<PAGE>
SCHEDULE 14A
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
[_] 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 (S) 240.14a-11(c) or (S) 240.14a-12
The Bon-Ton Stores, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
2801 East Market Street
York, PA 17402
May 14, 1999
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders to be
held at 9:00 a.m. on Tuesday, June 15, 1999, at the Ramada Inn, 2600 East
Market Street, York, Pennsylvania. Enclosed is the official notice of meeting,
the proxy statement, the proxy card and our 1998 Annual Report.
Your vote is important. Even if you plan to attend the meeting, I encourage
you to sign, date and return your proxy in the enclosed postage-paid envelope.
I hope to see you at the Annual Meeting.
Sincerely,
Heywood Wilansky
President and
Chief Executive Officer
<PAGE>
THE BON-TON STORES, INC.
2801 East Market Street
York, PA 17402
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of The Bon-Ton Stores, Inc. will be held
on Tuesday, June 15, 1999, at 9:00 a.m., at the Ramada Inn, 2600 East Market
Street, York, Pennsylvania, for the following purposes:
1. To elect nine directors to hold office for a one-year term;
2. To ratify the appointment of Arthur Andersen LLP as independent
accountants for 1999; and
3. To transact such other business as may properly come before the
meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS YOU VOTE IN FAVOR OF THE ELECTION OF
DIRECTORS AND THE APPOINTMENT OF ARTHUR ANDERSEN.
Only shareholders of record at the close of business on April 30, 1999 are
entitled to notice of, and to vote at, the Annual Meeting.
The enclosed proxy is solicited by the Board of Directors. Please review the
attached proxy statement concerning the business to be transacted at the
Annual Meeting.
ROBERT E. STERN
Vice President and
Corporate Secretary
York, Pennsylvania
May 14, 1999
WHETHER OR NOT YOU INTEND TO ATTEND THE MEETING, PLEASE COMPLETE THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. THIS WILL NOT
PREVENT YOU FROM VOTING AT THE MEETING.
<PAGE>
THE BON-TON STORES, INC.
----------------
PROXY STATEMENT
The Board of Directors of The Bon-Ton Stores, Inc. is providing this proxy
statement to solicit your proxy for use at the Company's Annual Meeting of
Shareholders. This proxy statement, the notice of annual meeting, and the
enclosed proxy card are first being sent to shareholders on or about May 14,
1999.
The Company does not anticipate that any matters will be raised at the
meeting other than those described in the notice. If any other matters
properly come before the meeting, the persons named as your proxy will be
authorized to act thereon in accordance with their judgment.
When your proxy card is returned properly signed, your shares will be voted
in accordance with your instructions. If your proxy card is signed and
returned without specifying choices, the shares will be voted "for" the Board
nominees for directors and "for" ratification of the appointment of Arthur
Andersen LLP as independent accountants for 1999.
You may revoke your proxy prior to its exercise by notifying the Secretary
of the Company in writing, by delivering a properly executed, later-dated
proxy card, or by voting in person at the meeting.
References in this proxy statement to a year refer to the Company's fiscal
year, which is the 52 or 53 week period ending on the Saturday nearer January
31 of the following calendar year (e.g. a reference to 1998 is a reference to
the fiscal year ending January 30, 1999).
VOTING SECURITIES AND SECURITY OWNERSHIP
Outstanding Shares and Voting Rights
At the close of business on April 30, 1999, the record date fixed for the
determination of shareholders entitled to notice of and to vote at the
meeting, there were 12,274,506 shares of Common Stock and 2,989,853 shares of
Class A Common Stock ("Class A Stock") outstanding. The Common Stock and the
Class A Stock vote together on all matters, provided that holders of Common
Stock are entitled to one vote per share and holders of Class A Stock are
entitled to ten votes per share. There are no other classes of voting
securities outstanding. In the election of directors, shareholders do not have
cumulative voting rights.
The presence at the meeting, in person or by proxy, of persons entitled to
cast a majority of the votes which shareholders of Common Stock and Class A
Stock, voting together, are entitled to cast on each matter will constitute a
quorum.
The election of directors requires a plurality of the votes cast (that is,
the nominees receiving the greatest number of votes will be elected). Each
other matter requires a majority of the votes cast. For purposes of
determining the number of votes cast on any matter, only those cast "for" or
"against" are included. Abstentions and broker non-votes are counted only to
determine whether a quorum is present at the meeting. A broker "non-vote"
occurs when a nominee for a beneficial owner does not vote on a particular
matter because the nominee does not have discretionary voting power as to that
item and has not received voting instructions from the beneficial owner.
<PAGE>
Principal Shareholders
This table sets forth, as of April 30, 1999, except as otherwise noted,
information regarding each person known to be a beneficial owner of more than
5% of the Common Stock or Class A Stock. To the Company's knowledge, each
person listed has sole voting power and sole investment power with respect to
the shares unless otherwise indicated.
<TABLE>
<CAPTION>
Class A Stock Common Stock(1)
-------------------- ---------------------
Number of Number of
Name and Address Shares Percent Shares Percent
---------------- --------- ------- --------- -------
<S> <C> <C> <C> <C>
M. Thomas Grumbacher................ 2,951,490(2) 98.7% 4,894,447 (3) 32.1%
2801 East Market Street
York, PA 17402
T. Rowe Price Associates, Inc....... -- -- 1,571,400 (4) 12.8%
100 E. Pratt Street
Baltimore, MD 21202
Mellon Bank Corporation............. -- -- 1,096,300 (5) 8.9%
One Mellon Bank Center
Pittsburgh, PA 15258
Nancy T. Grumbacher................. 545,237(6) 18.2% 1,077,464 (7) 8.4%
2801 E. Market Street
York, PA 17402
Henry F. Miller..................... 545,237(6) 18.2% 891,691 (8) 7.0%
111 South 15th Street
Philadelphia, PA 19102
FMR Corp............................ -- -- 862,500 (9) 7.0%
82 Devonshire Street
Boston, MA 02109
David R. Glyn....................... 545,237(6) 18.2% 866,741(10) 6.8%
111 South 15th Street
Philadelphia, PA 19102
The Prudential Insurance Company of
America............................ -- -- 805,600(11) 6.6%
751 Broad Street
Newark, NJ 07102-3777
Heywood Wilansky.................... -- -- 808,534(12) 6.5%
2801 East Market Street
York, PA 17402
</TABLE>
- --------
(1) Each share of Class A Stock is convertible into one share of Common Stock.
Accordingly, the number of shares of Common Stock for each person includes
the number of shares of Common Stock issuable upon conversion of all
shares of Class A Stock beneficially owned by such person. Also, the total
number of shares of Common Stock outstanding for purposes of calculating
percentage ownership of a person includes the number of shares of Class A
Stock beneficially owned by such person.
(2) Includes 545,237 shares of Class A Stock held by trusts for the benefit of
M. Thomas Grumbacher's children of which Nancy T. Grumbacher (Mr.
Grumbacher's wife), Henry F. Miller and David R. Glyn are the trustees.
Mr. Grumbacher disclaims beneficial ownership of all shares referred to in
this note.
(3) Includes 185,773 shares of Common Stock held by The Grumbacher Family
Foundation, a charitable foundation of which M. Thomas Grumbacher, Nancy
T. Grumbacher and David J. Kaufman are the directors, and 545,237 shares
of Class A Stock held by trusts for the benefit of M. Thomas Grumbacher's
children of which Nancy T. Grumbacher, Henry F. Miller and David R. Glyn
are the trustees. Also includes 321,504 shares of Common Stock held by
trusts for the benefit of Mr. Grumbacher's children of which
2
<PAGE>
Nancy T. Grumbacher, Henry F. Miller and David R. Glyn are the trustees,
and 24,950 shares of Common Stock held by other trusts for the benefit of
Mr. Grumbacher's children of which Nancy T. Grumbacher and Henry F. Miller
are the trustees. Mr. Grumbacher disclaims beneficial ownership of all
shares referred to above. Also includes options to purchase 22,900 shares.
(4) Based solely on a Schedule 13G dated February 12, 1999 filed with the SEC
by T. Rowe Price Associates, Inc. ("TRPA") and its affiliate. The Schedule
13G indicates that TRPA is the beneficial owner of, and has sole
dispositive power as to, all such shares, and has sole voting power as to
407,300 shares. TRPA's affiliate is the beneficial owner of, and has sole
voting power as to, 740,700 shares.
(5) Based solely on a Schedule 13G dated January 29, 1999 filed with the SEC
by Mellon Bank Corporation, the trustee of the Company's employee benefit
plan ("Mellon"), and two of its subsidiaries. The Schedule 13G indicates
that Mellon is the beneficial owner of all such shares, has sole voting
power as to 920,800 shares and has sole dispositive power as to 987,400
shares. Mellon shares dispositive power with such subsidiaries as to
108,900 shares. Each of such subsidiaries is the beneficial owner of
801,900 shares, has sole voting power as to 686,400 shares and has sole
dispositive power as to 693,000 shares.
(6) Consists of Class A Stock held by trusts for the benefit of M. Thomas
Grumbacher's children, of which Nancy T. Grumbacher, Henry F. Miller and
David R. Glyn are the trustees. Ms. Grumbacher, Mr. Miller and Mr. Glyn
each disclaim beneficial ownership of all shares referred to in this note.
(7) Consists of 185,773 shares of Common Stock held by The Grumbacher Family
Foundation, a charitable foundation of which Nancy T. Grumbacher, M.
Thomas Grumbacher and David J. Kaufman are the directors, and an aggregate
of 545,237 shares of Class A Stock and 321,504 shares of Common Stock held
by trusts for the benefit of M. Thomas Grumbacher's children, of which
Nancy T. Grumbacher, Henry F. Miller and David R. Glyn are the trustees,
and 24,950 shares of Common Stock held by trusts for the benefit of M.
Thomas Grumbacher's children of which Ms. Grumbacher and Mr. Miller are
the trustees. Ms. Grumbacher disclaims beneficial ownership of all shares
referred to in this note.
(8) Consists of 24,950 shares of Common Stock held by trusts for the benefit
of M. Thomas Grumbacher's children, of which Nancy T. Grumbacher and Henry
F. Miller are the trustees, and 545,237 shares of Class A Stock and
321,504 shares of Common Stock held by other trusts for the benefit of Mr.
Grumbacher's children of which Ms. Grumbacher, Mr. Miller and David R.
Glyn are the trustees. Mr. Miller disclaims beneficial ownership of all
shares referred to in this note.
(9) Based solely on a Schedule 13G dated February 1, 1999 filed with the SEC
by FMR Corp. ("FMR") and its two controlling shareholders. The Schedule
13G indicates that each of FMR and such shareholders is the beneficial
owner of, and has sole dispositive power as to, all such shares. A wholly-
owned subsidiary of FMR is the beneficial owner of 646,000 shares by
reason of acting as an investment adviser to various investment companies.
Each of FMR, a controlling shareholder thereof, and funds of which a
subsidiary of FMR is the investment adviser, has sole dispositive power as
to 646,000 shares. Neither FMR nor its controlling shareholders has sole
voting power of any of these shares. Another wholly-owned subsidiary of
FMR is the beneficial owner of 216,500 shares by reason of acting as
investment manager of certain institutional accounts. Each of FMR, through
its control of such subsidiary, and one of the controlling shareholders of
FMR, has sole dispositive and voting power as to these 216,500 shares.
(10) Consists of 545,237 shares of Class A Stock and 321,504 shares of Common
Stock held by trusts for the benefit of M. Thomas Grumbacher's children,
of which Nancy T. Grumbacher, Henry F. Miller and David R. Glyn are the
trustees. Mr. Glyn disclaims beneficial ownership of all shares referred
to in this note.
(11) Based solely on a Schedule 13G dated February 1, 1999 filed with the SEC
by The Prudential Insurance Company of America ("Prudential"). The
Schedule 13G indicates that Prudential is the beneficial owner of all
such shares. Prudential has sole voting and dispositive power as to
204,100 shares and shared voting and dispositive power as to 601,500
shares.
(12) Includes 166,666 shares issued pursuant to the Company's Amended and
Restated Stock Option and Restricted Stock Plan (the "Option Plan") that
are subject to forfeiture as provided in the Option Plan ( the
"Restricted Shares"), 250,000 shares awarded pursuant to The Bon-Ton
Stores, Inc. Performance Based Stock Incentive Plan for Heywood Wilansky
(the "Performance Based Plan") that are subject to forfeiture as provided
in the Performance Based Plan, and options to purchase 219,067 shares.
3
<PAGE>
The holders of the Class A Stock have entered into a shareholders' agreement
pursuant to which M. Thomas Grumbacher (or, if applicable, his personal
representative) has a right of first refusal to acquire any shares of Class A
Stock proposed to be transferred.
Security Ownership of Management
This table shows as of April 30, 1999, the holdings of each director, the
Company's Chief Executive Officer and the four other most highly compensated
executive officers during 1998 (the "Named Executives"), and all directors and
executive officers of the Company as a group. Each person listed has sole
voting power and sole investment power with respect to the shares indicated,
unless otherwise noted.
<TABLE>
<CAPTION>
Class A Stock Common Stock(1)
---------------------- ----------------------
Shares Shares
Beneficially Beneficially
Name Owned Percent Owned Percent
---- ------------ ------- ------------ -------
<S> <C> <C> <C> <C>
M. Thomas Grumbacher............... 2,951,490(2) 98.7% 4,894,447(3) 32.1%
Heywood Wilansky................... -- -- 808,534(4) 6.5%
Michael L. Gleim................... -- -- 238,928(5) 1.9%
James H. Baireuther................ -- -- 28,334(6) *
Samuel J. Gerson................... -- -- 3,000(6) *
Douglas G. Lamm.................... -- -- 62,123(7) *
Lawrence J. Ring................... -- -- 5,000(6) *
Robert C. Siegel................... -- -- 2,000 *
Leon D. Starr...................... -- -- 14,580(6) *
Leon F. Winbigler.................. -- -- 15,000(6) *
Thomas W. Wolf..................... -- -- 5,000 *
All directors and executive
officers as a group
(23 persons)...................... 2,951,490 98.7% 6,296,965(8) 39.8%
</TABLE>
- --------
* less than 1%
(1) See note (1) to Principal Shareholders table.
(2) See note (2) to Principal Shareholders table.
(3) See note (3) to Principal Shareholders table.
(4) See note (12) to Principal Shareholders table.
(5) Includes 5,000 Restricted Shares and options to purchase 153,283 shares.
(6) Includes options to purchase the number of shares indicated: Mr.
Bairuether--18,334 shares; Mr. Gerson--2,000 shares; Mr. Ring--2,000
shares; Mr. Starr--500 shares; and Mr. Winbigler--1,000 shares.
(7) Includes 9,375 shares issued pursuant to the Company's Management
Incentive Plan ("MIP"), 25,000 Restricted Shares and options to purchase
13,333 shares.
(8) Includes 451,666 Restricted Shares, 26,732 shares issued pursuant to the
MIP and options to purchase 598,353 shares.
4
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board has proposed the following nominees for election as directors to
hold office until the 2000 Annual Meeting of Shareholders and until their
respective successors have been elected. Each is currently a director. Should
a nominee become unavailable to accept election, the persons named as proxies
will vote for such other person as the Board may recommend unless the Board
reduces the number of directors.
M. Thomas Grumbacher--Director since 1967
Mr. Grumbacher, age 59, joined the Company in 1961 and has been Chairman of
the Board since August 1991. From 1977 to 1989 he was President and from 1985
to 1995 he was Chief Executive Officer of the Company.
Heywood Wilansky--Director since 1995
Mr. Wilansky, age 51, joined the Company in August 1995 as President and
Chief Executive Officer. Prior to joining the Company, Mr. Wilansky was
employed by The May Department Stores Company for more than 19 years, last
serving as President and Chief Executive Officer of the Foley's division from
1992 to 1995. Mr. Wilansky is a director of First Washington Realty Trust.
Samuel J. Gerson--Director since 1996
Mr. Gerson, age 57, has been Chairman and Chief Executive Officer of
Filene's Basement since 1984. Mr. Gerson is a director of Filene's Basement
Corp., Allmerica Financial Corp., and ASAHI America, Inc., and is a trustee
associate of Boston College and Vice-Chairman of the Urban League of Eastern
Massachusetts.
Michael L. Gleim--Director since 1991
Mr. Gleim, age 56, joined the Company in 1989 as Executive Vice President
and Chief Administrative Officer. He became Senior Executive Vice President in
June 1991, and Vice Chairman and Chief Operating Officer in December 1995.
Prior to joining the Company, Mr. Gleim was employed by Federated Department
Stores, Inc. for more than 25 years.
Lawrence J. Ring--Director since 1997
Dr. Ring, age 50, has been a Professor of Business Administration at the
College of William and Mary's Graduate School of Business Administration in
Williamsburg, Virginia for more than five years, and conducts an international
consulting and executive education practice. Dr. Ring is a director of
Sportmart, Inc.
Robert C. Siegel--Director since 1998
Mr. Siegel, age 62, has been a consultant to the apparel and footwear
industry since December 1998. From December 1993 to December 1998, he was
Chairman and Chief Executive Officer of The Stride Rite Corp. Mr. Siegel is a
director of McNaughton Apparel Group, Inc.
Leon D. Starr--Director since 1991
Mr. Starr, age 80, has been a management consultant to department and
specialty stores since 1984. Prior thereto, he held various positions with
Allied Stores Corporation for over 35 years.
Leon F. Winbigler--Director since 1991
Mr. Winbigler, age 73, served as Chairman and Chief Executive Officer of
Mercantile Stores Company, Inc. for 15 years before retiring in 1989.
5
<PAGE>
Thomas W. Wolf--Director since 1998
Mr. Wolf, age 50, has been President of the Wolf Organization, Inc., a
building materials manufacturer and distributor, since 1985. He is Chairman of
York Financial Corporation, a director of Manis Lumber Co., Vice Chairman of
the Board of York College of Pennsylvania and President of Better York, Inc.
Meetings and Committees of the Board of Directors
During 1998, the Board held five meetings and took action by unanimous
consent without a meeting on three occasions. The Board has an Executive
Committee, an Audit Committee and a Compensation and Stock Option Committee
(the "Compensation Committee"), but does not have a Nominating Committee. The
Executive Committee, which consists of M. Thomas Grumbacher, Heywood Wilansky
and Michael L. Gleim, held two meetings and took action by unanimous consent
without a meeting on two occasions during 1998. It has the authority to act in
place of the Board on certain specified matters. The Audit Committee, which
held two meetings during 1998, reviews the Company's internal controls and
handles matters relating to the Company's independent auditors. The Audit
Committee consists of Samuel J. Gerson, Lawrence J. Ring and Leon F.
Winbigler. The Compensation Committee, which held two meetings and took action
by unanimous consent without a meeting once during 1998, considers and
determines compensation issues involving the Chairman of the Board, the
President and Chief Executive Officer, and the Vice Chairman and Chief
Operating Officer, and oversees the compensation of other employees. The
Compensation Committee also administers the Option Plan, the MIP and the
Performance Based Plan. Samuel J. Gerson, Lawrence J. Ring and Leon F.
Winbigler sit on the Compensation Committee.
No director attended fewer than 75% of the total number of meetings of the
Board and Board Committees on which he served.
Compensation of Directors
Each non-employee director receives an annual fee of $20,000, $2,000 for
attendance at each Board meeting ($400 for participation in a meeting held via
teleconference), $1,000 for attendance at each Board Committee meeting ($400
for participation in a meeting held via teleconference), and an annual grant
of options to purchase 1,000 shares of Common Stock, provided that each non-
employee director who is a consultant to the Company receives one-half of such
compensation. Mr. Starr is the only non-employee director who provides
consulting services to the Company.
Mr. Starr has rendered consulting services to the Company since 1984 and
received approximately $65,000 in consulting fees from the Company in 1998.
The Company anticipates it will pay Mr. Starr approximately $65,000 in
consulting fees in 1999.
PROPOSAL TWO
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
Subject to shareholder ratification, the Board, upon recommendation of the
Audit Committee, has reappointed Arthur Andersen LLP, which served as the
Company's independent accountants in 1998, to serve as the Company's
independent accountants for 1999. If the shareholders do not ratify this
appointment, other independent accountants will be considered by the Board
upon recommendation of the Audit Committee.
A representative of Arthur Andersen LLP is expected to be present at the
meeting. Such representative will have the opportunity to make a statement and
will be available to respond to appropriate questions.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for the Company's last three years, the
compensation paid or accrued to each of the Named Executives:
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
--------------------------------------- -----------------------
Restricted Securities
Other Annual Stock Underlying All Other
Name and Position Year Salary($) Bonus($) Compensation($) Awards($)(1) Options(#) Compensation($)
----------------- ---- --------- -------- --------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Heywood Wilansky........ 1998 996,154 621,100 106,471(2) 3,562,500 250,000 989,591(3)
President and Chief 1997 800,000 264,000 872,423 -- 99,000 1,065,260
Executive Officer 1996 800,000 200,000 948,778 -- 104,800 --
M. Thomas Grumbacher.... 1998 350,000 73,626 8,061 -- -- --
Chairman of the 1997 350,000 87,120 7,931 -- 43,300 --
Board of Directors 1996 351,923 -- 2,175 -- 45,800 --
Michael L. Gleim........ 1998 427,659 110,550 11,436 40,000 15,000 49,575(3)
Vice Chairman and 1997 414,417 132,000 9,848 -- 49,600 291,147
Chief Operating Officer 1996 414,417 -- 4,530 -- 52,400 --
Douglas G. Lamm......... 1998 307,269 12,622 9,684 343,750 25,000 --
Executive Vice
President, 1997 254,808 67,329 9,406 89,982 -- --
Softlines Merchandise 1996 244,984 -- 1,302 -- -- --
James H. Baireuther..... 1998 239,192 35,000 9,076 -- 10,000 99,040(4)
Senior Vice President, 1997 224,808 42,000 6,367 -- -- 85,306
Chief Financial Officer 1996 135,785 -- 381 -- 20,000 25,234
</TABLE>
- --------
(1) Mr. Wilansky's award was made under the Performance Based Plan and vests
in three equal installments on February 1, 2001, February 1, 2002 and
February 1, 2003. Mr. Gleim's award was made under the Option Plan and
will vest on August 31, 2001, provided if Mr. Gleim's employment agreement
is not extended beyond July 31, 2000, it will vest on July 31, 2000. Mr.
Lamm's award was made under the Option Plan and will vest in three equal
installments on February 1, 2001, February 1, 2002 and February 1, 2003.
At January 30, 1999, the aggregate number of Restricted Shares and market
value of such shares were: Mr. Wilansky--416,666 shares with a market
value of $3,281,245; Mr. Gleim--5,000 shares with a market value of
$39,375; Mr. Lamm--35,276 shares with a market value of $277,799. No
dividends will be paid on these Restricted Shares.
(2) Includes a $67,858 automobile allowance as provided in Mr. Wilansky's
employment agreement.
(3) Value realized on vesting of Restricted Stock.
(4) Relocation reimbursements.
7
<PAGE>
Stock Option Grants
The following table reflects the stock option grants to each of the Named
Executives during 1998. The Company does not have any plan pursuant to which
stock appreciation rights may be granted.
Option Grants in 1998
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rate
of Stock Price
Appreciation for Option
Individual Grants Term (1)
------------------------------------------------------------- --------------------------------
Securities % of Total
Underlying Options Granted Exercise Market Price
Options To Employees Price on Date of Expiration
Granted in 1998 ($/Sh) Grant ($/Sh) Date 0% 5% 10%
---------- --------------- -------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Heywood Wilansky........ 250,000(2) 62.28 8.00 14.25 2/1/2008 $1,562,500 $3,802,937 $7,240,208
M. Thomas Grumbacher.... -- -- -- -- -- -- -- --
Michael L. Gleim........ 15,000(3) 3.74 8.00 8.00 9/9/2008 -- 75,467 191,249
Douglas G. Lamm......... 25,000(3) 6.23 13.75 13.75 2/1/2008 -- 216,183 547,849
James H. Baireuther..... 10,000(3) 2.49 14.25 14.25 2/26/2008 -- 89,617 227,108
</TABLE>
- --------
(1) Illustrates value that might be realized upon exercise of options
immediately prior to the expiration of their term, assuming specified
compounded rates of appreciation on the Common Stock over the term of the
options. Assumed rates of appreciation are not necessarily indicative of
future stock performance.
(2) These are performance based options which vest in three equal annual
installments.
(3) These options vest in three equal annual installments.
Stock Option Exercises and Holdings
The following table shows the number and value of stock options (exercised
and unexercised) for the Named Executives during 1998.
Option Exercises During 1998 and
Option Values at January 30, 1999
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
January 30, 1999 January 30, 1999(1)
------------------------- -------------------------
Shares Acquired Value
on Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
--------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Heywood Wilansky........ -- -- 83,333 453,800 $93,750 $245,275
M. Thomas Grumbacher.... -- -- -- 89,100 -- 107,213
Michael L. Gleim........ 16,567 $137,647 123,182 91,267 235,372 86,968
Douglas G. Lamm......... 10,000 67,500 5,000 30,000 1,250 1,250
James H. Baireuther..... -- -- 10,000 20,000 15,000 15,000
</TABLE>
- --------
(1) In-the-money options are options having an exercise price below $7.875,
the year end share price. Value is calculated by multiplying the
difference between the option exercise price and $7.875 by the number of
shares underlying the option.
8
<PAGE>
Employment Agreements
Heywood Wilansky
Mr. Wilansky's employment agreement continues until January 31, 2003, and
provides for an annual base salary of $1,000,000. He is eligible for an annual
cash bonus based upon the Company's performance and his individual performance
according to criteria established by the Compensation Committee--the maximum
bonus attainable is 100% of his base salary. The shares of Common Stock and
options to purchase Common Stock granted to Mr. Wilansky under the Performance
Based Plan will vest over time. If Mr. Wilansky is discharged without cause
(as defined in his employment agreement), he will continue to receive his base
salary for the greater of the remaining term of his employment agreement or
one year, his bonus for the year in which he is discharged determined on a
pro-rata basis, and he will be entitled to immediate vesting of his restricted
stock awards, options and retirement benefits. If Mr. Wilansky voluntarily
terminates his employment following a change of control, he will be entitled
to his base salary for the remaining term of his employment agreement and to
immediate vesting of his restricted stock and stock options. In addition, the
Company has agreed to establish a supplemental retirement plan for Mr.
Wilansky which will provide supplemental retirement income of approximately
$300,000 per year commencing when he reaches age 55 or following his
retirement or other termination of employment after reaching age 55. The
Company believes that the present value of the aggregate cost of this
supplemental retirement plan over time, assuming an interest rate of 6%, is
approximately $2,800,000.
Michael L. Gleim
Mr. Gleim's employment agreement expires July 31, 2000 and provides for an
annual base salary of $425,000. He is also eligible for an annual bonus to be
determined by the Compensation Committee. If Mr. Gleim is discharged without
cause or resigns for good reason (each as defined in his employment
agreement), he will continue to receive his base salary and other benefits for
the greater of the remaining term of the agreement or one year from
termination of employment.
Executive Severance
The Company has entered into severance agreements with certain of its
executive officers other than Messrs. Grumbacher, Wilansky and Gleim which
generally provides for payment of one year's base salary if the executive
officer is terminated without cause (as defined in such agreement).
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Stock Performance Graph
The following graph compares the yearly percentage change in the cumulative
total shareholder return on Common Stock from January 29, 1994 through January
30, 1999, the cumulative total return on the CRSP Total Return Index for The
Nasdaq Stock Market (US Companies) and the Nasdaq Retail Trade Stocks Index
during such period. The comparison assumes $100 was invested on January 29,
1994 in the Common Stock and in each of the foregoing indices and assumes the
reinvestment of any dividends.
[BONTON GRAPH APPEARS HERE]
Report of the Compensation Committee
The Compensation Committee, consisting entirely of non-employee directors,
approves all general policies affecting the compensation of the Company's
executive officers. The Compensation Committee determines the compensation of
Heywood Wilansky, President and Chief Executive Officer, M. Thomas Grumbacher,
Chairman of the Board, and Michael L. Gleim, Vice Chairman and Chief Operating
Officer, and utilizes recommendations from the Executive Committee with
respect to the level and form of compensation of the Company's other executive
officers, but retains the authority to determine the compensation of such
other executive officers and may accept, reject or modify, in its discretion,
the Executive Committee recommendations.
The basic forms of executive compensation are annual compensation, in the
form of salary and possible bonuses, and long-term incentives, currently
consisting primarily of stock options. The Compensation Committee seeks to
achieve a mix of these various forms of compensation to properly compensate
and motivate the Company's executives. In doing so, the Compensation Committee
considers various aspects of the Company's operating results as well as its
financial condition, and considers each executive's role in such achievement.
Annual Compensation--Salary and Bonus
Annual compensation is comprised of a base salary and a possible bonus. The
Compensation Committee set the base salary of M. Thomas Grumbacher for 1998.
The base salaries of Heywood Wilansky and Michael L. Gleim are established
pursuant to employment agreements which have been approved by the Compensation
Committee based on a variety of factors, including the general level of
executive compensation in the industry, the general level of executive
compensation in the Company and the evaluation of the importance
10
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of the executive to the Company. The base salaries of the remainder of the
Company's executives are approved annually by the Compensation Committee upon
review of recommendations from the Executive Committee, based on such
subjective factors as individual and Company performance. The Compensation
Committee commissions an independent contractor to conduct periodic surveys of
executive compensation in the department store industry and utilizes such
survey information in making its decisions on executive compensation.
The Compensation Committee believes it appropriate that an increasing amount
of the potential annual compensation for the Company's executives be in the
form of an annual bonus which is dependent upon the Company's performance. Mr.
Wilansky's annual bonus is determined pursuant to The Bon-Ton Stores, Inc.
Five Year Cash Bonus Plan for Heywood Wilansky which was approved by the
shareholders in 1998. For Messrs. Grumbacher and Gleim, the bonus for 1998 was
determined under a bonus plan based on the Company's net income during 1998.
For 1998, the Compensation Committee certified that the performance goals
required to be achieved under these plans were reached, which resulted in
bonuses paid to these executives in the amounts indicated in the Summary
Compensation Table.
With respect to the Company's executive officers other than Messrs.
Grumbacher, Wilansky and Gleim, the Company has adopted the Management
Incentive Plan (the "MIP") which provides for the granting of cash bonuses
and/or shares of Common Stock to participants based on a combination of
Company performance, measured by earnings before interest, and the
participant's individual performance, measured against various personal goals
and objectives established at the beginning of the year. The MIP is currently
administered by the Compensation Committee. Bonus payouts are discretionary
and no bonus payouts may be made if the Company fails to achieve established
minimum performance goals. MIP participants may elect to receive a portion of
their MIP bonus in shares of Common Stock ("Restricted MIP Shares") which
Shares are issued in the name of the participant but are restricted and are
not eligible for resale until bonus awards for such participants are made. In
addition, the Compensation Committee may accelerate the vesting of the
Restricted MIP Shares.
A cash bonus award or option grant may, in addition, be made at the
discretion of the Compensation Committee without regard to whether any
specified criteria are met.
Long-Term Incentives--Stock Options and Restricted Stock Awards
The Compensation Committee administers the Option Plan which provides for
the grant of stock options and restricted stock awards, both of whose value is
related to the value of the Common Stock. These options and awards are
intended to help align the executive officers' interests with those of
shareholders by increasing such officers' stake in the Company.
Stock options and restricted stock awards generally vest over a number of
years, and any unvested options or shares of restricted stock are usually
forfeited 90 days after termination of the recipient's employment. Such
awards, therefore, are also intended to encourage recipients to remain in the
employ of the Company over a substantial period of time.
Of the 401,400 stock options granted in 1998, 86% were granted to the
Company's executive officers.
Qualifying Executive Compensation for Deductibility Under Provisions of the
Internal Revenue Code
The Internal Revenue Code provides that publicly-held corporations may not
generally deduct compensation for its chief executive officer and certain
other executive officers to the extent that compensation for the executive
exceeds $1,000,000 unless such compensation is "performance based" as defined
in the Code. The Compensation Committee has taken such actions as are
appropriate to qualify, to the extent it determines such actions are in the
best interests of the Company, compensation paid to executives for
deductibility under the Code. Nevertheless, the Compensation Committee has in
the past, and may in the future, recommend or approve payment of compensation
that may not be deductible under these provisions if the Compensation
Committee has determined that such payments are in the best interests of the
Company.
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Compensation Committee:
Samuel J. Gerson
Lawrence J. Ring
Leon F. Winbigler
Section 16(a) Beneficial Ownership Reporting Compliance
The Company's executive officers and directors and persons who own more than
ten percent of either class of the Company's stock are required to file
reports of ownership and changes in ownership with the SEC and to furnish the
Company with copies of these reports. Based on the Company's review of the
reports received, the Company believes that all filings required to be made
during 1998 were made on a timely basis other than:
. the Form 4 report for June 1998 by M. Thomas Grumbacher, an officer,
director and beneficial owner of more than 10% of the Common Stock, with
respect to one transaction by Mr. Grumbacher and one transaction by a
trust of which Mr. Grumbacher is the trustee, was filed late;
. the Form 4 report for June 1998 by Mary Jo Grumbacher, who was at such
time a beneficial owner of more than 10% of the Common Stock, on which
one transaction was reported, was filed late;
. the Form 4 report for October 1998 by Lawrence J. Ring, a director, on
which two transactions were reported, was filed late;
. the Form 4 report for December 1998 by Leon D. Starr, a director, on
which two transactions were reported, was filed late; and
. the Form 4 reports for August 1998 and September 1998 by Leon F.
Winbigler, a director, on which a total of ten transactions were
reported, were filed late.
Certain Transactions
The Company leases its Oil City, Pennsylvania and Butler, Pennsylvania
stores from M. Thomas Grumbacher. Mr. Grumbacher is the ground tenant under
leases from the owners of the respective shopping centers. These leases
between the Company and Mr. Grumbacher were entered into on January 1, 1981
and February 17, 1981, respectively. The aggregate rental payments during 1998
for the Oil City store and the Butler store to Mr. Grumbacher were $223,500
and $273,000, respectively. Mr. Grumbacher has agreed to sell his interest in
the Butler lease to the owner of the shopping center, and the Company has
entered into a lease for this store directly with the owner. The Oil City
lease terminates on July 31, 2006 and provides the Company with five five-year
renewal options.
Additionally, the Company leases the land for its York Galleria store from
MBM Land Associates Limited Partnership ("MBM"), a partnership of which M.
Thomas Grumbacher, through a wholly-owned corporation, and certain trusts
established for the benefit of his three children, are the partners. The lease
expires on September 30, 2019, and the Company has the right to extend the
term of the lease for six additional periods of five years each. Rental
payments by the Company during 1998 under this lease aggregated $63,000.
The Company also leases from MBM a portion of the property on which its
distribution center is located. The remainder is leased from Mr. Grumbacher.
Aggregate annual rental payments under the leases are $162,000 until January
1, 2001. During 1998, Mr. Grumbacher and MBM received rental payments from the
Company under such leases aggregating $126,767 and $35,233, respectively. Each
of the leases terminates on May 31, 2017, and the Company has the right to
extend the term of each of the leases for two additional periods of five years
each at the then fair market rental value.
Total lease payments to M. Thomas Grumbacher and affiliated entities during
1998 were $721,500.
In 1995, in connection with his employment by the Company, Heywood Wilansky,
President and Chief Executive Officer of the Company, received a non-interest
bearing loan from the Company in the principal
12
<PAGE>
amount of $750,000, which loan was to be forgiven in two installments of
$375,000 each in December 1997 and April 1999 provided that Mr. Wilansky
remained employed by the Company. One such installment was forgiven in
December 1997, and the balance was forgiven on April 30, 1999.
The Company also made a $480,447 loan to Mr. Wilansky during 1998, the
principal being the amount of Mr. Wilansky's tax liability attributable to the
vesting of Mr. Wilansky's Restricted Shares. This loan bears interest at 4.25%
per annum. Interest is payable annually and the principal is payable on the
earlier of termination of Mr. Wilansky's employment or the sale of those
shares of the Company's Common Stock which gave rise to the tax liability.
This loan was made pursuant to the terms of Mr. Wilansky's employment
agreement.
In January 1998, the Company extended to Patrick J. McIntyre, Senior Vice
President and Chief Information Officer, an interest-free relocation loan in
the amount of $65,000 in connection with his employment by the Company. This
loan was repaid in April 1998.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2000 Annual Meeting of
Shareholders must be received by the Company by January 15, 2000 in order to
be considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
A shareholder may wish to have a proposal presented at the 2000 Annual
Meeting of Shareholders but not included in the Company's proxy statement and
form of proxy for that meeting. If notice of any such proposal is received by
the Company after March 30, 2000, such proposal shall be deemed "untimely" for
purposes of Rule 14a-4(c) under the Securities Exchange Act of 1934 and,
therefore, the Company will have the right to exercise discretionary voting
authority with respect to such proposal.
SOLICITATION OF PROXIES
Your proxy is being solicited by the Board of Directors. The Company will
bear the cost of this solicitation, including the charges of brokerage houses
and other institutions, nominees and fiduciaries in forwarding these materials
to beneficial owners.
This solicitation may be made in person or by telephone or telecopy by
directors, officers or employees of the Company, or by a professional proxy
solicitation organization engaged by the Company.
By order of the Board of Directors
ROBERT E. STERN
Vice President and
Corporate Secretary
May 14, 1999
13
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THE BON-TON STORES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned shareholder of THE BON-TON
STORES, INC. (the "Company") hereby
appoints Heywood Wilansky and Michael L.
Gleim, or either of them, with full power
of substitution, to act as attorneys and
proxies for the undersigned and to vote
all shares of stock of the Company which
the undersigned is entitled to vote if
personally present at the Annual Meeting
of Shareholders of the Company, to be held
at the Ramada Inn, 2600 East Market
Street, York, Pennsylvania, 17402 on June
15, 1999 at 9:00 a.m., provided that said
proxies are authorized and directed to
vote as indicated with respect to the
matters set forth on the opposite side of
this Proxy.
UNLESS OTHERWISE SPECIFIED, THE SHARES
WILL BE VOTED "FOR" THE ELECTION OF ALL
NOMINATED DIRECTORS AND "FOR" RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP
AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
This Proxy also delegates discretionary
authority to vote with respect to any
other business which may properly come
before the meeting.
(Please sign and date on reverse side)
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/\ FOLD AND DETACH HERE /\
<PAGE>
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[X] Please mark
your votes as
indicated in
this example
FOR WITHHOLD
1. Election of the Directors. [_] [_]
M. Thomas Grumbacher, Heywood Wilansky, Samuel J. Gerson, Michael L. Gleim,
Lawrence J. Ring, Robert C. Siegel, Leon D. Starr, Leon F. Winbigler, Thomas
W. Wolf
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below.)
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2.*Ratification of the appointment of Arthur FOR AGAINST ABSTAIN
Andersen LLP as the Company's independent [_] [_] [_]
accountants.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting,
Proxy Statement and Annual Report.
_________________________________________
_________________________________________
Signature(s)
Date ____________________________________
NOTE: Please sign this proxy exactly as
name(s) appears in address. When signing
as attorney-in-fact, executor,
administrator, trustee or guardian,
please add your title as such, and if the
signer is a corporation, please sign with
full corporate name by duly authorized
officer. Where stock is issued in the
name of two or more persons, all such
persons should sign.
PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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/\ FOLD AND DETACH HERE /\
