensation
through January 31, 2001, which amount will be reduced by any amounts earned by
him from other employment between August 1, 2000 and January 31, 2001, and the
Company will credit Mr. Tansky with service pursuant to the SERP as if he had
remained employed by the Company until age 65.
GERALD A. SAMPSON. Pursuant to an agreement between Mr. Sampson and the
Company, effective September 1996, Mr. Sampson is entitled to receive severance
payments in the event his employment
12
<PAGE> 15
with the Company is terminated in certain situations. If the Company terminates
Mr. Sampson's employment other than for cause or other than due to his total
disability or death, Mr. Sampson shall have the right to receive an amount equal
to his then-current annual base salary, payable in 12 monthly installments. Mr.
Sampson will also be entitled to receive such payments if his employment is
terminated by a successor to the Company within 24 months of a change of control
of the Company without cause or other than due to his total disability or death,
or if within 24 months of such a change of control Mr. Sampson resigns because
he is not permitted to continue in a position comparable in duties and
responsibilities to that which he held prior to the change of control. Beginning
six months following the date of a covered termination or resignation, all
amounts to be paid under such agreement shall be reduced by the amount Mr.
Sampson receives as compensation or severance related to other employment. Mr.
Sampson has agreed to provide the Company with three months advance notice of
his intent to resign from the Company provided that such resignation does not
follow a change of control of the Company.
STEPHEN C. ELKIN. Pursuant to an agreement between Mr. Elkin and Bergdorf
Goodman, effective September 1993, Mr. Elkin is entitled to receive severance
payments in the event his employment with Bergdorf Goodman is terminated in
certain situations. If the Company terminates Mr. Elkin's employment other than
for cause or other than due to his total disability or death, he will receive an
amount equal to one and one half times his then-current base salary, which
amount will be paid to him in 18 monthly installments following such termination
but will be reduced by any amounts received by him from other employment during
the period beginning six months following his termination and ending at the end
of the 18 month period. Mr. Elkin will also be entitled to receive such payments
in the event his employment is terminated without cause within 24 months of a
change of control of either Bergdorf Goodman or the Company, or in the event he
resigns within 24 months of a change of control because he is not permitted to
continue in a position comparable in duties and responsibilities to that which
he held before the change of control.
DAWN MELLO. Pursuant to an agreement between Ms. Mello and Bergdorf
Goodman, effective May 1994, Ms. Mello is entitled to receive severance payments
in the event her employment with Bergdorf Goodman is terminated in certain
situations. If the Company terminates Ms. Mello's employment other than for
cause or other than due to her total disability or death, Ms. Mello will receive
an amount equal to her then-current annual salary, which amount will be paid in
12 monthly installments following such termination but will be reduced by any
amounts received by her from other employment during the period beginning six
months and ending 12 months following such termination.
BERNIE FEIWUS. Pursuant to an agreement between Mr. Feiwus and NM Direct,
effective October 1995, Mr. Feiwus is entitled to receive severance payments in
the event his employment with NM Direct is terminated in certain situations. If
the Company terminates Mr. Feiwus' employment without cause within 24 months of
a change of control of the Company or of NM Direct, or if within 24 months after
such a change of control Mr. Feiwus resigns his employment because he is not
permitted to continue in a position comparable in duties and responsibilities to
that which he held before the change of control, he will receive an amount equal
to one and one half times his then-current annual base salary, which amount will
be paid in 18 monthly installments following such termination but will be
reduced by any amounts received by him from other employment during the period
beginning six months and ending 18 months following such termination.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Except as described below, none of the Company's directors, executive
officers, nominees for director or security holders known to the Company to own
of record or beneficially more than five
13
<PAGE> 16
percent of the Common Stock, nor any member of the immediate family of any such
persons, engaged in any transactions with the Company involving amounts in
excess of $60,000 since the beginning of the Company's last fiscal year. During
fiscal 1996 and through December 6, 1996, Mr. Sampson and Mr. Elkin had
outstanding loans under the Company's Key Executive Stock Purchase Loan Plan
(the "Loan Plan") in the respective maximum aggregate principal amounts of
$227,891 and $94,687. These loans, which were incurred pursuant to the Loan
Plan, were used by Messrs. Sampson and Elkin to purchase shares of Common Stock
and to discharge certain tax liabilities incurred in connection with the release
of restrictions on previous grants of restricted Common Stock. The loans are
secured by a pledge of the purchased shares and bear interest at an annual rate
of 5%, payable quarterly. Pursuant to the terms of the Loan Plan, each executive
officer's loan will become due and payable seven months after his employment
with the Company terminates.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, Richard A. Smith, Chairman of the Board of Directors of
the Company, served on the Boards of Directors of Liberty Mutual Insurance
Company and Liberty Mutual Fire Insurance Company (collectively, "Liberty
Mutual"). Gary L. Countryman, who served as a director of the Company and the
Chairman of the Company's Compensation Committee until his resignation from
those positions on January 19, 1996, is the Chairman and Chief Executive Officer
of Liberty Mutual. Mr. Countryman was elected as a director of Harcourt General
at its 1996 Annual Meeting of Stockholders. Liberty Mutual underwrites most of
the Company's insurance policies. These insurance policies contain terms which,
in the judgment of management, are no less favorable than could be obtained from
other insurance companies. During fiscal 1996, the Company paid to Liberty
Mutual an aggregate of approximately $2.2 million in premiums and administrative
fees.
------------------------
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF 1934, EACH AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS
PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION AND STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED
TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS, NOR SHALL SUCH SECTIONS
OF THIS REPORT BE DEEMED TO BE INCORPORATED INTO ANY FUTURE FILINGS MADE BY THE
COMPANY UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of Walter J. Salmon (Chairman),
Matina S. Horner and Jean Head Sisco. The members of the Compensation Committee
are all independent directors.
The principal responsibility of the Committee is to review the performance
of, and determine the compensation for, the executive officers of the Company
who are not also executive officers of Harcourt General. The individuals in this
group include Messrs. Tansky, Sampson, Elkin, Feiwus and Ms. Mello, all of whom
are named executive officers in the Summary Compensation Table. The compensation
of Harcourt General's executive officers, most of whom are also executive
officers of the Company, is determined by Harcourt General's Compensation
Committee.
Compensation Policies
The principal objectives of the Company's executive compensation program
are to reward competitively its executive officers in order to attract and
retain excellent management and to provide incentives that will most sharply
focus the attention of those individuals on the goal of increasing the
profitability of the Company and its operating divisions over both the short and
long terms.
14
<PAGE> 17
Early in each fiscal year, the Committee considers the recommendations of
the Chief Executive Officer, which are supported by data generated by the
Company's Human Resources Department, for each component of compensation of the
Company's executive officers. The Committee reviews those recommendations and
then approves them or makes such modifications as it deems appropriate.
The principal components of the Company's compensation program are:
Base Salary
Base salary is determined with reference both to salary survey
information from recognized compensation consulting firms and to each
executive officer's level of responsibility, experience and performance.
The salary survey data is used to establish benchmark amounts for both base
salary and total cash compensation for each executive position. Comparisons
are made to a range of retail companies or to divisions within such
companies, with the principal selection criteria for comparisons being
similar revenues to the division within the Company. While there are no
hard and fast rules which bind the Committee, the Company generally sets
its salary and total cash compensation benchmarks (assuming that maximum
bonuses are achieved) for executive officers at the 75th percentile of the
comparison group of companies in order to compete for and retain the best
management talent available. Because the Company competes for executive
talent with a broad range of companies, the Committee does not limit its
comparison information for compensation purposes to the companies included
in the peer group in the Stock Performance Graph.
The Committee reviews in detail the base salary levels for each of the
principal executive officers of the Company. While the Committee uses the
benchmarks as a reference point, a particular individual's base salary may
vary from the benchmark depending upon his or her salary history,
experience, individual performance, contractual obligations of the Company,
guidelines established by the Chief Executive Officer with respect to
salary increases for the entire Company and the subjective judgment of the
Committee.
Annual Incentive Plan
The determination of annual bonuses is based principally on the
achievement of performance objectives by the operating division for which
the executive is responsible and the individual executive's own
performance. For some executive officers, a small component of their bonus
eligibility depends on the Company's overall performance.
Shortly after the beginning of each fiscal year, the Compensation
Committee considers the recommendations of the Chief Executive Officer for
the Company's and each division's performance goals for the current year,
the executive officers who should participate in the annual incentive plan
for that year, and the maximum bonus values attainable by them. The
Committee approves those recommendations with such modifications as it
deems appropriate.
For fiscal 1996, the plan provided for maximum bonuses ranging from
35% to 45% of base salary. Eligibility for the divisional performance
component of the bonus was determined based on a weighting of several
factors, the most important of which was operating earnings before
corporate expenses. Other factors included return on net assets and working
capital as a percentage of sales. Similar factors will be used by the
Committee in determining bonuses for fiscal 1997. In addition, each of the
Company's executive officers prepares and reaches agreement with the Chief
Executive Officer on individual performance goals which must be achieved in
addition to the performance targets in order for an executive to receive
his or her full bonus. Individual performance goals typically include
achievement of specific tasks.
15
<PAGE> 18
The bonuses actually awarded to the executive officers for fiscal 1996
were determined by an assessment of all of these factors, as well as
certain subjective factors.
Absent extraordinary circumstances, if the financial performance
targets are exceeded, bonus awards are not increased over the maximum bonus
values established by the Committee. If the performance targets are not
met, bonus awards will, in all probability, be reduced at the discretion of
the Committee. If the Company and/or the relevant division falls
sufficiently short of its performance target, there is a presumption that
bonuses would not be paid absent special circumstances. Factors such as the
performance of a business unit for which the executive officer is
responsible and achievement of individual performance goals are considered
in the decision to award a bonus. If corporate and/or division performance
targets are met, but an individual falls short of his or her performance
goals, the individual's bonus could be reduced or eliminated in the
discretion of the Committee.
The bonus program is intended to put substantial amounts of total cash
compensation at risk with the intent of focusing the attention of the
executives on achieving both the Company's and their division's performance
goals and their individual goals, thereby contributing to profitability and
building shareholder value.
Stock Incentives
The Committee's purpose in awarding equity based incentives,
principally in the form of stock options which vest over a five year period
and terminate ten years from the date of grant and in the form of
restricted stock which vests over a five year period, is to achieve as much
as possible an identity of interest between the executives and the long
term interest of the stockholders. The principal factors considered in
determining which executive officers (including the named executive
officers) were awarded equity based compensation in the 1996 fiscal year,
and in determining the types and amounts of such awards, were salary
levels, equity awards granted to executives at competing retail companies,
as well as the performance, experience and level of responsibility of each
executive.
Compensation of the Chief Executive Officer
Mr. Tarr is also the Chief Executive Officer of Harcourt General, which
owns a majority of the outstanding Common Stock of the Company. All of Mr.
Tarr's cash and non-cash compensation is paid directly by Harcourt General to
Mr. Tarr pursuant to an employment agreement between Mr. Tarr and Harcourt
General which was approved by the Harcourt General Compensation Committee and
became effective in November 1991. Mr. Tarr receives no compensation directly
from the Company. However, pursuant to the Intercompany Services Agreement
between the Company and Harcourt General, Harcourt General provides certain
management and other corporate services to the Company, including Mr. Tarr's
services as Chief Executive Officer. During fiscal 1996, the Company paid or
accrued approximately $6.9 million to Harcourt General for all of its services
under the Intercompany Services Agreement, of which approximately $2.3 million
was attributable to Mr. Tarr's services. While the Special Review Committee of
the Company reviews each year the appropriateness of the charges by Harcourt
General to the Company under the Intercompany Services Agreement, neither this
Committee nor the Special Review Committee plays any role in determining the
compensation that Mr. Tarr, or any other executive officer of Harcourt General,
receives from Harcourt General.
16
<PAGE> 19
Compliance with the Internal Revenue Code
The Internal Revenue Code (the "Code") generally disallows a tax deduction
to public companies for compensation in excess of $1 million per year which is
not "performance based" paid to each of the executive officers named in the
Summary Compensation Table. The Committee and the Board of Directors recently
approved The Neiman Marcus Group 1997 Incentive Plan, subject to approval by the
stockholders of the Company at the 1997 Annual Meeting (see "Proposal to Approve
the Company's 1997 Incentive Plan"). If this Plan is approved by the
stockholders, it will allow the Committee to continue to award stock incentives
and cash bonuses based on objective criteria and consistent with past practice.
The stock incentives and cash bonuses awarded under the Plan will be
characterized as "performance based" compensation and therefore will be fully
deductible by the Company.
The Committee will continue to monitor the requirements of the Code and to
determine what actions should be taken by the Company in order to preserve the
tax deduction for executive compensation to the maximum extent, consistent with
the Company's continuing goals of providing the executives of the Company with
appropriate incentives and rewards for their performance.
COMPENSATION COMMITTEE
Walter J. Salmon, Chairman
Matina S. Horner
Jean Head Sisco
17
<PAGE> 20
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Company's Common Stock against the cumulative total return during the five
fiscal years ended August 3, 1996 of (i) the Standard & Poor's 500 Index and
(ii) a peer group index consisting of Tiffany & Co. and Nordstrom, Inc. The
graph assumes a $100 investment in the Company's Common Stock and in each index
company at August 3, 1991, and that all dividends were reinvested. The common
stocks of the companies in the peer group index have been weighted annually to
reflect relative stock market capitalization. The comparisons provided in this
graph are not intended to be indicative of possible future performance of the
Company's stock.
STOCK PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
THE NEIMAN MARCUS GROUP, INC., S&P 500 INDEX, AND PEER INDEX
[GRAPH]
<TABLE>
<CAPTION>
03-Aug-91 01-Aug-92 31-Jul-93 30-Jul-94 29-Jul-95 03-Aug-96
<S> <C> <C> <C> <C> <C> <C>
The Neiman Marcus Group, Inc. $100.00 $83.67 $91.04 $96.97 $98.47 $172.13
S&P 500 Index $100.00 $113.54 $123.20 $129.03 $161.79 $194.77
Peer Index $100.00 $62.36 $61.48 $94.49 $89.93 $101.62
</TABLE>
18
<PAGE> 21
2. PROPOSAL TO APPROVE THE COMPANY'S 1997 INCENTIVE PLAN
The Board of Directors has adopted, subject to stockholder approval, The
Neiman Marcus Group, Inc. 1997 Incentive Plan (the "1997 Incentive Plan"). The
Board of Directors believes that approval of the 1997 Incentive Plan will
advance the interests of the Company by providing eligible participants the
opportunity to receive a broad variety of equity-based and cash incentives
("Awards"). A total of 2,500,000 shares of Common Stock have been reserved for
issuance under the 1997 Incentive Plan, subject to adjustment as provided in the
1997 Incentive Plan. If the 1997 Incentive Plan is approved by the stockholders,
the Company will not grant any new awards under the 1987 Stock Incentive Plan.
SUMMARY OF THE 1997 INCENTIVE PLAN
The following summary description of the 1997 Incentive Plan is qualified
in its entirety by reference to the full text of the 1997 Incentive Plan
attached to this proxy statement as Exhibit A.
Deductibility of Performance Awards. If the 1997 Incentive Plan is
approved by the stockholders, certain payments to executive officers under the
1997 Incentive Plan will be eligible for treatment as "performance based"
compensation under Section 162(m) of the Internal Revenue Code ("Section
162(m)"). As described in the Compensation Committee Report on Executive
Compensation set forth in this proxy statement, Section 162(m) generally limits
to $1 million the annual corporate income tax deduction for compensation paid to
the chief executive officer or any of the four other highest paid executive
officers of a publicly-held corporation which is not "performance based"
compensation. The 1997 Incentive Plan is intended to comply with Section 162(m)
by allowing Awards granted under the 1997 Incentive Plan to qualify as
performance-based compensation. Under current regulations, in those cases where
an Award under the 1997 Incentive Plan would qualify for the Section 162(m)
performance-based exception by reason of being conditioned upon one or more of
the specific performance criteria described below (see "Performance Criteria"),
continued availability of the exception will depend upon reapproval by
stockholders of the material terms of the performance criteria not later than by
the first stockholder meeting that occurs in the fifth year following the year
in which the stockholders previously approved such terms.
Administration. The 1997 Incentive Plan will be administered by the
Compensation Committee of the Board of Directors (the "Committee"), which is
comprised solely of persons who qualify both as "outside directors" (within the
meaning of Section 162(m)) and "non-employee directors" (within the meaning of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934). Subject to
the terms of the 1997 Incentive Plan, the Committee has authority to interpret
the 1997 Incentive Plan; determine eligibility for and grant Awards; determine,
modify or waive the terms and conditions of any Award; and otherwise do all
things necessary to carry out the purposes of the 1997 Incentive Plan. In the
case of any Award intended to be eligible for the performance-based compensation
exception under Section 162(m), the Committee shall exercise its discretion
consistent with qualifying the Award for such exception.
Eligibility and Participation. In general, the Committee will select
participants in the 1997 Incentive Plan from among key employees of the Company
and its affiliates who, in the opinion of the Committee, are in a position to
make a significant contribution to the success of the Company or its affiliates.
The Committee also has discretion to include as participants in the 1997
Incentive Plan members of the Company's Board of Directors and other persons who
provide services to the Company or its affiliates. The maximum number of shares
for which stock options may be granted to any person, the maximum number of
shares subject to stock appreciation rights granted to any person, and the
aggregate maximum number of shares of Common Stock which may delivered to any
person
19
<PAGE> 22
pursuant to Awards that are not stock options or stock appreciation rights are
each limited to 1 million over the life of the 1997 Incentive Plan. In addition,
no more than $2 million may be paid to any individual with respect to any annual
cash performance-based bonuses, and no more than $2 million in cash
performance-based bonuses may be paid to any individual with respect to
multi-year performance periods ending in the same year. No Award may be granted
under the 1997 Incentive Plan after September 1, 2006, but Awards previously
granted may extend beyond such date.
Types of Awards. The Committee, in its discretion, may award (i) options
to purchase Common Stock, (ii) stock appreciation rights, (iii) restricted or
unrestricted Common Stock, (iv) promises to deliver stock or other securities in
the future, (v) convertible securities, (vi) cash bonuses, and (vii) cash
bonuses or loans to help defray the costs of the foregoing awards.
Performance Criteria. Awards under the 1997 Incentive Plan may be
conditioned upon satisfaction of specified performance criteria. In the case of
any such Award that is intended to qualify for exemption from the deduction
limitation rules of Section 162(m) (an "Exempt Award"), the criteria used in
connection with the Award shall be one or any combination of the following:
earnings or earnings per share (whether on a pre-tax, after-tax, operational or
other basis); return on equity; return on assets; revenues; sales; expenses; one
or more operating ratios; stock price; stockholder return; market share; cash
flow; inventory levels or inventory turn; capital expenditures; net borrowing,
debt leverage levels or credit quality; or the accomplishment of mergers,
acquisitions, dispositions, public offerings or similar extraordinary business
transactions. In the case of an Exempt Award, the Committee will preestablish
the particular performance goals in writing no later than 90 days after the
commencement of the period of service to which the performance relates (or
earlier if so required under applicable regulations) and will certify prior to
payment whether the performance goal or goals have been attained. If the
performance goal with respect to an Exempt Award is not attained, no other Award
shall be provided in substitution. Where rights under an Award depend in whole
or in part on attainment of performance objectives, actions by the Company that
have an effect, however material, on such performance objectives or on the
likelihood that they will be achieved will not be deemed an amendment or
alteration of the Award unless accomplished by a change in the express terms of
the Award or other action that is without substantial consequence except as it
affects the Award.
Rules Applicable to Awards. The Company retains the right at any time to
extinguish rights under an Award in exchange for payment in cash, Common Stock
(subject to the limitation on the maximum number of shares available with
respect to Awards) or other property on such terms as the Committee determines,
provided the holder of the Award consents to such exchange. Except as the
Committee otherwise expressly provides, Awards (other than an Award in the form
of an outright transfer of cash or unrestricted Common Stock) may not be
transferred other than by will or by the laws of descent and distribution and,
during the lifetime of a participant, an Award requiring exercise may be
exercised only by the participant. The Committee may determine the time or times
at which an Award will vest or become exercisable. Unless the Committee
expressly provides otherwise, an Award requiring exercise will cease to be
exercisable, and all other Awards to the extent not already fully vested will be
forfeited, immediately upon the cessation (for any reason, including death) of
the participant's employment or other service relationship with the Company and
its affiliates. The Committee may provide that upon the exercise of an Award the
participant will automatically receive a new Award of like kind covering a
number of shares determined by reference to the number of shares tendered to the
Company upon exercise of the first Award.
Stock Options. Each stock option (except as otherwise expressly provided
by the Committee consistent with continued qualification of the stock option as
an Exempt Award, or unless the Committee expressly determines that such stock
option is not subject to Section 162(m) or that the
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stock option is not intended to qualify as an Exempt Award), will have an
exercise price not less than the fair market value of the Common Stock subject
to the stock option, determined as of the date of grant, except that a stock
option intended to be an "incentive stock option" ("ISO") within the meaning of
Section 422 of the Internal Revenue Code granted to a person who owns (or by
application of attribution rules is deemed to own) more than 10% of the total
combined voting power of all classes of stock of the Company will have an
exercise price equal to at least 110% of such fair market value and will not be
exercisable after the expiration of five years from the date such option is
granted. Because the value of stock option and stock appreciation rights Awards
depends upon the price of the Company's Common Stock, such Awards generally will
be Exempt Awards without the need for the Committee to specify any other
performance criteria. Options awarded under the 1997 Incentive Plan will not be
ISOs except as expressly provided otherwise.
Effect of Certain Transactions. In the event of a consolidation or merger
in which the Company is not the surviving corporation or which results in the
acquisition of substantially all the Company's outstanding Common Stock by a
single person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of substantially all the
Company's assets or a dissolution or liquidation of the Company, all outstanding
Awards requiring exercise will cease to be exercisable, and all other Awards to
the extent not fully vested (including Awards subject to performance conditions
not yet satisfied or determined) will be forfeited, as of the effective time of
such transaction. Prior to such time the Committee may (but need not) accelerate
the vesting or exercisability of any Award or provide for substitute or
replacement awards.
Equitable Adjustment. In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the Company's capital
structure, the Committee will make appropriate adjustments to the maximum number
of shares that may be delivered under the 1997 Incentive Plan, to the maximum
share limits under the 1997 Incentive Plan, to the number and kind of shares of
stock or securities subject to Awards then outstanding or subsequently granted,
to any exercise prices relating to Awards, and to any other provision of Awards
affected by such change. The Committee also may make such adjustments to take
into account other distributions or events, if the Committee determines that
adjustments are appropriate to avoid distortion in the operation of the 1997
Incentive Plan and to preserve the value of Awards; provided, that no such
adjustment shall be made to the maximum share limits, or otherwise to an Award
intended to be eligible for the performance-based exception under Section
162(m), except to the extent consistent with that exception.
Amendment. Subject to the Committee's right to exercise its discretion
consistent with qualifying Awards for exception under Section 162(m), the
Committee may at any time or times amend the 1997 Incentive Plan or any
outstanding Award for any purpose which may at the time be permitted by law, or
may at any time terminate the 1997 Incentive Plan as to any further grants of
Awards, provided that no such amendment will, without the approval of the
stockholders of the Company, effectuate a change for which stockholder approval
is required in order for the 1997 Incentive Plan to continue to qualify under
Section 422 of the Internal Revenue Code or for Awards to be eligible for the
performance-based exception under Section 162(m).
Other Compensation. The existence of the 1997 Incentive Plan and the grant
of Awards will not affect the Company's right to pay other bonuses or
compensation, except as provided under the 1997 Incentive Plan.
PRICE OF COMMON STOCK
The closing price of the Common Stock on the New York Stock Exchange on
December 6, 1996 was $34.75.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax consequences
of the issuance and exercise of stock options awarded under the 1997 Incentive
Plan and is based on the law as in effect on November 1, 1996. The summary does
not address all federal tax consequences, nor does it cover state, local or
non-U.S. tax consequences.
In general, a participant realizes no taxable income on either the grant or
the vesting of a stock option. The exercise of a nonstatutory, or nonqualified,
option (i.e., an option that does not qualify as an ISO) results in ordinary
income (generally subject to withholding, if the participant is an employee)
equal to the difference (the "Option Spread") between the value of the Common
Stock purchased and the option exercise price. A corresponding deduction is
available to the Company. In general, the ordinary income associated with the
exercise is measured and taken into account at the time of exercise. Any
subsequent sale of Common Stock purchased under a nonstatutory option may result
in a capital gain or loss.
The exercise of an ISO does not produce ordinary taxable income. However,
because the Option Spread constitutes "alternative minimum taxable income"
(measured and taken into account, in general, at the time of exercise), exercise
of an ISO may result in an alternative minimum tax liability. In addition,
shares purchased under an ISO ("ISO Shares") are subject to special tax holding
rules. If a participant holds on to ISO Shares for at least two years from the
date of the ISO grant and at least one year after exercise, any gain or loss
recognized for tax purposes upon a subsequent sale of the shares will be a
long-term capital gain or loss. However, a disposition of ISO Shares by the
participant within either of these special holding periods (a so-called
"disqualifying disposition") results in ordinary compensation income in the year
of the disposition equal, in general, to the Option Spread at the time the
option was exercised. The ordinary income realized upon a disqualifying
disposition of ISO Shares is deductible to the Company but is not subject to
withholding. Any additional gain recognized for tax purposes in a disqualifying
disposition will be taxed as short-term or long-term capital gain.
An ISO that is exercised by the participant more than three months
following termination of employment (one year, if termination occurred by reason
of total and permanent disability) is treated for tax purposes as a nonstatutory
option. ISOs granted to a participant under the 1997 Incentive Plan (together
with ISOs granted to the participant after 1986 under any other plans of the
Company and certain affiliates) are also treated as nonstatutory options to the
extent that, in the aggregate, they first become exercisable in any calendar
year for shares of Common Stock having a fair market value (determined at time
of grant) in excess of $100,000.
Under the so-called "golden parachute" provisions of the Code, certain
Awards vested or paid in connection with a change of control of the Company may
also be non-deductible to the Company and may be subject to an additional 20%
federal excise tax. Non-deductible "parachute payments" will in general reduce
the $1 million limit on deductible compensation under Section 162(m) of the
Code, to the extent such limit is applicable to remuneration paid under the 1997
Incentive Plan or otherwise.
VOTING REQUIREMENTS
Approval of the 1997 Incentive Plan requires a favorable vote of a majority
of the votes cast at the Annual Meeting. Abstentions will be treated as votes
cast. Broker non-votes will be treated as present but not voting. On this
proposal, abstentions will have the same effect as votes against the proposal
and broker non-votes will have no effect. HARCOURT GENERAL WILL BE VOTING ITS
COMMON STOCK, REPRESENTING APPROXIMATELY 53.0% OF THE VOTING POWER OF THE
COMPANY, FOR THIS PROPOSAL.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO APPROVE THE 1997 INCENTIVE PLAN.
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3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Although Delaware law does not require that the selection by the Board of
Directors of the Company's auditors be approved each year by the stockholders,
the Board of Directors believes it is appropriate to submit its selection to the
stockholders for their approval and to abide by the result of the stockholders'
vote. The Board of Directors recommends that the stockholders ratify the
appointment of Deloitte & Touche LLP as independent auditors to audit the
financial statements of the Company for the fiscal year ending August 2, 1997.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they wish, and will be
available to respond to appropriate questions from stockholders. The Company
paid, or accrued, approximately $575,000 on account of professional services
rendered by Deloitte & Touche LLP for the fiscal year ended August 3, 1996.
Deloitte & Touche LLP also serves as the independent auditors for Harcourt
General.
Approval of the proposal to ratify the selection of Deloitte & Touche LLP
as the Company's independent auditors for the current fiscal year requires a
favorable vote of a majority of the votes cast at the Annual Meeting.
Abstentions will be treated as votes cast. Broker non-votes will be treated as
present but not voting. On this proposal, abstentions will have the same effect
as votes against the proposal and broker non-votes will have no effect. HARCOURT
GENERAL WILL BE VOTING ITS COMMON STOCK, REPRESENTING APPROXIMATELY 53.0% OF THE
VOTING POWER OF THE COMPANY, FOR THE SELECTION OF DELOITTE & TOUCHE LLP.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING AUGUST 2, 1997.
4. STOCKHOLDER PROPOSAL
Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, NW, Suite
215, Washington, D.C. 20037, the record owner of 150 shares of the Company's
Common Stock, has submitted for consideration at the Annual Meeting the proposal
set forth below. Following the proposal is the stockholder's statement in
support thereof, in the form received by the Company, and the statement of the
Company's Board of Directors in opposition thereto.
"RESOLVED: That the shareholders recommend that the Board take the
necessary step that Neiman Marcus specifically identify by name and corporate
title in all future proxy statements those executive officers, not otherwise so
identified, who are contractually entitled to receive in excess of $250,000
annually as a base salary, together with whatever other additional compensation
bonuses and other cash payments were due them."
"REASONS: In support of such proposed Resolution it is clear that the
shareholders have a right to comprehensively evaluate the management in the
manner in which the Corporation is being operated and its resources utilized."
"At present only a few of the most senior executive officers are so
identified, and not the many other senior executive officers who should
contribute to the ultimate success of the Corporation."
"Through such additional identification the shareholders will then be
provided an opportunity to better evaluate the soundness and efficacy of the
overall management."
"If you AGREE, please mark your proxy FOR this proposal."
Statement of the Board of Directors in Opposition
The Company provides extensive disclosure on compensation of its executive
officers in accordance with the rules and regulations of the Securities and
Exchange Commission (the "Commission") that apply to all public companies. The
proposal attempts to impose disclosure obligations beyond
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what is required by the Commission and beyond what is reported by most public
companies. The Commission's compensation disclosure rules were significantly
revised in 1992 after comprehensive review and comment from numerous reporting
companies, investors and other interested persons. The Company makes the full
disclosure required by these rules. The Board of Directors believes that the
existing disclosure provides stockholders with a clear overview of the
compensation structure for executive officers and provides an adequate basis for
stockholders to evaluate the Company's use of resources for compensation.
Approval of the stockholder proposal requires a favorable vote of a
majority of the votes cast at the Annual Meeting. Abstentions will be treated as
votes cast. Broker non-votes will be treated as present but not voting. On this
proposal, abstentions will have the same effect as votes against the proposal
and broker non-votes will have no effect. HARCOURT GENERAL WILL BE VOTING ITS
COMMON STOCK, REPRESENTING APPROXIMATELY 53.0% OF THE VOTING POWER OF THE
COMPANY, AGAINST THIS STOCKHOLDER PROPOSAL.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST THIS
STOCKHOLDER PROPOSAL.
5. OTHER MATTERS
The Board of Directors knows of no other matters which are likely to be
brought before the meeting. If any other matters should be properly brought
before the meeting, it is the intention of the persons named in the enclosed
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
DEADLINE FOR SUBMISSION OF
1998 STOCKHOLDER PROPOSALS AND NOMINATIONS
In order for stockholder proposals to be considered by the Company for
inclusion in the proxy material for the Annual Meeting of Stockholders to be
held in 1998, they must be received by the Company at its principal executive
offices by August 12, 1997. Any nominations for the Board of Directors must be
received no later than October 20, 1997. See "Meetings and Committees of the
Board of Directors and its Committees -- Nominating Committee."
By Order of the Board of Directors
ERIC P. GELLER
Secretary
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, ALL STOCKHOLDERS ARE URGED TO
PROMPTLY COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
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EXHIBIT A
THE NEIMAN MARCUS GROUP, INC.
1997 INCENTIVE PLAN
1. DEFINED TERMS
Appendix A, which is incorporated by reference, defines the terms used in
the Plan.
2. IN GENERAL
The Plan has been established to advance the interests of the Company by
giving selected Employees, directors and other persons (including both
individuals and entities) who provide services to the Company or its Affiliates
equity-based or cash incentives through the grant of Awards. No Award may be
granted under the Plan after September 1, 2006, but Awards previously granted
may extend beyond that date.
3. ADMINISTRATION
The Administrator has discretionary authority, subject only to the express
provisions of the Plan, to interpret the Plan; determine eligibility for and
grant Awards; determine, modify or waive the terms and conditions of any Award;
prescribe forms, rules and procedures (which it may modify or waive); and
otherwise do all things necessary to carry out the purposes of the Plan. Once an
Award has been communicated in writing to a Participant, the Administrator may
not, without the Participant's consent, alter the terms of the Award so as to
affect adversely the Participant's rights under the Award, unless the
Administrator expressly reserved the right to do so. In the case of any Award
intended to be eligible for the performance-based compensation exception under
Section 162(m)(4)(C) of the Code, the Committee shall exercise its discretion
consistent with qualifying the Award for such exception.
4. SHARES SUBJECT TO THE PLAN
A. A total of 2,500,000 shares of Stock have been reserved for issuance
under the Plan. The following shares of Stock will also be available for future
grants:
(i) shares remaining under an Award that terminates without having been
exercised in full (in the case of an Award requiring exercise by a
Participant for delivery of Stock);
(ii) shares subject to an Award, where cash is delivered to a
Participant in lieu of such shares;
(iii) shares of Restricted Stock that are forfeited to the Company;
(iv) shares of Stock tendered by a Participant as payment upon exercise
of an Award; and
(v) shares of Stock held back by the Administrator, or tendered by a
Participant, in satisfaction of tax withholding requirements.
Stock delivered under the Plan may be authorized but unissued Stock or
previously issued Stock acquired by the Company and held in treasury. No
fractional shares of Stock will be delivered under the Plan.
B. The maximum number of shares for which Stock Options may be granted to
any person over the life of the Plan shall be 1,000,000. The maximum number of
shares subject to SARs granted to any person over the life of the Plan shall
likewise be 1,000,000. For purposes of the preceding two sentences, the
repricing of a Stock Option or SAR shall be treated as a new grant to the extent
required
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under Section 162(m) of the Code. The aggregate maximum number of shares of
Stock delivered to any person over the life of the Plan pursuant to Awards that
are not Stock Options or SARs shall also be 1,000,000. Subject to these
limitations, each person eligible to participate in the Plan shall be eligible
in any year to receive Awards covering up to the full number of shares then
available for Awards under the Plan.
5. ELIGIBILITY AND PARTICIPATION
The Administrator will select Participants from among those key Employees,
directors and other individuals or entities providing services to the Company or
its Affiliates who, in the opinion of the Administrator, are in a position to
make a significant contribution to the success of the Company and its
Affiliates. Eligibility for ISOs is further limited to those individuals whose
employment status would qualify them for the tax treatment described in Sections
421 and 422 of the Code.
6. RULES APPLICABLE TO AWARDS
a. ALL AWARDS
(1) PERFORMANCE OBJECTIVES. Where rights under an Award depend in
whole or in part on attainment of performance objectives, actions by the Company
that have an effect, however material, on such performance objectives or on the
likelihood that they will be achieved will not be deemed an amendment or
alteration of the Award unless accomplished by a change in the express terms of
the Award or other action that is without substantial consequence except as it
affects the Award.
(2) ALTERNATIVE SETTLEMENT. The Company retains the right at any time
to extinguish rights under an Award in exchange for payment in cash, Stock
(subject to the limitations of Section 4) or other property on such terms as the
Administrator determines, provided the holder of the Award consents to such
exchange.
(3) TRANSFERABILITY OF AWARDS. Except as the Administrator otherwise
expressly provides, Awards (other than an Award in the form of an outright
transfer of cash or Unrestricted Stock) may not be transferred other than by
will or by the laws of descent and distribution and, during a Participant's
lifetime an Award requiring exercise may be exercised only by the Participant
(or in the event of the Participant's incapacity, the person or persons legally
appointed to act on the Participant's behalf).
(4) VESTING, ETC. The Administrator may determine the time or times at
which an Award will vest (i.e., become free of restrictions) or become
exercisable. Unless the Administrator expressly provides otherwise, an Award
requiring exercise will cease to be exercisable, and all other Awards to the
extent not already fully vested will be forfeited, immediately upon the
cessation (for any reason, including death) of the Participant's employment or
other service relationship with the Company and its Affiliates.
(5) TAXES. The Administrator will make such provision for the
withholding of taxes as it deems necessary. The Administrator may, but need not,
hold back shares from an Award or permit a Participant to tender previously
owned shares in satisfaction of tax withholding requirements.
(6) DIVIDEND EQUIVALENTS, ETC. The Administrator may provide for the
payment of amounts in lieu of dividends or other distributions with respect to
Stock subject to an Award.
(7) RIGHTS LIMITED. Nothing in the Plan shall be construed as giving
any person the right to continued employment or service with the Company or its
Affiliates, nor any rights as a shareholder except as to shares actually issued
under the Plan. The loss of existing or potential profit in Awards will not
constitute an element of damages in the event of termination of employment or
service for any
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reason, even if the termination is in violation of an obligation of the Company
or Affiliate to the Participant.
(8) SECTION 162(m). In the case of an Award intended to be eligible
for the performance-based compensation exception under Section 162(m)(4)(C) of
the Code, the Plan and such Award shall be construed in a manner consistent with
qualifying the Award for such exception.
b. AWARDS REQUIRING EXERCISE
(1) TIME AND MANNER OF EXERCISE. Unless the Administrator expressly
provides otherwise, (a) an Award requiring exercise by the holder will not be
deemed to have been exercised until the Administrator receives a written notice
of exercise (in form acceptable to the Administrator) signed by the appropriate
person and accompanied by any payment required under the Award; and (b) if the
Award is exercised by any person other than the Participant, the Administrator
may require satisfactory evidence that the person exercising the Award has the
right to do so.
(2) PAYMENT OF EXERCISE PRICE, IF ANY. Where the exercise of an Award
is to be accompanied by payment, the Administrator may determine the required or
permitted forms of payment either at or after the time of the Award, subject to
the following: (a) unless the Administrator expressly provides otherwise, all
payments will be by cash or check acceptable to the Administrator; and (b) where
shares issued under an Award are part of an original issue of shares, the Award
shall require an exercise price equal to at least the par value of such shares.
(3) RELOAD AWARDS. The Administrator may provide that upon the
exercise of an Award through the tender of previously owned shares of Stock, the
Participant or other person exercising the Award will automatically receive a
new Award of like kind covering a number of shares determined by reference to
the number of shares tendered in payment of the exercise price of the first
Award.
c. AWARDS NOT REQUIRING EXERCISE
Awards of Restricted Stock and Unrestricted Stock may be made in return for
either (i) services determined by the Administrator to have a value not less
than the par value of the awarded shares, or (ii) cash or other property having
a value not less than the par value of the awarded shares plus such additional
amounts (if any) as the Administrator may determine payable in such combination
of cash, other property (of any kind) or services as the Administrator may
determine.
7. EFFECT OF CERTAIN TRANSACTIONS
a. MERGERS, ETC.
In the event of a consolidation or merger in which the Company is not the
surviving corporation or which results in the acquisition of substantially all
the Company's outstanding Stock by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of the sale or
transfer of substantially all the Company's assets or a dissolution or
liquidation of the Company (a "covered transaction"), all outstanding Awards
requiring exercise will cease to be exercisable, and all other Awards to the
extent not fully vested (including Awards subject to performance conditions not
yet satisfied or determined) will be forfeited, as of the effective time of the
covered transaction. Prior to such time the Administrator may (but need not)
accelerate the vesting or exercisability of any Award or provide for substitute
or replacement awards from the acquiring entity (if any).
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b. CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK
(1) BASIC ANTIDILUTION PROVISIONS. In the event of a stock dividend,
stock split or combination of shares, recapitalization or other change in the
Company's capital structure, the Administrator will make appropriate adjustments
to the maximum number of shares that may be delivered under the Plan under
Section 4.a. and to the maximum share limits described in Section 4.b., and will
also make appropriate adjustments to the number and kind of shares of stock or
securities subject to Awards then outstanding or subsequently granted, any
exercise prices relating to Awards and any other provision of Awards affected by
such change.
(2) CERTAIN OTHER ADJUSTMENTS. The Administrator may also make
adjustments of the type described in paragraph (1) above to take into account
distributions to common stockholders other than stock dividends or normal cash
dividends, mergers, consolidations, acquisitions, dispositions or similar
corporate transactions, or any other event, if the Administrator determines that
adjustments are appropriate to avoid distortion in the operation of the Plan and
to preserve the value of Awards made hereunder; provided, that no such
adjustment shall be made to the maximum share limits described in Section 4.b.,
or otherwise to an Award intended to be eligible for the performance-based
exception under Section 162(m)(4)(C) of the Code, except to the extent
consistent with that exception.
8. CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any shares of Stock pursuant
to the Plan or to remove any restriction from shares previously delivered under
the Plan until: the Company's counsel has approved all legal matters in
connection with the issuance and delivery of such shares; if the outstanding
Stock is at the time listed on any stock exchange or national market system, the
shares to be delivered have been listed or authorized to be listed on such
exchange or system upon official notice of notice of issuance; and all
conditions of the Award have been satisfied or waived. If the sale of Stock has
not been registered under the Securities Act of 1933, as amended, the Company
may require, as a condition to exercise of the Award, such representations or
agreements as counsel for the Company may consider appropriate to avoid
violation of such Act. The Company may require that certificates evidencing
Stock issued under the Plan bear an appropriate legend reflecting any
restriction on transfer applicable to such Stock.
9. AMENDMENT AND TERMINATION
Subject to the last sentence of Section 3, the Administrator may at any
time or times amend the Plan or any outstanding Award for any purpose which may
at the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards, provided that (except to the extent expressly required
or permitted by the Plan) no such amendment will, without the approval of the
stockholders of the Company, effectuate a change for which stockholder approval
is required in order for the Plan to continue to qualify under Section 422 of
the Code or for Awards to be eligible for the performance-based exception under
Section 162(m)(4)(C) of the Code.
10. NON-LIMITATION OF THE COMPANY'S RIGHTS
The existence of the Plan or the grant of any Award shall not in any way
affect the Company's right to award a person bonuses or other compensation in
addition to Awards under the Plan.
11. GOVERNING LAW
The Plan shall be construed in accordance with the laws of The Commonwealth
of Massachusetts.
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APPENDIX A
DEFINITION OF TERMS
The following terms, when used in the Plan, shall have the meanings and be
subject to the provisions set forth below:
"ADMINISTRATOR": The Committee, if one has been appointed; otherwise the
Board.
"AFFILIATE": Any corporation or other entity owning, directly or
indirectly, 50% or more of the outstanding Stock of the Company, or in which the
Company or any such corporation or other entity owns, directly or indirectly,
50% of the outstanding capital stock (determined by aggregate voting rights) or
other voting interests.
"AWARD": Any of the following:
(i) Options ("Stock Options") entitling the recipient to acquire
shares of Stock upon payment of the exercise price. Each Stock Option
(except as otherwise expressly provided by the Committee consistent with
continued qualification of the Stock Option as a performance-based award
for purposes of Section 162(m) of the Code, or unless the Committee
expressly determines that such Stock Option is not subject to Section
162(m) of the Code or that the Stock Option is not intended to qualify for
the performance-based exception under Section 162(m) of the Code), will
have an exercise price not less than the fair market value of the Stock
subject to the option, determined as of the date of grant, except that an
ISO granted to an Employee described in Section 422(b)(6) of the Code will
have an exercise price not less than 110% of such fair market value. The
Administrator will determine the medium in which the exercise price is to
be paid, the duration of the option, the time or times at which an option
will become exercisable, provisions for continuation (if any) of option
rights following termination of the Participant's employment with the
Company and its Affiliates, and all other terms of the Option. No Stock
Option awarded under the Plan will be an ISO unless the Administrator
expressly provides for ISO treatment.
(ii) Rights ("SARs") entitling the holder upon exercise to receive
cash or Stock, as the Administrator determines, equal to a function
(determined by the Administrator using such factors as it deems
appropriate) of the amount by which the Stock has appreciated in value
since the date of the Award.
(iii) Stock subject to restrictions ("Restricted Stock") under the
Plan requiring that the Stock be redelivered to the Company if specified
conditions are not satisfied. The conditions to be satisfied in connection
with any Award of Restricted Stock, the terms on which such Stock must be
redelivered to the Company, the purchase price of such Stock, and all other
terms shall be determined by the Administrator.
(iv) Stock not subject to any restrictions under the Plan
("Unrestricted Stock").
(v) A promise to deliver Stock or other securities in the future on
such terms and conditions as the Administrator determines.
(vi) Securities (other than Stock Options) that are convertible into
or exchangeable for Stock on such terms and conditions as the Administrator
determines.
A-5
<PAGE> 32
(vii) Cash bonuses tied to performance criteria as described at
(viii) below ("Cash Performance Awards").
(viii) Awards described in any of (i) through (vii) above where the
right to exercisability, vesting or full enjoyment of the Award is
conditioned in whole or in part on the satisfaction of specified
performance criteria ("Performance Awards"). The Committee in its
discretion may grant Performance Awards that are intended to qualify for
the performance-based compensation exception under Section 162(m)(4)(C) of
the Code and Performance Awards that are not intended so to qualify. No
more than $2,000,000 may be paid to any individual with respect to any Cash
Performance Award. In applying the limitation of the preceding sentence:
(A) multiple Cash Performance Awards to the same individual that are
determined by reference to performance periods of one year or less ending
with or within the same fiscal year of the Company shall be subject in the
aggregate to one $2,000,000 limit, and (B) multiple Cash Performance Awards
to the same individual that are determined by reference to one or more
multi-year performance periods ending in the same fiscal year of the
Company shall be subject in the aggregate to a separate limit of
$2,000,000. With respect to any Performance Award other than a Cash
Performance Award, Stock Option or SAR, the maximum award opportunity shall
be 1,000,000 shares or their equivalent value in cash, subject to the
limitations of Section 4.b. For the avoidance of doubt, any Performance
Award of a type described in (i) through (vi) above shall be treated for
purposes of this paragraph as a Performance Award that is not a Cash
Performance Award, even if payment is made in cash.
In the case of a Performance Award intended to qualify as
performance-based for the purposes of Section 162(m) of the Code, the
Committee shall in writing preestablish a specific performance goal (based
solely on one or more qualified performance criteria) no later than 90 days
after the commencement of the period of service to which the performance
relates (or at such earlier time as is required to qualify the award as
performance-based under Code Section 162(m)(4)(C)). For purposes of the
Plan, a qualified performance criterion is any of the following: (1)
earnings or earnings per share (whether on a pre-tax, after-tax,
operational or other basis), (2) return on equity, (3) return on assets,
(4) revenues, (5) sales, (6) expenses, (7) one or more operating ratios,
(8) stock price, (9) stockholder return, (10) market share, (11) cash flow,
(12) inventory levels or inventory turn, (13) capital expenditures, (14)
net borrowing, debt leverage levels or credit quality, (15) the
accomplishment of mergers, acquisitions, dispositions, public offerings or
similar extraordinary business transactions or (16) any combination of the
foregoing. The performance goals selected in any case need not be
applicable across the Company, but may be particular to an individual's
function or business unit. Prior to payment of any Performance Award
intended to qualify as performance-based under Section 162(m)(4)(C) of the
Code, the Committee shall certify whether the performance goal has been
attained and such determination shall be final and conclusive. If the
performance goal is not attained, no other Award shall be provided in
substitution of the Performance Award.
(ix) Grants of cash, or loans, made in connection with other Awards
in order to help defray in whole or in part the economic cost (including
tax cost) of the Award to the Participant. The terms of any such grant or
loan shall be determined by the Administrator.
Awards may be combined in the Administrator's discretion.
"BOARD": The Board of Directors of the Company.
"CODE": The U.S. Internal Revenue Code of 1986, as from time to time
amended and in effect.
A-6
<PAGE> 33
"COMMITTEE": A committee of the Board comprised solely of two or more
outside directors within the meaning of Section 162(m) of the Code. The
Committee may delegate ministerial tasks to such persons (including Employees)
as it deems appropriate.
"COMPANY": The Neiman Marcus Group, Inc.
"EMPLOYEE": Any person who is employed by the Company or an Affiliate.
"ISO": A Stock Option intended to be an "incentive stock option" within
the meaning of Section 422 of the Code.
"PARTICIPANT": An Employee, director or other person providing services to
the Company or its Affiliates who is granted an Award under the Plan.
"PLAN": The Neiman Marcus Group, Inc. 1997 Incentive Plan as from time to
time amended and in effect.
"STOCK": Common Stock of the Company, par value $.01 per share.
A-7
<PAGE> 34
COMMON STOCK COMMON STOCK
THE NEIMAN MARCUS GROUP, INC.
P ANNUAL MEETING OF STOCKHOLDERS, JANUARY 17, 1997
R
O Richard A. Smith, Robert J. Tarr, Jr. and Eric P. Geller, and each of
X them (a majority of those present and acting to have all the powers
Y hereunder), with several powers of substitution, are hereby authorized to
represent and vote all shares of Common Stock of the undersigned at the
Annual Meeting of Stockholders of The Neiman Marcus Group, Inc. to be held
at The First National Bank of Boston, 100 Federal Street, Boston,
Massachusetts on Friday, January 17, 1997, at 10:00 a.m. and at any
adjournments thereof. The undersigned hereby revokes any Proxy previously
given and acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement, dated December 10, 1996, and a copy of the Annual Report for the
year ended August 3, 1996.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. THE BOARD OF DIRECTORS OF THE NEIMAN MARCUS GROUP, INC.
RECOMMENDS A VOTE FOR THE NOMINEES SET FORTH BELOW, FOR PROPOSALS 2 AND 3,
AND AGAINST PROPOSAL 4. IF THIS PROXY IS SIGNED AND RETURNED AND DOES NOT
SPECIFY A VOTE ON ANY PROPOSAL, THE PROXY WILL BE SO VOTED.
ELECTION OF CLASS III DIRECTORS
NOMINEES: JEAN HEAD SISCO, VINCENT M. O'REILLY
(SEE REVERSE SIDE TO CAST VOTE) -----------
SEE REVERSE
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE SIDE
-----------
<TABLE>
<S> <C>
Please mark
[X] votes as in
this example.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
- ------------------------------------------------------------------------------- --------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. THE BOARD OF DIRECTORS
- ------------------------------------------------------------------------------- RECOMMENDS A VOTE AGAINST
2. Approval of the Company's 1997 Incentive PROPOSAL 4.
Plan. --------------------------------------------------
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
FOR WITHHELD [ ] [ ] [ ] 4. Approval of stockholder [ ] [ ] [ ]
1. Election of [ ] [ ] 3. Approval of the appointment of Deloitte & proposal concerning
Directors (See Touche LLP as independent auditors of the compensation disclosure.
reverse). Company for the current fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
[ ]
- ---------------------------------------
For all nominees except as noted above
- --------------------------------------------------------------------------------
MARK HERE MARK HERE
FOR ADDRESS [ ] IF YOU PLAN [ ]
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
FOR joint accounts, each owner should sign. Executors,
Administrators,Trustees, etc., should give full title.
Signature: _______________________________ Date: _________________ Signature: _______________________________ Date: ________________
</TABLE>
<PAGE> 35
CONFIDENTIAL VOTING INSTRUCTIONS
TO: WACHOVIA BANK OF NORTH CAROLINA, N.A.
AS TRUSTEE UNDER
THE NEIMAN MARCUS GROUP, INC.
P SAVINGS AND INVESTMENT PLAN
R WITH RESPECT TO THE ANNUAL MEETING OF STOCKHOLDERS OF
O THE NEIMAN MARCUS GROUP, INC. -- JANUARY 17, 1997
X
Y I hereby instruct the Trustee to vote (in person or by proxy) all
shares of Common Stock of The Neiman Marcus Group, Inc. which are credited
to my account under the above-referenced Plan at the Annual Meeting of
Stockholders of The Neiman Marcus Group, Inc. to be held at The First
National Bank of Boston, 100 Federal Street, Boston, Massachusetts on
Friday, January 17, 1997 at 10:00 a.m. and at any adjournments thereof.
The undersigned hereby revokes any instruction previously given and
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement
dated December 10, 1996, and a copy of the Annual Report for the year
ended August 3, 1996.
THE SHARES REPRESENTED BY THIS INSTRUCTION CARD WILL BE VOTED BY THE
TRUSTEE AS DIRECTED BY THE UNDERSIGNED. THE BOARD OF DIRECTORS OF THE
NEIMAN MARCUS GROUP, INC. RECOMMENDS A VOTE FOR THE NOMINEES SET FORTH
BELOW, FOR PROPOSALS 2 AND 3, AGAINST PROPOSAL 4. IF THIS INSTRUCTION CARD
IS SIGNED AND RETURNED AND DOES NOT SPECIFY A VOTE ON ANY PROPOSAL, THE
INSTRUCTION CARD WILL BE SO VOTED.
ELECTION OF CLASS III DIRECTORS
NOMINEES: JEAN HEAD SISCO, VINCENT M. O'REILLY
(SEE REVERSE SIDE TO CAST VOTE) -----------
SEE REVERSE
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE SIDE
-----------
<TABLE>
<S> <C>
Please mark
[X] votes as in
this example.
THIS INSTRUCTION CARD IS SOLICITED BY THE PLAN TRUSTEE
- ---------------------------------------------------------------------------------- -------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
- ---------------------------------------------------------------------------------- THE BOARD OF DIRECTORS
FOR AGAINST ABSTAIN RECOMMENDS A VOTE AGAINST
2. Approval of the [ ] [ ] [ ] PROPOSAL 4.
Company's 1997
Incentive Plan. -------------------------------------------------
FOR AGAINST ABSTAIN
FOR WITHHELD 4. Approval of stock- [ ] [ ] [ ]
1. Election of [ ] [ ] 3. Approval of the [ ] [ ] [ ] holder proposal con-
Directors (See appointment of cerning compensation
reverse). Deloitte & Touche disclosure.
LLP as independent
auditors of the
Company for the
[ ] current fiscal year.
- ---------------------------------------
For all nominees except as noted above
- ----------------------------------------------------------------------------------
MARK HERE MARK HERE
FOR ADDRESS [ ] IF YOU PLAN [ ]
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
FOR joint accounts, each owner should sign. Executors,
Administrators, Trustees, etc., should give full title.
Signature: ______________________________ Date: _______________ Signature: ______________________________ Date: _______________
</TABLE>
<PAGE> 36
CONFIDENTIAL VOTING INSTRUCTIONS
TO: BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
AS TRUSTEE UNDER
BROADWAY STORES, INC.
P 401(k) SAVINGS AND INVESTMENT PLAN
R WITH RESPECT TO THE ANNUAL MEETING OF STOCKHOLDERS OF
O THE NEIMAN MARCUS GROUP, INC. -- JANUARY 17, 1997
X
Y I hereby instruct the Trustee to vote (in person or by proxy) all
shares of Common Stock of The Neiman Marcus Group, Inc. which are credited
to my account under the above-referenced Plan at the Annual Meeting of
Stockholders of The Neiman Marcus Group, Inc. to be held at The First
National Bank of Boston, 100 Federal Street, Boston, Massachusetts on
Friday, January 17, 1997 at 10:00 a.m. and at any adjournments thereof.
The undersigned hereby revokes any instruction previously given and
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement
dated December 10, 1996, and a copy of the Annual Report for the year
ended August 3, 1996.
THE SHARES REPRESENTED BY THIS INSTRUCTION CARD WILL BE VOTED BY THE
TRUSTEE AS DIRECTED BY THE UNDERSIGNED. THE BOARD OF DIRECTORS OF THE NEIMAN
MARCUS GROUP, INC. RECOMMENDS A VOTE FOR THE NOMINEES SET FORTH BELOW, FOR
PROPOSALS 2 AND 3, AGAINST PROPOSAL 4. IF THIS INSTRUCTION CARD IS SIGNED
AND RETURNED AND DOES NOT SPECIFY A VOTE ON ANY PROPOSAL, THE INSTRUCTION CARD
WILL BE SO VOTED.
ELECTION OF CLASS III DIRECTORS
NOMINEES: JEAN HEAD SISCO, VINCENT M. O'REILLY
(SEE REVERSE SIDE TO CAST VOTE) -----------
SEE REVERSE
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE SIDE
-----------
<TABLE>
<S> <C>
Please mark
[X] votes as in
this example.
THIS INSTRUCTION CARD IS SOLICITED BY THE PLAN TRUSTEE
- ---------------------------------------------------------------------------------- -------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
- ---------------------------------------------------------------------------------- THE BOARD OF DIRECTORS
FOR AGAINST ABSTAIN RECOMMENDS A VOTE AGAINST
2. Approval of the [ ] [ ] [ ] PROPOSAL 4.
Company's 1997
Incentive Plan. -------------------------------------------------
FOR AGAINST ABSTAIN
FOR WITHHELD 4. Approval of stock- [ ] [ ] [ ]
1. Election of [ ] [ ] 3. Approval of the [ ] [ ] [ ] holder proposal con-
Directors (See appointment of cerning compensation
reverse). Deloitte & Touche disclosure.
LLP as independent
auditors of the
Company for the
[ ] current fiscal year.
- ---------------------------------------
For all nominees except as noted above
- ----------------------------------------------------------------------------------
MARK HERE MARK HERE
FOR ADDRESS [ ] IF YOU PLAN [ ]
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
FOR joint accounts, each owner should sign. Executors,
Administrators, Trustees, etc., should give full title.
Signature: ______________________________ Date: _______________ Signature: ______________________________ Date: _______________
</TABLE>
<PAGE> 37
WACHOVIA
______________________________________________________________________________
Wachovia Corporate Services, Inc.
Trust Services Division
301 North Main Street
Winston-Salem, North Carolina 27150-3099
TO: Participants in The Neiman Marcus Group, Inc.
FROM: Wachovia Bank of North Carolina, N.A.
Trustee of the Savings and Investment Plan
DATE: December 10, 1996
As a participant in The Neiman Marcus Group, Inc. Savings and
Investment Plan, which owns shares of The Neiman Marcus Group, Inc., you are
entitled to instruct the Trustee on how to vote the shares of The Neiman Marcus
Group, Inc. Common Stock in your account on matters scheduled to come before the
Annual Meeting of Stockholders of The Neiman Marcus Group, Inc. to be held on
Friday, January 17, 1997.
A proxy statement, voting instruction card and return envelope are
enclosed. Please complete, date and sign the voting instruction card and mail
it promptly in the return envelope to exercise your right to direct the Trustee
with respect to shares of The Neiman Marcus Group, Inc. allocated to your
account.
If you own shares of The Neiman Marcus Group, Inc. outside of the
Savings and Investment Plan, you will receive similar materials for those
shares in a separate mailing. Please return both cards in their separate return
envelopes if you wish to fully participate in the matters being submitted to
the stockholders of The Neiman Marcus Group, Inc.
Enclosures
<PAGE> 38
[LOGO] BANKERS TRUST COMPANY
OF CALIFORNIA, N. A.
300 SOUTH GRAND AVENUE, LOS ANGELES, CALIFORNIA 90071
MAILING ADDRESS:
BUNKER HILL FINANCE STATION
P.O. BOX 712039
LOS ANGELES, CALIFORNIA 90071
December 10, 1996
TO: Participants in the Broadway Stores, Inc. 401(k) Savings and
Investment Plan
FROM: Bankers Trust Company
Trustee of the 401(k) Savings and Investment Plan
As a participant in the Broadway Stores, Inc. 401(k) Savings and Investment
Plan (formerly known as the Carter Hawley Hale Stores, Inc. Savings and
Investment Plan), which owns shares of The Neiman Marcus Group, Inc., you are
entitled to instruct the Trustee on how to vote the shares of The Neiman Marcus
Group, Inc. in your account, on the matters scheduled to come before the Annual
Meeting of Stockholders of The Neiman Marcus Group, Inc. to be held on Friday,
January 17, 1997.
A proxy statement, voting instruction card and return envelope are enclosed. If
you wish to exercise your right to vote, please complete, date and sign the
voting instruction card and mail promptly in the return envelope.
If you own shares of The Neiman Marcus Group, Inc. outside of the 401(k)
Savings and Investment Plan, you will receive similar materials for those
shares in the separate mailing. Please return both cards in their separate
return envelopes if you wish to fully participate in the matters being
submitted to the stockholders of The Neiman Marcus Group, Inc.
Enclosures
