<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
National Vision Associates, Ltd.
- --------------------------------------------------------------------------------
(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:
(4) Date Filed:
<PAGE> 2
NATIONAL VISION ASSOCIATES, LTD.
296 GRAYSON HIGHWAY
LAWRENCEVILLE, GEORGIA 30045
(770) 822-3600
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 21, 1998
To the Shareholders:
The Annual Meeting of Shareholders of National Vision Associates, Ltd., a
Georgia corporation, will be held at the Gwinnett Civic and Cultural Center,
Duluth, Georgia, on Tuesday, April 21, 1998, at 11:00 a.m., for the following
purposes:
1. To elect a Board of five Directors to serve for the ensuing year.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record at the close of business on Monday, February
23, 1998, will be entitled to vote at this meeting.
A proxy statement and a proxy solicited by the Board of Directors are
enclosed herewith. Please sign, date, and return the proxy promptly in the
enclosed business reply envelope. If you attend the meeting, you may, if you
wish, withdraw your proxy and vote in person.
By order of the Board of Directors,
MITCHELL GOODMAN
Secretary
Lawrenceville, Georgia
March 25, 1998
PLEASE COMPLETE AND RETURN THE ENCLOSED
PROMPTLY SO THAT YOUR VOTE MAY BE RECORDED AT
THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
<PAGE> 3
NATIONAL VISION ASSOCIATES, LTD.
PROXY STATEMENT
GENERAL
The Board of Directors (the "Board") of National Vision Associates, Ltd., a
Georgia corporation (the "Company"), is soliciting the enclosed proxy for use at
the 1998 Annual Meeting of Shareholders (the "Meeting") to be held on April 21,
1998. Only shareholders of record at the close of business on February 23, 1998,
will be entitled to vote at the Meeting. On February 23, 1998, the Company had
issued and outstanding 20,819,955 shares of Common Stock ("Common Stock").
The Company's principal executive offices are located at 296 Grayson
Highway, Lawrenceville, Georgia 30045. The approximate date on which this proxy
statement and the accompanying proxy are being first sent to shareholders is
March 25, 1998.
VOTING
Each of the 20,819,955 shares of Common Stock outstanding as of the record
date entitles the holder to notice of, and vote on, each matter to be presented
at the Meeting or any adjournments thereof. Each share is entitled to one vote.
Directors are elected by a plurality of the votes cast by the shares entitled to
vote. An automated system administered by the Company's transfer agent tabulates
the votes. Abstentions and "broker non-votes" (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares as to a matter with
respect to which the brokers or nominees do not have discretionary power to
vote) will be treated as present for purposes of determining the presence of a
quorum, but will otherwise have no effect on the election of directors.
REVOCABILITY OF PROXIES
Any person giving a proxy in the form accompanying this proxy statement has
the power to revoke it at any time before its exercise. It may be revoked by
filing with the Secretary of the Company an instrument of revocation or by the
presentation at the Meeting of a duly executed proxy bearing a later date. It
may also be revoked by attendance at the Meeting and election to vote in person.
SOLICITATION
The Company will bear the entire cost of preparing, assembling, printing
and mailing this proxy statement, the accompanying proxy and any additional
material which may be furnished to shareholders by the Company. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries and
custodians to forward to beneficial owners of stock held in their name. The
solicitation of proxies will be made by the use of the mails and through direct
communication with certain shareholders or their representatives by officers,
directors and employees of the Company, who will receive no additional
compensation therefor.
<PAGE> 4
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
COMPENSATION OF DIRECTORS
Non-employee directors of the Company receive an annual retainer of
$10,000. Non-employee directors who also serve on committees receive additional
compensation as follows: for each committee meeting attended, the Chairman of
the committee receives $2,000, and each committee member receives $1,000. Non-
employee directors are also eligible to participate in the Restated Non-Employee
Director Stock Option Plan. Under this stock option plan, the four non-employee
directors (Messrs. David I. Fuente, Ronald J. Green, Campbell B. Lanier, III,
and J. Smith Lanier, II) serving on the date of the 1997 annual meeting of
shareholders were each granted an option to purchase 7,500 shares of Common
Stock and are entitled to automatic grants of additional options to purchase
7,500 shares upon the date of each subsequent annual meeting of shareholders.
All option grants are at exercise prices no less than the "fair market value" of
a share of Common Stock on the date of grant. All options vest 50 percent on the
second anniversary of the grant date and 25 percent on each of the third and
fourth anniversaries of the grant date, or 100 percent upon the death of the
director.
MEETINGS OF THE BOARD OF DIRECTORS
During 1997, there were seven meetings of the Board.
AUDIT COMMITTEE
The Audit Committee consists of two directors: Campbell B. Lanier, III
(Chairman) and J. Smith Lanier, II. The Audit Committee held two meetings in
1997. The Audit Committee is responsible for recommending the appointment of
independent auditors, reviewing with the independent auditors the scope and
results of the audit engagement, establishing and monitoring the Company's
financial policies and control procedures, reviewing and approving related party
transactions and reviewing and monitoring the provision of non-audit services by
the Company's auditors.
COMPENSATION COMMITTEE
The Compensation Committee consists of three directors: David I. Fuente
(Chairman), Ronald J. Green and Campbell B. Lanier, III. The committee held four
meetings in 1997. The committee is responsible for establishing salaries,
bonuses, and other compensation for the Company's officers and making awards
under the Company's Restated Stock Option and Incentive Award Plan.
The Board has no nominating committee.
In 1997, all directors (except for Mr. Fuente) attended at least 75 percent
of the meetings of the Board and all committees of the Board of which they were
members.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The directors of the Company are elected annually to serve until the next
annual meeting of shareholders and until their respective successors are
elected. The authorized number of directors of the Company is presently fixed at
five. All the nominees are currently directors.
2
<PAGE> 5
Each proxy executed and returned by a shareholder will be voted as
specified thereon by the shareholder. If no specification is made, such proxy
will be voted for the election of the nominees named below to constitute the
entire Board. In the event that any nominee withdraws or for any reason is not
able to serve as a director, the proxy will be voted for such other person as
may be designated by the Board as a substitute nominee, but in no event will the
proxy be voted for more than five nominees. The management of the Company has no
reason to believe that any nominee will not serve if elected.
The Company's By-Laws contain an advance notice procedure for the
nomination of candidates for election to the Board. Notice of proposed
shareholder nominations for election of directors must be given to the Secretary
of the Company not less than 14 days nor more than 50 days prior to the meeting
at which directors are to be elected, unless the notice of meeting is given less
than 21 days prior to the meeting, in which case the notice of nomination must
be submitted not later than the 7th day following the day on which the notice of
meeting was mailed to shareholders. The notice of nomination must contain
information about each proposed nominee, including age, address, principal
occupation, financial standing, plans or ideas for managing the affairs of the
Company, the number of shares of stock of the Company beneficially owned by such
nominee and such other information as would be required to be disclosed under
the Securities Exchange Act of 1934 (the "Exchange Act"), in connection with any
acquisition of shares by such nominee or with the solicitation of proxies by
such nominee for his election as a director. Information must also be disclosed
by and about the shareholder proposing to nominate that person. The chairman of
a shareholder meeting may refuse to acknowledge the nomination of any person not
made in compliance with the foregoing procedure.
The foregoing summary description of the By-Laws is not intended to be
complete and is qualified in its entirety by reference to the text of the
By-Laws.
INFORMATION CONCERNING DIRECTORS
The following information is provided, as of March 16, 1998, regarding the
nominees for election as directors:
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
- ---- --- --------------------------
<S> <C> <C>
James W. Krause............................... 53 Chairman of the Board, President and Chief
Executive Officer and Director
David I. Fuente............................... 52 Director
Ronald J. Green............................... 50 Director
Campbell B. Lanier, III....................... 47 Director
J. Smith Lanier, II........................... 70 Director
</TABLE>
Mr. Krause joined the Company in April 1994 as President and Chief
Executive Officer and a director. He was named Chairman of the Company in June
1995. From 1980 until joining the Company, he was President and General Manager
of the automotive and international divisions of Sherwin-Williams Company.
A director since April 1992, Mr. Fuente has been Chairman of the Board and
Chief Executive Officer of Office Depot, Inc. since 1987.
A director since December 1990, Mr. Green has been a partner in the
accounting firm of Stephen M. Berman & Associates, Atlanta, Georgia, since 1980.
A director since October 1990, Mr. Campbell B. Lanier, III is Chairman of
the Board and Chief Executive Officer of ITC Holding Company, a
telecommunications services company located in West Point,
3
<PAGE> 6
Georgia. He is also Chairman, Chief Executive Officer and director of Intercel,
Inc. He also serves as a director of each of Mindspring Enterprises, Inc. and
K&G Men's Center, Inc.
A director since October 1990, Mr. J. Smith Lanier, II is Chairman and
Chief Executive Officer of J. Smith Lanier & Co., an insurance sales company. He
is also a director of Interface, Inc. Mr. Lanier is the uncle of Campbell B.
Lanier, III.
EXECUTIVE OFFICERS
The following table sets forth, as of March 16, 1998, certain information
regarding the executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
- ---- --- --------------------------
<S> <C> <C>
James W. Krause............................ 53 Chairman of the Board, President and Chief
Executive Officer
Michael J. Boden........................... 50 Senior Vice President, Retail Operations and
Merchandising
Eduardo Egusquiza.......................... 45 Senior Vice President, Information Technology
Mitchell Goodman........................... 44 Vice President, General Counsel and Secretary
Charles M. Johnson......................... 48 Senior Vice President, Manufacturing and
Distribution
Angus C. Morrison.......................... 41 Senior Vice President, Chief Financial Officer and
Treasurer
Robert W. Stein............................ 42 Vice President, Human Resources
Patric L. Welch............................ 47 Vice President, Professional Services
</TABLE>
For a description of the business experience of Mr. Krause, see
"Information Concerning Directors."
Mr. Boden joined the Company in June 1995 as Vice President, Sales and
Marketing and was named a Senior Vice President in February 1998. From 1992
until joining the Company, he served as Vice President -- Store Operations of
This End Up Furniture Company.
Mr. Egusquiza joined the Company in March 1998 as Senior Vice President,
Information Technology. From 1982 until joining the Company, he was employed by
Musicland Stores Corporation, Inc. where he served as Vice President of
Information Systems and Services.
Mr. Goodman joined the Company as General Counsel and Secretary in
September 1992 and was named a Vice President in November 1993.
Mr. Johnson joined the Company in October 1997 as Senior Vice President,
Manufacturing and Distribution. From 1988 until joining the Company, he was
employed by the Sherwin-Williams Company, where he served as Vice President and
Director of Research and Development.
Mr. Morrison joined the Company in February of 1995 as Vice President,
Corporate Controller. He was appointed Senior Vice President, Finance, and
Treasurer in March 1998. From 1993 until joining the Company, he was Controller
and Senior Financial Officer of the Soap Division of The Dial Corp. He was
Controller and Senior Financial Officer of the Food Division of the same company
from 1989 through 1992.
Mr. Stein joined the Company as Director of Human Resources in May 1992. In
January 1993, he was appointed Vice President, Human Resources.
4
<PAGE> 7
Mr. Welch joined the Company as Director Eastern Region in November 1994
and was appointed Vice President, Professional Services in February 1997. He was
District Manager of D.O.C. Optics Corp. from 1993 until joining the Company.
Previously, he was Regional Vice President of NuVision, Inc., where he was
employed from 1986 until 1993.
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The Company is not aware of any person who, on March 16, 1998, was the
beneficial owner of five percent (5%) or more of outstanding shares of Common
Stock, except as set forth below.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERSHIP OF CLASS
-------------------- --------
<S> <C> <C>
Rayna C. Weiner............................................. 2,053,152(a) 9.9%
Edward G. Weiner............................................ 1,748,500(b) 8.4%
WisdomTree Capital Management, Inc.......................... 1,044,570(c) 5.0%
</TABLE>
- ---------------
(a) Includes 159,948 shares owned by a trust of which Ms. Weiner is the trustee
and her daughter the beneficiary. Ms. Weiner's address is 712 West Paces
Ferry Road, Atlanta, Georgia. Ms. Weiner is the spouse of Mr. Weiner.
(b) Includes 25,000 shares that Mr. Weiner owns but which he may be obligated to
transfer to a director of the Company. Mr. Weiner's address is 500
Southeast Mizner Boulevard, Boca Raton, Florida 33432.
(c) Based on a Schedule 13D filed by the reporting person, whose address is 1633
Broadway, 38th Floor, New York, New York.
The following table sets forth information, as of March 16, 1998,
concerning beneficial ownership by all directors and nominees, by each of the
executive officers named in the Summary Compensation Table below, and by all
directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERSHIP OF CLASS
-------------------- --------
<S> <C> <C>
Campbell B. Lanier, III..................................... 925,280(1)(2) 4.4%
James W. Krause............................................. 571,069(3) 2.7%
J. Smith Lanier, II......................................... 271,610(2)(4) 1.2%
Sandra M. Buffa............................................. 158,750(5) *
Ronald J. Green............................................. 85,875(2)(6) *
David I. Fuente............................................. 69,875(2)(7) *
Mitchell Goodman............................................ 55,671(8) *
Robert W. Stein............................................. 64,088(9) *
Michael J. Boden............................................ 58,077(10) *
All directors and executive officers as a group (13
persons).................................................. 2,350,295 10.8%
</TABLE>
- ---------------
(1) Includes 69,948 shares owned by a corporation that is jointly controlled
by Mr. Lanier, 750 shares owned by his spouse and 750 shares held in
trust for one of his minor children.
5
<PAGE> 8
(2) Includes 16,875 shares which this individual has the right to acquire
under the Company's Non-Employee Director Stock Option Plan.
(3) Includes 512,500 shares which Mr. Krause has the right to acquire under
the Company's Restated Stock Option and Incentive Award Plan. Also
includes 30,000 shares of restricted stock awarded under the Company's
Restated Stock Option and Incentive Award Plan.
(4) Includes 1,800 shares owned by Mr. Lanier's wife, as to which he
disclaims beneficial ownership.
(5) Includes 118,750 shares which Ms. Buffa has the right to acquire under
the Company's Restated Stock Option and Incentive Award Plan. Also
includes 10,000 shares of restricted stock awarded under the Company's
Restated Stock Option and Incentive Award Plan.
(6) Includes 9,000 shares owned by Mr. Green's children, as to which he
disclaims beneficial ownership.
(7) Includes 25,000 shares which Mr. Fuente has the right to acquire from Mr.
Weiner pursuant to a stock option agreement.
(8) Includes 42,943 shares which Mr. Goodman has the right to acquire
pursuant to the Company's Restated Stock Option and Incentive Award Plan,
and 2,728 shares owned by Mr. Goodman's wife, as to which he disclaims
beneficial ownership. Also includes 10,000 shares of restricted stock
awarded under the Company's Restated Stock Option and Incentive Award
Plan.
(9) Includes 50,397 shares which Mr. Stein has the right to acquire pursuant
to the Company's Restated Stock Option and Incentive Award Plan. Also
includes 10,000 shares of restricted stock awarded under the Company's
Restated Stock Option and Incentive Award Plan.
(10) Includes 45,000 shares which Mr. Boden has the right to acquire pursuant
to the Company's Restated Stock Option and Incentive Award Plan. Also
includes 10,000 shares of restricted stock awarded under the Company's
Restated Stock Option and Incentive Award Plan.
* Less than 1%.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than ten percent (10%) of Common Stock to
file with the Securities and Exchange Commission (the "Commission") initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. The Company believes that, during 1997,
its officers, directors and holders of more than ten percent (10%) of Common
Stock complied with all Section 16(a) filing requirements. In making these
statements, the Company has relied upon the written representations of its
directors and officers and upon copies of reports furnished to the Company.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received from the Company by the
Company's President and Chief Executive Officer, and the Company's four most
highly compensated officers other than the President and Chief Executive Officer
(all such individuals, collectively, the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ---------------
--------------------------------------- RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($) OPTIONS/SARS(#) COMPENSATION($)
------------------ ---- --------- -------- --------------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
James W. Krause.......... 1997 338,000 247,000 63,000(1)(2) 50,000 20,000(3)
Chairman of the Board, 1996 307,000 177,000 143,000(4) 50,000 20,000(3)
President and Chief 1995 299,000 -0- 135,000(5) 50,000 20,000(3)
Executive Officer
Sandra M. Buffa(6)....... 1997 199,000 134,000 21,000(1)(7) 15,000
Senior Vice President, 1996 192,000 104,000 264,000(8) 15,000
Finance and Treasurer 1995 192,000 -0- 73,000(9) 15,000
Michael J. Boden......... 1997 185,000 135,000 21,000(1)(7) 15,000
Senior Vice President, 1996 178,000 97,000 15,000
Retail Operations and 1995 96,000(10) 9,600 47,000(11) 50,000
Merchandising
Mitchell Goodman......... 1997 141,000 99,000 17,000(12) 21,000(1)(7) 15,000
Vice President, General 1996 135,000 75,000 17,000(12) 15,000
Counsel and Secretary 1995 126,000 -0- 17,000(12) 15,000
Robert W. Stein.......... 1997 109,000 77,000 21,000(1)(7) 15,000
Vice President, 1996 97,000 57,000 15,000
Human Resources 1995 95,000 -0- 15,000
</TABLE>
- ---------------
(1) Restricted Stock Awards vest and restrictions lapse after five-year
performance period to the extent and depending upon achievement by the
Company of return on asset goals relative to a comparison group of
companies. Vesting is accelerated automatically upon a change of control
(as defined). Dividends (if any are declared) will be paid on restricted
stock.
(2) As of January 3, 1998, Mr. Krause had restricted stock holdings
representing 15,000 shares of Common Stock with a value of $90,000.
(3) The Company has executed a "split dollar" insurance agreement with Mr.
Krause. The annual premium (payable by the Company) is $20,000. The term
life portion of this premium is $2,500; the non-term life portion is
$17,500.
(4) $83,000 represents reimbursement of relocation expenses; $60,000 represents
tax reimbursement payments on the foregoing.
(5) $89,000 represents reimbursement of relocation expenses; $42,000 represents
tax reimbursement payments on the foregoing.
(6) Ms. Buffa resigned from the Company in March 1998.
(7) As of January 3, 1998, this executive had restricted stock holdings
representing 5,000 shares of Common Stock with a value of $30,000.
7
<PAGE> 10
(8) $162,000 represents reimbursement of relocation expenses; $102,000
represents tax reimbursement payments on the foregoing.
(9) $49,000 represents reimbursement of relocation expenses; $24,000 represents
tax reimbursement payments for the foregoing.
(10) Mr. Boden employed by the Company for only a portion of this calendar year.
(11) $30,000 represents reimbursement of relocation expenses; $17,000 represents
tax reimbursement payments for the foregoing.
(12) Represents partial forgiveness of $50,000 loan made in 1992.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants to the named
executive officers by the Company in 1997. In accordance with rules of the
Commission, there are shown the hypothetical gains or "option spreads" that
would exist for the respective options. These gains are based on assumed rates
of annual compound stock price appreciation of 5% and 10% from the date the
options were granted over the full option term.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION ----------------------
NAME GRANTED YEAR(1) ($/SHARE) DATE 5%($)(2) 10%($)(2)
---- ---------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
James W. Krause................ 50,000(3) 8.2% 4.8125 2/12/07 151,330 383,495
Michael J. Boden............... 15,000(3) 2.5% 4.8125 2/12/00 45,400 115,000
Sandra M. Buffa................ 15,000(3) 2.5% 4.8125 2/12/07 45,400 115,000
Mitchell Goodman............... 15,000(3) 2.5% 4.8125 2/12/07 45,400 115,000
Robert W. Stein................ 15,000(3) 2.5% 4.8125 2/12/07 45,400 115,000
</TABLE>
- ---------------
(1) The Company granted options covering 611,864 shares to employees in 1997.
(2) These amounts represent assumed rates of appreciation only. Actual gains, if
any, on stock option exercises and holdings of Common Stock are dependent
on the future performance of Common Stock and overall stock market
conditions. There can be no assurance that the amounts reflected in this
table will be achieved.
(3) Grants under the Company's Restated Stock Option and Incentive Award Plan.
Options vest 50% on second anniversary of grant date and 25% on each of the
third and fourth anniversary, subject to continued employment. Expiration
date is 10th anniversary of grant date.
8
<PAGE> 11
AGGREGATED FISCAL YEAR END OPTION VALUES
The following table provides information, as of January 3, 1998, regarding
the number and value of options held by the named executive officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#) AT YEAR-END($)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
James W. Krause.................................... 362,500 190,625
237,500(1) 281,250
Michael J. Boden................................... 25,000 48,438
55,000(1) 109,375
Sandra M. Buffa.................................... 107,500 6,563
37,500(1) 67,501
Mitchell Goodman................................... 31,693 11,524
40,807(1) 69,154
Robert W. Stein.................................... 39,147 13,842
42,353(1) 69,926
</TABLE>
- ---------------
(1) Shares represented were not exercisable as of January 3, 1998, and future
exercisability is subject to the executive's remaining employed by the
Company for up to four years from grant date of options.
CHANGE IN CONTROL ARRANGEMENTS
There are agreements between the Company and the named executive officers
which provide severance benefits in the event of termination of employment under
certain circumstances following a change in control of the Company (as defined).
The circumstances are termination by the Company (other than because of death or
disability commencing prior to a threatened change in control (as defined), or
for cause (as defined)), or by an officer as the result of a voluntary
termination (as defined). Following any such termination, in addition to
compensation and benefits already earned, the officer will be entitled to
receive a lump sum severance payment equal to up to three times the officer's
annual rate of base salary.
Cause for termination by the Company is the: (i) any act that constitutes,
on the part of the officer, (a) fraud, dishonesty, gross negligence, or willful
misconduct and (b) that directly results in material injury to the Company, or
(ii) the officer's material breach of the agreement, or (iii) the officer's
conviction of a felony or crime involving moral turpitude.
Circumstances which would entitle the officer to terminate as a result of
voluntary termination following a change in control include, among other things:
(i) the assignment to the officer of any duties inconsistent with the officer's
title and status in effect prior to the change in control or threatened change
in control; (ii) a reduction by the Company of the officer's base salary; (iii)
the Company's requiring the officer to be based anywhere other than the
Company's principal executive offices; (iv) the failure by the Company, without
the officer's consent, to pay to the officer any portion of the officer's then
current compensation; (v) the failure by the Company to continue in effect any
material compensation plan in which the officer participates immediately prior
to the change in control or threatened change in control; or (vi) the failure by
the Company to continue to provide the officer with benefits substantially
similar to those enjoyed by the officer under any of the Company's life
insurance, medical, or other plans. The term of each agreement is for a rolling
three years
9
<PAGE> 12
unless the Company gives notice that it does not wish to extend such term, in
which case the term of the agreement would expire three years from the date of
the notice.
REPORT OF THE COMPENSATION COMMITTEE
A. GENERAL
Compensation of the Company's senior management is reviewed by the
Compensation Committee (the "Committee"), which also administers the stock
option program of the Company, and grants stock options thereunder. The
compensation philosophy of the Company is based on the premise that the
Company's achievements result from the coordinated efforts of its employees. The
Company strives to achieve those objectives through teamwork that is focused on
meeting the expectations of customers and shareholders.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable the Company to attract,
retain and reward executive officers who contribute to the long-term success of
the Company. The Company's compensation program for executive officers,
including the chief executive officer, is based on the same four principles
applicable to compensation decisions for all employees of the Company:
- The Company pays competitively.
- The Company pays for performance.
- The Company strives for fairness in the administration of pay.
- The Company believes that employees should understand the performance and
pay administration process.
Stock Option Program
The purpose of this program is to provide additional incentives to
employees to work to maximize shareholder value. The option program also
utilizes vesting periods to encourage key employees to continue in the employ of
the Company. The Company grants stock options annually to key field and
administrative employees, including executive officers.
10
<PAGE> 13
B. 1997 COMPENSATION DECISIONS
1. 1997 CASH COMPENSATION
a. Salary Compensation
In 1997, the Committee awarded Mr. Krause a raise based on Mr. Krause's
achievements and compensation of other chief executive officers at comparable
companies. Evaluation of his performance was subjective and no fixed weights
were assigned to the factors considered. Salary compensation for the other named
executive officers in 1997 was similar to salary compensation for 1996. Raises
were approved on the basis of a merit grid system applied to all employees of
the Company. Evaluation of performance was subjective and no fixed weights were
assigned to the factors considered.
b. Bonus Compensation
The Company has in place an incentive compensation plan pursuant to which
each executive officer (including the chief executive officer) is entitled to
receive a bonus if the Company meets certain financial goals (based on defined
improvement in earnings per share) and the executive meets defined individual
performance goals. Bonuses were awarded for 1997 on the basis (and to the
extent) of the achievement of these goals.
2. 1997 EQUITY COMPENSATION
a. Option Grants
The Committee has approved a plan whereby its executive officers will each
receive annual grants of stock options. Annual grants were made in February of
1997: Mr. Krause received a grant covering 50,000 shares and each other named
executive officer received a grant covering 15,000 shares.
b. Restricted Stock Awards
In an effort to further align the interests of executives with interests of
shareholders, the Committee made awards of restricted stock in 1997 to the named
executive officers and certain other individuals. The awards vest over a
five-year performance period; the actual number of shares issued will depend
upon the Company's performance, measured at the end of such period, relative to
a peer group of companies. Mr. Krause received an award of 15,000 shares and
each other named executive officer received an award of 5,000 shares.
3. INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation in excess of $1,000,000 paid to certain executives of public
companies. Because the 1997 compensation levels of the Company's executive
officers were well below the $1,000,000 threshold the Committee did not, in
1997, adopt any policies or programs with respect to this section of the
Internal Revenue Code.
COMPENSATION COMMITTEE
David I. Fuente (Chairman)
Ronald J. Green
Campbell B. Lanier, III
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<PAGE> 14
PERFORMANCE GRAPH
NOTE: The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
Comparison of Five-Year Cumulative Total Return
among the Company, the NASDAQ Composite
Index, and the NASDAQ Retail Group Index
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
31-Dec-92 31-Dec-93 31-Dec-94 30-Dec-95 28-Dec-96 3-Jan-98
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
National Vision
Associates, Ltd. $100 $ 28 $ 14 $ 12 $ 16 $ 23
- ---------------------------------------------------------------------------------------------------------------------------------
NASDAQ Composite
Index* $100 $115 $112 $159 $195 $240
- ---------------------------------------------------------------------------------------------------------------------------------
NASDAQ Retail
Group* $100 $106 $ 96 $106 $126 $149
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Total return figures for the Nasdaq indices are calculated as of December 31
of each year.
12
<PAGE> 15
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
In 1997, David I. Fuente, Ronald J. Green and Campbell B. Lanier, III
served as members of the Compensation Committee.
CERTAIN TRANSACTIONS
The Company paid insurance premiums of approximately $905,000 in 1997 for
insurance policies purchased through an agency in which J. Smith Lanier, II, a
director of the Company, has a substantial ownership interest. The Audit
Committee (which has ratified the purchase of insurance by the Company from this
insurance agency) and management of the Company believe that these premiums are
comparable to those which could have been obtained from unaffiliated companies.
In 1996, Edward G. Weiner, the Company's then Vice Chairman, was employed
at an annual salary of $165,000 pursuant to an employment agreement with the
Company with a term ending March 1, 2000. In connection with Mr. Weiner's
resignation from the Board in February 1997, the employment agreement was
terminated, and the Company (in exchange for a non-competition agreement) paid
Mr. Weiner an amount equal to a discounted present value of the payments which
would have been made under the employment agreement.
INFORMATION CONCERNING THE COMPANY'S INDEPENDENT ACCOUNTANTS
The Board has selected the firm of Arthur Andersen LLP, independent public
accountants, to audit the accounts of the Company and its subsidiaries for the
year 1998. Arthur Andersen LLP has served the Company in this capacity since
1990. Representatives of Arthur Andersen LLP are expected to be present at the
Meeting and will be afforded an opportunity to make a statement if they so
desire. Such representatives will be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
All proposals of shareholders must be submitted to the Secretary of the
Company no later than November 25, 1998, in order to be considered for inclusion
in the Company's 1999 proxy materials. The Company's By-Laws require notice to
the Board or the President, as the case may be, in advance of any regular
shareholders' meeting, of any shareholder proposals. The By-Laws further require
that in connection with such proposals the shareholders provide certain
information to the Board or the President, as the case may be. The foregoing
summary description of the By-Laws is not intended to be complete and is
qualified in its entirety by reference to the text of the By-Laws.
OTHER MATTERS
The Board is not aware of any matters to come before the Meeting other than
the election of the directors. If any other matter should come before the
Meeting, then the persons named in the enclosed form of proxy will have
discretionary authority to vote all proxies with respect thereto in accordance
with their judgment.
13
<PAGE> 16
VOTING OF PROXIES
On matters coming before the Meeting as to which a choice has been
specified by the shareholders on the proxies, the shares will be voted
accordingly. If no choice is so specified, the shares will be voted FOR the
election of management's nominees for directors.
By order of the Board of Directors,
MITCHELL GOODMAN
Secretary
Dated: March 25, 1998
14
<PAGE> 17
NATIONAL VISION ASSOCIATES, LTD. LOGO
WWW.NATIONALVISION.COM
<PAGE> 18
APPENDIX
NATIONAL VISION ASSOCIATES, LTD.
ANNUAL SHAREHOLDERS MEETING
APRIL 21, 1998
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned does hereby appoint JAMES W. KRAUSE and MITCHELL GOODMAN
and each of them proxies of the undersigned with full power of substitution in
each of them to vote at the annual meeting of shareholders of the Company to be
held on April 21, 1998 at 11:00 a.m., and at any and all adjournments thereof,
with respect to all shares which the undersigned would be entitled to vote, and
with all powers which the undersigned would possess if personally present. This
proxy revokes all prior proxies given by the undersigned. Without limiting the
generality of the foregoing, said proxies are authorized to vote upon the
following matters:
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE NOMINEES NAMED
ON THE REVERSE SIDE HEREOF.
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR ON THE REVERSE SIDE. FOR
MORE THAN ONE OWNER AS SHOWN, EACH SHOULD SIGN. WHEN SIGNING IN A FIDUCIARY
CAPACITY, PLEASE GIVE FULL TITLE. IF THIS PROXY IS SUBMITTED BY A CORPORATION,
IT SHOULD BE EXECUTED IN THE FULL CORPORATE NAME BY A DULY AUTHORIZED OFFICER;
IF A PARTNERSHIP PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
- -------------------------------------------------------------------------------
<PAGE> 19
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
---------------
NATIONAL VISION
ASSOCIATES, LTD. Election of Directors:
---------------
<TABLE>
<S> <C>
DAVID I. FUENTE CAMPBELL B. LANIER, III With- For All
RONALD J. GREEN J. SMITH LANIER, II For hold Except
JAMES W. KRAUSE [ ] [ ] [ ]
</TABLE>
NOTE: If you do not wish your shares voted "FOR" a
particular nominee, mark the "FOR ALL EXCEPT" box and
strike a line through that nominee's name. Your shares
shall be voted for the remaining nominees.
RECORD DATE SHARES: In their discretion, the proxies are authorized to
vote upon any other business that may properly come
before the meeting or at any adjournment(s) thereof.
Please be sure to sign and date this Proxy. Date _________________________
Shareholder sign here __________________ Co-owner sign here ______________
- -------------------------------------------------------------------------------
DETACH CARD DETACH CARD
NATIONAL VISION ASSOCIATES, LTD.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy.
Your vote counts, and you are strongly encouraged to exercise your right
to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will
be voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Thank you in advance for your prompt consideration.
Sincerely,
National Vision Associates, Ltd.
