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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
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<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Venator Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class 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:
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(4) Date Filed:
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PRELIMINARY COPY, SUBJECT TO COMPLETION, DATED MAY 28, 1999
[VENATOR GROUP LOGO]
June , 1999
Dear Shareholder:
We invite you to attend the 1999 annual meeting of shareholders of Venator
Group, Inc., which will be held on , 1999, at 10:00 A.M., local
time, at .
The items to be considered and voted on at the meeting are described in the
notice of the 1999 annual meeting of shareholders and proxy statement
accompanying this letter.
We understand that you may receive proxy soliciting materials from Greenway
Partners, L.P. ("Greenway") in connection with items Greenway intends to present
at the meeting. These items are a slate of directors chosen by Greenway and
proposals relating to a change of the Company's name and the Company's
shareholder rights plan. The Board of Directors believes that these proposals
are not in the best interests of the Company and its shareholders and urges you
to vote against these proposals.
If you plan to attend the annual meeting, please mark the appropriate box
on the proxy card and return your completed card promptly so we can mail an
admission ticket to you. If your shares are not registered in your own name and
you would like to attend the meeting, please ask the broker, trust, bank or
other nominee that holds the shares to provide you with evidence of your share
ownership, as of the record date, in order to be admitted to the meeting.
Attendance at the meeting will be limited to shareholders as of the record date
(or authorized representatives) having an admission ticket or evidence of their
share ownership, and guests of the Company.
YOUR VOTE IS IMPORTANT. WE ENCOURAGE YOU TO VOTE YOUR SHARES AS SOON AS
POSSIBLE. IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN VOTING YOUR SHARES,
PLEASE CALL OUR PROXY SOLICITOR, INNISFREE M&A INCORPORATED, AT 1-888-750-5834.
SINCERELY,
<TABLE>
<S> <C>
/s/ Roger N. Farah /s/ Dale W. Hilpert
ROGER N. FARAH DALE W. HILPERT
Chairman of the Board and President and
Chief Executive Officer Chief Operating Officer
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TABLE OF CONTENTS
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PAGE
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Notice of Meeting........................................... 1
Voting and Revocability of Proxy............................ 2
Outstanding Voting Stock.................................... 2
Vote Required............................................... 2
Method of Counting Votes.................................... 2
Method and Cost of Proxy Solicitation....................... 3
Beneficial Ownership of the Company's Stock................. 3
Directors and Executive Officers.......................... 3
Persons Owning More than 5 Percent........................ 4
Section 16(a) Beneficial Ownership Reporting Compliance..... 6
Corporate Governance........................................ 6
Board of Directors.......................................... 7
Organization and Powers................................... 7
Committees of the Board................................... 7
Audit Committee........................................ 7
Acquisitions and Finance Committee..................... 8
Compensation Committee................................. 8
Executive Committee.................................... 8
Nominating and Organization Committee.................. 8
Retirement Investment Committee........................ 8
Directors Compensation and Benefits.................... 9
Directors and Officers Indemnification and Insurance... 9
Transactions with Management and Others..................... 10
PROPOSAL 1 -- ELECTION OF DIRECTORS......................... 10
Nominees.................................................. 11
Directors Continuing in Office............................ 11
Executive Compensation...................................... 13
Summary Compensation Table................................ 13
Long-Term Incentive Plan Awards in Last Fiscal Year....... 14
Option Grants in Last Fiscal Year......................... 15
Aggregated Option Exercises and Fiscal Year-End Option
Values................................................. 16
Retirement Plans.......................................... 16
Employment Contracts and Change-in-Control Arrangements... 18
Compensation Committee Interlocks and Insider
Participation.......................................... 20
Compensation Committee Report............................. 20
Performance Graphs........................................ 24
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT
ACCOUNTANTS............................................... 25
Greenway Solicitation....................................... 25
Participants in the Solicitation............................
Deadlines for Director Nominations and Shareholder
Proposals................................................. 28
Other Business.............................................. 28
Appendix A.................................................. A-1
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VENATOR GROUP, INC.
233 BROADWAY
NEW YORK, NEW YORK 10279
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
DATE: , 1999
TIME: 10:00 A.M., local time
PLACE:
RECORD DATE: June 7, 1999
The meeting is being held for the following purposes:
1. To elect four directors in Class II to serve for three-year terms
expiring at the 2002 annual meeting of shareholders. The Board of Directors
recommends a vote FOR the election of the existing director nominees proposed
for reelection by the Company, as described in the Company's proxy statement.
2. To ratify the appointment by the Board of Directors of KPMG LLP as
independent accountants of the Company for the 1999 fiscal year. The Board of
Directors recommends a vote FOR this proposal.
3. To vote on certain proposals of Greenway Partners, L.P., if properly
presented, as described in the Company's proxy statement relating to (i) a
change in the Company's name and (ii) the Company's Rights Plan. The Board of
Directors recommends a vote AGAINST each of these proposals.
4. To transact such other business as may properly come before the
meeting, or any adjournments or any postponements thereof.
The above matters are more fully described in the accompanying proxy
statement.
By Order of the Board of Directors
GARY M. BAHLER
Secretary
, 1999
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VENATOR GROUP, INC.
233 BROADWAY
NEW YORK, NEW YORK 10279
PROXY STATEMENT
This proxy statement is being furnished to shareholders of Venator Group,
Inc., a New York corporation (the "Company"), in connection with the
solicitation by the Board of Directors of proxies to be voted at the annual
meeting of shareholders to be held on , 1999, and for any adjournments
or postponements thereof. This proxy statement and the proxy card are first
being mailed to shareholders on or about , 1999.
The Company's Annual Report for the fiscal year ended January 30, 1999
("1998") has been mailed to each shareholder of record. You may obtain without
charge a copy of the Company's 1998 Form 10-K, exclusive of certain exhibits, by
writing to the Investor Relations Department, Venator Group, Inc., 233 Broadway,
New York, New York 10279.
VOTING AND REVOCABILITY OF PROXIES
You are urged to sign and date the enclosed proxy card and return it in the
enclosed prepaid envelope whether or not you attend the meeting. You have the
right to revoke your proxy at any time prior to the annual meeting by submitting
a later dated proxy or by voting in person by ballot at the meeting.
The enclosed proxy card shows the number of shares of Common Stock
registered in the name of each shareholder of record on June 7, 1999. Proxies
furnished to employees also show the number of shares held in the Company's
401(k) Plan, if applicable.
Greenway Partners, L.P. ("Greenway") has informed the Company that Greenway
intends to appear at the annual meeting to nominate four individuals for
election to the Board of Directors in opposition to the Company's nominees for
election to the Board of Directors and make certain shareholder proposals
concerning (i) a non-binding recommendation that the Company change its name and
(ii) a non-binding recommendation concerning the termination of the Shareholder
Rights Plan (the "Greenway Proposals"). Accordingly, the Board of Directors is
soliciting votes FOR the Company's slate of nominees for election to the Board
of Directors, FOR the ratification of the appointment of KPMG LLP as independent
accountants for the 1999 fiscal year ("1999") and AGAINST the Greenway
Proposals. Unless contrary instructions are indicated on the proxy card, all
shares represented by valid proxies received pursuant to this solicitation (and
not revoked) will be voted FOR the election of all of the Company's nominees for
directors named in this proxy statement, FOR the ratification of the appointment
of KPMG LLP as independent accountants for 1999 and AGAINST the Greenway
Proposals. If you specify a different choice on the proxy card, your shares will
be voted as specified.
OUTSTANDING VOTING STOCK
The only voting securities of the Company are the shares of Common Stock.
Only shareholders of record on the books of the Company at the close of business
on June 7, 1999 are entitled to vote at the annual meeting and any adjournments
or postponements thereof. Each share is entitled to one vote. There were
shares of Common Stock outstanding on the record date. Under the
Company's By-laws, the holders of a majority of the shares entitled to vote
thereat must be present in person or by proxy to constitute a quorum for the
transaction of business.
VOTE REQUIRED
Director nominees who receive the greatest number of votes cast at the
meeting will be elected as directors. The affirmative vote of the holders of a
majority of the votes cast at the meeting will be required to approve each other
proposal.
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METHOD OF COUNTING VOTES
Votes will be counted and certified by independent inspectors of election.
Under SEC rules, boxes and a designated blank space are provided on the proxy
card for you to mark if you wish to vote "for" or "against" or "abstain" from
voting on one or more of the proposals, or to withhold authority to vote for one
or more of the nominees for director. New York law and the Company's By-laws
require the presence of a quorum at the annual meeting. Under New York law,
abstentions are not counted in determining the votes cast for any proposal.
Votes withheld in connection with the election of one or more of the nominees
for director will not be counted as votes cast for those individuals. Broker
non-votes, which occur when brokers do not receive voting instructions from
their customers on non-routine matters and, consequently, have no discretion to
vote on those matters, are not counted as votes cast for any proposal.
The Company's Certificate of Incorporation and By-laws do not contain any
provisions with respect to the effect of abstentions or broker non-votes.
METHOD AND COST OF PROXY SOLICITATION
Proxies may be solicited, without additional compensation, by directors,
officers or employees of the Company by mail, telephone, facsimile, telegram, in
person or otherwise. The Company will bear the cost of the solicitation of
proxies, including the preparation, printing and mailing of the proxy materials.
In addition, the Company will request banks, brokers and other custodians,
nominees and fiduciaries to forward proxy material to the beneficial owners of
the Company's stock and obtain their voting instructions. The Company will
reimburse those firms for their expenses in accordance with the rules of the SEC
and New York Stock Exchange. In addition, the Company has retained Innisfree M&A
Incorporated ("Innisfree") to assist in the solicitation of proxies for a fee of
$ plus out of pocket expenses. Innisfree will employ approximately
people to solicit the Company's shareholders.
Expenses related to the solicitation of shareholders, in excess of those
normally spent for an annual meeting, are expected to aggregate approximately
$ , of which approximately $ has been spent to date. Appendix
A sets forth certain information relating to the Company's directors, nominees,
officers and other employees of the Company who will be soliciting proxies on
the Company's behalf ("Participants").
A shareholder may revoke any proxy at any time prior to its use by filing
with the Company a written revocation or duly executed proxy bearing a later
date. In addition, any shareholder who attends the meeting in person may vote by
ballot at the meeting, thereby canceling any proxy previously given.
BENEFICIAL OWNERSHIP OF THE COMPANY'S STOCK
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as reported to the Company, the number of
shares of Common Stock beneficially owned as of May 5, 1999, by each of the
directors and named executive officers. The table also shows the beneficial
ownership of the Company's stock by all directors, named executive officers and
executive officers as a group on that date, including shares of Common Stock
that they have a right to acquire within 60 days after May 5, 1999 by the
exercise of options that have been granted under the Company's stock option
plans.
Excluding Roger N. Farah, no director, named executive director or
executive officer beneficially owned one percent or more of the total number of
outstanding shares of Common Stock as of May 5, 1999. Mr. Farah beneficially
owned 1.01 percent as of this date.
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Except as otherwise noted in a footnote below, each person has sole voting
and investment power with respect to the number of shares shown.
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AMOUNT AND
NATURE OF BENEFICIAL
NAME OWNERSHIP
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<S> <C>
J. Carter Bacot............................................. 4,490
M. Jeffrey Branman.......................................... 226,773(a)
Purdy Crawford.............................................. 11,782
John E. DeWolf III.......................................... 106,666(b)
Roger N. Farah.............................................. 1,379,697(c)
Philip H. Geier Jr. ........................................ 11,782
Jarobin Gilbert Jr. ........................................ 2,008
Dale W. Hilpert............................................. 667,351(d)
Reid Johnson................................................ 21,666(e)
Allan Z. Loren.............................................. 888
Margaret P. MacKimm......................................... 5,990
John J. Mackowski........................................... 6,855
James E. Preston............................................ 25,915(f)
Christopher A. Sinclair..................................... 3,882
All 21 directors and executive officers as a group,
including the named executive officers.................... 2,993,901(g)
</TABLE>
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(a) Includes 40,000 shares of restricted stock granted on February 1, 1999;
141,666 shares that may be acquired by the exercise of stock options; 29,786
shares issued on April 16, 1999 in payment of 50 percent of his long-term
bonus for 1996-1998; and 275 shares held in the Company's 401(k) Plan.
(b) Includes 40,000 shares of restricted stock granted on February 1, 1999, and
66,666 shares that may be acquired by the exercise of stock options.
(c) Includes 275,000 shares of restricted stock granted on April 26, 1999;
115,488 shares issued on April 16, 1999 in payment of 50 percent of his
long-term bonus for 1996-1998; 800,000 shares that may be acquired by the
exercise of stock options; and 314 shares held in the Company's 401(k) Plan.
(d) Includes 100,000 shares of restricted stock granted on February 1, 1999;
57,744 shares issued on April 16, 1999 in payment of 50 percent of his
long-term bonus for 1996-1998; 499,999 shares that may be acquired by the
exercise of stock options and 2,239 shares held in the Company's 401(k)
Plan.
(e) Includes 16,666 shares that may be acquired by the exercise of stock
options. The options expire on May 26, 1999.
(f) Excludes 50 shares of Common Stock owned by Mr. Preston's stepchildren, with
respect to which Mr. Preston disclaims beneficial ownership.
(g) This figure represents approximately 2.18 percent of the shares of Common
Stock outstanding at the close of business on May 5, 1999. It includes all
of the shares referred to in footnotes (a) through (f) above, a total of
316,961 shares that may be acquired within 60 days after May 5, 1999 by
executive officers of the Company (excluding the named executive officers)
by the exercise of stock options, and 2,991 shares held by executive
officers (excluding the named executive officers) in the Company's 401(k)
Plan.
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PERSONS OWNING MORE THAN FIVE PERCENT OF THE COMPANY'S STOCK
Following is information with respect to shareholders who beneficially own
more than five percent of the Company's Common Stock. This information is
derived from documents filed by those shareholders with the SEC. To the best
knowledge of the Company, there are no other shareholders who beneficially own
more than five percent of a class of the Company's voting securities.
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AMOUNT AND
NAME AND ADDRESS NATURE OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------- -------------------- --------
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Greenway Partners, L.P. 19,649,612(a) 14.4%(a)
Greentree Partners, L.P.
Greenhut, L.L.C., Greenbelt Corp.,
Greenhouse Partners, L.P.,
Greenhut Overseas, L.L.C.,
Alfred D. Kingsley,
Gary K. Duberstein, and
Howard Stein
277 Park Avenue
New York, NY 10172
Andrew P. Hines (a)
100 Sea Horse Drive
Waukegan, IL 60085
AXA Assurance I.A.R.D. Mutuelle 13,684,101(b) 10.4%(b)
and AXA Assurances Vie Mutuelle
21, rue de Chateaudin
75009 Paris, France
AXA Conseil Vie Assurance Mutuelle (b)
100-101 Terasse Boieldieu
92042 Paris La Defense France
AXA Courtage Assurance Mutuelle (b)
26, rue Louis le Grand
75002 Paris, France
The Equitable Companies Incorporated (b)
1290 Avenue of the Americas
New York, New York 10104
AXA (b)
9 Place Vendome
75001 Paris, France
Mellon Bank Corporation 7,795,653(c) 5.74%(c)
One Mellon Bank Center
Pittsburgh, PA 15258
Sasco Capital, Inc. 6,940,213(d) 5.1%(d)
10 Sasco Hill Road
Fairfield, CT 06430
</TABLE>
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(a) Reflects shares beneficially owned as of April 30, 1999, according to a
preliminary proxy statement dated April 30, 1999 filed by Greenway Partners,
L.P. with the SEC. As reported, Greenway Partners, L.P. holds sole voting
and dispositive power with respect to 2,350,000 shares; Greentree Partners,
L.P. holds sole voting and dispositive power with respect to 1,500,900
shares; Greenhouse Partners, L.P. holds shared voting and dispositive power
with respect to 2,350,000 shares; Greenhut, L.L.C. holds shared voting and
dispositive power with respect to 1,500,900 shares; Greenbelt Corp. holds
sole voting and dispositive power with respect to 12,886,322 shares;
Greensea Offshore, L.P. holds sole voting and dispositive power with respect
to 2,250,000 shares; Greenhut Overseas, L.L.C. holds shared voting and
dispositive power with respect to 2,250,000 shares; Alfred D. Kingsley holds
sole voting and dispositive power with respect to 541,800 shares; Alfred D.
Kingsley and Gary K. Duberstein hold shared voting and
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dispositive power with respect to 18,987,222 shares; Andrew P. Hines holds
sole voting and dispositive power with respect to 590 shares; and Howard
Stein holds sole voting and dispositive power with respect to 120,000
shares.
(b) Reflects shares beneficially owned as of January 31, 1999 according to a
statement on Schedule 13G filed with the SEC. As reported in the 13G, the
parent holding companies -- AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, AXA Conseil Vie Assurance Mutuelle, AXA Courtage Assurance
Mutuelle and AXA -- hold sole voting power with respect to 1,020,101 shares;
sole dispositive power with respect to 13,257,001 shares; shared voting
power with respect to 12,632,900 shares and shared dispositive power with
respect to 427,100 shares. The Equitable Companies Incorporated, a parent
holding company, holds sole voting power with respect to 590,001 shares;
sole dispositive power with respect to 13,254,001 shares and shared voting
power with respect to 12,632,900 shares.
(c) Reflects shares beneficially owned as of December 31, 1998, according to a
statement on Schedule 13G filed with the SEC. Mellon Bank Corporation, a
parent holding company, reported that it holds sole voting power with
respect to 6,138,212 shares; sole dispositive power with respect to
7,501,655 shares; shared voting power with respect to 841 shares and shared
dispositive power with respect to 107,243 shares. All of the shares are held
by Mellon Bank Corporation and its direct or indirect subsidiaries in their
various fiduciary capacities.
(d) Reflects shares beneficially owned as of February 22, 1999 according to a
statement on Schedule 13G filed with the SEC. Sasco Capital, Inc. reported
that it has beneficial ownership to direct the disposition of 6,940,213
shares and has the sole power to vote 4,294,621 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires that the Company's directors, executive officers and beneficial owners
of more than 10 percent of the Company's common stock file with the SEC and the
New York Stock Exchange reports of ownership and changes in ownership of Common
Stock and other equity securities of the Company. These persons are required by
SEC rules to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of those reports furnished to the
Company or written representations that no other reports were required, the
Company believes that during the 1998 fiscal year, the directors, executive
officers and beneficial owners of more than 10 percent of the Company's common
stock complied with all applicable SEC filing requirements.
CORPORATE GOVERNANCE
The following is a summary of the Company's principal corporate governance
practices and policies.
INDEPENDENT BOARD OF DIRECTORS AND COMMITTEES
Only two of the 11 current members of the Board of Directors also serve as
officers of the Company and, at present, all of the committees of the Board
(other than the Executive Committee and the Retirement Administration Committee)
are composed entirely of outside directors. All members of the Compensation
Committee are directors meeting the criteria established for outside directors
in the regulations under Section 162(m) of the Internal Revenue Code and for
non-employee directors under Section 16 of the Exchange Act. The Audit Committee
is composed entirely of non-employee directors, as required by the rules of the
New York Stock Exchange. At least once a year, the outside directors meet
without the presence of management.
PAYMENT OF DIRECTORS FEES IN STOCK
Under the Directors Stock Plan, one-half of the annual fee payable to
directors for their Board service is paid in shares of the Company's Common
Stock, with the balance payable in cash. Directors may elect to receive up to
100 percent of their fees in stock.
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DIRECTOR RETIREMENT
The Company's mandatory retirement policy for directors is that no person
may be nominated or stand for election as a director after reaching age 72. The
Company discontinued its retirement plan for directors in 1995, and only four
directors, who were then serving and had at least five years of service, will
receive payments under the plan. In the event a non-employee director of the
Company changes his or her principal business position or affiliation, including
through retirement, the Board of Directors reviews and considers the
appropriateness of the individual's continued participation as a member of the
Board under those changed circumstances.
CONFIDENTIAL VOTING
The Company has a policy that shareholders be provided privacy in voting.
All proxy cards, voting instructions, ballots and voting tabulations identifying
shareholders are held permanently confidential from the Company, except as (i)
as necessary to meet any applicable legal requirements, (ii) when disclosure is
expressly requested by a shareholder or where a shareholder makes a written
comment on a proxy card, (iii) in a contested proxy solicitation, or (iv) to
allow independent election inspectors to tabulate and certify the vote. The
tabulators and inspectors of election are independent and are not employees of
the Company.
SHAREHOLDER RIGHTS PLAN
The Company has had a Shareholder Rights Plan in place since 1988, and,
last year, the Board of Directors adopted a new Rights Plan along the lines of
the Plan originally adopted in 1988.
The Board recently adopted certain amendments to the Rights Plan that would
make the Rights Plan inapplicable to certain kinds of offers to purchase all of
the Company's Common Stock that meet the criteria specified for "qualifying
offers." In general, the requirements for a qualifying offer are as follows:
- The purchase price is composed only of cash or of cash and securities.
- The person making the offer to purchase the stock (the "Offeror") has
provided firm written financial commitments from responsible financial
institutions for any cash portion of the purchase price and the opinion
of a nationally recognized investment bank with respect to the value of
any securities portion of the purchase price.
- The offer to purchase the Company's Common Stock remains open for at
least 120 days.
- The Offeror makes an irrevocable written commitment (1) to purchase those
shares that were not acquired through the original offer for the same
price paid for the shares that were acquired through the original offer,
(2) that the Offeror will not materially amend the offer except to
increase the offering price, and (3) that the Offeror will not make any
offer for the Company's stock for six months after the commencement of
the original offer.
- After the consummation of the transaction, the Offeror owns at least 80
percent of the outstanding Common Stock.
In addition, the Independent Directors, defined in the Rights Plan as
directors who are not current or former officers of the Company, holders of five
percent or more of the Company's shares, or the persons making the tender offer,
have the discretion to shorten the time periods related to the qualifying offer
provisions.
BOARD OF DIRECTORS
ORGANIZATION AND POWERS
The Board of Directors has responsibility for establishing broad corporate
policies, reviewing significant developments affecting the Company, and
monitoring the general performance of the Company. The
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Company's By-laws provide for a Board of Directors consisting of not less than 9
nor more than 17 directors, the exact number to be determined, from time to
time, by resolution adopted by a majority of the entire Board. The size of the
Board is presently fixed at 11 directors.
In 1999 the Board of Directors is scheduled to hold six regular meetings.
During 1998, the Board held eight meetings. During 1998, each director, other
than Allan Z. Loren, attended at least 75 percent of the aggregate total number
of meetings of the Board and of meetings held by all committees of which he or
she was a member. Because Mr. Loren was unable to attend two non-regular
meetings, his attendance fell below 75 percent.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has delegated certain duties to committees, which assist the
Board in carrying out its responsibilities. Each director serves on one or more
committees. There are six standing committees of the Board. The committee
memberships, the number of meetings held in 1998, and the functions of the
committees are described below.
AUDIT COMMITTEE. The members of the committee are John J. Mackowski
(Chairman), Purdy Crawford, Jarobin Gilbert Jr. and Allan Z. Loren. The
committee met five times during 1998.
The committee evaluates and reviews such matters as the Company's systems
of internal accounting controls and the scope and results of the Company's
internal audit procedures. The committee also recommends to the Board the
appointment of the Company's independent accountants, reviews the scope and
results of their audit and approves their audit and non-audit fees. The
committee has direct channels of communication with the Company's independent
accountants and internal audit staff, including meeting with them, both with and
without the presence of Company management, to discuss and review issues as
appropriate. The committee also meets with the Company's financial personnel and
general counsel to review their various activities and findings. While it is the
responsibility of management to design and implement an effective system of
internal accounting controls, it is the responsibility of the committee to
ensure that management has done so. It is also the responsibility of the
committee to review periodically the adequacy, management and effectiveness of
the Company's information systems.
ACQUISITIONS AND FINANCE COMMITTEE. The members of the committee are J.
Carter Bacot (Chairman), James E. Preston and Christopher A. Sinclair. The
committee held one meeting in 1998.
The committee considers proposals concerning mergers, combinations,
acquisitions, sales, or offers to purchase the Company's shares or significant
assets. In addition, the committee reviews certain proposed acquisitions by the
Company of shares or assets of third parties, and it considers proposed debt or
equity issues of the Company.
COMPENSATION COMMITTEE. The members of the committee are James E. Preston
(Chairman), Philip H. Geier Jr. and Margaret P. MacKimm. The committee met three
times during 1998.
The committee establishes and approves compensation plans and goals,
salaries, incentives and other forms of compensation for the Company's officers
and for certain other executives of the Company and its major subsidiaries and
operating divisions. The committee administers the Annual Incentive Compensation
Plan, the Long-Term Incentive Compensation Plan, the Supplemental Executive
Retirement Plan, the Executive Supplemental Retirement Plan, the Voluntary
Deferred Compensation Plan, and may take certain actions with respect to the
Trust (as defined on page ). The committee also administers the 1994 Venator
Group Employees Stock Purchase Plan, administers and grants options under the
1995 Stock Option and Award Plan and the 1998 Stock Option and Award Plan and
administers the 1986 Stock Option Plan and the Eastbay, Inc. 1994 Stock
Incentive Plan. Members of the committee are not eligible to participate in any
of these plans.
EXECUTIVE COMMITTEE. The members of the committee are Roger N. Farah
(Chairman) and all of the non-employee directors. The committee did not meet in
1998.
8
<PAGE> 12
Except for certain matters reserved to the Board, the committee has all of
the powers of the Board in the management of the business of the Company during
intervals between Board meetings.
NOMINATING AND ORGANIZATION COMMITTEE. The members of the committee are
Jarobin Gilbert Jr. (Chairman), J. Carter Bacot and James E. Preston. The
committee held one meeting in 1998.
The committee makes recommendations to the Board with respect to the size
and composition of the Board and the Company's internal organizational
structure. In addition, the committee reviews the qualifications of candidates,
and makes recommendations to the Board with respect to nominees, for election as
directors. The committee may also consider nominees recommended by shareholders
in accordance with the procedures described on page .
RETIREMENT INVESTMENT COMMITTEE. The members of the committee are Margaret
P. MacKimm (Chairman), Purdy Crawford and John J. Mackowski. The committee met
three times in 1998.
The committee has responsibility to supervise the investment of the assets
of the retirement plans of the Company and to appoint, review the performance of
and, if appropriate, replace, the trustee of the Company's pension trust and the
managers responsible for managing the funds of such trust.
In addition, the Board has established a Retirement Administration
Committee, composed of certain officers of the Company, to which the Board has
delegated certain administrative responsibilities with regard to the retirement
plans of the Company.
DIRECTORS COMPENSATION AND BENEFITS
Non-employee directors of the Company receive an annual retainer of
$40,000. The committee chairmen receive an additional annual retainer of $3,000.
No separate fees are paid for attendance at Board or committee meetings.
One-half of the annual retainer is required to be paid in shares of the
Company's Common Stock under the Directors' Stock Plan, with the balance payable
in cash. Directors may elect to receive up to 100 percent of their annual
retainer in shares of stock. The number of shares received under the plan is
determined by dividing the applicable retainer amount by the average price of a
share of stock on the last business day preceding July 1 of each year. In
addition, directors are reimbursed for their reasonable expenses in attending
meetings of the Board and committees, including travel expenses to and from
meetings.
The Directors' Retirement Plan was frozen as of December 31, 1995.
Consequently, only four of the current directors are entitled to receive a
retirement benefit under this plan because they had completed at least five
years of service as a director on the date the plan was frozen and they are not
entitled to receive a retirement benefit under any of the Company's other
retirement plans or programs. Under the Directors' Retirement Plan, an annual
retirement benefit of $24,000 will be paid to a qualified director for the
lesser of the number of years of his or her service as a director or 10 years.
Payment of benefits under this plan generally begins on the later of the
director's termination of service as a director or the attainment of age 65.
Directors with less than five years of service at December 31, 1995 and
directors who are elected after this date are not eligible to participate in the
Directors' Retirement Plan.
At the Company's request, during 1998 Jarobin Gilbert Jr. served on the
Supervisory Board of F.W. Woolworth Co. GmbH ("FWW Germany"), a former
subsidiary of the Company. In connection with this service, Mr. Gilbert received
a fee of DM 11,250 (approximately U.S. $6,325) and reimbursement for reasonable
expenses in attending meetings of the Supervisory Board. The Company sold FWW
Germany in October 1998, and Mr. Gilbert's membership on the Supervisory Board
ended at that time. Pursuant to a consulting arrangement with DBSS Group, Inc.
("DBSS"), of which Mr. Gilbert is the President and Chief Executive Officer, the
Company paid a fee of $15,000 to DBSS for consulting services rendered by Mr.
Gilbert during 1998 related to the Company's businesses in Germany. The Company
and DBSS terminated this consulting arrangement following the Company's sale of
FWW Germany in October 1998.
9
<PAGE> 13
DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE
The Company has purchased directors and officers liability and corporation
reimbursement insurance from National Union Fire Insurance Company of
Pittsburgh, Pa., The Great American Insurance Companies, The Chubb Group of
Insurance Companies and Executive Risk Indemnity, Inc. These policies insure the
Company and all of the Company's wholly owned subsidiaries. They also insure all
of the directors and officers of the Company and the covered subsidiaries. The
policies were written for a term of 36 months, from September 12, 1998 until
September 12, 2001. The total annual premium for these policies is $419,903.
Directors and officers of the Company, as well as all other employees with
fiduciary responsibilities under the Employee Retirement Income Security Act of
1974, as amended, are insured under policies issued by Federal Insurance Company
and National Union Fire Insurance Company, which have a total premium of
$104,249 for the 12-month period ending September 12, 1999.
In accordance with the indemnification provisions of the Company's By-laws,
the Company paid legal fees and expenses totaling approximately $58,265 during
1998 on behalf of certain of the Company's former officers who were named as
individual defendants in the litigation captioned In re Woolworth Corporation
Securities Class Action Litigation, which had been settled during 1998. The
amounts paid in 1998 were covered under the Company's directors and officers
liability insurance policies in effect during the applicable period.
The Company has entered into indemnification agreements with its directors
and executive officers, as approved by shareholders at the 1987 annual meeting.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company and its subsidiaries have had transactions in the normal course
of business with various other corporations, including certain corporations
whose directors or officers are also directors of the Company. The amounts
involved in these transactions have not been material in relation to the
businesses of the Company or its subsidiaries, and it is believed that these
amounts have not been material in relation to the businesses of the other
corporations. In addition, it is believed that these transactions have been on
terms no less favorable to the Company than if they had been entered into with
disinterested parties. It is anticipated that transactions with such other
corporations will continue in the future.
The Company had a consulting arrangement with DBSS, of which Jarobin
Gilbert Jr. is the President and Chief Executive Officer. Under this
arrangement, Mr. Gilbert provided consulting services to the Company related to
the Company's businesses in Germany. The Company and DBSS terminated this
arrangement following the sale of FWW Germany in October 1998. During 1998, the
Company paid fees of $15,000 to DBSS.
Purdy Crawford is Honorary Counsel to the Canadian law firm of Osler,
Hoskin & Harcourt, which provided legal services to the Company in 1998. Mr.
Crawford received no remuneration from the firm in 1998.
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides that the members of the
Board of Directors be divided into three classes serving staggered three-year
terms, each class to be as nearly equal in number as the other two. The terms of
the four directors who constitute Class II expire at the 1999 annual meeting
upon the election and qualification of their successors.
J. Carter Bacot, Purdy Crawford, Philip H. Geier Jr. and Dale W. Hilpert
will be considered for election as directors in Class II, each to hold office
for a three-year term expiring at the annual meeting in 2002. The seven
remaining directors will continue in office, in accordance with their previous
elections, until the expiration of the terms of their classes at the 2000 or
2001 annual meeting. Each nominee has been nominated by the Board of Directors
for election and has consented to serve for the specified term. All of the
nominees
10
<PAGE> 14
are presently serving as directors, having been elected to serve for their
present terms at the annual meeting in 1996.
If, prior to the annual meeting, any of the four nominees becomes unable to
serve as a director for any reason, the persons designated as proxies on the
enclosed proxy card will have full discretion to vote the shares represented by
proxies held by them for another person to serve as a director in place of that
nominee.
Biographical information follows for each of the four nominees and for each
of the seven other directors of the Company whose present terms as directors
will continue after the 1999 annual meeting. Any reference to a person's tenure
as a director of the Company includes service as a director of Venator Group
Specialty, Inc. (formerly named F.W. Woolworth Co.) for the period prior to the
1989 share exchange between the Company and Venator Group Specialty, Inc.
There are no family relationships among the directors or executive officers
of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION TO THE BOARD OF DIRECTORS OF EACH OF THE COMPANY'S NOMINEES
IDENTIFIED FOR REELECTION.
NOMINEES FOR DIRECTORS
TERMS EXPIRING IN 2002
<TABLE>
<S> <C>
[BACOT PHOTO] J. CARTER BACOT. Age 66. Director since 1993. Chairman of
the Board of The Bank of New York Company, Inc. (bank
holding company) and of The Bank of New York, its wholly
owned subsidiary, from 1982 to February 7, 1998; Chief
Executive Officer of The Bank of New York Company, Inc. and
of The Bank of New York from 1982 to July 1, 1997. He is a
trustee of Atlantic Mutual Insurance Company and a director
of its subsidiaries, Atlantic Specialty Insurance Company
and Centennial Insurance Company; and a director of The Bank
of New York Company, Inc., Time Warner, Inc., Associates
First Capital Corporation, Phoenix Home Life Mutual
Insurance Company and United Way of New York City. He is
also a Trustee of Hamilton College.
[CRAWFORD PHOTO] PURDY CRAWFORD. Age 67. Director since 1995. Chairman of
the Board of Imasco Limited (Canada) (consumer products and
services) since 1987 and its Chief Executive Officer from
1987 to 1995. He is also Chairman of the Board of CT
Financial Services Inc. and Canada Trustco Mortgage Company,
both of which are financial services companies and
subsidiaries of Imasco Limited. Mr. Crawford is a director
of Camco Inc., Canadian National Railway Company, Inco
Limited, Maple Leaf Foods Ltd., Petro-Canada and Nova Scotia
Power Inc. He is Governor Emeritus of McGill University;
Chancellor of Mount Allison University; a member of the
Advisory Board of Oxford Frozen Foods Limited; and Honorary
Counsel to the Canadian law firm of Osler, Hoskin &
Harcourt.
[GEIER PHOTO] PHILIP H. GEIER JR. Age 64. Director since 1994. Chairman
of the Board and Chief Executive Officer of Interpublic
Group of Companies, Inc. (advertising agencies and other
marketing communication services) since 1980. He is a
director of Fiduciary Trust Company International, AEA
Investors, Inc. and the International Tennis Hall of Fame.
He is also a member of the Board of Overseers and Managers
of Memorial Sloan Kettering Cancer Center, the Board of
Overseers of Columbia Business School, and of the Board of
Trustees of the Whitney Museum of American Art.
</TABLE>
11
<PAGE> 15
<TABLE>
<S> <C>
[HILPERT PHOTO] DALE W. HILPERT. Age 56. Director since 1995. The Company's
President and Chief Operating Officer since May 15, 1995.
Mr. Hilpert was Chairman and Chief Executive Officer of the
Payless Shoe Source division of The May Department Stores
Company (retail merchants) from 1985 to April 1995.
</TABLE>
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN 2001
<TABLE>
<S> <C>
[FARAH PHOTO] ROGER N. FARAH. Age 46. Director since 1994. The Company's
Chairman of the Board and Chief Executive Officer since
December 1994. Mr. Farah was President and Chief Operating
Officer of R. H. Macy & Co., Inc. (retail merchants) from
July 1994 to October 1994. He was Chairman of the Board and
Chief Executive Officer of Federated Merchandising Services,
a division of Federated Department Stores, Inc. (retail
merchants), from July 1991 to July 1994. He is a director of
Liz Claiborne, Inc. and a member of the Undergraduate
Executive Board of the Wharton School of the University of
Pennsylvania.
[PRESTON PHOTO] JAMES E. PRESTON. Age 66. Director since 1983. Chairman of
the Board of Avon Products, Inc. (manufacture and sale of
beauty and related products) from 1989 to May 6, 1999, and
Chief Executive Officer of Avon Products, Inc. from 1989 to
June 1998. He is a director of ARAMARK Corporation, Reader's
Digest Association, the Cosmetic, Toiletry and Fragrance
Association, and Project Hope; and a member of the Advisory
Board of the Salvation Army of Greater New York.
[SINCLAIR PHOTO] CHRISTOPHER A. SINCLAIR. Age 48. Director since 1995.
President and Chief Executive Officer of Caribiner
International (business communications) from December 22,
1998 to present. He was President and Chief Executive
Officer of Quality Food Centers, Inc. (supermarket chain)
from September 12, 1996 to March 1998. Mr. Sinclair was
Chairman and Chief Executive Officer of Pepsi-Cola Company,
a division of PepsiCo, Inc. ("PepsiCo") (beverages, snack
foods and restaurants) from April 1996 to July 1996; and
President and Chief Executive Officer of PepsiCo Foods and
Beverages International, a division of PepsiCo, from 1993 to
April 1996. He is a director of Caribiner International,
Mattel, Inc. and the Amos Tuck School of Business
Administration at Dartmouth College.
</TABLE>
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN 2000
<TABLE>
<S> <C>
[GILBERT PHOTO] JAROBIN GILBERT JR. Age 52. Director since 1981. President
and Chief Executive Officer of DBSS Group, Inc. (management,
planning and trade consulting services) since 1992. He is a
director of Whitman Corp. and Midas, Inc. He is a trustee of
Atlantic Mutual Insurance Company and a director of its
subsidiaries, Atlantic Specialty Insurance Company and
Centennial Insurance Company. Mr. Gilbert is also a director
of Valley Agency for Youth, and a permanent member of the
Council on Foreign Relations.
</TABLE>
12
<PAGE> 16
<TABLE>
<S> <C>
[MacKIMM PHOTO] MARGARET P. MACKIMM. Age 65. Director since 1977. Senior
Vice President -- Communications of Kraft Foods, Inc.
(multinational marketer and processor of food products) and
its predecessor, Kraft, Inc., from 1986 to 1989. She is a
director of Chicago Title Corporation, The World Press
Institute, and the Human Relations Foundation of Chicago.
[LOREN PHOTO] ALLAN Z. LOREN. Age 61. Director since 1998. Executive Vice
President and Chief Information Officer of American Express
Company (travel and financial services) since May 1994. He
was President and Chief Executive Officer of Galileo
International (global computer reservation system company)
from 1991 to 1994. He is a director of Reynolds & Reynolds
Company and Hershey Foods Corp.
[MACKOWSKI PHOTO] JOHN J. MACKOWSKI. Age 73. Director since 1986. Chairman of
the Board and Chief Executive Officer of Atlantic Mutual
Insurance Company and its subsidiary, Centennial Insurance
Company (property, liability and marine insurance) from 1985
to 1988; and Chairman of the Board and Chief Executive
Officer of Atlantic Specialty Insurance Company (formerly
Atlantic Reinsurance Company) (issuer of reinsurance
contracts), a subsidiary of Atlantic Mutual Insurance
Company, from 1986 to 1988. He is a director of Northern
Trust Company of Connecticut, and of Transatlantic Holdings,
Inc.
</TABLE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table provides certain compensation
information for the Company's Chief Executive Officer during 1998 and the four
other most highly compensated executive officers of the Company at January 30,
1999, for services rendered in all capacities during 1998 and the fiscal years
ended January 31, 1998 ("1997") and January 25, 1997 ("1996").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- -----------------------
AWARDS
-----------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTION/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($) ($)
- --------------------------- ---- --------- ------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Roger N. Farah(a)........... 1998 1,500,000 0 3,884(b) 0 1,671,670(m) 6,032(c)
Chairman of the Board and 1997 1,500,000 702,150 3,886(b) 0 0 5,610(c)
Chief Executive Officer 1996 1,500,000 780,900 3,372(b) 0 0 5,688(c)
Dale W. Hilpert............. 1998 825,000 0 0 100,000 835,835(m) 10,860(c)
President and Chief 1997 806,250 377,406 0 100,000 0 9,718(c)
Operating Officer 1996 750,000 390,450 0 100,000 0 8,506(c)
M. Jeffrey Branman(d)....... 1998 435,000 200,000(e) 0 150,000 431,158(m) 2,595(c)
Senior Vice President- 1997 415,000 394,262(e) 0 75,000 0 3,113(c)
Corporate Development 1996 365,079 390,060(e) 0 75,000 0 1,513(f)
</TABLE>
13
<PAGE> 17
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- -----------------------
AWARDS
-----------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTION/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($) ($)
- --------------------------- ---- --------- ------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Reid Johnson(g)............. 1998 434,000 0 9,191(h) 43,000 179,570(n) 14,561(i)
Former Senior Vice President 1997 169,034 200,000(j) 21,445(h) 50,000 0 126,664(k)
and Chief Financial Officer
John E. DeWolf III(d)....... 1998 406,250 0 0 50,000 374,805(m) 2,959(f)
Senior Vice President 1997 361,250 169,101 0 30,000 0 1,343(f)
Real Estate 1996 319,444 166,303 28,242(h) 30,000 0 254,620(l)
</TABLE>
- ---------------
(a) On January 9, 1995, the Company granted to Mr. Farah 200,000 shares of
Common Stock (the "Restricted Stock"), which are subject to a Restricted
Stock Agreement. The shares vest over a five-year period beginning January
31, 1996 through January 31, 2000, in increments of 40,000 shares on each
vesting date. Mr. Farah has the right to vote the Restricted Stock and to
receive and retain all regular cash dividends payable after January 1995 to
holders of Common Stock of record. At January 30, 1999, Mr. Farah held
80,000 shares of Restricted Stock (120,000 shares having previously vested),
having a value of $410,000, based upon a $5.125 closing price of the
Company's Common Stock as reported on the New York Stock Exchange on January
29, 1999, the last business day prior to the end of the fiscal year.
(b) Tax gross-up payment related to commuting use of company car.
(c) Includes the dollar value of the premium paid by the Company for a term life
insurance policy for the benefit of the named executive and the dollar value
of the Company's matching contribution under the 401(k) Plan made to the
named executive's account in shares of Common Stock. The dollar values of
amounts reported for 1998 are stated below. The shares of Common Stock for
the matching contribution were valued at $6.50 per share, which represents
the closing price of a share of Common Stock on December 31, 1998, the last
day of the plan year.
<TABLE>
<CAPTION>
EMPLOYER MATCHING
CONTRIBUTION UNDER
NAME LIFE INSURANCE PREMIUM 401(K) PLAN
- ---- ---------------------- ------------------
<S> <C> <C>
R. N. Farah.................... $5,012 $1,020
D. W. Hilpert.................. $9,840 $1,020
M. J. Branman.................. $1,575 $1,020
</TABLE>
(d) Elected to this position in March 1996.
(e) Includes $200,000 paid as a discretionary bonus under the terms of Mr.
Branman's employment.
(f) Dollar value of premium paid by the Company for term life insurance policy
for the benefit of the named executive.
(g) Held this position from September 8, 1997 until his resignation, effective
February 26, 1999.
(h) Tax gross-up payment related to relocation.
(i) Amount includes reimbursement for relocation expenses of $11,149 and payment
of premium of $3,412 for term life insurance policy for the benefit of named
executive.
(j) Guaranteed bonus paid pursuant to terms of employment.
(k) Amount includes a sign-on bonus of $100,000 and reimbursement for relocation
expenses of $26,664.
(l) Amount includes a sign-on bonus of $200,000 and reimbursement for relocation
expenses of $54,620.
(m) This payout was made for the 1996-1998 Performance Period. Fifty percent of
the total payout listed was made in cash and fifty percent was made in
shares of the Company's Common Stock. The amounts shown in the table reflect
the total of the cash payment and the value of the shares received on the
payment date. In accordance with the provisions of the Long-Term Incentive
Compensation Plan, the average of the daily closing prices of a share of the
Company's Common Stock in the 60-day period immediately preceding the
payment date of April 16, 1999 ($5.91228 per share) was used to determine
14
<PAGE> 18
the stock portion of the payout. If the payouts had been made fully in cash,
the cash payment would have been: $1,365,600 for Mr. Farah; $682,800 for Mr.
Hilpert; $352,216 for Mr. Branman; and $306,181 for Mr. DeWolf.
(n) Represents prorated cash payout for the 1996-1998 Performance Period.
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR(a)
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF PERIOD NON-STOCK PRICE-BASED PLAN
SHARES, UNITS UNTIL -------------------------------------
NAME OR OTHER RIGHTS PAYOUT THRESHOLD TARGET MAXIMUM
- ---- --------------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
R. N. Farah.................. 1,500,000 1998-2000 $337,500 $1,350,000 $2,490,000
D. W. Hilpert................ 825,000 1998-2000 185,625 742,500 1,369,500
M. J. Branman................ 435,000 1998-2000 97,875 391,500 722,100
J. E. DeWolf III............. 406,250 1998-2000 91,406 365,625 674,375
R. Johnson(b)................ 434,000 1998-2000 N/A N/A N/A
</TABLE>
- ---------------
(a) The named executive officers, excluding Mr. Johnson, and eight other
executive officers and key employees of the Company participate in the
Long-Term Incentive Compensation Plan ("Long-Term Plan"). Mr. Johnson
participated in this plan prior to his resignation. Under the Long-Term
Plan, individual target awards are expressed as a percentage of the
participant's annual base salary. The amounts shown in the table above under
the column headed "Number of Shares, Units or Other Rights" represent the
annual rate of base salary for 1998 for each of the named executive
officers. The amounts shown in the columns headed "Threshold," "Target" and
"Maximum" represent 22.5 percent, 90 percent and 166 percent, respectively,
of the named executive officer's annual base salary in the first year of the
Performance Period and represent the amount that would be paid to him at the
end of the Performance Period if the established performance goals are
attained.
Any payout under the Long-Term Plan is calculated based upon the Company's
performance in the Performance Period and measured against the performance
criteria set for the participant at the beginning of the Performance Period
by the Compensation Committee. These performance goals are based on one or
more of the following criteria: (i) the attainment of certain target levels
of, or percentage increase in, consolidated net income; or (ii) the
attainment of certain levels of, or a specified increase in, return on
invested capital. In addition, to the extent permitted by Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code")
(if applicable), the Compensation Committee has the authority to incorporate
provisions in the performance goals allowing for adjustments in recognition
of unusual or non-recurring events affecting the Company or the Company's
financial statements, or in response to changes in applicable laws,
regulations or accounting principles. Unless otherwise determined by the
Compensation Committee, payment in connection with such awards shall be made
only if and to the extent performance goals for the Performance Period are
attained and generally only if the participant remains employed by the
Company throughout the Performance Period. The Compensation Committee may
award, after completion of the Performance Period, a pro-rata payment to any
participant whose employment terminated during the Performance Period.
Upon a Change in Control, as defined in the Long-Term Plan, the Compensation
Committee may, to the extent permitted under Section 162(m) of the Internal
Revenue Code (if applicable), pay out an amount equal to or less than a
pro-rata portion (through the date of the Change in Control) of the
individual target award based on the actual performance results achieved
from the beginning of the Performance Period to the date of the Change in
Control and the performance results that would have been achieved had the
performance goals been met for the balance of the Performance Period.
Payment to a participant under the Long-Term Plan for each Performance
Period will be made, at the discretion of the Compensation Committee, either
in cash or in shares of Common Stock. If payment is made in shares of Common
Stock, the number of shares to be paid to the participant will be determined
by dividing the achieved percentage of a participant's annual base salary by
the fair market value, as
15
<PAGE> 19
defined in the Long-Term Plan, of the Common Stock on the date of payment.
The amount of any payout for the performance period may not exceed the
lesser of 300 percent of the participant's annual base salary or $5,000,000.
(b) Although Mr. Johnson was granted an award under the Long-Term Plan for the
1998-2000 Performance Period, he is not entitled to receive any payment
under this plan as a result of his resignation.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(A)
-------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE VALUE($)(B)
- ---- ---------- -------------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
R. N. Farah...................... 0 N/A N/A N/A N/A
D. W. Hilpert.................... 100,000 3.9 25.2813 04/08/08 896,065
M. J. Branman.................... 50,000 2.0 25.2813 04/08/08 448,033
100,000 3.9 13.50 08/12/08 443,685
R. Johnson(c).................... 43,000 1.7 25.2813 02/26/99 N/A
J. E. DeWolf III................. 50,000 2.0 25.2813 04/08/08 448,033
</TABLE>
- ---------------
(a) During 1998, stock options were granted to the named executive officers,
except Mr. Farah, on April 8, 1998 under the 1998 Stock Option and Award
Plan (the "1998 Award Plan") and the 1995 Stock Option and Award Plan (the
"1995 Award Plan"). In addition, a stock option was granted to Mr. Branman
on August 12, 1998.
The per-share exercise price of each stock option may not be less than the
fair market value of a share of Common Stock on the date of grant. In
general, no portion of any stock option may be exercised until the first
anniversary of its date of grant. The options granted on April 8, 1998 will
become exercisable in three equal annual installments, beginning April 8,
1999. The option granted on August 12, 1998 will become exercisable in two
equal installments on April 12, 2000 and August 12, 2000. If an option
holder retires, becomes disabled, or dies while employed by the Company or
one of its subsidiaries, all unexercised options that are then immediately
exercisable, plus those options that would have become exercisable on the
next succeeding anniversary of the date of grant of each option, will remain
(or become) immediately exercisable as of that date. Moreover, upon the
occurrence of a "Change in Control," as defined in the 1995 Award Plan and
the 1998 Award Plan, all outstanding options will become immediately
exercisable as of that date.
Options may remain exercisable for up to three years following an option
holder's retirement or termination due to disability, and for up to one year
for any other termination of employment for reasons other than cause.
However, under no circumstances may an option remain outstanding for more
than ten years from its date of grant.
(b) Values were calculated as of the date of grant using a Black-Scholes option
pricing model. The values shown in the table are theoretical and do not
necessarily reflect the actual values that the named executive officers may
ultimately realize. Any actual value to the officer will depend on the
extent to which the market value of the Company's Common Stock at a future
date exceeds the option exercise price. In addition to the fair market value
of the Common Stock on the date of grant and the exercise price, which are
identical, the following assumptions were used to calculate the values shown
in the table: a weighted-average risk-free interest rate of 4.57 percent; a
stock price volatility factor of 35 percent; a two year weighted-average
expected award life and a zero dividend yield. The assumptions and
calculations used for the model are consistent with the assumptions for
reporting stock option valuations in the Company's 1998 Annual Report.
16
<PAGE> 20
(c) Mr. Johnson resigned from the Company on February 26, 1999. In accordance
with the terms of the 1995 Award Plan and the 1998 Award Plan, the entire
option granted to him on April 8, 1998 was cancelled as of his resignation
date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FY-END(#) FY-END($)(A)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. N. Farah.......... 0 N/A 800,000 0 0 0
D. W. Hilpert........ 0 N/A 399,999 200,001 0 0
M. J. Branman........ 0 N/A 75,000 225,000 0 0
J. E. DeWolf III..... 0 N/A 30,000 80,000 0 0
R. Johnson........... 0 N/A 16,666 76,334 0 0
</TABLE>
- ---------------
(a) The fair market value (the average of the high and low prices of the
Company's Common Stock) on Friday, January 29, 1999, the last business day
of 1998, was $4.8438. No unexercised options were in-the-money on that date.
RETIREMENT PLANS
The Company maintains the Venator Group Retirement Plan (the "Retirement
Plan"), a defined benefit plan with a cash balance formula, which covers
associates of the Company and substantially all of its United States
subsidiaries. All qualified associates at least 21 years of age are covered by
the Retirement Plan, and plan participants become fully vested in their benefits
under this plan upon completion of five years of service or upon attainment of
age 65 while actively employed.
Under the cash balance formula, each participant has an account, for record
keeping purposes only, to which credits are allocated annually based upon a
percentage of the participant's W-2 Compensation, as defined in the Retirement
Plan. This percentage is determined by the participant's years of service with
the Company as of the beginning of each calendar year. The following table shows
the percentage used to determine credits at the years of service indicated.
<TABLE>
<CAPTION>
PERCENT OF W-2
PERCENT OF ALL COMPENSATION
YEARS OF SERVICE W-2 COMPENSATION OVER $22,000
- ---------------- ---------------- + --------------
<S> <C> <C> <C>
Less than 6................................................. 1.10 0.55
6-10........................................................ 1.50 0.75
11-15....................................................... 2.00 1.00
16-20....................................................... 2.70 1.35
21-25....................................................... 3.70 1.85
26-30....................................................... 4.90 2.45
31-35....................................................... 6.60 3.30
More than 35................................................ 8.90 4.45
</TABLE>
In addition, all balances in the participants' accounts earn interest at
the fixed rate of six percent, which is credited annually. At retirement or
other termination of employment, an amount equal to the vested balance then
credited to the account under the Retirement Plan is payable to the participant
in the form of a qualified joint and survivor annuity (if the participant is
married) or a life annuity (if the participant is not married). The participant
may elect to waive the annuity form of benefit described above and receive
benefits under the Retirement Plan in an optional annuity form or an immediate
or deferred lump sum. Participants may elect
17
<PAGE> 21
one of the optional forms of benefit with respect to the accrued benefit as of
December 31, 1995 if the individual participated in the Retirement Plan as of
that date.
The Internal Revenue Code limits annual retirement benefits that may be
paid to, and compensation that may be taken into account in the determination of
benefits for, any person under a qualified retirement plan such as the
Retirement Plan. Accordingly, for any person covered by the Retirement Plan
whose annual retirement benefit, calculated in accordance with the terms of this
plan, exceeds the limitations of the Internal Revenue Code, the Company has
adopted the Venator Group Excess Cash Balance Plan (the "Excess Plan"). The
Excess Plan is an unfunded, nonqualified benefit plan, under which the
individual is paid the difference between the Internal Revenue Code limitations
and the retirement benefit to which he or she would otherwise be entitled under
the Retirement Plan.
In addition, the Supplemental Executive Retirement Plan (the "SERP"), which
is an unfunded, nonqualified benefit plan, provides for payment by the Company
of supplemental retirement, death and disability benefits to certain executive
officers and certain other key employees of the Company and its subsidiaries.
The named executive officers and five of the other executive officers of the
Company are participants in the SERP. Under the SERP, the Compensation Committee
of the Board of Directors sets an annual targeted incentive award for each
participant consisting of a percentage of salary and bonus based on the
Company's performance against target. Achievement of the target causes an eight
percent credit to a participant's account. The applicable percentage decreases
proportionately to the percentage of the Company's performance below target, but
not below 4 percent, and increases proportionately to the percentage of the
Company's performance above target, but not above 12 percent. Participants'
accounts accrue simple interest at the rate of 6 percent annually.
The table below provides the estimated annual benefit for each of the named
executive officers stated as a single life annuity under the Retirement Plan,
the Excess Plan, and the SERP. Except for R. Johnson, the projections contained
in the table assume each person's continued employment with the Company to his
normal retirement date and that compensation earned during each year after 1998
to the individual's normal retirement date remains the same as compensation
earned by him during 1998. The projections in the table below are based upon the
greater of the accrued benefit as of December 31, 1995 or a single life annuity
determined by converting the account balance projected to normal retirement date
using a 6.00 percent interest rate at normal retirement age based on the average
rate as published in Federal statistical release H.15 (519) for 30-year U.S.
Treasury Bills for December 1998. The applicable interest rate is the rate
specified in sec.417(e)(3)(A)(ii)(II) of the Internal Revenue Code.
<TABLE>
<CAPTION>
TOTAL ANNUAL BENEFIT TOTAL ANNUAL BENEFIT
FOR YEARS 1-3 FOR YEARS 4 AND SUBSEQUENT
NAMED EXECUTIVE OFFICER FOLLOWING RETIREMENT(A) FOLLOWING RETIREMENT(A)
- ----------------------- ----------------------- --------------------------
<S> <C> <C>
R. N. Farah...................................... $2,025,362 $222,816
D.W. Hilpert..................................... $ 422,520 $ 34,336
M.J. Branman..................................... $ 756,118 $ 92,484
J.E. DeWolf III.................................. $ 613,743 $ 60,692
R. Johnson(b).................................... N/A N/A
</TABLE>
- ---------------
(a) The amounts stated for years 1-3 following retirement include the SERP
benefits, payable as a lump sum spread over a three-year period. The SERP
projections include a 4 percent credit to the participants' accounts for
1998 and assume an annual 8 percent credit going forward. Beginning with the
fourth year following retirement, the individuals' annual benefits will not
include any SERP payments and, therefore, their annual benefits for those
years will be reduced accordingly.
(b) As a result of Mr. Johnson's resignation on February 26, 1999, he is
ineligible to receive a benefit under the Retirement Plan.
18
<PAGE> 22
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
The Company presently has employment agreements with R. Farah and D.
Hilpert. In addition, the Company has severance agreements with M.J. Branman and
J.E. DeWolf III.
R.N. FARAH
The Company has entered into an employment agreement with Mr. Farah as
Chairman of the Board and Chief Executive Officer for a term ending on January
31, 2003. This agreement supersedes the agreement entered into with Mr. Farah in
1994 (the "1994 Agreement"). The new compensation arrangements reflect a
decision by the Company and Mr. Farah to reconfigure his compensation package to
reduce significantly his base salary and to increase the amount of his
compensation that is tied to the performance of the Company and the price of the
Company's Common Stock. During the contract term, Mr. Farah will receive a base
salary of not less than $1 million per year, which is a reduction of $500,000
per year from the base salary he was paid under the 1994 Agreement. In addition,
Mr. Farah participates in the Annual Incentive Compensation Plan (the "Annual
Plan") and the Long-Term Plan. His payout at budget under the Annual Plan is 100
percent of base salary.
Under his new employment agreement, Mr. Farah will receive an annual stock
option grant to purchase that number of shares of Common Stock having a market
value of $5,000,000 on the date of grant. He will also receive a one-time grant
of 275,000 shares of restricted stock under the 1998 Award Plan. The shares of
restricted stock will be subject to a restriction related to Mr. Farah's
continued employment with the Company, and will vest in three equal annual
installments beginning January 31, 2000.
In the event Mr. Farah's employment is terminated by him for good reason or
by the Company without cause, then Mr. Farah would be entitled to payments of
any unpaid base salary for the period prior to termination, any declared but
unpaid bonuses, and amounts due under any employee benefit or incentive plan.
Also, to the extent any shares of restricted stock which were granted to Mr.
Farah are unvested, these shares will immediately vest. Thereafter, for a period
ending on the earliest of (a) the later of January 31, 2003 or two years from
the date of termination, (b) his death, or (c) the violation of any
post-employment contract requirements, Mr. Farah would be entitled to receive
payments equal to his annual base salary immediately prior to termination. If
the sum of the foregoing payments is less than the guaranteed severance amount
provided for under the agreement, the Company will pay the difference to Mr.
Farah. The guaranteed severance amounts are as follows: (i) if Mr. Farah's
employment is terminated earlier than January 31, 2000, his guaranteed severance
amount is $4,500,000; (ii) if his termination date is from February 1, 2000 to
January 31, 2001, his guaranteed severance amount is $4,000,000; and (iii) if
his termination date is after January 31, 2001, his guaranteed severance amount
is $3,000,000.
In the event Mr. Farah's employment is terminated, whether by the Company
or by Mr. Farah, following a Change in Control, as defined in the agreement, Mr.
Farah would receive the same payments he would have received as if he had
terminated his employment for good reason. Also, all of Mr. Farah's unvested
shares of restricted stock and all of his unvested stock options would
immediately vest. If the sum of the payments to be made to Mr. Farah in the
event of his termination following a Change in Control is less than three times
his then current base salary plus annual bonus at target in the year of
termination, then the Company will pay the difference to Mr. Farah. In the event
he becomes entitled to the payments in this paragraph and the payments are
determined to constitute payments under Section 280G(b)(2) of the Internal
Revenue Code and subject to an excise tax under Section 4999 of the Internal
Revenue Code, the Company will provide him with a gross-up payment for the
excise and related income taxes incurred in connection with the gross-up
payment.
Finally, if the Company does not offer to extend his employment agreement
for at least one year beyond January 31, 2003 under the same terms and
conditions then existing, then the Company will pay Mr. Farah the sum of
$1,500,000.
19
<PAGE> 23
D.W. HILPERT
The Company has entered into a new employment agreement with Mr. Hilpert as
President and Chief Operating Officer for a term ending on January 31, 2002.
This agreement supersedes the agreement entered into with Mr. Hilpert in 1997.
During the contract term, Mr. Hilpert will receive a base salary of not less
than $825,000 per year. In addition, Mr. Hilpert participates in the Annual Plan
and the Long-Term Plan. His payout at budget under the Annual Plan is 75 percent
of base salary.
In the event Mr. Hilpert's employment is terminated by him for good reason
or by the Company without cause (or if the Company does not extend the term of
the employment agreement for at least one year beyond January 31, 2002 under
substantially similar terms and conditions), Mr. Hilpert would be entitled to
payments of any unpaid base salary for the period prior to termination, any
declared but unpaid bonuses, and amounts due under any employee benefit or
incentive plan. Thereafter, for a period ending on the earliest of (a) the later
of January 31, 2002 or one year from his termination date (b) his death, or (c)
the violation of any post-employment contract requirements, Mr. Hilpert would be
entitled to receive payments equal to his annual base salary immediately prior
to termination.
Mr. Hilpert would receive the payments described in the paragraph above (a)
in the event of the termination of his employment within one year following a
Change in Control, as defined in the agreement, or (b) if within one year
following a Change in Control the Company's Chief Executive Officer immediately
prior to a Change in Control ceases to hold this position and Mr. Hilpert
terminates his employment within 90 days of this change in the Company's Chief
Executive Officer. If the sum of the payments to be made to Mr. Hilpert in the
event of his termination following a Change in Control if the payments continued
until the later of January 31, 2002 or one year following termination is less
than three times his then current base salary plus annual bonus at target in the
year of termination, then the Company will pay the difference to Mr. Hilpert. In
the event he becomes entitled to the payments in this paragraph and the payments
are determined to constitute payments under Section 280G(b)(2) of the Internal
Revenue Code and subject to an excise tax under Section 4999 of the Internal
Revenue Code, the Company will provide him with a gross-up payment for the
excise and related income taxes incurred in connection with the gross-up
payment.
Finally, if Mr. Hilpert's employment is terminated by him for good reason
or by the Company without cause, or following a Change in Control, or if his
employment with the Company is not extended beyond January 31, 2002, and the
amount of retirement benefits Mr. Hilpert is then entitled to under the
Retirement Plan, the Excess Plan, and the SERP is less than $1,300,000, the
Company will increase the amount in his SERP account so that this total is
reached. This provision compensates Mr. Hilpert for the benefit he would have
received under his previous employer's supplementary plan.
M.J. BRANMAN AND J.E. DEWOLF III
The Company has entered into Senior Executive Severance Agreements with
M.J. Branman, J.E. DeWolf III and five other executive officers, which provide
for severance payments if their employment is terminated by the Company without
cause or by them for good reason. In the event such officer's employment is
terminated within 24 months following a Change in Control, he will receive 2
weeks' salary plus prorated annual bonus for each year of service, with a
minimum of 104 weeks. If such termination does not occur within 24 months
following a Change in Control, he will be entitled to receive 2 weeks' salary
plus prorated annual bonus for each year of service, with a minimum of 26 weeks.
The severance benefit payable to the executive under this agreement may not be
less than 12 months' salary. With respect to Mr. Branman, if the total severance
benefit he would be entitled to is less than the sum of the following amounts in
the year of termination: (i) his annual base salary, (ii) his expected annual
bonus at target and (iii) $200,000, then he would be entitled to receive
additional payments from the Company in the amount of the difference.
The Company also had a Senior Executive Severance Agreement with R. Johnson
providing for severance payments upon his termination by the Company or by him
for good reason. As a result of Mr. Johnson's resignation, however, this
agreement is of no further force and effect, and no payments were made to Mr.
Johnson under the agreement.
20
<PAGE> 24
The Company has established a trust (the "Trust") in connection with
certain of its benefit plans, arrangements, and agreements, including certain of
those described above, and other benefit plans, agreements or arrangements that
may, at the request of the Company, hereafter be covered (collectively, the
"Benefit Obligations"). Under the Trust agreement, in the event of a Change in
Control of the Company (as defined in the Trust Agreement), the trustee would
pay to the persons entitled to the Benefit Obligations, out of funds held in the
Trust, the amounts to which such persons may become entitled under the Benefit
Obligations. Upon the occurrence of a Potential Change in Control of the Company
(as defined in the Trust agreement), the Company is required to fund the Trust
with an amount sufficient to pay the total amount of the Benefit Obligations.
Following the occurrence, and during the pendency, of a Potential Change in
Control, the trustee is required to make payments of Benefit Obligations, to the
extent such payments are not made by the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the following individuals (none of whom had been an officer or
employee of the Company or any of its subsidiaries) served on the Compensation
Committee: Philip H. Geier Jr., Margaret P. MacKimm and James E. Preston. There
were no interlocks with other companies within the meaning of the SEC's proxy
rules.
COMPENSATION COMMITTEE'S REPORT TO SHAREHOLDERS
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee"),
composed of the directors listed below, has responsibility for all compensation
matters involving the Company's executive officers and for significant elements
of the compensation of the chief executive officers of its operating units. None
of the members of the Committee are officers or employees of the Company or any
of its subsidiaries. This is our report on the Company's executive compensation
in 1998.
Compensation Policy. It is the policy of the Committee to design and
maintain a compensation policy that will enable the Company to attract,
motivate, and retain executive officers and the chief executive officers of its
operating units by providing a fully competitive total compensation opportunity.
This policy provides for (i) competitive base salaries, which reflect the
responsibilities of the position held and performance in the position; (ii)
annual incentive opportunities payable in cash, which are based on the Company's
achievement of previously specified performance goals; (iii) long-term incentive
opportunities, payable in stock or cash, which are based on the Company's
achievement of previously specified performance goals; and (iv) long-term
stock-based incentive opportunities, which are designed to strengthen the
mutuality of interest between participating associates and the shareholders. The
Committee strives to balance short- and long-term incentive objectives and to
employ prudent judgment in establishing performance criteria, evaluating
performance, and determining actual incentive payment levels. For senior level
management associates the compensation policy provides that a greater percentage
of total compensation will be at risk, dependent upon the Company's performance
in relation to targets established under incentive compensation plans, or, in
the case of stock options, increases in the price of the Company's Common Stock.
Compensation Program. The Committee has established a total compensation
program for senior executive officers (the Chairman of the Board and Chief
Executive Officer, President and Chief Operating Officer, and Senior Vice
Presidents) and the chief executive officers of its operating businesses
consisting of five components: base salary, participation in the Annual Plan,
participation in the Long-Term Plan, grants under the 1995 and 1998 Award Plans,
and the opportunity to participate in the employee stock purchase program. We
note that the Company's shareholders, at annual meetings in prior years, have
approved the Annual Plan, the Long-Term Plan, the 1995 Award Plan, the 1998
Award Plan, and the 1994 Employees Stock Purchase Plan (the "Stock Purchase
Plan"). The Company has a substantially similar compensation program for its
other officers and senior management employees.
21
<PAGE> 25
A performance evaluation of each management associate is conducted at the
beginning of each year, based upon goals, responsibilities, and other
performance criteria established at the beginning of the prior year. Salary
recommendations are then made based upon the results of this performance review.
With regard to executive officers and the chief executive officers of the
Company's operating units, management makes these salary recommendations to the
Committee. The Committee then reviews the base salaries of these individuals and
determines the changes, if any, that should be made to those base salaries based
upon the officer's performance and to maintain a competitive position with other
national retail companies.
At the beginning of each year, the Committee also establishes the
performance goals under the Annual Plan for that year and under the Long-Term
Plan for the performance period then beginning. The performance goals under the
Annual Plan for 1998 were based on a combination of pre-tax earnings and
percentage return on invested capital of the Company in relation to targets
established by the Committee. In 1998, these targets for executive officers were
equal to the pre-tax earnings and percentage return on invested capital set in
the Company's operating budget for the year. Approximately 800 key management
employees, including executive officers, are participants in the Annual Plan.
The chief executive officers of the operating units participate in annual bonus
plans with goals tied to operating results of their respective units. Payments
under the Long-Term Plan have been based on a combination of cumulative net
income and percentage return on invested capital of the Company during the
performance period, in relation to targets established by the Committee.
Each year the Committee considers granting options to purchase Common Stock
to key employees, including executive officers. Stock option grants are intended
to provide additional incentive for superior performance by officers and key
employees who have the most impact on the management and success of the
Company's businesses. Stock options granted by the Committee in 1998 generally
vest in three equal annual installments beginning on the first anniversary of
the date of grant. Approximately 450 employees participate. Also, qualified
executive officers and other employees may purchase shares of Common Stock under
the Stock Purchase Plan.
In determining the number of options to be granted to executive officers,
the Committee considered a number of factors, including the position held by the
individual, his or her performance, the number of options granted in previous
years, the financial results of the Company for the prior year, the price of a
share of Common Stock, and the fact that management was implementing a
turn-around plan for the Company. In 1998, the Committee granted to the named
executive officers the stock options shown in the table on page . In January
1999 the Committee approved grants of restricted stock to a group of 35 senior
managers and key employees of the Company, not including the Chief Executive
Officer. The size of the individual grants ranged from 5,000 shares to 100,000
shares, with the average grant being for 24,000 shares. Restrictions on the
shares lapse for each individual if that individual continues to be employed by
the Company on the fifth anniversary of the grant date. The restrictions will
lapse on the third anniversary of the grant date if certain performance targets,
set by the Committee, are met. In the view of the Committee, the granting of
this restricted stock was to the benefit of the Company and its shareholders by
providing a means of retaining key managers, many of whom had been recruited to
the Company in the past several years, and by motivating key managers to achieve
performance goals.
The performance of the Company's continuing operations in 1998 did not meet
the performance targets established by the Committee under the Annual Plan, and
therefore no payments were made to the executive officers under that plan.
Principally as a result of the Company's performance in 1996 and 1997, the
performance of the Company's continuing operations in the 1996-1998 performance
period under the Long-Term Plan was above the threshold levels established by
the Committee for cumulative net income and percentage return on invested
capital for the performance period, and therefore, below-target payments were
made to the participants in that plan, including the named executive officers
shown in the table on page .
Chief Executive Officer's Compensation. Mr. Farah's compensation
arrangements in 1998 were unchanged from those negotiated by the Company and Mr.
Farah at the time he joined the Company in 1994, which were embodied in an
employment agreement entered into at that time (the "1994 Agreement"). In 1998,
Mr. Farah was paid a base salary of $1,500,000, and was eligible to earn a bonus
at target under the
22
<PAGE> 26
Annual Plan of 50 percent of his base salary. Options to purchase 800,000 shares
of Common Stock and 200,000 shares of restricted stock were issued to him in
1994, and no additional stock options were granted to him in 1998. The shares of
restricted stock are subject to a restriction related to Mr. Farah's continued
employment, and vest at 20 percent per year at the end of the first through
fifth years of employment. As of January 31, 1999, the restrictions have lapsed
on 160,000 of these shares and the restrictions on the remaining shares lapse in
January 2000. Also, in 1998 Mr. Farah purchased 1,046 shares of Common Stock at
$16.58 per share under the Stock Purchase Plan, which was the maximum number of
shares he was permitted to purchase under the terms of that plan.
Based upon the Company's performance in 1998 compared to targets
established under the Annual Plan, as discussed above, no payment was made to
Mr. Farah under the Annual Plan for 1998. The target payout under the Long-Term
Plan for the 1996-98 performance period was 163 percent of base salary. Because
the performance of the Company in 1998 was significantly below plan, following
two years of essentially on-plan performance in 1996 and 1997, the Company's
performance did not meet the targets established by the Committee for the
1996-98 performance period. Consequently, the Long-Term Plan payout to Mr. Farah
for the performance period was 91.04 percent of his base salary, which would
translate to a cash amount of $1,365,600. This compares to the 163 percent of
base salary that he would have earned had the performance targets been achieved.
Fifty percent of this bonus was paid to Mr. Farah in cash and 50 percent in
shares of Common Stock.
As noted, Mr. Farah's compensation arrangements in 1998 were unchanged from
those negotiated by the Company and Mr. Farah at the time he joined the Company
in 1994. In approving these compensation arrangements at that time, the
Committee considered that the elements of Mr. Farah's compensation package were
the result of negotiation between the Company and Mr. Farah, following a search
that identified Mr. Farah as the best candidate for the Chief Executive
Officer's position.
It has been the Company's practice, with regard to its senior executives,
to negotiate new employment agreements approximately one year prior to the end
of the then-current agreement, so as to be assured of securing, on an ongoing
basis, the services of its key executives. Consequently, the Company and Mr.
Farah have entered into a new employment agreement, the terms of which are
summarized on page , for a term ending January 31, 2003 (the "1999
Agreement"). In the 1999 Agreement, the Company and Mr. Farah have agreed to
reconfigure his compensation package to reduce significantly his base salary and
to increase the amount of his compensation that is "at risk" based upon the
performance of the Company (through increased "at target" payouts under the
Annual Plan and the Long-Term Plan) and the price of the Company's shares
(through a restricted stock grant and ongoing stock option grants). It was the
view of the Committee that it was in the best interests of the Company and its
shareholders to enter into a new employment agreement with Mr. Farah in order to
secure his services for a reasonable future period and, after consulting with
independent compensation consultants, to reconfigure the components of his
compensation to provide greater incentives tied to the performance of the
Company and its share price. In approving the compensation arrangements for Mr.
Farah contained in the 1999 Agreement, the Committee considered the compensation
arrangements with Mr. Farah reflected in the 1994 Agreement, the importance to
the Company of retaining Mr. Farah's services for a reasonable period in the
future, compensation arrangements of chief executive officers of other companies
in the retail and athletic footwear and apparel industries, and the benefits to
the Company and its shareholders that it expected to result from providing Mr.
Farah with a meaningful incentive compensation opportunity tied to the
performance of the Company and the price of its Common Stock.
23
<PAGE> 27
One Million Dollar Pay Deductibility Cap. Under Section 162(m) of the
Internal Revenue Code, public companies are precluded from receiving a federal
tax deduction on compensation paid to certain executive officers in excess of $1
million per year unless certain requirements are met. It is generally the
Committee's view that the compensation plans and programs of the Company should
be designed and administered in a manner that ensures the tax deductibility by
the Company of compensation paid to its executives. As a consequence, the Annual
Plan, the Long-Term Plan, and the 1995 and 1998 Award Plans are structured so
that cash compensation paid and stock options granted under those plans qualify
for an exemption from the $1 million pay deductibility limit. The Committee
recognizes, however, that situations may arise when it is in the best interests
of the Company and its shareholders to pay compensation to an executive that
cannot be deducted for tax purposes. Most of the compensation related to the
restricted stock grants made to Mr. Farah, and potentially some portion of the
restricted stock grants made to certain other officers, is not expected to be
deductible. It was the view of the Committee that the benefits of securing the
services of Mr. Farah and these officers outweighs the Company's inability to
obtain a tax deduction for those elements of compensation.
James E. Preston, Chairman
Philip H. Geier Jr.
Margaret P. MacKimm
PERFORMANCE GRAPHS
The following performance graph compares the cumulative total shareholder
return on the Company's Common Stock against the cumulative total return of the
S&P 500 Index and the S&P Retail Stores Composite Index from January 31, 1994
through January 31, 1999. The graph assumes an investment of $100 in the
Company's Common Stock and in each index on January 31, 1994, and that all
dividends were reinvested.
<TABLE>
<CAPTION>
VENATOR GROUP S&P 500 S&P RETAIL
------------- ------- ----------
<S> <C> <C> <C>
Jan 94 100.00 100.00 100.00
Jan 95 60.87 97.68 91.13
Jan 96 43.48 132.06 96.72
Jan 97 78.74 163.24 114.05
Jan 98 84.06 203.54 167.35
Jan 99 19.81 265.70 272.34
</TABLE>
24
<PAGE> 28
The next graph compares the cumulative total shareholder return on the
Company's Common Stock against the Russell 2000 Index and a selected peer group
from September 27, 1996 (the date on which all peer group members were publicly
held) through January 31, 1999. The peer group consists of the Company, The
Finish Line, Inc., Footstar, Inc., Just For Feet, Inc., and The Sports
Authority, Inc. The Company believes that this selected group reflects the
Company's peers as retailers in the athletic footwear and apparel industry.
<TABLE>
<CAPTION>
VENATOR GROUP RUSSELL 2000 PEER
------------- ------------ ----
<S> <C> <C> <C>
Sept 96 100.00 100.00 100.00
Jan 97 98.79 106.93 86.27
Jan 98 105.45 124.46 61.30
Jan 99 24.85 123.65 49.21
</TABLE>
On January 29, 1999, which was the last trading day of the Company's most
recently completed fiscal year and the final date used in the above performance
graph, the closing price of a share of the Company's Common Stock was $5.125. On
May 27, 1999, the price of a share of the Company's Common Stock was $10.00.
PROPOSAL 2. RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit Committee, has
appointed KPMG LLP ("KPMG") as independent accountants of the Company for the
fiscal year that began January 31, 1999, subject to ratification by the
shareholders at the 1999 annual meeting. A resolution for ratification will be
presented at the 1999 annual meeting.
KPMG has no interest, financial or otherwise, direct or indirect, in the
Company other than as independent accountants.
Representatives of KPMG are expected to be present at the annual meeting
and will have an opportunity to make a statement and respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 2.
25
<PAGE> 29
GREENWAY SOLICITATION
Greenway has nominated four individuals for election to the Board of
Directors in opposition to the Company's nominees for election to the Board of
Directors. Greenway has also stated that it intends to present the Greenway
Proposals.
FOR THE REASONS GIVEN BELOW, THE BOARD OF DIRECTORS BELIEVES THAT THE
ELECTION OF THE GREENWAY SLATE OF NOMINEES AND THE APPROVAL OF THE GREENWAY
PROPOSALS WOULD BE HARMFUL TO THE COMPANY AND ITS SHAREHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE SLATE OF DIRECTORS PROPOSED BY
THE BOARD (SEE PAGE ) AND AGAINST THE GREENWAY PROPOSALS.
ELECTION OF DIRECTORS. The Company believes that its Board of Directors
should be composed of individuals who are business leaders, representing a broad
range of business and community experience, and bringing to Board membership
background, experience, and skills that enable them to contribute to the
Company's long-term objectives. Each of the existing directors being proposed
for reelection in Class II is a world-class business leader, with the depth of
experience to represent all of the Company's shareholders. All of the directors
being proposed for reelection were first elected to the Board within the past
six years.
- Carter Bacot served for over 15 years as the Chairman of the Board and
Chief Executive Officer of The Bank of New York Company, Inc., and is a
director of a number of other public companies.
- Purdy Crawford is the Chairman of the Board of Imasco Limited, a $10
billion (Canadian) corporation, and served as that company's Chief
Executive Officer for eight years. As a Canadian business leader and a
director of a number of leading Canadian corporations, he brings an
international perspective to the Board, which, given the global nature of
the Company's operations, is an important contribution.
- Philip Geier is the Chairman of the Board and Chief Executive Officer of
Interpublic Group of Companies, an advertising and marketing
communications company, a position he has held for nineteen years. He is
also an active community leader, participating on the boards of a number
of community organizations.
- Dale Hilpert, the Company's President and Chief Operating Officer, has
over 20 years experience as a senior executive of retail companies,
including 10 years as the Chief Executive Officer of Payless Shoe Source,
then a division of May Department Stores Company.
In contrast, Greenway, a minority shareholder of the Company, is proposing
to replace these directors with Greenway's nominees, two of whom are principals
of Greenway, one of whom is an officer of a company controlled by Greenway, and
one of whom is a limited partner of Greenway. The Company believes that these
individuals have limited and overlapping business experience, represent a
limited point of view concerning the Company, and do not have the background or
experience to represent the interests of all of the Company's shareholders.
Since being advised of the Greenway proposals, the Company has engaged in
discussions with Greenway in an effort to resolve this matter. These discussions
included an offer by the Company that two of the Greenway nominees -- Alfred D.
Kingsley and Gary K. Duberstein -- be included as additional directors on the
slate recommended for election by the Board of Directors at the 1999 annual
meeting. As a result of certain issues raised in the course of those
discussions, however, the Board became concerned that Mr. Kingsley's and Mr.
Duberstein's membership on the Board of Directors would result in their being a
destabilizing influence on the Company, and not in the best interests of all
shareholders. Therefore, the Board finally concluded that there was not an
acceptable basis on which it could invite Mr. Kingsley and Mr. Duberstein to
join the Board.
FOR THESE REASONS, THE BOARD OF DIRECTORS BELIEVES THAT SHAREHOLDERS WOULD
BE FAR BETTER SERVED BY ELECTING CARTER BACOT, PURDY CRAWFORD, PHILIP GEIER, AND
DALE HILPERT TO THE BOARD, AND YOU ARE URGED TO VOTE FOR THESE INDIVIDUALS ON
THE ENCLOSED PROXY CARD.
26
<PAGE> 30
PROPOSAL 3. GREENWAY PROPOSAL RELATING TO CHANGE IN NAME
CHANGE OF COMPANY NAME. Greenway is seeking shareholder approval for a
proposal recommending that the Company change its name back to Woolworth
Corporation.
At the 1998 annual meeting, 69.6 percent of the holders of the Company's
outstanding shares (and 79.4 percent of the shares voting at the meeting)
approved an amendment to the Certificate of Incorporation changing the Company's
name to Venator Group, Inc.
In the view of the Board of Directors, the Company's new name better
reflects its current portfolio of businesses and its position as a leading
global retailer of merchandise designed for active lifestyles.
The restructuring of the Company's business that occurred between 1994 and
1997 led the Company to consider the need for a change in its corporate name. In
particular, it closed its Woolworth operations in the United States in 1997. In
1998, after the change in the Company's name, the Company sold its Woolworth
operations in Germany and Austria, so that it no longer operates Woolworth
stores anywhere in the world.
Following careful study, the Company changed its name to Venator Group.,
Inc. As part of the process of identifying a new name, the Company conducted a
study which showed that there was a negative perception of the Woolworth name
among key stakeholders, including real estate developers, employees, and
institutional investors. Further, it showed that investors did not associate the
Woolworth name with the type of business the Company had become. Having carried
out the name change in 1998, now to change the Company's name yet again would be
costly and disruptive and serve no useful purpose. Also, as there are businesses
operating in various parts of the world under the Woolworth name that are not
related to the Company, the Company's use of Woolworth as its corporate name
would be confusing to stakeholders, real estate developers and suppliers.
For these reasons, the Board of Directors unanimously recommends a vote
AGAINST the Greenway Proposal concerning a change in the Company's name
(Proposal 3).
PROPOSAL 4. GREENWAY PROPOSAL RELATING TO RIGHTS PLAN
SHAREHOLDER RIGHTS PLAN. Greenway is also proposing that shareholders
approve a resolution recommending that the Board of Directors terminate the 1998
Rights Plan, redeem the rights distributed thereunder, and not adopt any new
rights agreement unless approved by the affirmative vote of the then-holders of
a majority of the outstanding shares of the Company.
The Company has had a Rights Plan in place since 1988. In the view of the
Board of Directors, the Rights Plan maximizes shareholder value and protects
shareholders and the Company from abusive takeover tactics. Last year, the Board
of Directors adopted a new Rights Plan along the lines of the plan originally
adopted in 1988. The Rights Plan is designed to ensure that, if there is a sale
of the Company, the Board of Directors will have the opportunity to effect a
transaction on optimal terms.
At the 1998 annual meeting shareholders voted in favor of a non-binding
proposal requesting that the Board of Directors terminate the Rights Plan. Since
the last annual meeting, the Board has given very careful consideration to its
decision to continue to maintain a Rights Plan. The Board has concluded that,
given the volatility of the share price of the Company's Common Stock in the
past year, caused at least in part by industry and market factors outside the
control of the Company's managers, it is in the best interests of all
shareholders to have some form of Rights Plan in place. As a result of the
Board's analysis, and taking into account the views expressed by shareholders at
last year's annual meeting, the Board recently adopted certain amendments to the
Rights Plan that would make the Rights Plan inapplicable to certain kinds of
qualifying offers to purchase all of the Company's Common Stock. In general, the
requirements for a qualifying offer are as follows:
- The offer is composed only of cash or of cash and securities.
- The person making the offer to purchase the stock (the "Offeror") has
provided firm written financial commitments from responsible financial
institutions for any cash portion of the offer and the opinion of a
nationally recognized investment bank with respect to any securities
portion of the offer.
27
<PAGE> 31
- The offer to purchase the Company's Common Stock remains open for at
least 120 days.
- The Offeror makes an irrevocable written commitment (1) to purchase those
shares that were not acquired through the original offer for the same
price paid for the shares that were acquired through the original offer,
(2) that the Offeror will not materially amend the offer except to
increase the offering price, and (3) that the Offeror will not make any
offer for the Company's stock for six months after the commencement of
the original offer.
- After the consummation of the transaction, the Offeror owns at least 80
percent of the outstanding common stock.
In addition, the Independent Directors, defined in the Rights Plan as directors
who are not current or former officers of the Company, holders of five percent
or more of the Company's shares, or the persons who have made the tender offer,
have the discretion to shorten the time periods related to the qualifying offer
provision.
The Rights Plan is not intended to prevent or deter an offer to acquire the
Company's stock at a price and on terms that would be in the best interests of
all shareholders. It is designed to ensure that, if there is a sale of the
Company, the Board of Directors will have the opportunity to effect a
transaction on the optimal terms. If the Board determines that an unsolicited
offer is fair, and on terms that reflect full value, and that are otherwise in
the best interests of the shareholders, the Board can redeem the Rights issued
to shareholders pursuant to the provisions of the Rights Agreement and permit
the offer to proceed. As amended, the Rights Plan would not apply in any event
to an offer that met the criteria for a qualifying offer.
The Board considers the continuation of the Rights Plan, as amended, to be
in the best interests of all shareholders and, therefore, unanimously recommends
a vote AGAINST the Greenway Proposal relating to the Rights Plan (Proposal 4).
PARTICIPANTS IN THE SOLICITATION
Under applicable regulations of the SEC, each member of the Board of
Directors, certain executive officers of the Company and certain other corporate
officers of the Company may be deemed to be a "participant" in the Company's
solicitation of proxies. The principal occupation and business address of each
person who may be deemed a participant are set forth in Appendix A hereto.
Information about the present ownership by the directors and named executive
officers of the Company of the Company's securities is provided in this proxy
statement and the present ownership of the Company's securities by other
participants is listed in Appendix A.
DEADLINES FOR NOMINATIONS AND SHAREHOLDER PROPOSALS
The Company's By-laws require that notice of nominations to the Board of
Directors proposed by shareholders be received by the Secretary of the Company,
along with certain other specified material, at least 75 days prior to the
meeting of shareholders at which directors are to be elected. Any shareholder
who wishes to nominate a candidate for election to the Board should obtain a
copy of the relevant section of the By-laws from the Secretary of the Company.
Proposals of shareholders intended to be presented pursuant to Rule 14a-8
under the Exchange Act at the 2000 annual meeting must be received by the
Secretary of the Company no later than February , 2000 in order to be
considered for inclusion in the 2000 proxy statement. In order for proposals of
shareholders made outside of Rule 14a-8 to be considered "timely" within the
meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be received
by the Secretary of the Company no later than April , 2000. All proposals
should be addressed to the Secretary, Venator Group, Inc., 233 Broadway, New
York, New York 10279.
28
<PAGE> 32
OTHER BUSINESS
The Board of Directors knows of no other business which will be presented
at the 1999 annual meeting. If other matters properly come before the meeting,
the persons named as proxies will exercise their discretionary authority to vote
on such matters in accordance with their best judgment.
By Order of the Board of Directors
GARY M. BAHLER
Secretary
, 1999
29
<PAGE> 33
APPENDIX A
INFORMATION CONCERNING THE DIRECTORS AND CERTAIN OFFICERS OF THE COMPANY WHO MAY
ALSO SOLICIT PROXIES
The following table sets forth the name, principal business address and the
present office or other principal occupation or employment, and the name,
principal business and the address of any corporation or other organization in
which their employment is carried on, of the directors and certain officers of
the Company who may also solicit proxies from shareholders of the Company.
Unless otherwise indicated, the principal occupation refers to such person's
position with the Company and the business address is Venator Group, Inc., 233
Broadway, New York, New York 10279.
DIRECTORS
The principal occupations of the Company's directors who are deemed
participants in the solicitation are set forth on pages 11 through 13 of this
proxy statement. The principal business address of Messrs. Farah and Hilpert is
that of the Company. The name, business and address of the other
director-participants' organization of employment are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
- ---- -------
<S> <C>
J. Carter Bacot......................................... The Bank of New York Company, Inc.
One Wall Street
New York, NY 10286
Purdy Crawford.......................................... Imasco Limited
Royal Bank Plaza
200 Bay Street
North Tower, Suite 2000
Toronto, Ontario M5J 2J2
Canada
Philip H. Geier Jr...................................... Interpublic Group of Companies,
Inc.
1271 Avenue of the Americas
New York, NY 10020
Jarobin Gilbert Jr...................................... DBSS Group, Inc.
301 East 57th Street
New York, NY 10022
Allan Z. Loren.......................................... American Express Company
200 Vesey Street
New York, NY 10285
Margaret P. MacKimm..................................... c/o Venator Group, Inc.
233 Broadway
New York, NY 10279
John J. Mackowski....................................... c/o Venator Group, Inc.
233 Broadway
New York, NY 10279
James E. Preston........................................ Nine Maple Street
Kent, CT 06757
Christopher A. Sinclair................................. Caribiner International
16 West 61st Street
New York, NY 10023
</TABLE>
A-1
<PAGE> 34
EXECUTIVE OFFICERS AND CERTAIN CORPORATE OFFICERS
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ---- --------------------
<S> <C>
Gary M. Bahler.............................. Senior Vice President, General Counsel and Secretary
M. Jeffrey Branman.......................... Senior Vice President -- Corporate Development
John E. DeWolf III.......................... Senior Vice President -- Real Estate
S. Ronald Gaston............................ Senior Vice President and Chief Information Officer
John F. Gillespie........................... Senior Vice President -- Human Resources
Bruce L. Hartman............................ Senior Vice President and Chief Financial Officer
Maryann M. McGeorge......................... Senior Vice President -- Merchandise Operations
John H. Cannon.............................. Vice President and Treasurer
Lauren B. Peters............................ Vice President and Controller
Juris Pagrabs............................... Vice President -- Investor Relations
Frances E. Trachter......................... Vice President -- Public Affairs
Sheilagh M. Clarke.......................... Counsel and Assistant Secretary
</TABLE>
INFORMATION REGARDING OWNERSHIP OF THE COMPANY'S SECURITIES BY PARTICIPANTS
None of the participants owns any of the Company's securities of record but
not beneficially. The number of shares of Common Stock held by directors and the
named executive officers is set forth on page of this proxy statement. The
number of shares of Common Stock held by the other participants as of May 5,
1999 is set forth below. The information includes shares that may be acquired by
the exercise of stock options within 60 days of May 5, 1999:
<TABLE>
<CAPTION>
SHARE
NAME OWNERSHIP
- ---- ---------
<S> <C>
Gary M. Bahler.............................................. 128,143
John H. Cannon.............................................. 112,207
S. Ronald Gaston............................................ 40,000
John F. Gillespie........................................... 114,477
Bruce L. Hartman............................................ 64,597
Maryann M. McGeorge......................................... 73,355
Lauren B. Peters............................................ 8,332
Juris Pagrabs............................................... 16,999
Frances E. Trachter......................................... 62,467
Sheilagh M. Clarke.......................................... 8,499
</TABLE>
INFORMATION REGARDING TRANSACTIONS IN THE COMPANY'S SECURITIES BY PARTICIPANTS
The following table sets forth purchases and sales of the Company's
securities by the participants listed below during the past two years. Unless
otherwise indicated, all transactions are in the public market.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF COMMON
COMMON STOCK
NAME DATE PURCHASED OR (SOLD) FOOTNOTE
- ---- -------- ------------------- --------
<S> <C> <C> <C>
DIRECTORS
J. Carter Bacot...................................... 07/01/97 879 (1)
07/01/98 1,129 (1)
Purdy Crawford....................................... 07/01/97 818 (1)
07/01/98 1,050 (1)
</TABLE>
A-2
<PAGE> 35
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF COMMON
COMMON STOCK
NAME DATE PURCHASED OR (SOLD) FOOTNOTE
- ---- -------- ------------------- --------
<S> <C> <C> <C>
Roger N. Farah....................................... 06/01/97 1,223 (2)
03/19/98 (15,000) (3)
06/01/98 1,046 (2)
02/10/99 500,000 (4)
04/14/99 275,000 (11)
04/14/99 314 (6)
04/16/99 115,488 (10)
04/26/99 275,000 (11)
Philip H. Geier Jr................................... 07/01/97 818 (1)
07/01/98 1,050 (1)
04/01/99 6,000 (7)
Jarobin Gilbert Jr................................... 07/01/97 879 (1)
09/10/97 (982) (3)
07/01/98 1,129 (1)
Dale W. Hilpert...................................... 04/09/97 100,000 (4)
06/01/97 1,223 (1)
04/08/98 100,000 (4)
06/01/98 1,046 (1)
06/12/98 100 (7)
02/01/99 100,000 (5)
02/10/99 150,000 (4)
04/14/99 2,239 (6)
04/16/99 57,744 (10)
Allan Z. Loren....................................... 04/09/98 100 (7)
07/01/98 788 (1)
Margaret P. MacKimm.................................. 07/01/97 879 (1)
07/01/98 1,129 (1)
John J. Mackowski.................................... 07/01/97 879 (1)
07/01/98 1,129 (1)
10/01/98 1,000 (7)
James E. Preston..................................... 07/01/97 1,759 (1)
07/01/98 2,259 (1)
10/28/98 8,000 (7)
03/15/99 5,000 (7)
Christopher A. Sinclair.............................. 07/01/97 818 (1)
07/01/98 1,050 (1)
EXECUTIVE OFFICERS AND CERTAIN CORPORATE OFFICERS
Gary M. Bahler....................................... 04/09/97 25,000 (4)
06/01/97 603 (2)
02/10/98 2,000 (8)
02/10/98 (1,793) (9)
04/08/98 25,000 (4)
06/01/98 729 (2)
02/01/99 30,000 (5)
02/10/99 35,000 (4)
04/14/99 314 (6)
04/16/99 3,253 (10)
</TABLE>
A-3
<PAGE> 36
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF COMMON
COMMON STOCK
NAME DATE PURCHASED OR (SOLD) FOOTNOTE
- ---- -------- ------------------- --------
<S> <C> <C> <C>
M. Jeffrey Branman................................... 04/09/97 75,000 (4)
04/22/97 5,000 (7)
04/08/98 50,000 (4)
06/01/98 1,046 (2)
08/12/98 100,000 (4)
09/25/98 7,000 (7)
12/04/98 7,000 (7)
12/28/98 (5,000) (3)
02/01/99 40,000 (5)
02/10/99 50,000 (4)
04/14/99 275 (6)
04/16/99 29,786 (10)
John E. DeWolf III................................... 04/09/97 30,000 (4)
04/08/98 50,000 (4)
02/01/99 40,000 (5)
02/10/99 50,000 (4)
04/16/99 25,893 (10)
04/23/99 (11,000) (3)
04/26/99 (14,893) (3)
S. Ronald Gaston..................................... 11/30/98 30,000 (4)
02/01/99 40,000 (5)
John F. Gillespie.................................... 04/09/97 30,000 (4)
04/08/98 30,000 (4)
06/01/98 632 (2)
02/01/99 30,000 (5)
02/10/99 35,000 (4)
04/14/99 275 (6)
04/16/99 23,566 (10)
04/29/99 (23,000) (3)
Bruce L. Hartman..................................... 04/09/97 25,000 (4)
04/08/98 25,000 (4)
02/01/99 30,000 (5)
02/10/99 35,000 (4)
04/14/99 865 (6)
Maryann M. McGeorge.................................. 04/09/97 10,000 (4)
04/08/98 10,000 (4)
02/01/99 30,000 (5)
02/10/99 35,000 (4)
04/14/99 284 (6)
04/16/99 3,072 (10)
John H. Cannon....................................... 04/09/97 17,000 (4)
02/09/98 5,357 (8)
02/09/98 (4,952) (9)
04/08/98 17,000 (4)
10/07/98 10,000 (7)
01/22/99 10,000 (7)
02/10/99 17,000 (4)
04/14/99 1,250 (6)
Lauren B. Peters..................................... 03/11/97 10,000 (4)
04/08/98 5,000 (4)
09/01/98 12,000 (4)
02/10/99 25,000 (4)
Juris Pagrabs........................................ 04/09/97 17,000 (4)
04/08/98 17,000 (4)
02/10/99 30,000 (4)
</TABLE>
A-4
<PAGE> 37
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF COMMON
COMMON STOCK
NAME DATE PURCHASED OR (SOLD) FOOTNOTE
- ---- -------- ------------------- --------
<S> <C> <C> <C>
Frances E. Trachter.................................. 04/09/97 10,000 (4)
02/10/98 2,000 (8)
02/10/98 (1,793) (9)
04/08/98 10,000 (4)
02/10/99 10,000 (4)
04/14/99 314 (6)
Sheilagh M. Clarke................................... 04/09/97 2,000 (4)
04/08/98 2,000 (4)
02/10/99 3,000 (4)
</TABLE>
- ---------------
FOOTNOTES:
(1) Acquisition of shares under the Directors Stock Plan.
(2) Acquisition of shares under the 1994 Employees Stock Purchase Plan.
(3) Open market sale.
(4) Stock option grant.
(5) Restricted stock award granted under the 1998 Stock Option and Award Plan
and pursuant to a Restricted Stock Agreement dated as of February 1, 1999.
(6) The aggregate number of shares owned, as of the dated indicated, which were
purchased through periodic payments and/or the annual Company Match under
the Company's 401(k) Plan.
(7) Open market purchase.
(8) Stock option exercise.
(9) Shares swapped in to the Company to exercise stock option.
(10) Payment under the Long-Term Incentive Plan in shares of Common Stock of a
portion of the bonus earned for the 1996-1998 Performance Period.
(11) Restricted stock award granted under the 1998 Stock Option and Award Plan
and pursuant to a Restricted Stock Agreement dated as of April 26, 1999.
MISCELLANEOUS INFORMATION CONCERNING PARTICIPANTS
Except as described in this Appendix A or in the proxy statement, none of
the participants nor any of their respective affiliates or associates (together,
the "Participant Affiliates"), (i) directly beneficially owns any shares of
Common Stock of the Company or any securities of any subsidiary of the Company
or (ii) has had any relationship with the Company in any capacity other than as
a shareholder, employee, officer or director. Furthermore, except as described
in this Appendix A or in the proxy statement, no Participant Affiliate is either
a party to any transaction or series of transactions since February 1, 1998, or
has knowledge of any currently proposed transaction or series of transactions,
(i) to which the Company or any of its subsidiaries was or is to be a party,
(ii) in which the amount involved exceeds $60,000, and (iii) in which any
Participant Affiliate had or will have, a direct or indirect material interest.
Except for the employment agreements described in the proxy statement, no
Participant Affiliate has entered into any agreement or understanding with any
person respecting any future employment by the Company or its affiliates or any
future transactions to which the Company or any of its affiliates will or may be
a party. Except as described in this Appendix A or in the proxy statement, there
are no contracts, arrangements or understandings by any Participant Affiliate
within the past year with any person with respect to the Company's Common Stock.
A-5
<PAGE> 38
PROXY
VENATOR GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
THE ANNUAL MEETING TO BE HELD ON 1999.
Gary M. Bahler, Roger N. Farah, Bruce L. Hartman, or any of them, each with
power of substitution, are hereby authorized to vote the shares of the
undersigned at the Annual Meeting of Shareholders of Venator Group, Inc., to be
held on , 1999, at 10:00 A.M., local time, at and at any
adjournment or postponement thereof, upon the matters set forth in the Venator
Group, Inc. Proxy Statement and upon such other matters as may properly come
before the Annual Meeting, voting as specified on the reverse side of this card
with respect to the matters set forth in the Proxy Statement, and voting in the
discretion of the above-named persons on such other matters as may properly come
before the Annual Meeting.
PROPOSAL 1. - ELECTION OF DIRECTORS.
Nominees for Terms Expiring at the Annual Meeting in 2002: J. Carter Bacot,
Purdy Crawford, Philip H. Geier Jr., Dale W. Hilpert
PLEASE COMPLETE, SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND PROMPTLY
RETURN IT IN THE ENCLOSED ENVELOPE.
YOU MAY SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE,
BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD
OF DIRECTORS' RECOMMENDATIONS. THE PERSONS NAMED ABOVE AS PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(continued on reverse side)
<PAGE> 39
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND
AGAINST PROPOSALS 3 AND 4.
DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS 1 AND 2
FOR WITHHELD
1. ELECTION OF [ ] [ ]
DIRECTORS
(see reverse
side)
FOR, except vote withheld from the following nominee(s):
- -------------------------------------------------------
FOR AGAINST ABSTAIN
2. APPOINTMENT OF INDEPENDENT ACCOUNTANTS [ ] [ ] [ ]
DIRECTORS RECOMMEND A VOTE "AGAINST"
PROPOSALS 3 AND 4
FOR AGAINST ABSTAIN
3. GREENWAY PROPOSAL TO [ ] [ ] [ ]
CHANGE THE COMPANY'S
NAME
FOR AGAINST ABSTAIN
4. GREENWAY PROPOSAL TO [ ] [ ] [ ]
TERMINATE THE RIGHTS
AGREEMENT.
I plan to attend [ ]
meeting.
SIGNATURE(S) DATE , 1999
---------------------------------- ---------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, give
full title as such. If signing on behalf of a corporation, sign the full
corporate name by authorized officer. The signer hereby revokes all proxies
heretofore given by the signer to vote at the 1999 Annual Meeting of
Shareholders of Venator Group, Inc. and any adjournment or postponement thereof.
