<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HOMEBASE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF HOMEBASE, INC.]
3345 Michelson Drive
Irvine, CA 92612
April 25, 2000
Dear Stockholder:
We invite you to attend our 2000 Annual Meeting of Stockholders on
Thursday, June 1, 2000 at 10:00 a.m. PDT at the offices of Gibson, Dunn &
Crutcher LLP, 14th Floor, 4 Park Plaza, Irvine, California 92614.
At this meeting, you are being asked to elect two directors. Your vote is
important regardless of the number of shares you own. Accordingly, we urge you
to read the proxy statement and to vote your proxy promptly in accordance with
the instructions on your proxy card.
We hope that you will join us on June 1st.
Sincerely,
/s/ Herbert J. Zarkin
Herbert J. Zarkin
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
[LOGO OF HOMEBASE, INC.]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 1, 2000
The Annual Meeting of Stockholders of HomeBase, Inc. (the "Company") will
be held at the offices of Gibson, Dunn & Crutcher LLP, 14th Floor, 4 Park
Plaza, Irvine, California 92614, on Thursday, June 1, 2000 at 10:00 a.m. PDT
for the following purposes:
1. To elect two directors to serve until the 2003 Annual Meeting of
Stockholders;
2. To transact any other business which may properly be brought before the
meeting.
Stockholders of record at the close of business on April 3, 2000 are
entitled to notice of and to vote at the meeting and any adjournments thereof.
A list of stockholders entitled to vote at the meeting will be open to
examination by stockholders during normal business hours for the ten-day
period preceding the meeting at the offices of Gibson, Dunn & Crutcher LLP, 4
Park Plaza, Irvine, California 92614.
By Order of the Board of
Directors
John L. Price
Secretary
Irvine, California
April 25, 2000
PLEASE SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD, OR YOU
MAY VOTE YOUR PROXY BY TELEPHONE OR ON THE INTERNET IN ACCORDANCE WITH
THE INSTRUCTIONS ON YOUR CARD.
<PAGE>
[LOGO OF HOMEBASE, INC. APPEARS HERE]
ANNUAL MEETING OF STOCKHOLDERS
June 1, 2000
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
HomeBase, Inc. (the "Company"). Unless instructions to the contrary are given,
shares represented by duly completed proxies will be voted for the election of
the two nominees set forth below. Any proxy may be revoked prior to the voting
thereof by a written revocation received by the Secretary of the Company at
its address set forth below, by the receipt of a later dated proxy or by a
request at the meeting that the proxy be revoked.
Stockholders of record at the close of business on April 3, 2000 are
entitled to receive notice of and to vote at the meeting. Each share of Common
Stock, par value $.01, of the Company (the "Common Stock") outstanding on the
record date is entitled to one vote. As of the close of business on April 3,
2000 there were outstanding and entitled to vote 37,603,148 shares of Common
Stock.
This Proxy Statement, the enclosed proxy and the Annual Report for the
Company's fiscal year ended January 29, 2000 ("fiscal 1999") were first mailed
to stockholders on or about the date of the Notice of Meeting. The Company's
address is 3345 Michelson Drive, Irvine, California 92612.
Vote Required
Under the Company's by-laws, so long as a quorum is present at the meeting,
the election of directors will require the affirmative vote of the holders of
shares representing a plurality of the votes cast at the meeting. Although
shares that withhold authority for any nominee and broker non-votes (i.e.,
shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners and with respect to which the broker or
nominee indicates that it does not have discretionary authority to vote such
shares) will be counted as present at the meeting for quorum purposes, such
shares will not be considered to be votes cast with respect to the election of
directors. Accordingly, shares that withhold authority and broker non-votes
will have no effect on the voting on the matters being presented for
stockholder action at the meeting.
ELECTION OF DIRECTORS
The Board of Directors has voted to fix the number of directors at seven.
The Company's Restated Certificate of Incorporation and by-laws provide for
the classification of the Board of Directors into three classes, as nearly
equal in number as possible, with the term of office of one class expiring
each year. The enclosed proxy will be voted to elect the two nominees named
below, unless otherwise instructed, as directors for a term of three years
expiring at the 2003 Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified. If any nominee should become
unavailable, such proxy will be voted either for a substitute nominee
designated by the Board of Directors or such lesser number of directors as may
be designated by the Board of Directors, unless instructions are given to the
contrary. Management does not anticipate that any of the nominees will become
unavailable. The nominees as directors and incumbent directors are as follows:
Nominees as Directors--Terms Expiring 2003
Harold Leppo, 63, has been a Director since December 1998. Mr. Leppo has
been Chief Executive Officer of Harold Leppo & Company, a retail consulting
firm in Stamford, Connecticut, since 1988. Prior to that, he held a number of
managerial positions at Lord & Taylor and Allied Stores, Inc., including
President and Chief Operating Officer of Lord & Taylor in 1987 and Executive
Vice President of Allied Stores in 1988. Mr. Leppo is a Director of Filene's
Basement Corp., Royce Hosiery Corp. and J. Baker, Inc. He is a member of the
Company's Executive Compensation Committee.
1
<PAGE>
Edward J. Weisberger, 58, has been a Director and Senior Vice President,
Finance of the Company since July 1997. From 1994 to July 1997 he served as
Senior Vice President and Chief Financial Officer of the Company. From April
1989 to September 1994 he served as Vice President-Finance of the Company.
Mr. Weisberger is also an employee and a Director of BJ's Wholesale Club, Inc.
Mr. Weisberger is a member of the Company's Finance Committee.
Incumbent Directors--Terms Expiring 2002
John D. Barr, 52, has been a Director since July 1997. Since 1999 he has
been President and Chief Executive Officer of Automotive Performance
Industries. From 1995 to 1998 Mr. Barr was a Director, President and Chief
Operating Officer of Quaker State Corporation. From 1987 to 1995 he served as
Senior Vice President of Ashland, Inc. and President of its subsidiary, The
Valvoline Company. Mr. Barr is Chairman of the Company's Executive
Compensation Committee and a member of the Executive Committee.
Lorne R. Waxlax, 66, has been a Director since January 1990 and was
Chairman of the Board from 1996 to July 1997. From 1985 to 1993, Mr. Waxlax
was Executive Vice President of The Gillette Company. Mr. Waxlax is a Director
of BJ's Wholesale Club, Inc., Clean Harbors, Inc., HON Industries, Inc. and
Pennzoil-Quaker State Company. Mr. Waxlax is Chairman of the Audit Committee
and a member of the Executive Compensation Committee and Executive Committee.
Ernest T. Klinger, 64, has been a Director since December 1999. Mr. Klinger
has been Co-Chairman of the Board, President and Chief Financial Officer of
Chicago Pizza & Brewery, Inc. since 1999 and a Director of that corporation
since 1997. He was Chief Financial Officer and Vice President-Finance and
Administration of Arden Group, Inc. from 1983 to 1999. Mr. Klinger is a member
of the Company's Audit Committee.
Incumbent Directors--Terms Expiring 2001
Robert W. Cox, 62, has been a Director since January 1999. Since 1994 Mr.
Cox has been Chairman Emeritus of the law firm of Baker & McKenzie. From 1992
to 1994 he served as Chairman of the law firm's Policy Committee and from 1984
to 1992 as its Managing Partner and Chairman of its Executive and Strategic
Planning Committees. Mr. Cox is a director of Carey International, Inc. and
HON Industries, Inc. He is Chairman of the Company's Finance Committee and a
member of the Audit Committee.
Herbert J. Zarkin, 61, has been President and Chief Executive Officer of
the Company since March 2000, Chairman of the Board since July 1997 and a
Director since May 1993. From May 1993 to July 1997 Mr. Zarkin served as
President and Chief Executive Officer of the Company. Mr. Zarkin is also
Chairman of the Board of Directors of BJ's Wholesale Club, Inc. Mr. Zarkin is
the Chairman of the Company's Executive Committee and a member of the Finance
Committee.
Director Compensation
Directors who are not employees of the Company are paid an annual retainer
of $20,000 and fees of $2,000 for each Board meeting attended, $900 for each
Audit or Executive Compensation Committee meeting attended and $750 for
certain telephone meetings. The Chairman of the Audit Committee and the
Chairman of the Executive Compensation Committee are each paid $3,000 per
annum for their services as such. All directors are reimbursed for out-of-
pocket expenses incurred in attending such meetings. Directors may participate
in the Company's General Deferred Compensation Plan.
Each new non-employee director receives an initial grant of stock options
to purchase 5,000 shares of Common Stock and annual grants of options to
purchase 3,000 shares of Common Stock thereafter. The exercise price for each
of these options is the fair market value of a share of Common Stock on the
date of grant. Each
2
<PAGE>
option is nontransferable except upon death, will expire between seven and ten
years after the date of grant and will become exercisable in three equal
annual installments beginning on the first anniversary of the date of grant.
If the director dies or otherwise ceases to be a director prior to the date
that the option or a portion thereof becomes exercisable, the option will
immediately expire with respect to the shares that are not yet exercisable.
Any vested options will remain exercisable for a period of one year following
cessation of service as a director of the Company. All unexercised options
will become exercisable in full in the event of a change of control
(as defined).
The Company has an employment agreement with Mr. Weisberger under which he
is employed as Senior Vice President, Finance, a non-executive office of the
Company until July 29, 2000. Mr. Weisberger receives a minimum annual base
salary of $150,000 and participates in specified incentive and other benefit
plans. Mr. Weisberger must generally devote approximately one-half of his
working time and attention to the performance of his duties and
responsibilities under his employment agreement. If his employment is
terminated by the Company other than for cause, Mr. Weisberger is entitled to
certain cash compensation amounts and to certain benefits and continuation of
base salary until July 29, 2000 at the rate in effect upon termination. The
continuing base salary payments are subject to reduction after three months
for compensation earned by Mr. Weisberger from other employment (other than
employment at BJ's Wholesale Club, Inc.), and the continuing benefits are
subject to reduction at any time for comparable benefits received from other
employment. In the event of a change of control followed by termination of
employment as described below under "Change of Control Severance Benefits"
beginning on page 9, Mr. Weisberger would be entitled to the termination
benefits described thereunder, to the extent such benefits would exceed the
benefits otherwise described above.
Committees of the Board of Directors
The Company's Board has four committees: (i) Audit, (ii) Executive
Compensation, (iii) Executive and (iv) Finance.
The Audit Committee, which held three meetings during fiscal 1999, reviews
with management, the internal audit group and the independent public
accountants the Company's financial statements, the accounting principles
applied in their preparation, the scope of the audit, any comments made by the
public accountants upon the financial condition of the Company and its
accounting controls and procedures, and such other matters as the Committee
deems appropriate. The Committee reviews with management such matters relating
to compliance with corporate policies as the Committee deems appropriate.
The Executive Compensation Committee, which held five meetings during
fiscal 1999, reviews compensation policies and compensation of officers and
other members of management, including incentive compensation plans. In
addition, the Executive Compensation Committee has responsibility for matters
of corporate governance other than recommendations to the Board of Directors
of nominees to fill vacancies on the Board of Directors.
The Executive Committee of the Board of Directors, which met once during
fiscal 1999, is authorized to act on behalf of the Board during intervals
between meetings of the Company's Board of Directors. In addition, the
Executive Committee has responsibility for consideration of the qualifications
of, and recommendation to the Board of Directors of, nominees to fill
vacancies on the Board of Directors and considers nominees recommended by
stockholders if such recommendations are in writing and timely filed with the
Secretary of the Company.
The Finance Committee of the Board of Directors reviews with management and
advises the Company's Board with respect to the Company's finances, including
exploring methods of meeting the Company's financing requirements and planning
the Company's capital structure. The Finance Committee did not meet during
fiscal 1999.
During fiscal 1999 the Board of Directors held 10 meetings. Each director
attended at least 75% of all meetings of the Board and Committees of which he
was a member.
3
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information, as of April 3, 2000,
concerning beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to beneficially own more than five percent of the
outstanding shares of the Company's Common Stock, (ii) each Director of the
Company, (iii) each Named Executive Officer of the Company appearing in the
Summary Compensation Table on page 6, and (iv) all Directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Percent of
Outstanding
Shares of Shares of
Common Stock Common Stock
Name and Address of Beneficial Owner Beneficially Owned(1) Beneficially Owned
------------------------------------ --------------------- ------------------
<S> <C> <C>
First Pacific Advisors, Inc. ......... 6,640,395(2) 17.0%
11400 West Olympic Blvd., Suite 1200
Los Angeles, CA 90064
David J. Greene and Company, LLC...... 4,564,870(3) 12.1%
599 Lexington Avenue
New York, NY 10022
Dimensional Fund Advisors, Inc. ...... 3,220,400(4) 8.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Vanguard Windsor Funds--Windsor Fund.. 2,307,100(5) 6.1%
P.O. Box 2600
Valley Forge, PA 19482-2600
Franklin Resources, Inc. et al. ...... 1,532,100(6) 4.1%
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94403-7777
FMR Corp. ............................ 1,195,742(7) 3.2%
82 Devonshire Street
Boston, MA 02109
John D. Barr.......................... 9,500 *
Robert W. Cox......................... 2,667 *
Ernest T. Klinger..................... -0- *
Harold Leppo.......................... 2,667 *
Lorne R. Waxlax....................... 17,000 *
Herbert J. Zarkin..................... 652,672 1.7%
Allan P. Sherman...................... 780,628 2.0%
Edward J. Weisberger.................. 149,542 *
Thomas F. Gallagher................... 149,961 *
Scott L. Richards..................... 149,750 *
William B. Langsdorf.................. 136,510 *
All Directors and Executive Officers
as a Group (12 Persons).............. 2,057,231 5.2%
</TABLE>
- --------
* Indicates less than 1%.
4
<PAGE>
(1) Includes the following shares of Common Stock that may be acquired upon
exercise of outstanding stock options which were exercisable on April 3,
1999 or within 60 days thereafter: Mr. Barr 4,500 shares; Mr. Cox, 2,667
shares; Mr. Leppo; 2,667 shares, Mr. Waxlax, 8,000, shares; Mr. Zarkin,
590,000 shares; Mr. Sherman, 713,803 shares; Mr. Weisberger, 137,000,
shares; Mr. Gallagher, 121,282 shares; Mr. Richards, 132,483 shares; Mr.
Langsdorf, 119,519 shares; all Directors and Executive Officers as a
group, 1,835,255 shares.
(2) Information is as of December 31, 1999 and is based on a Schedule 13G/A
filed with the Securities and Exchange Commission (the "Commission") by
First Pacific Advisors, Inc., which reported that it has shared power to
vote 2,026,046 shares and shared dispositive power with respect to
6,640,395 shares; includes 1,384,096 shares of Common Stock obtainable
upon conversion of the Company's 5.25% Convertible Subordinated Notes due
2004.
(3) Information is as of December 31, 1999 and is based on a Schedule 13G/A
filed with the Commission by David J. Greene and Company, LLC., which
reported that it has sole power to vote 446,700 shares and shared power to
vote 2,200,710 shares and has sole dispositive power with respect to
446,700 shares and shared dispositive power with respect to 4,118,170
shares.
(4) Information is as of December 31, 1999 and is based on a Schedule 13G
filed with the Commission by Dimensional Fund Advisors, Inc., which
reported that it has sole power to vote 3,322,400 shares and sole
dispositive power with respect to 3,322,400 shares.
(5) Information is as of December 31, 1999 and is based on a Schedule 13G/A
filed with the Commission by Vanguard Windsor Funds--Windsor Fund, which
reported that it has sole power to vote 2,307,100 shares and shared
dispositive power with respect to 2,307,990 shares; such dispositive power
is shared with its investment advisor, Wellington Management Company, LLP,
which has also filed a Schedule 13G/A with the Commission.
(6) Information is as of December 31, 1999 and is based on a Schedule 13G/A
filed with the Commission by Franklin Resources, Inc., et al., which
reported that Franklin Advisory Services, Inc. has sole power to vote
1,532,100 shares and sole dispositive power with respect to 1,532,100
shares.
(7) Information is as of December 31, 1999 and is based on a Schedule 13G/A
filed with the Commission by FMR Corp., which reported that it had no
power to vote shares and sole dispositive power with respect to 1,195,742
shares.
5
<PAGE>
Executive Compensation
The following table sets forth certain information concerning the annual
and long-term compensation provided to the individual who served as the
Company's Chief Executive Officer during fiscal 1999 and to the four other
most highly compensated executive officers (collectively the "Named Executive
Officers") whose salary and bonus exceeded $100,000 for fiscal 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------
Annual Compensation Awards Payouts
---------------------------------- --------------------- ----------
Restricted Securities
Name and Principal Fiscal Other Annual Stock Underlying LTIP All Other
Position(1) Year Salary(2) Bonus Compensation(3) Awards(4) Options(5) Payouts(6) Compensation(7)
------------------ ------ --------- -------- --------------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allan P. Sherman........ 1999 $585,594 $ -- $232,323 $ -- 100,000 $ -- $34,081
President and Chief 1998 544,220 466,397 234,899 -- 100,000 -- 32,011
Executive Officer 1997 511,538 -- 237,860 145,560 200,000 83,190 30,354
Herbert J. Zarkin....... 1999 350,000 -- 14,708 -- -- -- 20,698
Chairman of the Board 1998 350,000 299,950 14,708 -- -- -- 20,430
1997 505,769 -- 15,776 -- 40,000 180,320 21,259
Thomas F. Gallagher..... 1999 263,535 -- 41,122 -- 135,000(8) -- 17,978
Executive Vice 1998 233,444 120,037 48,873 -- 25,000 -- 16,472
President 1997 217,308 -- 83,639 176,248 75,000 80,874 15,665
Store Operations
Scott L. Richards....... 1999 261,903 -- 12,020 -- 135,000(8) -- 17,896
Executive Vice 1998 230,084 118,309 10,559 -- 25,000 -- 16,304
President 1997 217,308 -- 9,972 94,536 75,000 24,957 15,665
Merchandising
William B. Langsdorf.... 1999 258,631 -- 11,869 -- 135,000(8) -- 17,732
Executive Vice 1998 213,537 109,801 9,799 -- 25,000 -- 15,002
President and Chief 1997 183,961 -- 7,370 129,516 75,000 27,730 13,377
Financial Officer
</TABLE>
- -------
(1) Mr. Sherman resigned as the Company's President and Chief Executive
Officer on March 2, 2000. Mr. Zarkin was elected to the additional
positions of President and Chief Executive Officer on March 3, 2000.
(2) Salary is calculated based on 52-week years for fiscal 1999 and 1998 and
on a 53-week year for fiscal 1997.
(3) Includes for Mr. Sherman $113,467, $119,504, and $125,120, in fiscal 1999,
fiscal 1998 and fiscal 1997, respectively, for loan forgiveness and the
value of the interest-free component of a housing loan from the Company
pursuant to the terms of his employment contract, and $88,874, $86,975 and
$85,475, in fiscal 1999, fiscal 1998 and fiscal 1997, respectively, for
reimbursement of tax liabilities related to that loan and certain items
under "All Other Compensation." Includes for Mr. Gallagher $12,692,
$22,692 and $32,961 in fiscal 1999, 1998 and 1997, respectively, for
relocation and housing costs and $12,094, $10,713 and $35,497 in fiscal
1999, 1998 and 1997, respectively, for reimbursement of tax liabilities
related to those costs and certain items under "Other Annual
Compensation." Includes for Messrs. Zarkin, Sherman, Richards, and
Langsdorf in fiscal 1999, 1998 and 1997 the reimbursement for tax
liabilities related to the Company's contributions under the Company's
Executive Retirement Plan and excludes perquisites having an aggregate
value less than the lesser of $50,000 or 10% of salary plus bonus.
(4) Restricted stock awards were issued at no cost to Messrs. Sherman,
Gallagher, Richards and Langsdorf in fiscal 1997. All such awards issued
to Messrs. Sherman, Gallagher and Richards, as well as approximately 10%
of those issued to Mr. Langsdorf, were automatic adjustments in prior
holdings to reflect the terms of the Distribution (see "Relationship with
BJ's Wholesale Club, Inc." on page 13). The dollar value of these awards
is based on the closing market price of the Company's Common Stock on the
date of grant. The shares subject to each award generally vest in fixed
annual percentages
6
<PAGE>
over three to five year periods. Vesting is contingent upon continued
employment on the vesting dates. The dollar values of restricted stock
holdings based on the fair market value of the Company's Common Stock on
January 29, 2000 were as follows: Mr. Zarkin, $0; Mr. Sherman, $0; Mr.
Gallagher, $28,766; Mr. Richards, $14,385; and Mr. Langsdorf, $24,375. In
the event of a change of control (as defined), each person's restricted
shares would become unrestricted. Holders of restricted shares are entitled
to the same dividends as those paid to holders of unrestricted shares.
(5) Reflects the grant of options to purchase Common Stock. The Company has
never granted stock appreciation rights.
(6) Payouts for fiscal 1997 reflect the Company's Growth Incentive Plan award
earned by the named person for the three-year performance period ended
January 25, 1997.
(7) For fiscal 1999, represents the Company's contributions under its 401(k)
Savings Plan for Salaried Employees and the Company's Executive Retirement
Plan as presented below:
<TABLE>
<CAPTION>
1999 Company
Contributions
------------------
401(k) Executive
Savings Retirement
Name Plan Plan
---- ------- ----------
<S> <C> <C>
Allan P. Sherman...................................... $4,800 $29,281
Herbert J. Zarkin..................................... 3,199 17,499
Thomas F. Gallagher................................... 4,800 13,178
Scott L. Richards..................................... 4,800 13,096
William B. Langsdorf.................................. 4,800 12,932
</TABLE>
(8) Includes 100,000 Equity Units awarded to each of Messrs. Gallagher,
Richards and Langsdorf during fiscal 1999. Each Equity Unit is payable in
cash over a three year vesting schedule (or upon a defined change of
control), the value of each Equity Unit to be based on the market value of
the Company's Common Stock on the date of vesting, but in no event less
than $6.00 per share nor more that $12.00 per share.
Stock Option Grants
The following table sets forth the stock option grants made by the Company
to the Named Executive Officers during fiscal 1999:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------------------------
Potential Realizable Value at
Number of Percent of Assumed Annual Rates of
Securities Total Options Stock Price Appreciation For
Underlying Granted to Exercise or Option Term(1)
Options Employees In Base Price Expiration -------------------------------
Name Granted Fiscal Year Per Share(2) Date 0%(3) 5% 10%
----------------------- ---------- ------------- ------------ ---------- ------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Allan P. Sherman........ 100,000 13.9% $4.1875 4/08/2006 -- $111170,250 $ 397,250
Herbert J. Zarkin....... -- 0% -- -- -- -- --
Thomas F. Gallagher..... 35,000 4.9% 4.1875 4/08/2006 -- 59,588 139,038
Scott L. Richards....... 35,000 4.9% 4.1875 4/08/2006 -- 59,588 139,038
William B. Langsdorf.... 35,000 4.9% 4.1875 4/08/2006 -- 59,588 139,038
</TABLE>
- --------
(1) The dollar amounts in these columns are the result of calculations at 0%
and the arbitrary annual appreciation rates of 5% and 10% set by the
Securities and Exchange Commission and are not intended to forecast
possible future stock price appreciation, if any.
(2) All options granted in fiscal 1999 were granted with an exercise price
equal to the closing price of the Common Stock on the New York Stock
Exchange on the date of grant; they expire seven years from the date of
grant and vest at specified intervals or upon a change of control (as
defined).
(3) No gain to the optionees is possible without an increase in stock price,
which will benefit all stockholders commensurately.
7
<PAGE>
Aggregated Option Exercises and Valuation
The following table sets forth, on an aggregated basis, the exercise of
stock options during fiscal 1999 by the Named Executive Officers and the
fiscal year-end value of unexercised options held by such officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Number of Unexercised Options at In-The-Money Options
Shares Fiscal Year-End at Fiscal Year-End(2)
Acquired Value ------------------------- -------------------------
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Allan P. Sherman........ -- -- 713,803 245,744 -- --
Herbert J. Zarkin....... -- -- 580,000 10,000 130,125 --
Thomas F. Gallagher..... -- -- 106,504 81,807 -- --
Scott L. Richards....... -- -- 117,705 79,733 -- --
William B. Langsdorf.... -- -- 103,704 70,398 285 --
</TABLE>
- --------
(1) Based on the difference between the option exercise price and the fair
market value of the Common Stock on the date of exercise.
(2) Based on the fair market value of the Company's Common Stock on January
29, 2000, less the option exercise price.
Retirement Benefits
Under the Company's Executive Retirement Plan, employees in high-level
management positions in the Company, as selected by the Company's Executive
Compensation Committee (the "ECC"), including all executive officers, are
eligible to receive annual cash retirement contributions in an amount
determined by the ECC, provided that the smallest annual retirement
contribution shall equal, on an after-tax basis, at least three percent of the
participant's base salary. All amounts paid under the Executive Retirement
Plan are to be used exclusively to fund an investment vehicle, selected by the
ECC, which is appropriate to provide retirement income, such as an insurance
policy.
The Company made retirement contributions after the end of fiscal 1999
equal to 5% (net of taxes) of each participant's base salary during 1999. If
the participant terminates employment prior to the end of the fiscal year in
which the participant is credited with four years of service, the participant
forfeits the right to any benefit under the Executive Retirement Plan. As of
January 29, 2000, all Named Executive Officers were credited with at least
four years of service.
Employment Agreements
The Company has entered into employment agreements with each of the Named
Executive Officers. Pursuant to his employment agreement, as amended, Mr.
Zarkin is employed as Chairman of the Board of Directors, President and Chief
Executive Officer of the Company. Mr. Zarkin receives an annual base salary of
$350,000 and participates in specified incentive and other benefit plans. Mr.
Zarkin generally must devote approximately one-half of his working time and
attention to the performance of his duties and responsibilities under his
employment agreement; provided that, to the extent of any conflicts between
the time required to be devoted under his employment agreement with the
Company and his employment agreement with BJ's Wholesale Club, Inc. Mr. Zarkin
shall allocate his duties between the two companies as he and the Company's
Executive Compensation Committee deem reasonably appropriate. The Company is
entitled to terminate Mr. Zarkin's employment at any time with or without
cause (as defined). If his employment terminates by reason of death,
disability, incapacity or termination by the Company other than for cause, or
if Mr. Zarkin resigns as a
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<PAGE>
result of his being removed from his positions with the Company or as a result
of his failure to be reelected to the office of Chairman of the Board of
Directors and a member of the Executive Committee, Mr. Zarkin is entitled to
payments of certain cash compensation amounts and continuation of base salary
and certain benefits for a period of 12 months after termination at the rate
in effect upon termination. In addition, Mr. Zarkin will be entitled to
payments under the Company's Management Incentive Plan (the "MIP") for the
fiscal year ended immediately prior to the date of termination of Mr. Zarkin's
employment (if not already paid), and a pro rated MIP award for the year of
termination. Any stock options or other stock-based awards held by Mr. Zarkin
on the date of termination continue to vest. The continuing base salary
payments are subject to reduction after three months for compensation earned
by Mr. Zarkin from other employment (other than employment at BJ's Wholesale
Club, Inc.), and the continuing benefits are subject to reduction at any time
for comparable benefits received by Mr. Zarkin from other employment.
Under the Company's employment agreement with Mr. Sherman, Mr. Sherman was
employed as the President and Chief Executive Officer of the Company during
fiscal 1999 and was paid base salary at the annual rate of $600,000 from June
1, 1999. Mr. Sherman also participated in specified incentive and other
benefit plans. In addition, in connection with his election as President of
the Company's then HomeBase Division in 1993, the Company agreed to extend to
him an interest-free loan of $700,000 for the purchase of a residence in
California and to forgive the loan over seven years in equal installments,
$100,000 of which was forgiven in each of fiscal 1994, 1995, 1996, 1997, 1998
and 1999. The Company also agreed to make certain tax "gross-up" payments to
Mr. Sherman. In connection with Mr. Sherman's resignation as President and
Chief Executive Officer on March 2, 2000, the Company agreed to continue
payment of Mr. Sherman's base salary for a period of 78 weeks at the rate in
effect upon his resignation and for an additional 13 weeks at the rate of
$7,000 per week, to continue certain benefits for a period of 91 weeks, to the
forgiveness of the final $100,000 installment of his relocation loan, plus
certain tax "gross-up" payments, and to a payment of $10,000. In addition, Mr.
Sherman will be entitled to payments of a pro rated MIP award for fiscal 2000.
The continuing base salary payments are subject to reduction after three
months for compensation earned by Mr. Sherman from other employment, and the
continuing benefits are subject to reduction at any time for comparable
benefits received by Mr. Sherman from other employment.
The Company has entered into an employment agreement with each of Messrs.
Gallagher, Richards and Langsdorf under which each serves as an executive
officer of the Company, receives an annual base salary of $275,000, and
participates in specified incentive and other benefit plans. If employment
terminates by reason of termination by the Company other than for cause, each
such executive officer will be entitled to payment of certain cash
compensation amounts and to certain benefits and continuation of base salary
for 12 months after termination at the rate in effect upon termination. The
continuing base salary payments will be subject to reduction after three
months for compensation from other employment, and the continuing benefits
will be subject to reduction at any time for comparable benefits received from
other employment.
In the event of a change of control followed by termination of employment
as described below under "Change of Control Severance Benefits," each of
Messrs. Zarkin, Gallagher, Richards, Langsdorf and Weisberger would be
entitled to the termination benefits described thereunder, to the extent such
benefits would exceed the benefits otherwise described above.
Change of Control Severance Benefits
The Company provides change of control severance benefits, under separate
change of control agreements, to Messrs. Zarkin, Gallagher, Richards,
Langsdorf and Weisberger. Under such agreements, in general, upon a change of
control (as defined) of the Company, the executive would be entitled to
accelerated payment of the MIP target award for the year in which the change
of control occurs. If, during the 24-month period following a change of
control, the Company were to terminate the executive's employment other than
for cause (as defined) or the executive were to terminate his employment for
reasons specified in the agreement, or if employment were to terminate by
reason of death, disability or incapacity, the executive would be entitled to
receive a lump-sum amount equal to the amount of the executive's MIP target
award plus a multiple of the executive's annual base salary. For Messrs.
Gallagher, Richards and Langsdorf the multiple is two and one-half and for
Messrs. Zarkin
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and Weisberger the multiple is two. The Company would also be obligated to
provide specified benefits, including continued health, medical and life
insurance benefits for between two and two and one-half years. The foregoing
benefits would be payable whether or not they gave rise to a federal excise
tax on so-called "excess parachute payments" or were non-deductible, except to
the extent a reduction in amounts paid would increase the executive's after-
tax benefits. The Company would also be obligated to pay all legal fees and
expenses reasonably incurred by the executive in seeking enforcement of
contractual rights following a change of control. In addition, upon
involuntary termination within 24 months following a change of control, any
agreement by the executive not to compete with the Company following
termination of his employment would cease to be effective.
Indemnification Agreements
The Company entered into indemnification agreements with each of its
directors and executive officers indemnifying them against expenses,
settlements, judgments and fines incurred in connection with any threatened,
pending or completed action, suit, arbitration or proceeding, where the
individual's involvement is by reason of the fact that he or she is or was a
director or officer of the Company or served at the Company's request as a
director or officer of another organization (except that indemnification is
not provided against judgments and fines in a derivative suit unless permitted
by Delaware law). An individual may not be indemnified if he or she is found
not to have acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interest of the Company, except to the
extent Delaware law permits broader contractual indemnification. The
indemnification agreements provide procedures, presumptions and remedies
designed to substantially strengthen the indemnity rights beyond those
provided by the Company's Certificate of Incorporation and by Delaware law.
EXECUTIVE COMPENSATION COMMITTEE REPORT
The following report has been submitted to the Board of Directors of the
Company by its Executive Compensation Committee, in compliance with
requirements of the Securities and Exchange Commission:
As members of the Executive Compensation Committee ("ECC") of the Company
it is our responsibility to review the Company's compensation policies and
programs, approve or, with respect to the Chairman of the Board and the Chief
Executive Officer, recommend to the Board of Directors for approval, incentive
plan awards and all elements of compensation for the Company's executive
officers, and administer the Company's stock incentive plans. All of the
members of the ECC are independent, non-employee directors.
Executive Compensation Principles
The Company's executive compensation program is designed to provide
competitive levels of compensation that:
--Integrate compensation with the achievement of the Company's annual and
long-term performance goals and business strategies
--Recognize management initiatives and achievements
--Reward outstanding corporate performance
--Attract and retain key executives critical to the long-term success of
the Company
--Link management's long-term interests with stockholders' interests
through stock-based awards.
With respect to Section 162(m) of the Internal Revenue Code, which limits
the ability of publicly-held corporations to deduct non-performance-based
compensation for certain executive officers, the ECC believes that the
Company's compensation plans should be structured to satisfy the requirements
for tax deductibility unless doing so is determined by the ECC to be not in
the best interest of the Company.
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<PAGE>
Compensation Policies for Executive Officers
The total compensation program for all executive officers consists of both
cash and equity-based compensation and takes into account applicable
provisions of employment agreements of such officers. Through stock options
and stock grants available under the Company's stock incentive plan, the ECC
seeks to align executive officers' long-range interests with those of
stockholders by providing executive officers with the opportunity to
participate in the growth of the Company's stock value. The ECC is advised by
Towers Perrin, compensation consultants, concerning salary competitiveness and
the design of the Company's executive compensation programs. Towers Perrin
provides services to the Company, which are billed at hourly rates, on an "as
requested" basis. The Company does not have a retainer or other contract with
Towers Perrin. The Company has consulted with Towers Perrin during the past
year.
Base Salary. Base salaries for the Company's executive officers, including
the Chief Executive Officer, are set within ranges that are determined based
upon a review of publicly available information concerning compensation paid
to executives with similar responsibilities at certain peer companies. The ECC
utilizes the compensation consulting firm to assist in the compilation and
interpretation of this data. The companies selected for these purposes are
retail companies, including major competitors of the Company, as to which
compensation information is available. While some of these peer companies are
included in the Dow Jones Industry Group Index OTS--Other Specialty Retailers
appearing in the Performance Graph on page 15, these peer companies are not
all the same as the companies constituting that index. The ECC's overall
objective is to set base salaries at approximately the midpoint of competitive
ranges. However, an individual executive's placement within a range and salary
adjustments are based upon the ECC's evaluation of the executive's performance
and value to the Company.
Annual Incentive Program. Under the Company's Management Incentive Plan
("MIP"), executive officers and other members of management are eligible to
receive incentive awards based upon the attainment of annual performance
goals, primarily a specified level of after-tax income. The ECC approves the
MIP goals and participation opportunities at the beginning of each fiscal year
and reviews the payout calculations after the year's financial results have
been audited. Target awards for executive officers and Mr. Weisberger range
from 25% to 50% of base salary but if target goals are not met, there would be
either no MIP award or a reduced award based on a percentage of the target
realized. If results exceed goal(s), an executive officer could earn an
additional award, depending upon the extent to which goals are exceeded. No
award may exceed $1,000,000 in any calendar year. No Named Executive Officers
received MIP awards for 1999 because annual performance goals were not met.
Long-Term Incentive Program. The Company's Growth Incentive Plan ("GIP") is
intended to provide high-level executives of the Company, as selected by the
ECC, with cash awards based upon the growth and performance of the Company.
Five executive officers of the Company, including Messrs. Zarkin, Gallagher,
Richards and Langsdorf are eligible to participate in the GIP, as well as 17
other officers of the Company. Depending on responsibilities within the
Company, awards are earned based on one or more of the following objective
measures of performance or growth, as selected by the ECC at the beginning of
the award period: operating income, pre-tax income, net income, gross profit
dollars, costs, any of the preceding measures as a percent of sales, earnings
per share, sales, return on equity, and return on investment. All relevant
factors upon which the cash award is based (e.g., performance measurement,
length of award period, relation between performance and cash award) are
determined at the beginning of the award period by the ECC. There is no target
amount for each award. However, there is a threshold amount based on the
Company's growth, and the value of each award increases as achievement of the
performance measurement increases. No awards were issued in fiscal 1999 to the
Named Executive Officers.
Stock-Based Incentives. Stock options are awarded to the Company's key
employees, including executive officers, by the ECC based upon such factors as
the compensation level and responsibility of the particular employee, the
employee's contribution towards Company performance, and review of competitive
compensation data for executives at the same group of peer companies referred
to previously in this report, with the ECC
11
<PAGE>
generally targeting awards to the median of such surveys. The options are
designed to reward recipients to the extent the Company's stock value is
enhanced and, because of the vesting provisions of such grants, also provide
an incentive for the employee to remain with the Company. Since the ECC does
not grant options on a cumulative basis, the size of previous grants is not a
factor in making future grants.
Equity Unit Awards. In recognition of the advisability of retaining key
executives of the Company in an increasingly competitive marketplace, during
fiscal 1999 the Company retained SCA Consulting, independent compensation
experts, to assist in designing a long-term stock-based compensation vehicle
designed to encourage employee retention. During fiscal 1999 the Company
awarded Equity Units to 19 officers of the Company (including Messrs.
Gallagher, Richards and Langsdorf). Each Equity Unit is payable in cash over a
three to four year vesting schedule based on the market value of the Company's
Common Stock on the date of vesting, but in no event less than $6.00 per share
nor more than $12.00 per share in the case of Messrs. Gallagher, Richards and
Langsdorf and no less than $5.00 nor more than $8.00 in the case of the other
awardees. Awardees other than Messrs. Gallagher, Richards and Langsdorf were
offered the awards in exchange for the surrender of certain outstanding stock
options whose exercise prices were above the market value of the Company's
Common Stock at the time of the award.
Chief Executive Officer Compensation
Pursuant to the terms of Mr. Sherman's employment contract, his salary has
been reviewed annually by the ECC. His salary was increased to $600,000
effective June 1, 1999, setting his salary to approximately the
45th percentile of the compensation range of the survey of peer companies
referred to previously in this report. The number of options granted to Mr.
Sherman in fiscal 1999 was determined after a review of competitive
compensation data of executives at the same group of peer companies referred
to previously in this report without targeting a specific percentile range.
The granting of options encourages long-term performance and promotes
management retention while further aligning shareholders' and management's
interest in enhancing the value of the Company's Common Stock.
Mr. Sherman's target MIP award for fiscal 1999 provided a target
opportunity equal to 50% of base salary earned during the fiscal year if
performance goals had been met; the actual payout can vary between 0% and 100%
of annualized base salary at the beginning of the fiscal year. No MIP payout
to Mr. Sherman for fiscal 1999 was made.
Executive Compensation
Committee
John D. Barr, Chairman
Harold Leppo
Lorne R. Waxlax
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<PAGE>
RELATIONSHIP WITH BJ's WHOLESALE CLUB, INC.
Prior to July 28, 1997, the Company, then known as Waban Inc., operated
through two divisions--the HomeBase Division and the BJ's Wholesale Club
Division (the "BJ's Division"). As of July 26, 1997, the Company transferred
all of the net assets of its BJ's Division to a wholly-owned subsidiary, BJ's
Wholesale Club, Inc. ("BJI"). On July 28, 1997, the Company distributed to its
stockholders on a pro rata basis all of the outstanding common stock of BJI
(the "Distribution") and changed its name from Waban Inc. to HomeBase, Inc.
In connection with the Distribution, BJI and the Company entered into a
series of agreements, including those described below. Although the following
summaries of these agreements set forth an accurate description of their
material terms and provisions, such summaries are qualified in their entirety
by reference to the detailed provisions of the agreements, copies of which
have been filed with the Securities and Exchange Commission.
Distribution Agreement
BJI and the Company entered into a Separation and Distribution Agreement
(the "Distribution Agreement"), which provided for, among other things, (i)
the principal corporate transactions required to effect the Distribution, (ii)
the division between BJI and the Company of certain assets and liabilities and
(iii) the execution and delivery of certain agreements governing the
relationship between BJI and the Company following the Distribution.
The Distribution Agreement provided for, among other things, (i) the
transfer by the Company to BJI of all of the assets of the BJ's Division,
including the stock of subsidiaries which held assets of the BJ's Division,
and the assets associated with the Company's corporate headquarters in
Massachusetts, (ii) BJI's assumption of the leases and other liabilities of
the BJ's Division and 75% of the amount of all bank indebtedness of the
Company existing as of the date of the Distribution, and (iii) the issuance by
BJI to the Company of the Common Stock of BJI to be distributed in the
Distribution.
Under the Distribution Agreement the Company agreed to indemnify BJI for
certain liabilities relating to the Company's business. Similarly, BJI agreed
to indemnify the Company for certain liabilities pertaining to BJI's business.
The Distribution Agreement also requires BJI and the Company to indemnify each
other for losses incurred due to a failure to perform their respective
obligations under the Distribution Agreement or any other agreement entered
into in connection with the Distribution. In addition, the Distribution
Agreement provides that the Company will provide liability insurance for a
period of six years following the Distribution to each individual who served
as a director or officer of the Company prior to the Distribution. BJI also
agreed to indemnify, defend and hold harmless each such individual from any
losses and liabilities incurred by them in connection with the approval of the
Distribution Agreement.
Leases
Upon the Distribution, BJI assumed all liabilities to third-party lessors
with respect to leases entered into by the Company with respect to the BJ's
Division. While the Company continues to be liable, by law, with respect to
such lease liabilities, BJI has agreed to indemnify the Company for such
liabilities.
In connection with the spin-off of the Company by The TJX Companies, Inc.
("TJX") in 1989, the Company and TJX entered into an agreement (the "1989
Agreement") pursuant to which the Company must indemnify TJX against any
liabilities that TJX might incur with respect to 42 current Company real
estate leases as to which TJX is either a lessee or guarantor.
In connection with the Distribution, BJI agreed that for approximately five
years after the Distribution it will indemnify TJX with respect to any
liabilities (as defined in the 1989 Agreement) that TJX may incur with respect
to the Company leases and thereafter it will indemnify TJX for 50% of such
liabilities. In addition, the
13
<PAGE>
Company has agreed that after the Distribution, the Company will not renew any
lease identified in the 1989 Agreement as to which TJX is a lessee or
guarantor unless the applicable lessor agrees to remove TJX as a lessee or
guarantor.
The Distribution Agreement contains restrictions on the renewal of Company
leases similar to those contained in the agreement between the Company and
TJX. BJI may not renew any of its real estate leases (other than ground
leases) for which the Company may be liable during any period during which BJI
does not meet certain standards of creditworthiness.
Tax Sharing Agreement
The Company and BJI entered into a Tax Sharing Agreement providing for the
allocation between the parties of federal, state, local and foreign tax
liabilities, and the entitlement to tax refunds, for periods beginning prior
to the Distribution Date, and various related matters.
Procedures for Addressing Conflicts
As a result of the Distribution, BJI and the Company have significant
contractual and other ongoing relationships that may present certain conflict
situations for Mr. Zarkin, who serves as Chairman of the Board of Directors,
President and Chief Executive Officer of the Company and as Chairman of the
Board of Directors of BJI, and for Messrs. Waxlax and Weisberger, who serve as
directors of both companies. Each of these persons also owns (or has options
or other rights to acquire) a significant number of shares of common stock in
both companies. The Company has adopted procedures to be followed by its Board
of Directors to limit the involvement of each such person in conflict
situations whereby all transactions being considered by the Company which
relate to BJI must (i) be approved by a majority of the Board of Directors and
by a majority of the disinterested members of the Board of Directors and (ii)
be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
14
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on
the Company's Common Stock, based on the market price of the Common Stock (as
adjusted to reflect the Distribution), with the cumulative total return on the
common stock of companies in the Standard & Poor's 500 Stock Index and the Dow
Jones Industry Group Index OTS--Other Specialty Retailers from February 1,
1995 to January 31, 2000. The Dow Jones Industry Group Index OTS--Other
Specialty Retailers currently includes 250 specialty retail companies,
including the Company and the other publicly traded home improvement chains
(other than those operated as divisions of other companies). This index does
not include department stores, discount stores, drug stores or supermarkets.
The graph assumes that the value of the investment at February 1, 1994 was
$100 and that all dividends were reinvested. The values of investments in the
companies in the Standard & Poor's 500 Stock Index and the Dow Jones Industry
Group Index OTS--Other Specialty Retailers were measured as of the date
nearest the end of the Company's fiscal year for which index data is readily
available. This information was furnished by Media General Financial Services.
FIVE-YEAR PERFORMANCE
[GRAPH OF FIVE-YEAR PERFORMANCE APPEARS HERE]
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
HomeBase, Inc. $100.00 $110.79 $156.12 $173.43 $171.83 $ 83.50
Dow Jones Retailer Index $100.00 $102.36 $118.72 $153.26 $228.37 $252.02
Standard & Poor's 500 Index $100.00 $138.67 $175.20 $222.34 $294.58 $325.06
15
<PAGE>
OTHER MATTERS
Independent Accountants
The Board of Directors has appointed PricewaterhouseCoopers LLP as
independent accountants to audit the financial statements of the Company for
the fiscal year ending January 27, 2001. The Company expects that
representatives of PricewaterhouseCoopers LLP will be present at the Meeting,
will have the opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity
securities, to file with the SEC and the New York Stock Exchange initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Executive officers, directors and
greater-than-ten-percent shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based on a review of the copies of such reports
furnished to the Company and written representations that no other reports
were required, all Section 16(a) filing requirements applicable to its
executive officers and directors were complied with during fiscal 1999.
Stockholder Proposals
Proposals of stockholders intended to be presented at the next annual
meeting of stockholders, pursuant to Rule 14a-8 under the Exchange Act, must
be received by the Company no later than 5 p.m. PST on December 28, 2000 in
order to be considered for inclusion in the Company's proxy materials for that
meeting. Proposals must be in writing and sent via registered or certified
mail addressed to HomeBase, Inc., Attention: Corporate Secretary at 3345
Michelson Drive, Irvine, CA 92612. In addition, the Company's by-laws require
that the Company be given advance written notice of stockholder nominations
for election to the Company's Board of Directors and of other matters which
stockholders wish to present for action at an annual meeting of stockholders
(other than matters included in the Company's proxy materials in accordance
with Rule 14a-8 under the Exchange Act). The Secretary must receive such
notice at the address noted above not less than 70 days nor more than 90 days
prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting is
advanced by more than 20 days, or delayed by more than 70 days, from such
anniversary date, the Secretary must receive such notice not earlier than the
90th day prior to such annual meeting and not later than the close of business
on the later of the 70th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of such annual
meeting is first made. Assuming that the 2001 Annual Meeting is held during
the period from May 12, 2001 to August 10, 2001 (as it is expected to be), in
order to comply with the time periods set forth in the Company's by-laws,
appropriate notice would need to be provided to the Secretary of the Company
at the address noted above no earlier than March 3, 2001 and no later than
March 23, 2001.
Other Matters
The Company has no knowledge of any other matter which may come before the
Meeting and does not intend to present any such other matter. However, if any
such other matters shall properly come before the Meeting or any adjournment
thereof, the persons named as proxies will have discretionary authority to
vote the shares represented by the accompanying proxy in accordance with their
own judgment.
Neither the Executive Compensation Committee Report appearing above at
pages 10, 11 and 12 nor the Performance Graph appearing above on page 15 shall
be deemed incorporated by reference by any general statement incorporating
this proxy statement into any filing under the Securities Act of 1933 or under
the
16
<PAGE>
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates such information by reference, and shall not
otherwise be deemed filed under such Acts.
The cost of solicitation of proxies will be borne by the Company. The
Company has retained Georgeson Shareholder Communications Corporation to
assist in soliciting proxies by mail, telephone and personal interview for a
fee of $5,000 plus expenses. Officers and employees of the Company may also
assist in soliciting proxies in the same manner.
BY ORDER OF THE BOARD OF DIRECTORS
John L. Price
Secretary
17
<PAGE>
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PROXY
HomeBase, Inc.
Proxy for the Annual Meeting of Stockholders
To be held June 1, 2000
This Proxy is solicited on behalf of the Board of Directors of the Company
and should be returned as soon as possible to the First Chicago Trust Company
a Division of EquiServe.
The undersigned, having received notice of the Annual Meeting and the Board
of Directors' proxy statement therefor, and revoking all prior proxies, hereby
appoint(s) John D. Barr, William B. Langsdorf and John L. Price, and each of
them, attorneys or attorney of the undersigned (with full power of substitution
in them and each of them) for and in the name(s) of the undersigned to attend
the Annual Meeting of Stockholders of HomeBase, Inc. (the "Company") to be held
on Thursday, June 1, 2000, at 10:00 a.m., PDT at the offices of Gibson, Dunn &
Crutcher LLP, 14th floor, 4 Park Plaza, Irvine, California 92614, and any
adjournments thereof, and there to vote and act upon the following matters in
respect of all shares of stock of the Company which the undersigned may be
entitled to vote or act upon, with all the powers the undersigned would possess
if personally present.
In their discretion, the proxy holders are authorized to vote upon such
other matters as may properly come before the meeting or any adjournments
thereof. The shares represented by this proxy will be voted as directed by the
undersigned. If no direction is given with respect to any proposal, this proxy
will be voted as recommended by the Board of Directors. Attendance of the
undersigned at the meeting or at any adjournment thereof will not be deemed to
revoke this proxy unless the undersigned shall revoke this proxy in writing.
Change of address:
---------------------------------
---------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
[SEE REVERSE SIDE]
Whether or not you plan to attend the Annual Meeting, you are urged to
complete, date, sign and return this proxy in the accompanying envelope if you
are voting by mail.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE IF YOU ARE VOTING BY MAIL
<PAGE>
[X] Please mark your
votes as in this
example.
The Board of Directors of the Company recommends that stockholders vote "FOR"
all of the following proposals. To vote in accordance with the Board of
Directors' recommendations just sign this Proxy (if you are voting by mail); no
boxes need to be checked. Unless marked otherwise, this Proxy will be voted in
accordance with the Board of Directors' recommendations.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOR WITHHOLD NOMINEES:
1. Election of two [_] [_] 01. Harold Leppo and
Directors for a 02. Edward J. Welsberger 2. To consider such other business, if
term to expire any, as may properly come before the
in 2003 meeting or any adjournment thereof.
(for all nominees except marked below)
- --------------------------------------------------------------------------------------
Mark here for address change [_]
and note on the reverse side
of this card.
Mark here if you plan to attend [_]
the Annual Meeting.
-----------------------------------------------
</TABLE>
SIGNATURE(S) _______________________________________ DATE _______________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
- --------------------------------------------------------------------------------
X FOLD AND DETACH IF YOU ARE VOTING BY MAIL X
HomeBase, Inc.
Dear Stockholder:
HomeBase, Inc. encourages you to take advantage of new and convenient ways by
which you can vote your shares. You can vote your shares electronically through
the internet or the telephone. This eliminates the need to return the proxy
card.
To vote your shares electronically you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear in
the box above must be used to access the system.
1. To vote over the internet:
. Log on to the internet and go to the web site
http://www.eproxyvote.com/hbi
2. To vote over the telephone:
. On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683) 24 hours
a day, 7 days a week
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need for you to
mail back your proxy card.
Your vote is important. Thank you for voting.
