<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
- --------------------------------------------------------------------------------
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[X] 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, Inc.
(Name of Registrant as Specified In Its Charter)
Eric P. Geller
The Neiman Marcus Group, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
(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
[NEIMAN MARCUS LOGO]
The Neiman Marcus Group,
Inc.
27 Boylston Street
Chestnut Hill, MA 02467
(617) 232-0760
November 24, 1999
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 21, 2000
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 21, 2000, AT THE
COMPANY'S CORPORATE HEADQUARTERS, 27 BOYLSTON STREET, CHESTNUT HILL,
MASSACHUSETTS, for the following purposes:
1. To elect three Class III directors, consisting of one Class A
director and two Class B directors.
2. To consider and act on a proposal to amend the Company's 1997
Incentive Plan to increase the number of shares reserved for issuance under
the Plan from 2,500,000 to 4,900,000.
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 cumulative voting.
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 ENVELOPE.
<PAGE> 3
[NEIMAN MARCUS LOGO]
The Neiman Marcus Group, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
(617) 232-0760
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 21, 2000
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" or "Neiman Marcus") for use at the Annual Meeting of Stockholders to
be held at 10:00 a.m. on Friday, January 21, 2000, at THE COMPANY'S CORPORATE
HEADQUARTERS, 27 BOYLSTON STREET, CHESTNUT HILL, MASSACHUSETTS, and at any
adjournments or postponements 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
amendment of the 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 cumulative voting. If any other matters are properly
presented at the meeting for consideration, the persons named in the enclosed
forms of proxy and acting thereunder will have discretion to vote on such
matters in accordance with their judgment.
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 forms of proxy is expected to commence on or about
November 24, 1999.
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 November 22, 1999 as the record date for
determining the stockholders having the right to vote at the Annual Meeting (the
"Record Date"). As of the Record Date there were outstanding and entitled to
vote at the meeting 27,979,660 shares of Class A Common Stock and 21,390,960
shares of Class B Common Stock. Each holder of record of the Company's Class A
Common Stock and Class B Common Stock on the Record Date is entitled to one vote
per share at the meeting. Only holders of Class A Common Stock are entitled to
vote on the election of the Class A director. Similarly, only holders of Class B
Common Stock are entitled to vote on the election of Class B directors. In all
other matters being submitted to a vote of the stockholders at the meeting,
holders of Class A Common Stock and Class B Common Stock will vote together as a
single class. As further described below, Harcourt General, Inc. has agreed to
vote its shares of Class A Common Stock on all matters in proportion to the
votes cast affirmatively or negatively by all other holders of Class A Common
Stock.
<PAGE> 4
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.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of November 10, 1999, with
respect to the beneficial ownership of Class A Common Stock and Class B Common
Stock by (i) each person known to the Company to own beneficially more than 5%
of the outstanding shares of either the Class A Common Stock or the Class B
Common Stock; (ii) each executive officer named in the Summary Compensation
Table; (iii) each director of the Company; and (iv) all current directors and
executive officers of the Company as a group.
Prior to October 22, 1999, Harcourt General, Inc. ("Harcourt General")
owned approximately 54% of the outstanding common stock of the Company. On
October 22, 1999, Harcourt General distributed to its stockholders approximately
21.4 million of the 26.4 million shares of Company common stock owned by
Harcourt General (the "Distribution"). In order for the Distribution to be
tax-free to Harcourt General and its stockholders, the stockholders of the
Company approved a recapitalization plan (the "Recapitalization") in September
1999 pursuant to which the approximately 21.4 million shares of common stock to
be distributed by Harcourt General to its stockholders were exchanged for a new
class of the Company's common stock, Class B Common Stock, having the right to
elect at least 82% of the Company's Board of Directors. The shares of the
Company's common stock held prior to the Distribution by stockholders other than
Harcourt General and the approximately 5 million shares retained by Harcourt
General were redesignated as Class A Common Stock, having the right to elect up
to 18% of the Board of Directors. The Class A Common Stock and Class B Common
Stock are identical in all other respects. In connection with the Distribution,
Harcourt General has agreed to vote the shares of the Company's Class A Common
Stock retained by it following the Distribution (as reflected in the table
below) on all matters in proportion to the votes cast affirmatively or
negatively by all other holders of Class A Common Stock.
<TABLE>
<CAPTION>
TOTAL
CLASS A COMMON STOCK CLASS B COMMON STOCK COMMON STOCK
------------------------- ------------------------- -------------------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF TOTAL
NAME OF BENEFICIAL OWNER NUMBER(1) CLASS NUMBER(1) CLASS COMMON STOCK
------------------------ --------- ------------- --------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Smith Family Group(2).............. -- -- 6,027,890 28.1% 12.2%
c/o Richard A. Smith
Harcourt General, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
Harcourt General, Inc.(3).......... 4,988,542 17.8% -- -- 10.1%
27 Boylston Street
Chestnut Hill, MA 02467
Richard A. Smith(2)................ -- -- 3,786,590 17.7% 7.7%
Nancy L. Marks(2).................. -- -- 2,982,590 13.9% 6.0%
c/o Harcourt General, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
Gabelli Funds, Inc.(4)............. 4,475,500 16.0% 228,190 1.1% 9.5%
One Corporate Center
Rye, NY 10580
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
TOTAL
CLASS A COMMON STOCK CLASS B COMMON STOCK COMMON STOCK
------------------------- ------------------------- -------------------
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF TOTAL
NAME OF BENEFICIAL OWNER NUMBER(1) CLASS NUMBER(1) CLASS COMMON STOCK
------------------------ --------- ------------- --------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
PRIMECAP Management Company(5)..... 4,050,080 14.5% 1,487,367 6.9% 11.2%
225 South Lake Avenue
Pasadena, CA 91101
Neuberger Berman, LLC(6)........... 1,438,251 5.1% 797,249 3.7% 4.5%
605 Third Avenue
New York, NY 10158
Burton M. Tansky(7)................ 181,980 * -- -- *
Gerald A. Sampson(8)............... 85,058 * -- -- *
Stephen Elkin(9)................... 98,636 * 120 * *
Dawn Mello(10)..................... 24,880 * -- -- *
Matina S. Horner(11)............... 4,594 * -- -- *
Vincent M. O'Reilly(11)............ 2,022 * 218 * *
Walter J. Salmon(11)............... 11,164 * -- -- *
Jean Head Sisco(11)................ 4,304 * -- -- *
Robert A. Smith(2)(12)............. -- -- 249,446 1.2% *
Brian J. Knez(2)(13)............... -- -- 181,658 * *
John R. Cook(14)................... -- -- 6,718 * *
All current executive officers and
directors as a group (21
persons)(15)..................... 438,850 1.6% 4,244,595 19.8% 9.4%
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated in the following footnotes, each stockholder
referred to above has sole voting and dispositive power with respect to the
shares listed. Certain of the shares included in the table have been
counted more than once because of certain rules and regulations of the
Securities and Exchange Commission (the "Commission"). The total number of
shares owned by, or for the benefit of, Richard A. Smith, Nancy L. Marks
and members of their families is as shown for the "Smith Family Group". See
Note 2.
(2) The Smith Family Group includes Richard A. Smith, Chairman of the Company;
Nancy L. Marks, Mr. Smith's sister; Robert A. Smith, Co-Chief Executive
Officer and a director of the Company and Brian J. Knez, Co-Chief Executive
Officer and a director of the Company, who are, respectively, the son and
son-in-law of Richard A. Smith; other members of their families and various
family corporations, trusts and charitable foundations. Members of the
Smith Family Group possess sole or shared voting power over all of the
shares shown in the table. Members of the Smith Family Group may be
regarded as controlling persons of Harcourt General, as the Smith Family
Group owns in the aggregate approximately 28% of the outstanding equity
securities of Harcourt General and virtually all of the Harcourt General
Class B Stock which carries special voting rights under certain
circumstances. The shares beneficially owned by Harcourt General are not
included in the amount shown for the Smith Family Group.
The Smith Family Group has filed a Schedule 13D with the Commission which
discloses that substantially all of the members of the Smith Family Group
have entered into two separate agreements restricting the transfer of their
shares of the Company's Class B Common Stock. First, the Smith Family Group
has agreed with the Company not to transfer shares of the Company's Class B
Common Stock for a 180-day period ending on April 21, 2000 except in
certain
3
<PAGE> 6
circumstances. Second, certain members of the Smith Family Group have
entered into a stockholders agreement dated as of September 1, 1999 (the
"Stockholders Agreement"). The Stockholders Agreement provides that members
of the Smith Family Group holding a total of 5,908,210 shares of Class B
Common Stock (representing 98% of the shares of Class B Common Stock
beneficially owned by the Smith Family Group) will be prohibited from
transferring such shares for three years subject to certain exceptions.
Following such three-year period, such shares will be subject to a right of
first offer pursuant to which any party to the Stockholders Agreement
desiring to transfer such shares must first offer to sell such shares to
the other parties to the Stockholders Agreement and, to the extent such
parties do not buy all the shares, then to the Company.
(3) The Company and Harcourt General are parties to a Distribution Agreement,
pursuant to which Harcourt General has agreed to vote the shares of the
Company's Class A Common Stock retained by it following the Distribution
(the "Retained Shares") on all matters in proportion to the votes cast
affirmatively or negatively by all other holders of Class A Common Stock.
In addition, Harcourt General has agreed, subject to certain exceptions,
that for the two year period ending on October 21, 2001, it will not sell,
exchange or transfer in any 60-day period Retained Shares representing 5%
or more of the total outstanding shares of the Class A Common Stock and
Class B Common Stock without first offering to the Company the right to
purchase such shares. Harcourt General intends to dispose of the Retained
Shares as market conditions permit and, in any event, before 2005.
(4) The information reported with respect to the Class A Common Stock is based
on a Schedule 13D dated August 18, 1997 filed with the Commission by the
Gabelli Funds, Inc. and its affiliates (collectively, the "Gabelli
Affiliates"). With respect to the Class B Common Stock, the information
reported is based on information provided by the Gabelli Affiliates as of
November 17, 1999. The Gabelli Affiliates have sole voting power with
respect to 4,372,500 shares of Class A Common Stock and 216,441 shares of
Class B Common Stock, and sole dispositive power with respect to all of the
shares reported in the table.
(5) The information reported is based on information provided by PRIMECAP
Management Company as of October 31, 1999 with respect to its ownership of
Neiman Marcus common stock. PRIMECAP Management Company has sole voting and
shared dispositive power with respect to all of the shares reported in the
table.
(6) The information reported is based on information provided by Neuberger
Berman, LLC as of November 19, 1999 with respect to its ownership of Neiman
Marcus common stock. Neuberger Berman, LLC has sole voting power with
respect to 1,625,092 shares reported in the table, and shared dispositive
power with respect to all of the shares reported in the table.
(7) Includes 106,580 shares of Class A Common Stock which are subject to
outstanding options exercisable within 60 days of November 10, 1999. Also
includes 49,900 shares of restricted Class A Common Stock over which Mr.
Tansky has voting but not dispositive power.
(8) Includes 29,840 shares of Class A Common Stock which are subject to
outstanding options exercisable within 60 days of November 10, 1999. Also
includes 20,500 shares of restricted Class A Common Stock over which Mr.
Sampson has voting but not dispositive power.
(9) Includes 64,840 shares of Class A Common Stock which are subject to
outstanding options exercisable within 60 days of November 10, 1999. Also
includes 10,100 shares of restricted Class A Common Stock over which Mr.
Elkin has voting but not dispositive power. Also includes 7,519 shares of
Class A Common Stock allocated to Mr. Elkin under the Company's Employee
Savings Plan ("ESP") as to which Mr. Elkin shares voting power with the
trustee of the ESP.
(10) Ms. Mello retired from the Company after the end of fiscal 1999 and
information for her is reported as of August 2, 1999. Includes 11,480
shares of Class A Common Stock which are subject to outstanding options
exercisable within 60 days of August 2, 1999. Also includes 5,200 shares of
restricted Class A Common Stock over which Ms. Mello has voting but not
dispositive power.
4
<PAGE> 7
(11) Dr. Horner, Mr. O'Reilly, Mr. Salmon and Mrs. Sisco hold, respectively,
4,594, 1,222, 1,222 and 3,170 common stock based units which are included
in the table. These directors do not have voting or dispositive power with
respect to these common stock based units. See Directors' Compensation.
(12) Mr. Smith has voting but not dispositive power with respect to 4,398 shares
of restricted Class B Common Stock. All of the shares reported for Mr.
Smith are included in the shares owned by the Smith Family Group. See Note
2.
(13) Mr. Knez has voting but not dispositive power with respect to 4,398 shares
of restricted Class B Common Stock. All of the shares reported for Mr. Knez
are included in the shares owned by the Smith Family Group. See Note 2.
(14) Includes 2,199 shares of restricted Class B Common Stock with respect to
which Mr. Cook has voting but not dispositive power.
(15) Includes (i) 212,740 shares of Class A Common Stock which are subject to
outstanding options exercisable within 60 days of November 10, 1999, (ii)
147,471 shares of restricted Class A Common Stock and Class B Common Stock
over which individuals in the group have voting but not dispositive power,
(iii) 8,587 shares of Class A Common Stock allocated to individuals in the
group under the ESP as to which such individuals share voting power with
the trustee of the ESP, and (iv) the 10,208 common stock based units
referred to in Note 11 above.
5
<PAGE> 8
1. ELECTION OF DIRECTORS
The Company's Board of Directors is separated into three classes (Class I,
Class II and Class III), only one of which classes is scheduled for election
each year. At each Annual Meeting a Class of directors is elected for a full
term of three years. In addition, pursuant to the Company's Restated Certificate
of Incorporation, as amended (the "Certificate of Incorporation"), holders of
Class B Common Stock are entitled to elect at least 82% of the Company's Board
of Directors and holders of the Class A Common Stock are entitled to elect the
remaining directors. The Board of Directors has fixed the number of directors at
eight, one of whom is elected by the holders of the Class A Common Stock and
seven of whom are elected by the holders of the Class B Common Stock. To ensure
that there will be at least one Class A director at all times, the Company's
Board of Directors may not consist of less than six members.
At the 2000 Annual Meeting, three Class III directors are to be elected,
consisting of one Class A director and two Class B directors. The persons named
in the accompanying forms of proxy will vote each proxy for the election of the
nominees listed below, unless directed otherwise. Each of the nominees is
currently a member of the Board of Directors. The Company has no reason to
believe that any of 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 by the holders of each of the
Class A Common Stock and Class B Common Stock, respectively, at the Annual
Meeting is required to elect the Class A and Class B directors, respectively.
All of the nominees for director and the directors who will continue to
serve after the 2000 Annual Meeting are listed below with their principal
occupations for the last five years.
NOMINEES FOR TERMS EXPIRING IN 2003 (CLASS III DIRECTORS)
VINCENT M. O'REILLY, age 62, Director since 1997, Class A Director
Distinguished Senior Lecturer, Carroll School of Management, Boston College
since October 1997; Executive Vice Chairman of Coopers & Lybrand prior thereto;
Director of Eaton Vance Corp. and Teradyne, Inc.
JOHN R. COOK, age 58, Director since 1998, Class B Director
Senior Vice President and Chief Financial Officer of the Company and of
Harcourt General.
JEAN HEAD SISCO, age 74, Director since 1987, Class B Director
Partner in Sisco Associates, international management consultants; Director
of Textron, Inc., Chiquita Brands International, Inc., The American Funds
Tax-Exempt Series I and K-Tron International, Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 2001 (CLASS I DIRECTORS)
RICHARD A. SMITH, age 75, Director since 1987, Class B Director
Chairman of the Company and of Harcourt General; Chief Executive Officer of
the Company from January 1997 until December 1998 and prior to December 1991;
Chief Executive Officer of Harcourt General from January 1997 until November
1999 and prior to December 1991; Chairman, President
6
<PAGE> 9
(until November 1995) and Chief Executive Officer of GC Companies, Inc.;
Director of the Company, Harcourt General and GC Companies, Inc. Mr. Smith is
the father of Robert A. Smith and the father-in-law of Brian J. Knez.
ROBERT A. SMITH, age 40, Director since 1997, Class B Director
Co-Chief Executive Officer of the Company since May 1999; Chief Executive
Officer of the Company from December 1998 until May 1999; President and Co-Chief
Executive Officer of Harcourt General since November 1999; President and Chief
Operating Officer of the Company from January 1997 until December 1998;
President and Co-Chief Operating Officer of Harcourt General from January 1997
until November 1999; Group Vice President of the Company and of Harcourt General
prior to January 1997; President and Chief Operating Officer of GC Companies,
Inc. since November 1995; Director of the Company and of Harcourt General. Mr.
Smith is the son of Richard A. Smith and the brother-in-law of Brian J. Knez.
DIRECTORS WHOSE TERMS EXPIRE IN 2002 (CLASS II DIRECTORS)
MATINA S. HORNER, PH.D., age 60, Director since 1993, Class B Director
Executive Vice President of the Teachers Insurance and Annuity
Association-College Retirement Equities Fund (TIAA-CREF) and President Emerita
of Radcliffe College since 1989; Director of Boston Edison Company.
BRIAN J. KNEZ, age 42, Director since 1998, Class B Director
Co-Chief Executive Officer of the Company since May 1999; President and
Co-Chief Executive Officer of Harcourt General since November 1999; President
and Co-Chief Operating Officer of Harcourt General from January 1997 until
November 1999; President (until November 1998) and Chief Executive Officer of
Harcourt, Inc. since May 1995; President of the Scientific, Technical, Medical
and Professional Group of Harcourt, Inc. prior to May 1995; Director of the
Company and of Harcourt General. Mr. Knez is the son-in-law of Richard A. Smith
and the brother-in-law of Robert A. Smith.
WALTER J. SALMON, age 69, Director since 1987, Class B Director
Stanley Roth Sr. Professor of Retailing (Emeritus since 1997), Graduate
School of Business Administration, Harvard University; Director of Hannaford
Bros. Co., The Quaker Oats Company, Circuit City Stores, Inc., Luby's
Cafeterias, Inc., Harrah's Entertainment, Inc., Cole National Corporation and
PetsMart, Inc.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended July 31, 1999, the Board of Directors held six
meetings and acted by unanimous written consent on four other occasions. During
fiscal 1999, 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.
Audit Committee. The members of the Audit Committee, which met four times
during fiscal 1999, are Mrs. Sisco (Chair), Dr. Horner, Mr. O'Reilly 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
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<PAGE> 10
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 audit
services.
Special Review Committee. The members of the Special Review Committee are
Mr. Salmon (Chairman), Dr. Horner, Mr. O'Reilly and Mrs. Sisco. The Special
Review Committee met once during fiscal 1999. 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 Amended and
Restated Intercompany Services Agreement (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 such agreement. For
information regarding the Intercompany Services Agreement, see Note 1 to the
Summary Compensation Table. The four independent directors (all of whom are
members of the Special Review Committee) also met as a group four times during
the year to consider and act upon various matters related to the Distribution
and Recapitalization described under "Stock Ownership of Certain Beneficial
Owners and Management."
Compensation Committee. The members of the Compensation Committee, which
met twice during fiscal 1999, are Mr. Salmon (Chairman), Dr. Horner, Mr.
O'Reilly 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 incentive plans.
Nominating Committee. All of the directors of the Company serve on the
Nominating Committee, which held one meeting during fiscal 1999. Mrs. Sisco is
the Chair 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 by stockholders for nominees for
director must be made in writing and received by the Secretary of the Company,
27 Boylston Street, Chestnut Hill, Massachusetts 02467 no later than October 17,
2000 (see "Deadline for Submission of Stockholder Proposals and Nominations for
Director for Annual Meeting of Stockholders to be held in January 2001"). 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
meet during fiscal 1999, are Richard A. Smith (Chairman), Walter J. Salmon,
Brian J. Knez and Robert A. Smith. 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
8
<PAGE> 11
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 employees of the Company or Harcourt General
("Non-Employee Directors") each receive (i) an annual cash retainer of $20,000,
(ii) a fee of $2,000 per Board of Directors meeting attended, (iii) a fee of
$750 (the Chairperson receives $1,500) for each committee meeting attended, and
(iv) reimbursement for travel and incidental expenses (an aggregate of $18,996
in fiscal 1999) incurred in attending meetings and carrying out their duties as
directors. If a Non-Employee 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.
In addition, each Non-Employee Director is entitled to receive grants of
stock-based units in an aggregate amount equal to the value of the annual cash
retainer. Grants are made quarterly, with the number of stock-based units in
each grant calculated by dividing $5,000 (the amount of the quarterly cash
retainer) by the trailing five day average of the closing price of the Company's
Class A Common Stock at the end of each fiscal quarter. The value of each
Non-Employee Director's stock-based units will be payable only in cash when the
Non-Employee Director ceases to serve as a member of the Board of Directors of
the Company. These stock-based units do not carry voting or dispositive rights.
The Company offers Non-Employee Directors the right to elect to receive all
or part of the cash portion of their fees on a deferred basis (i) in the form of
cash with interest at a rate equal to the average of the top rates paid by major
New York banks on three-month negotiable certificates of deposit as quoted on
the last business day of the fiscal quarter, or (ii) in the form of stock-based
units, calculated on the basis of the trailing five day average of the closing
price of the Company's Class A Common Stock at the end of each fiscal quarter.
For fiscal 1999, Dr. Horner elected to receive all of her fees on a deferred
basis using the stock based method and Mrs. Sisco elected to receive fifty
percent of her fees on a deferred basis using the stock based method.
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 any class 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 1999.
9
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE (1)
The following table provides information on the compensation provided by
the Company during fiscal 1999, 1998 and 1997 to the Company's Chief Executive
Officer and the four most highly paid executive officers of the Company during
fiscal 1999. Under the Intercompany Services Agreement between the Company and
Harcourt General, Harcourt General provides certain management services to the
Company, including the services of the Company's Chief Executive Officer.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(3)
-----------------------
AWARDS
ANNUAL COMPENSATION -----------------------
----------------------------------- RESTRICTED
OTHER ANNUAL STOCK ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(4) ($)(5) ($)(6) (#) ($)(7)
- ------------------ ------ -------- -------- ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Chief Executive 1999 -- -- -- -- -- --
Officer (1)(2) 1998 -- -- -- -- -- --
1997 -- -- -- -- -- --
B. Tansky 1999 $882,930 $220,000 -- $248,125 55,000 $27,419
President and Chief 1998 $807,968 $470,000 -- $260,206 20,200 $20,227
Operating Officer of 1997 $750,000 $292,500 -- -- 10,000 $19,357
the Company, and
Chairman and Chief
Executive Officer of
Neiman Marcus Stores
G. Sampson 1999 $540,000 $ 75,000 -- $119,100 12,500 $14,400
President and Chief 1998 $520,000 $220,000 -- $125,163 9,600 $14,126
Operating Officer of 1997 $500,000 $174,000 -- -- 6,500 $14,070
Neiman Marcus Stores
S. Elkin 1999 $510,000 $ 50,000 -- $119,110 12,500 $13,800
Chairman and Chief 1998 $495,000 $210,000 -- $125,163 9,600 $13,883
Executive Officer of 1997 $480,000 $185,000 -- -- -- $10,771
Bergdorf Goodman
D. Mello 1999 $400,000 $ 24,000 -- $ 49,625 6,000 $10,500
President of Bergdorf 1998 $385,000 $140,000 -- $ 59,288 4,700 $10,289
Goodman(8) 1997 $365,000 $110,000 -- -- 4,000 $ 9,210
</TABLE>
- ---------------
(1) Richard A. Smith, Chairman of the Company and of Harcourt General, served as
Chief Executive Officer of the Company from January 15, 1997 until December
2, 1998. He was succeeded as Chief Executive Officer of the Company by
Robert A. Smith, a director and then President of the Company. On May 14,
1999, Brian J. Knez, a director of the Company, was elected by the Board of
Directors to serve along with Robert Smith as Co-Chief Executive Officer of
the Company. Of the amounts payable under the Intercompany Services
Agreement (see Note 2), approximately $460,000, $448,000 and $365,000,
respectively, were attributable to Richard A. Smith's services for fiscal
1999, 1998 and 1997, $673,000 was attributable to Robert A. Smith's services
for fiscal 1999, and $205,000 was attributable to Brian J. Knez's services
for fiscal 1999. These amounts include costs related to base compensation,
bonuses, benefits and amounts necessary to fund retirement benefits, all of
which are direct obligations of Harcourt General.
(2) Under the Intercompany Services Agreement, Harcourt General provides certain
management, accounting, financial, legal, tax, human resources and other
corporate services to the Company, including the services of certain senior
officers of Harcourt General who are also senior officers of
10
<PAGE> 13
the Company, in consideration of a fee based on Harcourt General's direct
and indirect costs of providing the corporate services. The level of
Harcourt General services and fees are subject to the approval of the
Special Review Committee of the Board of Directors of the Company, which
consists entirely of directors who are independent of Harcourt General.
During fiscal years 1999, 1998 and 1997, the Company paid or accrued
approximately $6.0 million, $5.4 million and $5.7 million, respectively, to
Harcourt General for all of its services under the Intercompany Services
Agreement.
(3) Other than restricted stock, stock options and equity based awards which may
be granted under the Company's 1997 Incentive Plan, the Company does not
have a long-term compensation program for its executive officers that
includes long-term incentive payouts.
(4) Bonus payments are reported with respect to the year in which the related
services were performed.
(5) No disclosure regarding items included in this category is required since no
amounts in any of the fiscal years reported for any of the named executive
officers exceed the lesser of $50,000 or 10% of the annual salary and bonus
for the named executive officer.
(6) Calculated by multiplying the closing price of the Company's common stock on
the New York Stock Exchange on the date of grant by the number of shares
awarded. For restricted common stock granted in fiscal 1998 and 1999, the
restrictions lapse upon the achievement of specified performance targets or,
if the specified targets are not reached within five years of the date of
grant, then the restrictions lapse eight years from the date of grant. The
specified performance targets have not yet been attained. For restricted
common stock granted prior to fiscal 1998, twenty percent of an award of
restricted common stock are freed from the restrictions 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 and receive all dividends which may be paid with respect to such
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 1999, the named
executive officers' restricted stock holdings and market values (based on
the New York Stock Exchange closing price of $25.00 for the Company's common
stock at fiscal year-end) were as follows: Mr. Tansky -- 21,900 shares
($547,500); Mr. Sampson -- 9,600 shares ($240,000); Mr. Elkin -- 11,600
shares ($290,000); and Ms. Mello -- 5,200 shares ($130,000).
(7) The items accounted for in this column include the cost to the Company of
(a) matching contributions under the Company's Key Employee Deferred
Compensation Plan and (b) group life insurance premiums. For fiscal 1999,
such amounts for each of the named executive officers were, respectively, as
follows: Mr. Tansky -- $24,419 and $3,000; Mr. Sampson -- $11,400 and
$3,000; Mr. Elkin -- $10,800 and $3,000; and Ms. Mello -- $8,100 and $2,400.
(8) Ms. Mello retired as President of Bergdorf Goodman after the end of fiscal
1999.
11
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding options granted under
the Company's 1997 Incentive Plan during the fiscal year ended July 31, 1999 to
the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
----------------------------------------------- POTENTIAL REALIZABLE
% OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM(2)
GRANTED IN FISCAL PRICE EXPIRATION ---------------------
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
- ---- ---------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Chief Executive Officer(3)...... -- -- -- -- -- --
B. Tansky....................... 30,000 6.41% $24.8125 9/18/08 $468,133 $1,186,342
25,000 5.34% $24.9375 12/3/08 $392,076 $ 993,599
G. Sampson...................... 12,500 2.67% $24.8125 9/18/08 $195,056 $ 494,309
S. Elkin........................ 12,500 2.67% $24.8125 9/18/08 $195,056 $ 494,309
D. Mello(4)..................... 6,000 1.28% $24.8125 9/18/08 $ 93,627 $ 237,268
</TABLE>
- ---------------
(1) No stock appreciation rights were granted to any named executive officer
during fiscal 1999. All option grants are non-qualified stock options to
purchase shares of the Company's Class A Common Stock and have 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. All options were granted at fair
market value measured by the closing price of the common stock on the New
York Stock Exchange on the date of grant.
(2) These potential realizable values are based on assumed rates of appreciation
required by applicable regulations of the Securities and Exchange
Commission.
(3) None of the executive officers of Harcourt General who are also officers of
the Company, including those executive officers of Harcourt General who
served as Chief Executive Officer of the Company during fiscal 1999,
participated in the Company's 1997 Incentive Plan.
(4) Ms. Mello retired from the Company after the end of fiscal 1999.
12
<PAGE> 15
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information regarding stock options/SARs
exercised during fiscal 1999 and the number and value of stock options held at
July 31, 1999 by the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
JULY 31, 1999(#) JULY 31, 1999($)
--------------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(1)
- ---- --------------- ----------- --------------------- ----------------
<S> <C> <C> <C> <C>
Chief Executive Officer(2)....... -- -- -- --
B. Tansky........................ -- -- 89,540/82,160 $902,000/$60,313
G. Sampson....................... -- -- 21,720/28,880 $174,300/$48,544
S. Elkin......................... 2,000 $26,688 56,420/24,180 $594,750/$44,844
D. Mello(3)...................... 7,500 $73,125 5,540/15,160 $ 31,875/$33,000
</TABLE>
- ---------------
(1) 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 Company's common stock on the New York Stock Exchange at fiscal
year-end ($25.00) less the option exercise price for those shares. These
values have not been realized.
(2) None of the executive officers of Harcourt General who are also officers of
the Company, including those executive officers of Harcourt General who
served as Chief Executive Officer of the Company during fiscal 1999,
participated in the Company's 1997 Incentive Plan.
(3) Ms. Mello retired from the Company after the end of fiscal 1999.
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, nonqualified plan under which benefits are
paid from the Company's general assets to 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 minimum established by the Company ($160,000 as of July 31, 1999) 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.
Benefits under the SERP become fully vested after five years of service with the
Company.
13
<PAGE> 16
The following table, which includes benefits under the Retirement Plan and
the SERP, 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 1999 who elects to receive his or her
benefit in the form of a straight life annuity. The amounts actually payable
will be lower than the amounts shown below, since such amounts will be reduced
by 60% of the participant's estimated primary Social Security benefit.
ESTIMATED ANNUAL RETIREMENT BENEFITS
UNDER RETIREMENT PLAN AND SERP
<TABLE>
<CAPTION>
AVERAGE TOTAL YEARS OF SERVICE
PENSIONABLE --------------------------------------------------------
EARNINGS 5 10 15 20 25
----------- -------- -------- -------- -------- --------
<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
900,000 90,000 180,000 270,000 360,000 450,000
1,000,000 100,000 200,000 300,000 400,000 500,000
</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
July 31, 1999 and years of service creditable at age 65.
<TABLE>
<CAPTION>
PENSIONABLE EARNINGS YEARS OF SERVICE(2)
FOR YEAR ENDED ------------------------------
NAME JULY 31, 1999(1) AT JULY 31, 1999 AT AGE 65
- ---- -------------------- ----------------- ---------
<S> <C> <C> <C>
Chief Executive Officer(3)........... -- -- --
B. Tansky............................ $883,000 --(4) 21(4)
G. Sampson........................... 540,000 --(5) 21(5)
S. Elkin............................. 510,000 21 30
D. Mello(6).......................... 400,000 18 15
</TABLE>
- ---------------
(1) In computing the combined benefit under the Retirement Plan and SERP,
"pensionable earnings" means, with respect to the Retirement Plan, base
salary and any bonus and, with respect to the SERP, base salary only. The
amounts shown above include base salary only.
(2) The years of credited service set forth in the table reflect years of
credited service under the Retirement Plan, which is a "career average plan"
with no limitation on years of credited service. However, credited service
under the SERP may not exceed 25 years.
(3) None of the executive officers of Harcourt General who are also officers of
the Company, including those executive officers of Harcourt General who
served as Chief Executive Officer of the Company during fiscal year 1999,
participate in the Company's Retirement Plan or SERP.
(4) For purposes of determining Mr. Tansky's retirement benefits under the SERP,
Mr. Tansky will be credited with two times his years of service with the
Company provided (i) he remains continuously employed by the Company until
his 65th birthday and, following his retirement, agrees not to compete with
the Company for a period of three years, (ii) the Company terminates his
employment other than for cause, or (iii) he resigns under certain
circumstances following a change of control of the Company; otherwise Mr.
Tansky's accrued service under the SERP will be
14
<PAGE> 17
calculated at 5/3 times his years of service if he retires after age 65 and
in the normal manner in all other cases. Mr. Tansky is 61 years old.
(5) 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 (i) he remains continuously employed by the
Company until his 65th birthday, (ii) the Company terminates his employment
other than for cause, or (iii) he resigns under certain circumstances before
age 65 or following a change of control of the Company; otherwise, Mr.
Sampson's accrued service under the SERP will be calculated in the normal
manner. Mr. Sampson is 58 years old.
(6) Ms. Mello retired from the Company after the end of fiscal 1999.
SEVERANCE AGREEMENTS; CHANGE OF CONTROL ARRANGEMENTS
Burton Tansky
Pursuant to an agreement between Mr. Tansky and the Company effective
November 1999, Mr. Tansky is entitled to receive severance payments in the event
his employment with the Company is terminated in certain situations. If the
Company terminates Mr. Tansky's employment other than for cause or other than
due to his total disability or death, Mr. Tansky shall have the right to receive
an amount equivalent to two times his then-current annual base salary payable in
24 monthly installments. Mr. Tansky 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. 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.
Gerald A. Sampson
Pursuant to an agreement between Mr. Sampson and the Company effective
September 1998, as amended, Mr. Sampson is entitled to receive severance
payments in the event his employment 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 equivalent to one and one-half times his
then-current annual base salary, payable in 18 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.
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
15
<PAGE> 18
he is not permitted to continue in a position comparable in duties and
responsibilities to that which he held before the change of control.
Stock Awards: In addition to the individual agreements described above,
the Company's 1997 Incentive Plan and the terms of all outstanding individual
award agreements provide that in the event of a change of control all
outstanding awards become fully vested and exercisable.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During fiscal 1999 and through November 10, 1999, Messrs. Tansky, Sampson
and 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 $367,594, $536,649, and $193,768. At July 31, 1999, the outstanding
amounts of such loans were as follows: Mr. Tansky -- $367,594; Mr. Sampson --
$536,649; and Mr. Elkin -- $178,306. In accordance with the provisions of the
Loan Plan, these loans were used to acquire shares of the Company's common stock
either in the open market or pursuant to stock option exercises 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. No other officer of the Company had outstanding loans under the Loan
Plan in excess of $60,000 during fiscal 1999 or subsequent thereto.
------------------------
16
<PAGE> 19
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 PROXY STATEMENT 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
Introduction
The Compensation Committee is composed of Walter J. Salmon (Chairman),
Matina S. Horner, Vincent M. O'Reilly 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 for fiscal 1999 include Messrs. Tansky, Sampson, Elkin, and Ms. Mello all
of whom are named executive officers in the Summary Compensation Table. Ms.
Mello, a named executive officer, resigned shortly after the end of the fiscal
year. 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 (i) reward competitively its executive officers, (ii) attract and retain
individuals important to the success of the Company, (iii) provide incentives
that will motivate those executives, and (iv) reward the Company's executives
for achieving the business objectives of the Company and its operating divisions
over both the short and long terms.
The Committee makes annual and long term incentives a significant component
of the Company's executive officers' total compensation. The Committee also
increases the variable risk and reward of such incentive compensation in
proportion to an executive's level of responsibility in the Company.
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 and/or outside compensation consultants,
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 (i) base
salary, (ii) annual incentive bonus, and (iii) stock incentives.
Base Salary
For fiscal 1999, base salary was 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 was used to establish
17
<PAGE> 20
benchmark amounts for both base salary and total cash compensation for
each executive position. Comparisons were made to a broad range of
domestic publicly held retailing companies, including "upscale" specialty
retailing companies. Because the Company competes for executive talent
with a broad range of companies, the Committee did not limit its
comparison information for compensation purposes to the companies included
in the peer group in the Stock Performance Graph. For fiscal 1999, the
Committee generally set its salary and total cash compensation benchmarks
(assuming that target bonuses would be achieved) for executive officers at
the middle range of the comparison group of companies.
The Committee reviewed in detail the base salary levels for each of the
named executive officers of the Company. While the Committee used the
benchmarks described above 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, 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 Bonus
The annual incentive 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. For fiscal
1999 the named executive officers' cash bonus opportunity for performance
at the level of meeting the fiscal 1999 budget ranged from 7 1/2% to
15 1/2% of base salary, and increased to a range of 30% to 60% of base
salary for performance above the fiscal 1999 budget. For performance in
fiscal 1999 which represented a significant improvement over the Company's
fiscal 1999 budget, cash bonus opportunities ranged from 60% to 120% of
base salary. The determination of annual bonuses for the named executive
officers for fiscal 1999 was based principally on (i) the achievement of
performance objectives by the operating division for which the executive
was responsible, (ii) the individual executive's own performance, and
(iii) the Company's overall performance. 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 for Neiman
Marcus Stores and Bergdorf Goodman, and growth in the number of customer
accounts for NM Direct. The individual performance goals for each of the
Company's named executive officers included the achievement of certain
specified tasks.
Bonuses actually awarded to the named executive officers for fiscal
1999 were determined by an assessment of all of these factors, as well as
certain subjective factors. Because the Company and the relevant divisions
fell short of performance targets in certain cases in fiscal 1999, bonuses
awarded were adjusted based on an assessment, in each case, of the
achievement of Company, divisional and/or individual performance goals.
In October 1999 the Compensation Committee established the Company's
and each division's performance goals for fiscal 2000 and determined the
executive officers who should participate in the annual incentive plan for
that year and their respective bonus award opportunities. For fiscal 2000
the named executive officers' cash bonus opportunity for performance at
the level of meeting the fiscal 2000 budget will range from 8 3/4% to 15%
of base salary, and will increase to a range of 35% to 60% of base salary
for performance above the fiscal 2000 budget which would represent an
improvement over the Company's fiscal 1999 results. For
18
<PAGE> 21
performance in fiscal 2000 which would represent a significant improvement
over the Company's fiscal 2000 budget, cash bonus opportunities will range
from 70% to 120% of base salary. If performance is below the fiscal 2000
budget, the Committee may reduce cash bonus awards or not grant them at
all.
Stock Incentives
In 1997 the Committee restructured the Company's long term stock
incentive program to provide for increased capital accumulation
opportunities for executive officers. The Committee's purpose in awarding
equity based incentives is to achieve as much as possible an identity of
interest between the Company's executives and the long term interest of
the stockholders. For fiscal 1999, the principal factors considered in
determining which executives (including the named executive officers) were
awarded equity based compensation, and in determining the types and
amounts of such awards, included salary levels, equity awards granted to
executives at competing retail companies, and the performance, experience,
and level of responsibility of each executive.
The Company granted two kinds of equity based incentives in fiscal
1999: (i) non-qualified stock options, and (ii) performance accelerated
restricted stock. Non-qualified stock options vest over a five year period
and terminate ten years and one day from the date of grant. The
restrictions on performance accelerated restricted stock lapse upon the
earlier of (i) the achievement of specified business objectives (including
without limitation improvements in operating earnings and return on net
assets) within five years of the date of grant, or (ii) the eighth
anniversary of the date of grant.
Compensation of the Chief Executive Officer
Richard A. Smith, Chairman of the Company and of Harcourt General, served
as Chief Executive Officer of the Company until December 2, 1998. He was
succeeded as Chief Executive Officer of the Company by Robert A. Smith, a
director and then President of the Company and President and Co-Chief Operating
Officer of Harcourt General. On May 14, 1999, Brian J. Knez, a director of the
Company and then President and Co-Chief Operating Officer of Harcourt General,
was elected by the Board of Directors to serve along with Robert A. Smith as
Co-Chief Executive Officer of the Company. Messrs. Smith, Smith and Knez receive
all of their cash and non-cash compensation from Harcourt General and not from
the Company. For further information regarding the charges incurred by the
Company for the services of its Chief Executive Officer under the Intercompany
Services Agreement between the Company and Harcourt General, see Note 1 to the
Summary Compensation Table. 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
any executive officer of Harcourt General receives from Harcourt General.
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. During fiscal 1997, the Committee, the Board of
Directors and the stockholders of the Company approved The Neiman Marcus Group
1997 Incentive Plan. This Plan allows the Committee to award stock incentives
and cash bonuses based on
19
<PAGE> 22
objective criteria. It is expected that the stock incentives and cash bonuses
awarded under the Plan will generally be characterized as "performance based"
compensation and therefore will be fully deductible by the Company. The Company
expects that the executive officers of the Company will, in appropriate cases,
agree to defer income if and to the extent that their compensation is not
deductible by the Company under the Code. The Committee will continue to monitor
the requirements of the Code 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
Vincent M. O'Reilly
Jean Head Sisco
20
<PAGE> 23
STOCK PERFORMANCE GRAPH
The following graph compares the total cumulative return over five years on
the Company's Common Stock to the total cumulative return over the same period
of the common stocks of companies in (i) the Standard & Poor's 500 Index, and
(ii) a peer group index consisting of Tiffany & Co. and Nordstrom, Inc. The
graph assumes that the value of the investment in the Company's Common Stock and
each index was $100 at July 30, 1994, and that all dividends were reinvested.
Saks Holdings Inc., which had been included in the peer index last year, has
been deleted as a result of its acquisition in 1998 by another company. The
common stocks of the companies in the peer group index have been weighted
annually at the beginning of each fiscal year 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.
[LINE GRAPH OMITTED]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
July 30, 1994 July 29, 1995 August 3, 1996 August 2, 1997 August 1, 1998 July 31, 1999
- ------------------------------- -------------- ------------- -------------- -------------- -------------- -------------
THE NEIMAN MARCUS GROUP, INC. 100.00 101.55 177.50 184.52 217.96 165.12
- ------------------------------- -------------- ------------- -------------- -------------- -------------- -------------
S&P 500 INDEX 100.00 102.54 123.44 185.53 222.81 267.67
- ------------------------------- -------------- ------------- -------------- -------------- -------------- -------------
PEER INDEX 100.00 95.01 110.39 162.12 282.39 368.43
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE
COMPANY'S 1997 INCENTIVE PLAN
In 1997 the Company's stockholders approved the adoption of The Neiman
Marcus Group, Inc. 1997 Incentive Plan (the "Plan"). The Compensation Committee
of the Board of Directors (the "Committee") has adopted, subject to stockholder
approval, an amendment to the Plan that would (i) increase the number of shares
of the Company's common stock reserved for issuance under the Plan from
2,500,000 to 4,900,000 shares.
The Plan is intended to advance the interests of the Company by providing
eligible participants the opportunity to receive a broad variety of equity based
and cash incentives ("Awards"). In October and November 1999 the Committee
approved grants of stock options and restricted stock under the Plan covering a
total of 1,393,650 shares for approximately 115 of the Company's key employees.
The
21
<PAGE> 24
Committee granted these Awards in order to more directly align the interests of
executives with the interests of the Company's stockholders and to motivate and
retain key employees following the distribution by Harcourt General of most of
its controlling equity position in the Company in October 1999.
After giving effect to these awards, there are approximately 340,000 shares
remaining available for issuance under the Plan. Since the Plan does not expire
until September 2006, the Company believes that the remaining number of
authorized shares will not be sufficient for the Company's future needs.
NO OTHER CHANGES TO THE PLAN ARE BEING PROPOSED. THE PRINCIPAL PROVISIONS
OF THE PLAN ARE DESCRIBED BELOW.
Administration. The Plan is administered by the Committee which is
comprised solely of persons who qualify both as "outside directors" (within the
meaning of Section 162(m) of the Code) and "non-employee directors" (within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934).
The Committee has authority to interpret the Plan; determine eligibility for and
grant Awards under the Plan; determine, modify or waive the terms and conditions
of any Award; and otherwise do all things necessary to carry out the purposes of
the Plan.
Eligibility and Participation. In general, the Committee selects
participants in the 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 Plan members of
the Company's Board of Directors and other persons who provide services to the
Company or its affiliates. No Award may be granted under the 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 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 of any combination of the following: earnings or earnings per
share (whether on a pre-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 turns; capital expenditures; net borrowings, debt leverage levels or
credit quality; or the accomplishment of mergers, acquisitions, dispositions,
public offerings or similar extraordinary business transactions. If the
performance goal with respect to an Exempt Award is not attained, no other Award
shall be provided in substitution.
Rules Applicable to Awards. 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.
22
<PAGE> 25
Stock Options. Each stock option (expect 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 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.
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 Plan, to the maximum share limits
under the 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 Plan and to preserve the
value of Awards.
Change of Control. The Plan provides that, unless the Award instrument
provides otherwise, in the event of a change of control, all Awards, including
all outstanding stock options and restricted stock, will become fully vested and
exercisable.
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 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 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 Internal Revenue Code or
for Awards to be eligible for the performance-based exception under Section
162(m).
Other Compensation. The existence of the Plan and the grant of Awards will
not affect the Company's right to pay other bonuses or compensation, except as
provided under the Plan.
VOTING REQUIREMENTS
Approval of the amendment of the Plan requires a favorable vote of a
majority of the shares present or represented at the Annual Meeting. On this
proposal, abstentions will have the same effect as votes against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO APPROVE THE AMENDMENT OF THE PLAN.
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
23
<PAGE> 26
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 July 29,
2000.
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 $2.3 million on account of professional services
rendered by Deloitte & Touche LLP for the fiscal year ended July 31, 1999.
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 shares present or represented at the Annual
Meeting. On this proposal, abstentions will have the same effect as votes
against the proposal.
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 JULY 29, 2000.
4. STOCKHOLDER PROPOSAL
Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W.,
Suite 215, Washington, DC 20037, the record owner of 150 shares of the Company's
Class A 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 stockholders of Neiman Marcus, assembled in Annual
Meeting in person and by proxy, hereby request the Board of Directors to take
the necessary steps to provide for cumulative voting in the election of
directors, which means each stockholder shall be entitled to as many votes as
shall equal the number of shares he or she owns multiplied by the number of
directors to be elected, and he or she may cast all of such votes for a single
candidate, or any two or more of them as he or she may see fit."
"REASONS: Many states have mandatory cumulative voting, so do National
Banks."
"In addition, many corporations have adopted cumulative voting."
"Last year the owners of 4,170,378 shares, representing approximately 10.4%
of shares voting, voted FOR this proposal."
"If you AGREE, please mark your proxy FOR this resolution."
Statement of the Board of Directors in Opposition
The Company's present system for election of directors, which is like that
of many major publicly traded corporations, allows all stockholders to vote on
the basis of their share ownership. The Board of Directors believes that the
current voting system is most likely to produce an effective Board of Directors
which will represent the interests of all of the Company's stockholders.
Cumulative voting, which permits relatively small groups of stockholders to
elect directors to represent their particular interests or points of view, could
result in the creation of an adversarial Board of Directors, where each director
advocates the positions of the group responsible for his or her election rather
than the positions which are in the best interest of the Company and all of the
stockholders. The Board of
24
<PAGE> 27
Directors believes there should never be any question as to whether a Director
is acting for the benefit of all of the stockholders, rather than as a
representative of any special group.
Approval of this advisory proposal requires a favorable vote of a majority
of the shares present or represented at the Annual Meeting. On this proposal,
abstentions will have the same effect as votes cast against the proposal and
broker non-votes will have no effect. Section 214 of the General Corporation Law
of the State of Delaware states that a certificate of incorporation may provide
for cumulative voting. In order actually to effect cumulative voting, therefore,
stockholders of the Company must vote to amend the Company's Restated
Certificate of Incorporation to so provide. No such proposal has been placed
before the stockholders, but if it were, it would require the favorable vote of
the holders of shares representing at least a majority of the issued and
outstanding Class A Common Stock and Class B Common Stock voting as a single
class.
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 STOCKHOLDER PROPOSALS
AND NOMINATIONS FOR DIRECTOR
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD IN JANUARY 2001
In order for stockholder proposals which are submitted pursuant to Rule
14a-8 of the Securities Exchange Act of 1934 (the "Exchange Act") to be
considered by the Company for inclusion in the proxy material for the Annual
Meeting of Stockholders to be held in January 2001, they must be received by the
Secretary of the Company by July 28, 2000.
For proposals that stockholders intend to present at the Annual Meeting of
Stockholders to be held in January 2001 outside the processes of Rule 14a-8 of
the Exchange Act, unless the stockholder notifies the Secretary of the Company
of such intent by October 17, 2000, any proxy that management solicits for such
Annual Meeting will confer on the holder of the proxy discretionary authority to
vote on the proposal so long as such proposal is properly presented at the
meeting.
In order for suggestions by stockholders for nominees for director to be
considered by the Nominating Committee, they must be received by the Secretary
of the Company by October 17, 2000; see "Meetings and Committees of the Board of
Directors -- Nominating Committee."
25
<PAGE> 28
All such communications to the Secretary of the Company must be in writing
and must be received by the Company at its principal executive offices (27
Boylston Street, Chestnut Hill, Massachusetts 02467) by the applicable date.
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.
26
<PAGE> 29
714-PS-99
<PAGE> 30
CLASS A COMMON STOCK PROXY CLASS A COMMON STOCK
THE NEIMAN MARCUS GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS, JANUARY 21, 2000
Robert A. Smith, Brian J. Knez and Eric P. Geller, and each of them
singly, each with power of substitution, are hereby authorized to represent and
vote all shares of Class A Common Stock of the undersigned at the Annual Meeting
of Stockholders of The Neiman Marcus Group, Inc. to be held at the Company's
corporate headquarters, 27 Boylston Street, Chestnut Hill, Massachusetts on
Friday, January 21, 2000, at 10:00 a.m. and at any adjournments or postponements
thereof. The undersigned hereby revokes any Proxy previously given and
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement, dated
November 24, 1999, and a copy of the Annual Report for the year ended July 31,
1999.
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 NOMINEE 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 VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
ELECTION OF CLASS A DIRECTOR
NOMINEE: VINCENT M. O'REILLY
- ----------- -----------
SEE REVERSE (SEE REVERSE SIDE TO CAST VOTE) SEE REVERSE
SIDE CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE SIDE
- ----------- -----------
<PAGE> 31
- --------------------------------------------------------------------------------
[X] PLEASE MARK 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.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Class A Director (See Reverse) [ ] [ ]
FOR AGAINST ABSTAIN
2. Approval of an amendment to the Company's 1997
Incentive Plan to increase the number of shares [ ] [ ] [ ]
reserved for issuance under the Plan from
2,500,000 to 4,900,000.
3. Approval of the appointment of Deloitte & Touche
LLP as independent auditors of the Company for [ ] [ ] [ ]
the current fiscal year.
- --------------------------------------------------------------------------------
----------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST PROPOSAL 4.
----------------------------------------------------
FOR AGAINST ABSTAIN
4. Approval of stockholder
proposal concerning [ ] [ ] [ ]
cumulative voting.
----------------------------------------------------
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: _____
<PAGE> 32
CLASS B COMMON STOCK PROXY CLASS B COMMON STOCK
THE NEIMAN MARCUS GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS, JANUARY 21, 2000
Robert A. Smith, Brian J. Knez and Eric P. Geller, and each of them
singly, each with power of substitution, are hereby authorized to represent and
vote all shares of Class B Common Stock of the undersigned at the Annual
Meeting of Stockholders of The Neiman Marcus Group, Inc. to be held at the
Company's corporate headquarters, 27 Boylston Street, Chestnut Hill,
Massachusetts on Friday, January 21, 2000, at 10:00 a.m. and at any adjournments
or postponements thereof (the "Annual Meeting"). The undersigned hereby revokes
any Proxy previously given and acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement, dated November 24, 1999, and a copy of the Annual
Report for the year ended July 31, 1999.
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 VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
ELECTION OF CLASS B DIRECTORS
NOMINEES: JOHN R. COOK, JEAN HEAD SISCO
- ----------- -----------
SEE REVERSE (SEE REVERSE SIDE TO CAST VOTE) SEE REVERSE
SIDE CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE SIDE
- ----------- -----------
<PAGE> 33
- --------------------------------------------------------------------------------
[X] PLEASE MARK 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.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Class B Directors (See reverse) [ ] [ ]
[ ]______________________________________
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Approval of an amendment to the Company's 1997
Incentive Plan to increase the number of shares [ ] [ ] [ ]
reserved for issuance under the Plan from
2,500,000 to 4,900,000.
3. Approval of the appointment of Deloitte & Touche
LLP as independent auditors of the Company for [ ] [ ] [ ]
the current fiscal year.
- --------------------------------------------------------------------------------
----------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST PROPOSAL 4.
----------------------------------------------------
FOR AGAINST ABSTAIN
4. Approval of stockholder
proposal concerning [ ] [ ] [ ]
cumulative voting.
----------------------------------------------------
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: _____
<PAGE> 34
DETACH HERE
CONFIDENTIAL VOTING INSTRUCTIONS
TO: FIDELITY MANAGEMENT TRUST COMPANY
AS TRUSTEE UNDER
THE NEIMAN MARCUS GROUP, INC.
EMPLOYEE SAVINGS PLAN
WITH RESPECT TO THE ANNUAL MEETING OF STOCKHOLDERS OF
THE NEIMAN MARCUS GROUP, INC.-- JANUARY 21, 2000
I hereby instruct the Trustee to vote (in person or by proxy) all
shares of Class A 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 Company's
corporate headquarters, 27 Boylston Street, Chestnut Hill, Massachusetts on
Friday, January 21, 2000, at 10:00 a.m. and at any adjournments or postponements
thereof. The undersigned hereby revokes any instruction previously given and
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement dated
November 24, 1999, and a copy of the Annual Report for the year ended July 31,
1999.
THE SHARES REPRESENTED BY THIS INSTRUCTION CARD WILL BE VOTED BY THE TRUSTEE AS
DIRECTED BY THE UNDERSIGNED. FIDELITY MANAGEMENT TRUST COMPANY MAKES NO
RECOMMENDATIONS CONCERNING YOUR INSTRUCTIONS. THE BOARD OF DIRECTORS OF THE
NEIMAN MARCUS GROUP, INC. RECOMMENDS A VOTE FOR THE NOMINEE SET FORTH BELOW, FOR
PROPOSALS 2 AND 3 AND 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 VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. IF
THIS INSTRUCTION CARD IS NOT RECEIVED BY JANUARY 18, 2000, THE SHARES CREDITED
TO YOUR ACCOUNT WILL NOT BE VOTED.
ELECTION OF CLASS A DIRECTOR
NOMINEE: VINCENT M. O'REILLY
- ----------- -----------
SEE REVERSE (SEE REVERSE SIDE TO CAST VOTE) SEE REVERSE
SIDE CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE SIDE
- ----------- -----------
<PAGE> 35
- --------------------------------------------------------------------------------
[X] PLEASE MARK 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.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Class A Director (See reverse). [ ] [ ]
FOR AGAINST ABSTAIN
2. Approval of an amendment to the Company's 1997
Incentive Plan to increase the number of shares [ ] [ ] [ ]
reserved for issuance under the Plan from
2,500,000 to 4,900,000.
3. Approval of the appointment of Deloitte & Touche
LLP as independent auditors of the Company for [ ] [ ] [ ]
the current fiscal year.
- --------------------------------------------------------------------------------
----------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST PROPOSAL 4.
----------------------------------------------------
FOR AGAINST ABSTAIN
4. Approval of stockholder
proposal concerning [ ] [ ] [ ]
cumulative voting.
----------------------------------------------------
MARK HERE MARK HERE
FOR ADDRESS [ ] IF YOU PLAN [ ]
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
Signature: _______________________________________ Date: ___________________
<PAGE> 36
To: Participants in The Neiman Marcus Group, Inc.
Employee Savings Plan
From: Fidelity Management Trust Company
Trustee of the Employee Savings Plan
Date: November 24, 1999
As a participant in The Neiman Marcus Group, Inc. Employee Savings 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. Class A
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 21, 2000.
A proxy statement, voting instruction card and return envelop are
enclosed. Please complete, date and sign the voting instruction card and mail it
in the return envelope by January 18, 2000 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
Employee Savings 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
