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:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ANNTAYLOR STORES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ANNTAYLOR STORES CORPORATION
- --------------------------------------------------------------------------------
(Name of Person Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
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1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 7, 1995
------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of AnnTaylor
Stores Corporation, a Delaware corporation (the "Company"), will be held at 2:00
p.m. on Wednesday, June 7, 1995, at The Parker-Meridien Hotel, 118 West 57th
Street, New York, New York, for the following purposes:
1. To elect two Class I Directors of the Company, each to serve for a term
of three years;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent accountants for fiscal year 1995; and
3. To transact such other business as may properly come before the meeting
and any adjournments or postponements thereof.
Only stockholders of record at the close of business on April 10, 1995 are
entitled to notice of and to vote at the Annual Meeting and at any and all
adjournments or postponements thereof. A list of stockholders entitled to vote
at the meeting will be available for inspection at the office of the Secretary
of the Company, 142 West 57th Street, New York, New York, for at least ten days
prior to the meeting, and will also be available for inspection at the meeting.
By Order of the Board of Directors,
Jocelyn F.L. Barandiaran, Secretary
New York, New York
April 28, 1995
YOUR VOTE IS IMPORTANT
EACH STOCKHOLDER IS URGED TO COMPLETE, SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED
PROXY TO THE COMPANY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. RETURNING A SIGNED PROXY WILL NOT PREVENT YOU FROM
ATTENDING THE MEETING AND VOTING IN PERSON, IF YOU SO DESIRE.
<PAGE>
[LOGO]
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 7, 1995
PROXY STATEMENT
------------------------------------
This Proxy Statement is being furnished to the stockholders of AnnTaylor
Stores Corporation, a Delaware corporation (the "Company"), in connection with
the solicitation of proxies by the Board of Directors of the Company for use at
the Annual Meeting of Stockholders of the Company, to be held at 2:00 p.m. on
Wednesday, June 7, 1995, at The Parker-Meridien Hotel, New York, New York, and
at any and all adjournments or postponements thereof. At the Annual Meeting, the
stockholders of the Company are being asked to consider and vote upon (i) the
election of two Class I Directors, each to serve for a term of three years and
(ii) a proposal to ratify the appointment of the Company's independent
accountants for fiscal year 1995.
This Proxy Statement and the enclosed form of proxy are first being mailed
to stockholders of the Company on or about April 28, 1995.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Only holders of record of the Company's common stock, par value $.0068 per
share ("Common Stock"), at the close of business on April 10, 1995 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting. At the close
of business on the Record Date, there were 23,109,618 shares of Common Stock
outstanding. The presence, either in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding on the Record Date is
necessary to constitute a quorum at the Annual Meeting. All abstentions and
broker non-votes will be included as shares that are present and entitled to
vote for purposes of determining the presence of a quorum at the meeting.
Each stockholder will be entitled to one vote per share, in person or by
proxy, for each share of Common Stock held in such stockholder's name as of the
Record Date on any matter submitted to a vote of stockholders at the Annual
Meeting. The election of the Class I Directors will require the affirmative vote
of a plurality of the shares of Common Stock represented and voting in person or
by proxy and entitled to vote at the Annual Meeting. Ratification of the
appointment of the Company's independent accountants for the Company's 1995
fiscal year will require the affirmative vote of a majority of the shares of
Common Stock represented in person or by proxy and entitled to vote at the
Annual Meeting. In determining whether each of the proposals submitted to a vote
of stockholders has received the requisite number of affirmative votes, (i)
abstentions will be counted and will have the same effect as a vote against the
proposal, except that abstentions will not be counted as votes cast in
connection with determining the plurality required to elect a director and will
have no effect on the outcome of that vote and (ii) proxies for which the broker
does not have discretionary authority and has not received voting instructions
from the beneficial owners ("broker non-votes") will not be counted as votes
cast with respect to any proposal and will have no effect on the outcome of such
vote.
Shares of Common Stock represented by properly executed proxies received in
time for voting at the Annual Meeting will, unless such proxy has previously
been revoked, be voted in accordance with the instructions indicated thereon. In
the absence of specific instructions to the contrary, the persons named in the
accompanying form of proxy intend to vote all properly executed proxies received
by them (i) FOR the election of the Board of Director's nominees as Class I
Directors and (ii) FOR the ratification of Deloitte & Touche LLP as the
Company's independent accountants for the Company's 1995 fiscal year. No
business other than as set forth in the accompanying Notice of Annual Meeting is
expected to come before the Annual Meeting, but should any other matter
requiring a vote of stockholders be properly brought before the Annual Meeting,
it is the intention of the persons named in the enclosed form of proxy to vote
such proxy in accordance with their best judgment on such matters.
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For information with respect to advance notice requirements applicable to
stockholders who wish to propose any matter for consideration or nominate any
person for election as a director at an annual meeting, see "Stockholder
Proposals for 1996 Annual Meeting".
Under applicable Delaware law, none of the holders of Common Stock is
entitled to appraisal rights in connection with any proposal to be acted on at
the Annual Meeting.
Execution of the enclosed proxy will not prevent a stockholder from
attending the Annual Meeting and voting in person. Any proxy may be revoked at
any time prior to the exercise thereof by delivering in a timely manner a
written revocation or a new proxy bearing a later date to the Secretary of the
Company, 142 West 57th Street, New York, New York 10019, or by attending the
Annual Meeting and voting in person. Attendance at the Annual Meeting will not,
however, in and of itself constitute a revocation of a proxy.
This solicitation is being made by the Company. The cost of this
solicitation will be borne by the Company. Solicitation will be made by mail,
and may be made personally or by telephone by officers and other employees of
the Company who will not receive additional compensation for solicitation.
The principal executive offices of the Company are located at 142 West 57th
Street, New York, New York 10019.
PROPOSAL 1
ELECTION OF CLASS I DIRECTORS
The Board of Directors of the Company is divided into three classes,
designated Class I, Class II and Class III, serving staggered three-year terms.
The Company's Certificate of Incorporation requires that such classes be as
nearly equal in number of directors as possible. The terms of the Company's two
current Class I Directors, Rochelle B. Lazarus and Robert C. Grayson, expire at
the Annual Meeting.
At the Annual Meeting, two Class I Directors are to be elected to serve
three-year terms ending in 1998 or until their respective successors are elected
and qualified or their earlier death, resignation or removal. Each of the two
nominees presently serves as a Class I Director. Each of the two nominees has
consented to serve as a Director if elected at the Annual Meeting and, to the
best knowledge of the Board of Directors, each of such nominees is and will be
able to serve if so elected. In the event that either of these nominees should
be unavailable to stand for election before the Annual Meeting, the persons
named in the accompanying proxy intend to vote for such other person, if any, as
may be designated by the Board of Directors, in the place of a nominee unable to
serve.
The Board of Directors recommends that stockholders vote "FOR" the Company's
nominees as Class I Directors.
Set forth below is a brief biography of each nominee for election as a Class
I Director and of all other members of the Board of Directors who will continue
in office.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
TERM EXPIRING IN 1998
ROCHELLE B. LAZARUS, AGE 47. Ms. Lazarus has been a Director of the Company
and its wholly owned operating subsidiary AnnTaylor, Inc. ("Ann Taylor") since
April 1992. She has been President of Ogilvy & Mather North America, an
advertising agency, since April 1994, having served as President of its New York
office from June 1991 to April 1994. Ms. Lazarus was at Ogilvy & Mather Direct
from 1987 to 1991, serving as president for the last two of those years.
ROBERT C. GRAYSON, AGE 50. Mr. Grayson has been a Director of the Company
and Ann Taylor since April 1992. He has been president of Robert C. Grayson &
Associates, Inc., a retail marketing consulting firm, since February 1992. He
has been a vice chairman of the board of Tommy Hilfiger Corp., a men's apparel
manufacturer and retailer, and chairman of the board of Tommy Hilfiger Retail, a
subsidiary of such company, since June 1994. From June 1985 to February 1992,
Mr. Grayson was
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<PAGE>
the president and chief executive officer of Lerner New York, a specialty
women's apparel retailer and a division of The Limited, Inc., a specialty
retailer. Mr. Grayson is also a director of Tommy Hilfiger Corp. and Sunglass
Hut International, Inc.
INCUMBENT CLASS II DIRECTORS
TERM EXPIRING 1996
SALLY FRAME KASAKS, AGE 50. Ms. Kasaks has been Chairman, Chief Executive
Officer and a Director of the Company and Ann Taylor since February 1992. From
February 1989 to January 1992, she was president and chief executive officer of
Abercrombie & Fitch, a specialty retailer and a division of The Limited, Inc., a
specialty retailer. From November 1985 to September 1988, Ms. Kasaks was
president of The Talbots Stores, a specialty women's apparel retailer. For the
six years before 1985, she served in various capacities at Ann Taylor, the last
two of those years as president.
JAMES J. BURKE, JR., AGE 43. Mr. Burke has been a Director of the Company
and Ann Taylor since February 1989. He has been managing partner of Stonington
Partners, Inc. ("Stonington Partners"), a private investment firm, since
November 1993, and a director of Stonington Partners since August 1993. He was a
partner of Merrill Lynch Capital Partners, Inc. ("ML Capital Partners"), a
private investment firm associated with Merrill Lynch & Co., Inc. ("ML&Co."),
from May 1993 through June 1994, and was president and chief executive officer
of ML Capital Partners from January 1987 through April 1993. Mr. Burke was a
first vice president of Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") from July 1988 through June 1994 and was a managing director
of the Investment Banking Division of ML&Co. from April 1985 through June 1994.
Mr. Burke is also a director of ML Capital Partners, Amstar Corporation,
Borg-Warner Security Corporation, Pathmark Stores, Inc., Supermarkets General
Holdings Corporation, United Artists Theater Circuit, Inc., Wherehouse
Entertainment, Inc. and World Color Press, Inc.
INCUMBENT CLASS III DIRECTORS
TERM EXPIRING 1997
GERALD S. ARMSTRONG, AGE 51. Mr. Armstrong has been a Director of the
Company and Ann Taylor since February 1989. He has been a partner of Stonington
Partners, a private investment firm, since November 1993, and a director of
Stonington Partners since August 1993. He was a partner of ML Capital Partners,
a private investment firm associated with ML&Co., from May 1993 through June
1994, and was an executive vice president of ML Capital Partners from November
1988 through April 1993. Mr. Armstrong was a managing director of the Investment
Banking Division of ML&Co. from November 1988 through June 1994. Mr. Armstrong
is also a director of ML Capital Partners, Beatrice Foods, Inc., Blue Bird
Corporation, First USA, Inc., Simmons Company, Wherehouse Entertainment, Inc.
and World Color Press, Inc.
PAUL E. FRANCIS, AGE 40. Mr. Francis has been Executive Vice
President-Finance and Administration of the Company and Ann Taylor since April
1993, and has been a Director of the Company and Ann Taylor since February 1989.
He was a vice president of ML Capital Partners from July 1987 to April 1993 and
a managing director of the Investment Banking Division of ML&Co. from January
1993 to April 1993. From January 1990 to January 1993, he was a director of the
Investment Banking Division of ML&Co.
HANNE M. MERRIMAN, AGE 53. Ms. Merriman has been a Director of the Company
and Ann Taylor since December 1993. She has been the Principal in Hanne Merriman
Associates, retail business consultants, since January 1992, and from February
1990 to December 1990. From January 1991 to June 1992, Ms. Merriman was
president and chief operating officer of Nan Duskin, Inc., a specialty women's
apparel retailer, and from December 1988 to January 1990 was president and chief
executive officer of Honeybee, Inc., a women's apparel retail catalog business
and a division of Spiegel, Inc. Ms. Merriman is also a director of USAir Group,
Inc., CIPSCO, Inc., Central Illinois Public Service Company, State Farm Mutual
Automobile Insurance Company, The Rouse Company and
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<PAGE>
T. Rowe Price Mutual Funds. She is a member of the National Women's Forum and a
trustee of the American-Scandinavian Foundation.
Messrs. Armstrong and Burke serve on the Board of Directors of the Company
and Ann Taylor as representatives of ML&Co. and certain of its affiliates,
which, as of the Record Date, beneficially owned an aggregate of 26.6% of the
Common Stock. See "Compensation of Directors and Related Matters", "Compensation
Committee Interlocks and Insider Participation" and "Beneficial Ownership of
Common Stock".
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Company's Board of Directors held five meetings in fiscal 1994. Each
Director attended at least 80% of the total number of Board meetings and
meetings of Board committees on which such Director served. The Board of
Directors has established standing Audit and Compensation Committees. There is
no standing Nominating Committee. The membership and functions of the committees
of the Board of Directors are as follows:
AUDIT COMMITTEE: The principal functions of the Audit Committee include
recommending independent accountants; conferring with the Company's independent
accountants regarding the scope and results of their audit of the Company;
reviewing the fees of the Company's independent accountants and other terms of
their engagement; conferring with the Company's internal audit department
regarding planned audit activities and results of its audits; and reviewing the
adequacy of internal accounting controls and the results of fiscal policies and
financial management of the Company. The Audit Committee held two meetings in
fiscal 1994. The current members of the Audit Committee are Mr. Grayson and Ms.
Lazarus.
COMPENSATION COMMITTEE: The principal functions of the Compensation
Committee are to review and make recommendations regarding the compensation of
the executive officers of the Company and to administer the Company's benefit
plans, including its stock option plans and management performance compensation
plan. The Compensation Committee held four meetings in fiscal 1994 at which
resolutions were adopted, and four additional working sessions. The current
members of the Compensation Committee are Mr. Armstrong, Mr. Burke, Ms. Lazarus
and Ms. Merriman.
COMPENSATION OF DIRECTORS AND RELATED MATTERS
Directors who are employees of the Company, and Directors serving on the
board as representatives of ML&Co. and its affiliates, do not receive any
compensation for serving on the Board of Directors of either the Company or Ann
Taylor. Directors who are not employees of the Company or representatives of
ML&Co. or its affiliates receive $20,000 in compensation annually, plus $750 for
each meeting attended.
Mr. Armstrong and Mr. Burke serve on the Boards of Directors of the Company
and Ann Taylor as representatives of ML&Co and certain of its affiliates. In
1993, Messrs. Armstrong and Burke, together with other colleagues from ML
Capital Partners, founded Stonington Partners, formerly known as First Capital
Partners, Inc. In July 1994, Messrs. Armstrong and Burke left the employment of
ML&Co., although each has continued to serve as a director of ML Capital
Partners and certain other companies, including the Company and Ann Taylor, in
which ML&Co. or certain of its affiliates have equity investments. In this
connection, each of Messrs. Armstrong and Burke entered into a consulting
agreement with ML&Co. which provides, among other things, for his continued
availability to serve on the Boards of Directors of the Company, Ann Taylor and
such other companies, unless requested to resign by ML&Co., and for his
compensation by ML&Co. for serving in such capacities and for other consulting
services.
Robert C. Grayson & Associates, Inc. ("RCG Associates"), a company
wholly-owned by Mr. Grayson, a director of the Company, has been engaged as a
consultant to Ann Taylor with respect to certain real estate and other matters
since August 1992. The current term of the engagement runs through July 1995 and
requires payment by Ann Taylor to RCG Associates of $4,000 per month through
July 1995. For fiscal 1994, RCG Associates received aggregate fees of $48,000
pursuant to this engagement.
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<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth information regarding
the annual and long-term compensation awarded or paid for each of the last three
fiscal years to those persons who were, for the fiscal year ended January 29,
1995, the Chief Executive Officer and the four other most highly compensated
executive officers of the Company and Ann Taylor (collectively, the "named
executives"). None of Mr. Francis, Mr. Gromek or Mr. Richardson was employed by
the Company in fiscal year 1992; accordingly, no information is set forth in the
table with respect to these officers for that year.
TABLE I
SUMMARY OF COMPENSATION TO CERTAIN EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------------------------
------------------------------------------ SECURITIES ALL OTHER
NAME AND PRINCIPAL FISCAL OTHER ANNUAL RESTRICTED UNDERLYING COMPENSATION
POSITION YEAR SALARY ($) BONUS ($)(A) COMPENSATION ($) STOCK AWARDS ($) OPTIONS (#) ($)(B)
- ----------------------------- ------ ---------- ------------ ---------------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sally Frame Kasaks........... 1994 $750,000 $450,000 $ 8,303 -- 170,000 $7,857
Chairman and Chief Executive 1993 $650,000 $243,750 -- -- 30,000 $7,755
Officer 1992 $600,000 $150,000 -- $1,327,500(c) 200,000 $3,077
Paul E. Francis.............. 1994 $325,000 $156,000 -- -- 80,000 $2,281
Executive Vice 1993 $262,292 $ 80,167 -- -- 70,000 --
President-Finance and 1992 -- -- -- -- -- --
Administration
Joseph R. Gromek(d).......... 1994 $365,000 $131,400 -- -- 60,000(e) $4,330
Senior Vice 1993 $282,468 $ 64,750 -- -- 30,000(f) $1,188
President-General 1992 -- -- -- -- -- --
Merchandise Manager
Andrea M. Weiss.............. 1994 $254,600 $ 88,200 -- -- 50,000 $2,757
Senior Vice 1993 $234,600 $ 50,625 -- -- 15,000 $1,318
President-Director of Stores 1992 $120,569 $ 35,000 $ 15,576 -- 25,000 $ 180
Randy Richardson............. 1994 $195,000 $ 58,500 $ 11,239 -- 30,000 $2,611
Senior Vice 1993 $185,000 $ 39,312 $ 64,129(h) -- 20,000 $ 583
President-Information 1992 -- -- -- -- -- --
Services(g)
</TABLE>
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<TABLE>
<C> <S>
(a) Bonus awards indicated for 1994 and 1993 were paid pursuant to the Company's Management
Performance Compensation Plan. Bonus amounts indicated for 1992 represent guaranteed bonus
amounts paid to Ms. Kasaks pursuant to her 1992 Employment Agreement and to Ms. Weiss in
accordance with the terms of her compensation arrangement upon hire by the Company.
(b) Represents contributions made by the Company on behalf of the named executives to its 401(k)
Savings Plan and the cost of group term life insurance paid by the Company on behalf of
qualifying executive officers during the years shown.
(c) Pursuant to the terms of her 1992 Employment Agreement, Ms. Kasaks was awarded 60,000 shares of
restricted stock, of which 15,000 shares vested upon hiring, and 15,000 shares vested at the end
of each of fiscal years 1992, 1993 and 1994. Ms. Kasaks would be entitled to receive dividends on
these shares proportionately with the other holders of the Company's Common Stock, if dividends
are paid. Ms. Kasaks has received no other awards of restricted stock from the Company. For
purposes of the above table, the 60,000 restricted shares have been valued at $22.125 per share,
which was the closing market price of the Company's Common Stock on the New York Stock Exchange
on the effective date of the grant. The aggregate value of Ms. Kasaks' restricted stock holdings
on January 28, 1995, based on the closing market price of the Common Stock on the New York Stock
Exchange on January 27, 1995 (the last trading day in fiscal 1994) of $34.00, was $2,040,000.
(d) Mr. Gromek resigned from his position with the Company on April 18, 1995.
(e) 55,001 of these options were not vested at the time of Mr. Gromek's separation of employment and
were cancelled on the separation date.
(f) 12,000 of these options were not vested at the time of Mr. Gromek's separation of employment and
were cancelled on the separation date.
(g) Mr. Richardson was promoted to Senior Vice President-Technology and Logistics effective February
20, 1995.
(h) Includes $47,119 reimbursement of relocation expenses.
</TABLE>
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The following table sets forth certain information with respect to stock
options awarded during fiscal year 1994 to the named executives listed in Table
I above. These option grants are also reflected in Table I. In accordance with
Securities and Exchange Commission ("Commission") rules, the hypothetical
realizable values for each option grant are shown based on compound annual rates
of stock price appreciation of 5% and 10% from the grant date to the expiration
date. The assumed rates of appreciation are prescribed by the Commission and are
for illustration purposes only; they are not intended to predict future stock
prices, which will depend upon market conditions and the Company's future
performance and prospects.
TABLE II
STOCK OPTIONS GRANTED IN FISCAL YEAR 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
# OF % OF TOTAL OF STOCK PRICE
SECURITIES # OF OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(B)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED(A) FISCAL 1994 ($/SHARE) DATE 5% ($) 10% ($)
- ------------------------ ---------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sally Frame Kasaks...... 170,000 21.59% $25.375 2/23/04 $2,712,900 $6,875,000
Paul E. Francis......... 80,000 10.16% $25.375 2/23/04 $1,276,650 $3,235,300
Joseph R. Gromek........ 60,000(c) 7.62% $25.375 2/23/04 $ 957,500 $2,426,500
Andrea M. Weiss......... 50,000 6.35% $25.375 2/23/04 $ 797,900 $2,022,000
Randy Richardson........ 30,000 3.81% $25.375 2/23/04 $ 478,750 $1,213,250
</TABLE>
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<TABLE>
<C> <S>
(a) One-third of the options granted to each of the named executives in 1994 are "time
vesting" options which vest 25% per year on each of the first through fourth
anniversaries of the date of grant. The remaining two-thirds of these options are
"performance-vesting" options which become fully exercisable upon the earliest to occur
of: (i) the ninth anniversary of the date of grant, (ii) the date on which the trading
price of the Common Stock is at least $50.75 per share (representing a doubling of the
stock price on the date of grant), provided that this occurs before the fifth
anniversary of the grant, and (iii) the date on which the Company's aggregate
consolidated net income before extraordinary items for four consecutive quarters after
fiscal 1993 equals at least $2.13 per share (representing a tripling of fiscal year
1993 net income before extraordinary items), provided that this occurs before the fifth
anniversary of the grant. If the Company achieves 80% of either of the performance
measures described in (ii) or (iii) above by the fifth anniversary of the grant, then a
portion of the options becomes exercisable, equal to 25% of the grant plus 3.75% for
every percentage point by which performance exceeds 80% of the measure. Upon the
occurrence of one of the following "Acceleration Events," all such options will become
vested: (i) any person (excluding certain specified persons) becomes the owner of at
least 20% of the Common Stock, (ii) a majority of the Board of Directors changes, or
(iii) a merger or other specified event occurs.
(b) These columns show the hypothetical realizable value of the options granted for the
ten-year term of the options, assuming that the market price of the Common Stock
subject to the options appreciates in value at the annual rate indicated in the table,
from the date of grant to the end of the option term.
(c) 55,001 of these options were not vested at the time of Mr. Gromek's separation of
employment and were cancelled on the separation date.
</TABLE>
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The following table shows the number and value of stock options exercised by
each of the named executives listed in Table I during fiscal year 1994, the
number of all vested (exercisable) and unvested (not yet exercisable) stock
options held by each such officer at the end of fiscal year 1994, and the value
of all such options that were "in the money" (i.e., the market price of the
Common Stock was greater than the exercise price of the options) at the end of
fiscal year 1994.
TABLE III
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1994 AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES $ VALUE OF UNEXERCISED
# OF SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON $ VALUE OPTIONS AT END OF FISCAL 1994 AT END OF FISCAL 1994
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(A)
- ---------------------- ----------- ------------ ----------------------------- ----------------------------
<S> <C> <C> <C> <C>
Sally Frame Kasaks.... -- -- 162,000/238,000 $1,658,625/$2,215,125
Paul E. Francis....... -- -- 28,000/122,000 $318,500/$1,167,750
Joseph R. Gromek...... 9,000 $221,625 3,000/78,000(b) $47,625/$803,250
Andrea M. Weiss....... 10,000 $203,125 11,000/69,000 $131,500/$675,750
Randy Richardson...... -- -- 10,000/40,000 $119,000/$384,750
</TABLE>
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(a) Calculated based on the closing market price of the Common Stock of $34.00
on January 27, 1995, the last trading day in fiscal year 1994, less the
amount required to be paid upon exercise of the option.
(b) 67,001 of these options were not vested at the time of Mr. Gromek's
separation of employment and were cancelled on the separation date.
PENSION PLAN. Ann Taylor adopted, as of July 1, 1989, a defined benefit
retirement plan for the benefit of employees of Ann Taylor (the "Pension Plan").
The Pension Plan is a "cash balance pension plan" intended to qualify under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"). An
account balance is established for each participant, which is credited with a
benefit equal to 3% of compensation during each of the participant's first ten
years of service, 4% of compensation during each of the participant's next five
years of service, and 5% of compensation during each of the participant's years
of service in excess of fifteen. Compensation for this purpose includes salary,
bonus and certain other benefits. The Code limits the compensation that may be
taken into account under the Pension Plan for any participant. Participants'
accounts are credited with interest quarterly, at a rate equal to the average
one-year Treasury bill rate. Retirement benefits are determined by dividing the
amount of a participant's account by a specified actuarial factor, subject,
however, to the limitation imposed by the Code. Participants are fully vested in
their accounts after completion of five years of service. Participants receive
credit for service with Ann Taylor prior to July 1, 1989 for purposes of vesting
and determining the percentage of compensation that will be credited to their
accounts.
As of January 28, 1995, the credited years of service under the Pension Plan
for Ms. Kasaks was 1.75 years, for Mr. Francis 0.5 years, for Mr. Gromek 0.5
years, for Ms. Weiss 1.25 years, and for Mr. Richardson 1.0 years. The estimated
monthly retirement benefit, payable as a single life annuity, that would be
payable to each of the executives named in Table I above who were participants
in the plan during fiscal year 1994, assuming retirement as of December 31,
1994, the commencement of payments at age 65 and annual interest at the rate of
7%, is as follows: Ms. Kasaks, $182; Mr. Francis, $230; Mr. Gromek, $132; Ms.
Weiss, $296; and Mr. Richardson, $301. These benefits would not be subject to
any reduction for social security benefits or other offset amounts.
7
<PAGE>
The estimated annual retirement benefit to which Ms. Kasaks would be
entitled pursuant to the 1994 employment agreement described below, beginning at
age 60, would be $783,331, after taking into account offsets for other pension
benefits.
EMPLOYMENT AGREEMENT. Effective as of February 1, 1994, the Company and Ms.
Sally Frame Kasaks entered into an employment agreement (the "1994 Agreement"),
which replaced the employment agreement previously in effect between the Company
and Ms. Kasaks. The 1994 Agreement provides for Ms. Kasaks' employment as
Chairman of the Board and Chief Executive Officer of the Company for a term of
three years, which term is automatically extended on an annual basis for one
additional year unless either party provides notice (a "Nonrenewal Notice") that
it does not wish to extend the term. Under the terms of the 1994 Agreement, Ms.
Kasaks is entitled to an annual base salary of not less than $750,000, and is
entitled to participate in the Company's annual bonus and stock option plans as
well as other Company benefit programs. In addition, the Company loaned Ms.
Kasaks the sum of $500,000, which amount is payable on January 31, 1999. See
"Indebtedness of Management".
The 1994 Agreement also provides Ms. Kasaks with a supplemental retirement
benefit (the "SERP") equal to 50 percent of her "final average compensation"
(the highest average of her annual salary and bonus over a period of three
consecutive fiscal years, except that the maximum bonus to be taken into account
for any year may not exceed Ms. Kasaks' salary for that year), reduced by social
security benefits and amounts payable under any Company pension plan. The SERP
is fully vested upon Ms. Kasaks' attainment of age 55 with 15 years of service
with the Company, including service with the Company's predecessor. The SERP
also becomes fully vested (although subject to reduction to reflect actual and
deemed service of less than 15 years) in the event of Ms. Kasaks' death,
disability or termination by the Company without Cause (as defined in the 1994
Agreement); in the event of termination by Ms. Kasaks for Good Reason (as
defined in the 1994 Agreement); or in the event the term of the 1994 Agreement
expires by reason of a Nonrenewal Notice provided by the Company. The SERP
provides a 50% survivor benefit to Ms. Kasaks' spouse for his life. Payment of
the SERP benefits is subject to Ms. Kasaks' continued compliance with certain
noncompete and nonsolicitation provisions contained in the 1994 Agreement.
In the event of termination of Ms. Kasaks employment by the Company without
Cause, termination by Ms. Kasaks for Good Reason or expiration of the term of
the 1994 Agreement by reason of a Nonrenewal Notice provided by the Company, Ms.
Kasaks shall be entitled, among other things, to receive continued salary and
the average of her last three bonuses (such amounts generally to be paid over a
period equal to the longer of 18 months or the remainder of the term of the 1994
Agreement, subject to Ms. Kasaks' compliance with the noncompete and
nonsolicitation provisions of the 1994 Agreement), and to additional vesting of
all or a portion of her outstanding stock options and restricted shares. If any
payments or benefits received by Ms. Kasaks would be subject to the "golden
parachute" excise tax under the Internal Revenue Code, the Company has agreed to
pay to Ms. Kasaks such additional amounts as may be necessary to place her in
the same after-tax position as if the payments had not been subject to such
excise tax.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation policy, which is endorsed by the
Compensation Committee of the Board of Directors and by the full Board of
Directors, is designed to attract and retain highly motivated, results-oriented
executives of experience and ability, by basing executives' compensation, in
significant part, on the growth and profitability of the Company. There are two
principal components to executive compensation: (i) cash compensation,
consisting of both a base salary and a variable performance-based portion that
is dependent upon short-term Company operating profits, and (ii) stock option
grants, the value of which is dependent upon the long-term performance of the
Company. The Committee believes that this compensation structure provides
executives with incentive to remain with the Company and to direct their efforts
towards building the long-term profitability of the Company and the value of its
stock.
8
<PAGE>
The Company may also make grants of shares of restricted stock when deemed
necessary in order to attract key executive officers, as was the case in
connection with the hiring of the Company's Chief Executive Officer, or to
provide an incentive to, or reward outstanding performance by, junior level
management associates, when it believes these grants will be more effective
incentive tools than stock option grants.
In determining executive compensation, consideration is given to, among
other things, the individual executive's experience and historical and
anticipated contribution to the Company. Consideration is also given to the
amount and forms of compensation paid to like executives by other companies in
the Company's industry, including the companies that comprise the Dow Jones
Specialty Apparel Retailers Index, to the extent that such information is
available. No specific weight is given to any of these considerations.
ANNUAL CASH COMPENSATION
An executive's total annual cash compensation is intended to compensate the
executive fairly. In the view of the Company, "fair" compensation is generally
at the middle to upper end of the range for the industry, taking into
consideration the individual executive's experience and historical and expected
contribution to the Company. In assembling its executive team over the past
three years, the Company has found that, in order to attract qualified
executives, in many instances it has had to offer annual cash compensation (base
salary plus performance compensation) that is at the upper end of the industry
range.
The executive's base salary is set at an amount that is less than the
executive's targeted "fair" compensation level; in order to attain the targeted
compensation level, the executive is dependent upon earning the variable,
performance-based component of cash compensation. If the Company achieves its
financial objectives, the performance compensation is paid and, when added to
the executive's base compensation, should result in the executive achieving his
or her targeted "fair" compensation level. If the Company performs exceptionally
well, the executive's contribution to this performance would also be reflected
by a greater performance compensation payment. Similarly, failure of the Company
to reach its objectives would result in the executive's performance
compensation, and thus total cash compensation, being less than the targeted
level.
Consistent with this philosophy, since the variable component of cash
compensation is an integral part of an executive's compensation and is necessary
in order for the executive to achieve the targeted "fair" remuneration, the
Company and the Committee refer to this variable component not as a "bonus" but
as "performance compensation".
The performance-based, variable component of cash compensation is paid
pursuant to the Company's Management Performance Compensation Plan (the
"Performance Compensation Plan"), which was adopted by the Board of Directors in
August 1992, amended and restated by the Board of Directors in 1994 and approved
by the Company's stockholders at the 1994 Annual Stockholders Meeting. Under the
Performance Compensation Plan, each spring and fall season, the Compensation
Committee establishes a target operating profit level for the six-month season,
and the percentage of base salary that each executive would be eligible to
receive, as performance-based compensation, if the profit objective is met. Each
executive's performance compensation percentage is determined by the Committee,
in consultation with management and the other members of the Board, based on
their judgment of the extent to which the individual executive's performance
could affect overall Company results. Thus, the percentage of senior executives'
targeted cash compensation that consists of performance-based compensation is
significantly greater than the percentage of junior executives' compensation
that is performance-based.
9
<PAGE>
The Committee believes that this cash compensation strategy provides
executives with a balance between compensation security and appropriate
incentives to use their best efforts to cause the Company to achieve and exceed
its profit objectives.
LONG TERM INCENTIVE COMPENSATION
The other principal component of executives' compensation is stock options,
which are intended as a tool to attract, provide incentive to and retain those
executives and senior management-level associates who make the greatest
contribution to the business, and who can have the greatest effect on the long
term profitability of the Company. The exercise price of stock options is set at
a price equal to or greater than the market price of the Common Stock at the
time of the grant. The options therefore do not have any value to the executive
unless the market price of the Common Stock rises. Two-thirds of the stock
options granted to senior executives in 1994 were "performance-vesting" options,
which do not vest for at least five years unless specified earnings or Common
Stock trading price targets are met (see "Analysis of 1994 Executive
Compensation" below). The Committee believes that these stock options more
closely align the executives' interests with those of its stockholders, and
focus management on building profitability and long-term stockholder value.
Stock options are often awarded as part of an individualized compensation
package developed for a newly hired executive. The Compensation Committee also
believes it is appropriate to make periodic grants of stock options,
approximately annually, in order to provide continuing incentives to management
and to remain competitive with industry peers and leaders. In making periodic
stock option grants to executives, the Committee also considers the amount of
stock options previously granted to them.
The Committee believes that, in certain cases, grants of restricted stock
provide a more effective incentive tool than grants of stock options. Restricted
stock awards are intended principally for junior level management, in
recognition of past performance and to encourage continued contributions to the
Company.
ANALYSIS OF 1994 COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee believes that, since joining Ann Taylor as Chairman and Chief
Executive Officer of the Company in 1992, Sally Frame Kasaks has developed and
implemented a cogent strategy to support the growth and profitability of the
Company's business, aimed at enhancing the perception of Ann Taylor as a
national brand and capitalizing on the strength of that brand through the
introduction of product extensions and new channels of distribution. Ms. Kasaks
has also concentrated on restructuring the Company's internal organization and
assembling an experienced executive team to support and execute this strategy.
The Committee believes that the success of the strategy implemented by Ms.
Kasaks and her executive team is evident in the growth in the Company's sales,
profitability and Common Stock trading price. In the three years that Ms. Kasaks
has been Chairman and Chief Executive Officer of Ann Taylor, revenues have
increased from $437.7 million in fiscal 1991 to $658.8 million in fiscal 1994
and net income before extraordinary items and special charges has increased from
$0.05 per share for fiscal 1991 to $1.40 per share in fiscal 1994. In addition,
the market price of the Common Stock has increased during this period from
$22.125 at the end of fiscal 1991 to $34.00 at the end of fiscal 1994.
The term of the Company's 1992 employment agreement with Ms. Kasaks was
scheduled to expire at the end of fiscal year 1994. The Compensation Committee
and the Board of Directors believe that the retention of Ms. Kasaks as the
Chairman and Chief Executive Officer is important to the continued successful
execution of the Company's growth strategy. Therefore, in spring 1994 the
Compensation Committee commenced negotiation of a new employment agreement with
Ms. Kasaks. The Committee engaged legal counsel to assist in these negotiations
and consulted with the Company's independent accountants regarding the financial
impact of the terms of the agreement. The Committee also obtained
10
<PAGE>
advice from a national compensation consultant. In developing the terms of Ms.
Kasaks' 1994 Employment Agreement, the Committee took into account, among other
things, the significant improvements in the Company's financial performance
indicated above, compensation of chief executives of other companies in the
Company's industry, and compensation of chief executives at other companies
exhibiting similar growth rates. Ms. Kasaks' 1994 annual base salary was
determined by the terms of the 1994 Employment Agreement and her 1994 bonus was
determined in accordance with the Company's Management Performance Compensation
Plan. The terms of the 1994 Employment Agreement are more fully described above
under "Employment Agreement".
The Compensation Committee assigned to Ms. Kasaks a performance compensation
percentage of 25% of her annual base salary under the Performance Compensation
Plan for each of the spring and fall seasons in 1994 (or 50% for the full year).
Operating income before goodwill and special charges improved 42.9% in the
spring 1994 season compared to the prior year's spring season, which exceeded
the target levels established by the Committee under the Plan for spring 1994
and resulted in the performance-based component of executive compensation,
including that of Ms. Kasaks, exceeding the targeted level for the spring
season. However, although operating income before goodwill and special charges
improved 43.9% in the fall 1994 season compared to the prior year's fall season,
this was lower than the targeted operating income levels established by the
Committee under the Plan for fall 1994 and resulted in the performance-based
component of executive compensation, including that of Ms. Kasaks, being less
than the targeted level for the fall season.
In 1994, the Committee also granted Ms. Kasaks 170,000 stock options under
the Company's 1992 Stock Option Plan, representing 21.59% of all stock options
granted to Company associates in fiscal 1994. In determining the number of stock
options to be granted to Ms. Kasaks, the Compensation Committee considered stock
option grants made to chief executive officers of other companies in the
Company's industry, the total amount of stock options previously awarded to Ms.
Kasaks, and the relationship of Ms. Kasaks' long-term incentive compensation to
her overall compensation package. The terms of the stock options granted to Ms.
Kasaks in 1994 are more fully described below under "Analysis of 1994 Executive
Compensation".
ANALYSIS OF 1994 EXECUTIVE COMPENSATION
Virtually all of the Company's senior executives were recruited and joined
the Company within the last three years. Many of these executives were recruited
from companies that are among the leaders in their industries and have
significantly greater resources than Ann Taylor. The Company believes that the
success of its growth strategy depends, in part, on retention and motivation of
this executive talent. The Committee believes that the success of current
management's business strategies increases the risk that competitors may attempt
to recruit the Company's executives. The Company's compensation structure is
intended to be competitive with leading members of the industry and to provide
senior executives with incentive to remain with the business.
In fall 1993, the Company and the Board of Directors engaged an independent
national compensation consultant to supplement the Company's and the
Compensation Committee's efforts in reviewing the Company's executive
compensation structure and comparing it with that of other companies in the
women's apparel and specialty retail industries, and to provide advice regarding
compensation for the Company's senior executives.
The Compensation Committee concluded that current executive cash
compensation levels were consistent with the executive compensation objectives
described above, but that executives' equity interest and long term incentive
compensation (stock options) were not equivalent with industry levels. After
consultation with its independent compensation consultant, in February 1994 the
Committee awarded stock option grants under the Company's 1992 Stock Option Plan
to a group of 30 senior executives, including Ms. Kasaks. The total number of
options granted to these executives was 676,500. In determining the number of
options granted to the foregoing group of senior executives, the
11
<PAGE>
Compensation Committee considered stock option grants previously made to such
executives and stock option grants to senior executives of other companies in
the Company's industry.
The exercise price of the options granted to senior executives in February
1994 is $25.375, the fair market value of the Common Stock as of the close of
business on the day prior to the day on which the grants were made. One-third of
these options are "time-vesting" options, which become exercisable 25% on each
of the first through fourth anniversaries of the date of grant. These
time-vesting options were in an amount and on terms generally consistent with
prior annual grants made to executives, except that the vesting schedule for
these options is more restrictive compared to prior option grants that become
exercisable 20% upon grant and 20% on each of the first through fourth
anniversaries of those grants.
The remaining two-thirds of the options granted to each executive in
February 1994 are "performance-vesting" options, which become fully exercisable
prior to the fifth anniversary of the date of grant only if the price of the
Company's Common Stock on the New York Stock Exchange reaches at least $50.75
(double the price of the Common Stock at the time of grant) or aggregate
consolidated net income before extraordinary items for four consecutive quarters
equals at least $2.13 per share (triple the Company's fiscal year 1993 net
income before extraordinary items and before the $.05 per share effect of a
special restructuring charge taken in 1993). If each of these targets were
achieved in the fifth year, they would represent an average annual rate of
increase in the Company's stock price and net income before extraordinary items
of 15% and 25%, respectively. If the Company achieves at least 80% of either of
these performance measures by the fifth anniversary of the date of grant, then
the options become partially exercisable, at a rate of 25% plus 3 3/4% for each
percentage point by which the Company exceeds 80% of the performance measure. If
the Company does not achieve at least 80% of the performance measures by the
fifth anniversary, then none of the performance-vesting options become
exercisable until the ninth anniversary of the grant.
In establishing the performance measures by which the performance-vesting
options become exercisable, the Committee selected targets that would make
management compensation contingent on the creation of significant value for the
Company's stockholders, thus closely aligning management's and stockholders'
interests and directing management's efforts towards the long term profitability
of the Company. The Committee also believes that these performance-vesting
options will provide significant retention and performance incentives to
executives.
Gerald S. Armstrong
James J. Burke, Jr.
Rochelle B. Lazarus
Hanne M. Merriman
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of the Record Date, ML&Co. and certain of its affiliates beneficially
owned an aggregate of approximately 26.6% of the outstanding Common Stock.
Messrs. Armstrong and Burke serve on the Boards of Directors of the Company and
Ann Taylor as representatives of ML&Co. and its affiliates. Accordingly, ML&Co.
and its affiliates are in a position to influence the management of the Company.
Messrs. Armstrong and Burke are also members of the Compensation Committee of
the Board of Directors of the Company and Ann Taylor.
The Company paid underwriting commissions to Merrill Lynch in connection
with the Company's Common Stock offering in May 1994 (the "Offering"). The
Company agreed to indemnify Merrill Lynch, as underwriter, against certain
liabilities, including certain liabilities under the federal securities laws, in
connection with the Offering.
STOCK PERFORMANCE GRAPH
The following line graph compares the cumulative total stockholder return on
the Company's Common Stock on an annual basis from May 16, 1991, the date of the
Company's initial public offering of the Common Stock, through January 28, 1995,
with the cumulative total return on the Standard & Poor's 500 Stock Index ("S&P
500") and the Dow Jones Specialty Apparel Retailers Index ("DJ Apparel") for the
same period. In accordance with the rules of the Commission, the returns are
indexed to a value of $100 at May 16, 1991 and assume that all dividends were
reinvested.
COMPARISON OF ANNUAL CUMULATIVE TOTAL RETURN THROUGH JANUARY 28, 1995
ANNTAYLOR, S&P 500 INDEX, AND DJ APPAREL INDEX
5/91 1/92 1/93 1/94 1/95
Ann Taylor $100.00 $ 84.62 $ 82.21 $ 84.13 $130.77
S&P 500 $100.00 $112.10 $123.95 $139.06 $140.60
DJ Apparel $100.00 $119.38 $113.20 $105.78 $ 95.58
13
<PAGE>
INDEBTEDNESS OF MANAGEMENT
Pursuant to the 1994 Employment Agreement, the Company loaned Ms. Kasaks the
sum of $500,000, which amount is payable on January 31, 1999. On each date on
which interest is payable under the loan, the Company has agreed to pay to Ms.
Kasaks such amounts as may be necessary to place her in the same after-tax
position as if the loan had been interest-free. The loan shall be forgiven by
the Company if Ms. Kasaks is employed on the maturity date; if, prior to such
date, she is involuntarily terminated without Cause or dies or becomes disabled
while still employed; or if the term of the 1994 Agreement expires by reason of
a Nonrenewal Notice having been provided by the Company.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and certain officers to file with the Securities and Exchange
Commission and the New York Stock Exchange initial reports of ownership and
reports of changes in ownership of the Company's Common Stock. Copies of all
such Section 16(a) reports are required to be furnished to the Company. These
filing requirements also apply to holders of more than ten percent of the
Company's Common Stock. To the Company's knowledge, based solely on a review of
the copies of Section 16(a) reports furnished to the Company during the fiscal
year ended January 27, 1995, or written representations from certain reporting
persons that no Forms 5 were required for those persons, all transactions were
reported on a timely basis except (i) two Form 4 filings and the 1995 Form 5
filing by Mr. Francis, which were filed two days late, (ii) one Form 4 filing by
Mr. Gromek, a former executive officer of the Company, which was filed one day
late and (iii) two Form 4 filings by Mr. Craig Sorrels, a former executive
officer of the Company, which were also filed late.
BENEFICIAL OWNERSHIP OF COMMON STOCK
PRINCIPAL STOCKHOLDERS
As of the April 10, 1995 Record Date, the outstanding Common Stock was held
of record by 495 stockholders. The following table sets forth certain
information concerning the beneficial ownership of Common Stock by each
stockholder who is known by the Company to own beneficially in excess of 5% of
the outstanding Common Stock, by each director, by the named executives listed
in Table I above, and by all directors and executive officers as a group, as of
the Record Date. Except as otherwise indicated, all persons listed below have
(i) sole voting power and investment power with respect to their shares of
Common Stock, except to the extent that authority is shared by spouses under
applicable law, and (ii) record and beneficial ownership with respect to their
shares of Common Stock.
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<PAGE>
<TABLE>
<CAPTION>
NO. OF
SHARES OF
NAME OF BENEFICIAL OWNER COMMON STOCK PERCENT
- ---------------------------------------------------------------------- ------------ -------
<S> <C> <C>
Merrill Lynch Entities(a)............................................. 6,155,278 26.6%
FMR Corp.(b).......................................................... 1,540,800 6.7
Nicholas-Applegate Capital Management(c).............................. 1,198,521 5.2
Sally Frame Kasaks(d)................................................. 292,165 1.3
Paul E. Francis(d).................................................... 82,653 *
Joseph R. Gromek(d)................................................... 14,222 *
Andrea M. Weiss(d).................................................... 23,366 *
Randy Richardson(d)................................................... 15,004 *
Gerald S. Armstrong(e)(f)............................................. 10,964 *
James J. Burke, Jr.(e)................................................ 52,920 *
Robert C. Grayson..................................................... 15,000 *
Rochelle B. Lazarus(g)................................................ 300 *
Hanne M. Merriman..................................................... 200 *
All executive officers and directors as a group (13 persons)(d)....... 539,229 2.3
</TABLE>
- ------------
<TABLE>
<C> <S>
* Less than 1%.
(a) As of the Record Date, certain affiliates of ML&Co. (collectively, the "Merrill Lynch
Entities") beneficially owned an aggregate of 6,155,278 shares, or approximately 26.6%,
of the outstanding Common Stock. Shares of Common Stock beneficially owned by the
Merrill Lynch Entities were held as follows: 3,010,249 shares by Merrill Lynch Capital
Appreciation Partnership No. B-II, L.P.; 1,756,892 shares by ML Offshore LBO
Partnership No. B-II; 851,656 shares by ML IBK Positions, Inc.; 334,796 shares by
Merchant Banking L.P. No. III; 163,448 shares by Merrill Lynch KECALP L.P. 1989; 29,834
shares by MLCP Associates L.P. No. I; 7,483 shares by Merrill Lynch KECALP L.P. 1987;
760 shares by ML Capital Partners; and 160 shares by Merrill Lynch Capital Appreciation
Company Limited II. The Merrill Lynch Entities are deemed to have shared voting and
investment power with other ML&Co. affiliates with respect to the shares of Common
Stock indicated as held by them. The address for Merrill Lynch Capital Appreciation
Company Limited II is P.O. Box 25, Roseneath, The Grange, St. Peter Port, Guernsey, The
Channel Islands. The address for each of the other Merrill Lynch Entities is 250 Vesey
Street, World Financial Center, North Tower, New York, New York 10281.
(b) Pursuant to a Schedule 13-G dated March 9, 1995 and filed with the Commission by FMR
Corp., as of February 28, 1995, FMR Corp. had sole voting power with respect to 71,400
shares, shared voting power with respect to no shares, and shared dispositive power
with respect to 1,540,800 shares. The address for FMR Corp. is 82 Devonshire Street,
Boston, Massachusetts 02109.
(c) Pursuant to a Schedule 13-G dated February 14, 1995 and filed with the Commission by
Nicholas-Applegate Capital Management, Nicholas-Applegate Capital Management has sole
voting power with respect to 483,665 shares, shared voting power with respect to no
shares, and sole dispositive power with respect to 1,198,521 shares. The address for
Nicholas-Applegate Capital Management is 600 West Broadway, 29th floor, San Diego,
California 92101.
(d) The shares listed include shares subject to options exercisable within 60 days of April
10, 1995 as follows: Ms. Kasaks, 232,165 shares; Mr. Francis, 48,666 shares; Mr.
Gromek, 13,999 shares; Ms. Weiss, 23,166 shares; Mr. Richardson, 14,499 shares; and all
executive officers and directors as a group (13 persons), 364,636 shares.
(e) James J. Burke, Jr. and Gerald S. Armstrong serve on the Board of Directors of the
Company and Ann Taylor as designees of ML&Co. and certain of its affiliates, and are
directors of ML Capital Partners. Each of Messrs. Burke and Armstrong disclaims
beneficial ownership of shares beneficially owned by the Merrill Lynch Entities.
(f) 3,000 of these shares are held by Mr. Armstrong's wife, as Custodian for their
children. Mr. Armstrong disclaims beneficial ownership of these shares.
(g) Shares are held in a pension fund of which Ms. Lazarus' husband is the sole
beneficiary. Ms. Lazarus has no voting or investment power with respect to these
shares.
</TABLE>
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PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to stockholder ratification, the Board of Directors has reappointed
the firm of Deloitte & Touche LLP, Certified Public Accountants, as independent
auditors to make an examination of the accounts of the Company for the fiscal
year 1995. Deloitte & Touche has served as the independent auditors of the
Company since January 1989.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" SUCH
RATIFICATION.
Unless contrary instructions are given, the proxies solicited by management
will be voted "FOR" such ratification. Ratification will require the affirmative
vote of the holders of a majority of the Common Stock present in person or by
proxy and entitled to vote at the meeting.
One or more representatives of Deloitte & Touche LLP are expected to be
present at the Annual Meeting and will have an opportunity to make a statement
if they desire to do so and will be available to respond to questions.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
In accordance with Rule 14a-8 under the Securities Exchange Act of 1934, any
stockholder proposals intended to be presented at the 1996 Annual Meeting of
Stockholders must be received by the Company no later than December 29, 1995 in
order to be considered for inclusion in the Company's Proxy Statement and form
of proxy relating to that meeting.
Section 9 of Article II of the Company's By-Laws provides that, in order for
a stockholder to nominate a person for election to the Board of Directors at an
annual meeting of the Company, such stockholder must be a stockholder of record
on the date the notice described below is given and on the record date for the
annual meeting, and must have given timely prior written notice to the Secretary
of the Company. To be timely, notice must be received by the Company not less
than sixty days nor more than ninety days prior to the anniversary date of the
last meeting (or if the meeting date is not within thirty days before or after
the anniversary date of the last meeting, then not later than the tenth day
following the day on which the notice of the date of the meeting was mailed or
public disclosure thereof was made). Such notice must contain certain
information about the person whom the stockholder proposes to nominate and the
stockholder giving the notice, including the name, age, address, occupation, and
class and number of shares of Common Stock beneficially owned by the proposed
nominee and the name, address and class and number of shares of Common Stock
beneficially owned by such stockholder.
In addition, Section 10 of Article II of the Company's By-Laws provides
that, in order for a stockholder to propose any matter for consideration at an
annual meeting of the Company, such stockholder must have given timely prior
written notice to the Secretary of the Company of such stockholder's intention
to bring such business before the meeting. To be timely, notice must be received
by the Company not less than sixty days nor more than ninety days prior to the
anniversary date of the last meeting (or if the meeting date is not within
thirty days before or after the anniversary date of the last meeting, then not
later than the tenth day following the day on which the notice of the date of
the meeting was mailed or public disclosure thereof was made). Such notice must
contain certain information about such business and the stockholder who proposes
to bring the business before the meeting, including a brief description of the
business the stockholder proposes to bring before the meeting, the reasons for
conducting such business at the annual meeting, the class and number of shares
of Common Stock beneficially owned by such stockholder, and any material
interest of such stockholder in the business so proposed.
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ADDITIONAL INFORMATION
Copies of the Company's 1994 Annual Report to Stockholders, which includes
audited financial statements, are being mailed to stockholders of the Company
with this Proxy Statement. Additional copies are available without charge on
request. Requests should be addressed to the Secretary, AnnTaylor Stores
Corporation, 142 West 57th Street, New York, New York 10019.
ANNTAYLOR STORES CORPORATION
New York, New York
April 28, 1995
17
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ANNTAYLOR STORES CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF ANNTAYLOR STORES CORPORATION
FOR THE ANNUAL MEETING TO BE HELD ON JUNE 7, 1995
The undersigned hereby appoints James J. Burke, Jr. and
Paul E. Francis, and either of them, proxies of the undersigned
with full power of substitution to vote all shares of Common
Stock, par value $.0068 per share, of AnnTaylor Stores
Corporation ("the Company") owned or held by the undersigned at
the Annual Meeting of Stockholders of the Company to be held at
The Parker-Meridien Hotel, New York, New York, on June 7, 1995 at
2:00 p.m. local time and at any adjournment thereof.
Such proxies are directed to vote as set forth on the
reverse side hereof. The shares represented by this proxy will
be voted as directed by the stockholder. If no direction is
given when the duly executed proxy is returned, such shares will
be voted "FOR all nominees" in (a), "FOR" the proposal in (b) and
in accordance with the judgement of such proxies upon such other
matters as may properly come before the Annual Meeting.
(Continued and to be signed on other side.)
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The Board of Directors Recommends a vote "FOR all nominees" in
(a) and "FOR" the proposal in (b).
(a) ELECTION OF THE FOLLOWING NOMINEES AS CLASS I DIRECTORS:
Rochelle B. Lazarus and Robert C. Grayson
(for terms to expire at the 1998 annual meeting).
FOR all
nominees
/ /
Authority
withheld for
all nominees
/ /
Authority withheld for the following
nominee(s) only:
(Write the name(s) of such nominee(s) in the space provided
below)
(b) PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE
LLP as independent public accountants for the Company for fiscal
year 1995.
For Against Abstain
/ / / / / /
(c) IN THEIR JUDGMENT, UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THIS ANNUAL MEETING.
Dated:_____________________________________, 1995
_________________________________________________
_________________________________________________
(Signature)
Please mark, date, sign and return this proxy in the enclosed
envelope. Please sign as names appear at left. When signing as
agent, attorney, or fiduciary, or for a corporation or
partnership, indicate the capacity in which you are signing.
Shares registered in joint names should be signed by each joint
tenant or trustee.
