<PAGE>
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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CompUSA Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
COMPUSA INC.
14951 NORTH DALLAS PARKWAY
DALLAS, TEXAS 75240
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 4, 1998
To the Stockholders of
CompUSA Inc.
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of CompUSA Inc., a Delaware corporation (the "Company"), will be
held at the Hotel Inter-Continental, 15201 North Dallas Parkway, Dallas,
Texas, on November 4, 1998, at 8:00 a.m., local time, for the following
purposes:
(1) To elect three members of the Board of Directors, which will
consist of nine directors, for the term of office stated in the
Proxy Statement.
(2) To consider and ratify the selection of the Company's independent
auditors.
(3) To transact any other business that may properly come before the
Meeting and any adjournments thereof.
The close of business on September 7, 1998, has been fixed as the record
date for determining stockholders entitled to notice of and to vote at the
Meeting and any adjournments thereof. For a period of at least ten days
prior to the Meeting, a complete list of stockholders entitled to vote at the
Meeting will be open for the examination by any stockholder during ordinary
business hours at the Company's headquarters, which is located at 14951 North
Dallas Parkway, Dallas, Texas.
Information concerning the matters to be acted upon at the Meeting is
set forth in the accompanying Proxy Statement.
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN PERSON
ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors
/s/ Mark R. Walker
-----------------------------
Mark R. Walker
SENIOR VICE PRESIDENT-GENERAL
COUNSEL AND SECRETARY
Dallas, Texas
September 25, 1998
<PAGE>
COMPUSA INC.
14951 NORTH DALLAS PARKWAY
DALLAS, TEXAS 75240
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 4, 1998
This Proxy Statement is first being mailed on September 25, 1998, to
stockholders of CompUSA Inc. (the "Company") by the board of directors of the
Company (the "Board of Directors" or the "Board") to solicit proxies (the
"Proxies") for use at the Annual Meeting of Stockholders (the "Meeting") to
be held at the Hotel Inter-Continental, 15201 North Dallas Parkway, Dallas,
Texas, on Wednesday, November 4, 1998, at 8:00 a.m., local time, and at such
other times and places to which the Meeting may be adjourned.
All shares represented by valid Proxies, unless the stockholder
otherwise specifies, will be voted (i) FOR the election of the persons named
herein under "Election of Directors" as nominees for election as a director
of the Company for the term described herein; (ii) FOR the ratification of
the selection of Ernst & Young LLP as the Company's independent auditors for
the fiscal year ending June 26, 1999 ("fiscal 1999"); and (iii) at the
discretion of the Proxyholders with regard to any other matters that may
properly come before the Meeting and any adjournments thereof.
Any stockholder executing a Proxy retains the right to revoke it at any
time prior to exercise at the Meeting. A Proxy may be revoked by delivery of
written notice of revocation to the Secretary of the Company, by execution
and delivery of a later Proxy or by voting the shares in person at the
Meeting. If not revoked, all shares represented by properly executed Proxies
will be voted as specified therein or as noted above, as applicable.
RECORD DATE AND VOTING SECURITIES
The record date for determining the stockholders entitled to notice of
and to vote at the Meeting and any adjournments thereof is the close of
business on September 7, 1998 (the "Record Date"), at which time 90,936,442
shares of the Company's Common Stock, $.01 per share par value ("Common
Stock"), were outstanding. Common Stock is the only class of outstanding
voting securities of the Company.
<PAGE>
QUORUM AND VOTING
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the Common Stock issued and outstanding and entitled to vote
thereat is necessary to constitute a quorum to transact business. Each share
represented at the Meeting in person or by proxy will be counted for purposes
of determining whether a quorum is present. In deciding all matters, a
holder of Common Stock on the Record Date shall be entitled to cast one vote
for each share of Common Stock then registered in such holder's name.
Election of the director nominees named in Proposal No. 1, or any of
them, requires the affirmative vote of a plurality of the shares of Common
Stock present or represented at the Meeting and entitled to vote thereon.
Votes may be cast in favor of or withheld with respect to all of the director
nominees, or any of them. Votes that are withheld will be counted for quorum
purposes, but will be excluded entirely from the tabulation of votes in
respect of the proposal and, therefore, will not otherwise affect the outcome
of the vote on the proposal. Proxies may not be voted for a greater number
of persons than the number of nominees named in this Proxy Statement.
Ratification of the selection of the Company's independent auditors
requires the affirmative vote of a majority of the shares of Common Stock
present or represented at the Meeting and entitled to vote thereon.
Abstentions on this proposal may be specified and will be counted for
purposes of determining the number of shares present or represented and
entitled to vote thereon. As a result, abstentions will have the same effect
as votes against this proposal.
Under the rules of the New York Stock Exchange (the "NYSE"), brokers who
hold shares in street name have discretionary authority to vote on routine
items even if they have not received instructions from the beneficial owner,
who is the person entitled to vote such shares. However, brokers do not have
authority to vote on certain "nonroutine" items without such instructions.
The NYSE reviews proxy statements, determines which items are routine and
which are nonroutine, and then notifies its member brokers as to the
nonroutine items over which they have no discretionary authority. Any such
"broker nonvotes" (shares held by brokers or nominees as to which they have
no discretionary power to vote on a particular matter and have received no
instructions from the persons entitled to vote such shares) are counted as
present and entitled to vote for purposes of determining whether a quorum is
present but are not entitled to vote on any nonroutine matter to be acted
upon. The effect of broker nonvotes on any particular matter depends on the
vote required to approve the matter. For matters requiring the affirmative
vote of a plurality of the shares of Common Stock present or represented at
the Meeting, such as Proposal No. 1, broker nonvotes have no effect on the
outcome of the vote. For matters requiring the affirmative vote of a majority
of the shares of Common Stock present or represented at the Meeting and
entitled to vote, such as Proposal No. 2, broker nonvotes are not counted as
among the shares entitled to vote with respect to such matter, and thus have
the effect of reducing the number of affirmative votes required to approve
the proposal and the number of negative votes required to block such approval.
2
<PAGE>
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information as of the Record Date
regarding the beneficial ownership of Common Stock by (i) each person or
group known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director and nominee for
director of the Company, (iii) the Company's Named Officers (as defined under
"EXECUTIVE COMPENSATION--Summary Compensation Table") and (iv) all directors
and executive officers of the Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK (1)
---------------------------------
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP (2)(3) COMMON STOCK
- ------------------------ ---------------- ------------
<S> <C> <C>
FMR Corp. (4)
82 Devonshire Street
Boston, Massachusetts 02109 13,348,100 14.1%
AMVESCAP PLC (5)
11 Devonshire Square
London EC2M 4YR
England 7,439,700 7.9%
Putnam Investments, Inc. (6)
One Post Office Square
Boston, Massachusetts 02109 6,998,370 7.4%
Pilgrim Baxter & Associates, Ltd. (7)
11255 Drummers Lane, Suite 300
Wayne, Pennsylvania 19067 6,314,500 6.7%
Giles H. Bateman 346,189 *
Leonard L. Berry, Ph.D. 34,348 *
Warren D. Feldberg 70,272 *
James F. Halpin 2,004,788 2.1%
Morton E. Handel 4,028 *
Denise Ilitch 3,028 *
Lawrence Mittman 9,856 *
Kevin J. Roche 215,604 *
Barry L. Williams 666 *
Harold F. Compton 1,094,441 1.2%
J. Samuel Crowley 325,328 *
Lawrence N. Mondry 747,402 *
James E. Skinner 422,414 *
All directors and executive officers as
a group (40 persons) 6,550,733 6.9%
</TABLE>
- ---------------
* Less than 1.0%
(NOTES CONTINUED ON FOLLOWING PAGE)
3
<PAGE>
(NOTES CONTINUED FROM PREVIOUS PAGE)
(1) "Beneficial owner" means generally any person who, directly or indirectly,
has or shares voting power or investment power with respect to a security.
All information with respect to the beneficial ownership of any stockholder
has been furnished by such stockholder and the Company believes that,
except as otherwise indicated, each stockholder has sole voting and
investment power with respect to shares listed as beneficially owned by
such stockholder.
(2) Includes shares of Common Stock issuable upon exercise of options that were
exercisable on the Record Date or within 60 days thereafter by Messrs.
Bateman, Berry, Feldberg, Halpin, Handel, Mittman, Roche, Williams,
Compton, Crowley, Mondry, Skinner and Ms. Ilitch and all directors and
executive officers as a group, with such shares numbering 163,064; 28,848;
35,272; 1,448,536; 1,028; 9,856; 28,848; 666; 739,824; 249,769; 172,857;
238,505; 1,028; and 3,782,062, respectively.
(3) Includes shares of Common Stock restricted by the Company as to their sale,
assignment, transfer, pledge or other encumbrance by Messrs. Halpin,
Compton, Crowley, Mondry, Skinner and all directors and executive officers
as a group, with such shares numbering 76,970; 68,043; 32,240; 32,240;
32,240; and 503,507, respectively. The vesting of these restricted stock
awards may be accelerated if specified performance goals are met. See
"EXECUTIVE COMPENSATION -- Summary Compensation Table."
(4) Based on a Report on Schedule 13G dated February 9, 1998, which was jointly
filed with the Securities and Exchange Commission (the "Commission") by FMR
Corp. ("FMR"), Edward C. Johnson 3d and Abigail P. Johnson. FMR reported
sole voting power with respect to 75,400 shares and sole dispositive power
with respect to all 13,348,100 shares. Mr. Johnson and Ms. Johnson
reported sole dispositive power with respect to all 13,348,100 shares.
(5) Based on a Report on Schedule 13G dated February 12, 1998, which was
jointly filed with the Commission by AMVESCAP PLC, Invesco, Inc., Invesco
North American Holdings, Inc., Invesco Capital Management, Inc., Invesco
Funds Group, Inc., Invesco Management & Research, Inc., Invesco Realty
Advisors, Inc., AIM Management Group, Inc., AMVESCAP Group Services, Inc.,
and AVZ, Inc. The Report indicates that such entities beneficially own an
aggregate of 7,439,700 shares and each has shared voting and shared
dispositive power with respect to all such shares.
(6) Based on a Report on Schedule 13G dated January 28, 1998, which was jointly
filed with the Commission by Marsh & McClennan Companies, Inc. ("Marsh &
McClennan"), Putnam Investments, Inc. ("Putnam Investments"), Putnam
Investment Management, Inc. ("Putnam Management"), and Putnam Advisory
Company, Inc. ("Putnam Advisory"). Marsh & McClennan disclaimed beneficial
ownership of all shares. Putnam Investments reported beneficial ownership
of and shared dispositive power with respect to 6,998,370 shares and shared
voting power with respect to 1,046,057 of such shares. Putnam Management
reported beneficial ownership of and shared dispositive power with respect
to 5,607,513 of the shares beneficially owned by Putnam Investments.
Putnam Advisory reported beneficial ownership of and shared dispositive
power with respect to 1,390,857 of the shares beneficially owned by Putnam
Investments and reported shared voting power with respect to 1,046,057 of
such shares.
(7) Based on a Report on Schedule 13G dated February 14, 1997, which was
jointly filed with the Commission by Pilgrim Baxter & Associates, Ltd.
("Pilgrim Baxter"), Harold J. Baxter and Gary L. Pilgrim. Pilgrim Baxter,
Mr. Baxter and Mr. Pilgrim reported shared voting power and sole
dispositive power with respect to all shares beneficially owned.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes of directors
serving staggered three-year terms. All directors of one class hold their
positions until the annual meeting of stockholders at which the terms of the
directors in such class expire and their respective successors are elected
and qualified. The Company's Restated and Amended Certificate of
Incorporation (the "Charter") provides that the number of directors will not
be less than three nor greater than thirteen and will be divided into three
classes as nearly equal in number as the then authorized number of directors
permits. The Bylaws of the Company provide that the number of directors will
be established by resolution of the Board of Directors within the limitations
set forth in the Charter.
4
<PAGE>
The Board of Directors has approved the recommendation of the Nominating
and Governance Committee that Giles H. Bateman, Leonard L. Berry, Ph.D., and
Morton E. Handel be submitted as nominees to the stockholders to serve
three-year terms as directors expiring at the 2001 annual meeting of
stockholders and until their successors are elected and have qualified.
Messrs. Bateman, Berry and Handel have served as members of the Board of
Directors since prior to the last annual meeting of stockholders.
The Nominating and Governance Committee will consider nominees for
election to the Board of Directors recommended by stockholders entitled to
vote for the election of directors, provided such recommendations are made in
accordance with the Bylaws of the Company. Generally, the Bylaws provide
that a stockholder must deliver written notice of such recommendations to the
Secretary of the Company not later than 75 days prior to the date on which,
in the immediately preceding year, the annual meeting of stockholders was
held.
The nominees named above have consented to serve as members of the Board
of Directors if elected. If any of the above nominees for any reason are
unable or unwilling to serve at the time of the Meeting, the Proxyholders
will have discretionary authority to vote the Proxies for a substitute
nominee or nominees. The following sets forth information as to the nominees
for election at the Meeting and each of the directors whose term of office
will continue after the Meeting, including their ages, present principal
occupations, other business experience during the last five years,
memberships on committees of the Board of Directors and directorships in
other publicly-held companies.
<TABLE>
<CAPTION>
SERVED
AS YEAR
DIRECTOR TERM
NAME AGE POSITION WITH THE COMPANY SINCE EXPIRES
- ------------------------------------ --- ----------------------------------------------- -------- -------
<S> <C> <C> <C> <C>
Nominees for three-year terms ending
in 2001:
Giles H. Bateman (1) (2) 53 Chairman of the Board of Directors 1991 1998
Leonard L. Berry, Ph.D. (3) 55 Director 1993 1998
Morton E. Handel (4) 63 Director 1997 1998
Continuing directors:
Warren D. Feldberg (3) 48 Director 1992 1999
Kevin J. Roche (2) (3) 40 Director 1989 1999
Barry L. Williams (4) 54 Director 1997 1999
James F. Halpin (1) (2) 47 President, Chief Executive Officer and Director 1993 2000
Denise Ilitch (3) 42 Director 1997 2000
Lawrence Mittman (4) 47 Director 1995 2000
</TABLE>
- ---------------------
(1) Member of the Nominating and Governance Committee
(2) Member of the Finance Committee
(3) Member of the Compensation Committee
(4) Member of the Audit Committee
Giles H. Bateman has served as a director of the Company since December
1991 and as Chairman of the Board of Directors since December 1993. Since
January 1992, Mr. Bateman has been an investor in and director of several
private companies primarily engaged in retailing. In 1991, Mr. Bateman
served as a Visiting Professor at the University of San Diego Olin Hall
School of Business Administration. Mr. Bateman was a co-founder of The Price
Company, the operator of The Price Club chain of warehouse club retail
superstores. Mr. Bateman served as a director and Chief Financial Officer of
The Price Company from 1976 to 1991 and as Vice Chairman from 1986 to 1991.
He is also a director of Boatracs, Inc.
Leonard L. Berry, Ph.D. has served as a director of the Company since
November 1993. Dr. Berry has served as a Professor of Marketing and as
Director of the Center for Retailing Studies at Texas A&M University since
1982. He has also held the J.C. Penney Chair of Retailing Studies at Texas
A&M University since January 1991. Dr. Berry is also a director of Lowe's
Companies, Inc. and Hastings Entertainment, Inc.
5
<PAGE>
Morton E. Handel has served as a director of the Company since January
1997. Mr. Handel is President of S&H Consulting, Ltd., a privately held
financial and consulting firm based in West Hartford, Connecticut, where he
has been employed since 1991. From 1988 to 1991 he was Chairman and Chief
Executive Officer of Coleco Industries, Inc. Mr. Handel is also currently
President, Chief Executive Officer and a director of Ranger Industries, Inc.,
an inactive company; a director of Concurrent Computer Corporation, Ithaca
Industries, Inc. and Toy Biz, Inc.; and Vice Chairman of the Board of Regents
of the University of Hartford.
Warren D. Feldberg has served as a director of the Company since October
1992. Since January 1997, Mr. Feldberg has been Chairman and Chief Executive
Officer of The Caldor Corporation, a discount department store retail chain.
Mr. Feldberg served as President and Chief Operating Officer of The Caldor
Corporation from May 1996 to January 1997. Mr. Feldberg served as Chairman
and Chief Executive Officer of Marshalls, Inc., a retail organization and a
subsidiary of CVS Corp. (formerly known as Melville Corporation), from
October 1991 to June 1995. Mr. Feldberg also served as Vice President of CVS
Corp. during the same period. From 1988 to October 1991, Mr. Feldberg was
employed by Dayton Hudson Corporation, where he served in a variety of
positions for its Target retail division, most recently as President during
1991.
Kevin J. Roche has served as a director of the Company since 1989. Mr.
Roche has served as Senior Vice President of CoreStates Holdings, Inc. since
April 1998, Senior Vice President of First Union Investors, Inc. since April
1995, Senior Vice President of First Union Capital Partners, Inc. since April
1993, Senior Vice President of First Union Corporation since April 1991 and
Senior Vice President of First Union National Bank since December 1988.
Barry L. Williams has served as a director of the Company since May
1997. Since July 1992, he has been President of Williams Pacific Ventures
Inc., a venture capital and real estate investment and consulting firm. He
was President of C.N. Flagg Power Inc., a construction services company, from
July 1988 until its sale in July 1992, and a Managing Principal of Bechtel
Investments, Inc. until May 1987. He is also a director of CH2M Hill
Companies, Ltd., PG&E Corporation, Simpson Manufacturing Company, Inc., R.H.
Donnelley & Company, and Newhall Land and Farming Co., Inc.
James F. Halpin has served as President and a director of the Company
since May 1993 and as Chief Executive Officer since December 1993. Mr.
Halpin also served as Chief Operating Officer from May 1993 to January 1995.
From 1990 to November 1992, Mr. Halpin was President of HomeBase, a home
center warehouse retailer. From 1988 to 1990, Mr. Halpin was President of
BJ's Wholesale Club, a chain of warehouse club retail stores. He also served
as Executive Vice President of Waban Inc., the parent corporation of HomeBase
and BJ's Wholesale Club, from 1988 to May 1993. He is also a director of Toy
Biz, Inc., Lowe's Companies, Inc. and Interphase Corporation.
Denise Ilitch has served as a director of the Company since January
1997. Ms. Ilitch is President of Olympia Development, Inc., a Detroit-based
real estate and entertainment development company, where she has been
employed since February 1996. Ms. Ilitch is also Vice Chairwoman of Little
Caesar Enterprises, Inc., an international pizza restaurant chain, where she
has served since May 1997. From January 1993 to January 1997, Ms. Ilitch
operated her own retail marketing firm, Bright Lites, Inc., and from July
1989 to June 1993 served as Senior Vice President of Little Caesar
Enterprises, Inc. Ms. Ilitch also holds advisory positions in marketing with
the Detroit Red Wings hockey teams and with the Detroit Tigers baseball team.
She is also a director of Beauticontrol Cosmetics, Inc., and the Detroit
Branch of the Federal Reserve Bank of Chicago.
Lawrence Mittman has served as a director of the Company since January
1995. Mr. Mittman is a Partner of the New York City law firm Battle Fowler,
where he has been employed since 1979.
6
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of the Board
of Directors. The Board meets on a regularly scheduled basis to review
significant developments affecting the Company and to act on matters
requiring Board approval. It also holds special meetings and acts by written
consent when important matters require Board action between scheduled
meetings. The Board of Directors met eight times and acted by written
consent once during fiscal 1998. During such period, all members of the Board
of Directors participated in at least 75% of the aggregate of all meetings of
the Board and any committees on which they served, except for Denise Ilitch,
who participated in 71% of such meetings.
The Board of Directors has four standing committees (each, a
"Committee"): the Nominating and Governance Committee, the Finance Committee,
the Audit Committee and the Compensation Committee. The functions of these
Committees, their current members, the number of meetings held and the number
of times action was taken by written consent during fiscal 1998 are described
below.
The Nominating and Governance Committee is empowered to recommend
nominees for election to the Board and review the role, composition and
structure of the Board and its Committees. The Nominating and Governance
Committee is comprised of James F. Halpin (Chairman) and Giles H. Bateman.
The Nominating and Governance Committee acted by written consent once during
fiscal 1998.
The Finance Committee has the responsibility of making recommendations
to the Board with respect to the Company's credit arrangements, the issuance
of equity and long-term debt securities and other matters. The Finance
Committee is comprised of Kevin J. Roche (Chairman), Giles H. Bateman and
James F. Halpin. The Finance Committee met twice during fiscal 1998.
The Audit Committee was established to review the professional services
and independence of the Company's independent auditors and to review the
Company's financial statements, procedures and internal controls. The Audit
Committee is comprised of Morton E. Handel (Chairman), Lawrence Mittman and
Barry L. Williams. The Audit Committee met nine times during fiscal 1998.
The Compensation Committee has the responsibility of reviewing plans for
succession to senior executive positions, fixing annual salaries and bonuses
for the officers and key employees of the Company and administering the
Long-Term Incentive Plan and the Officers' Bonus Plan. The Compensation
Committee is comprised of Warren D. Feldberg (Chairman), Dr. Leonard Berry,
Kevin J. Roche and Denise Ilitch. The Compensation Committee met six times
and acted by written consent once during fiscal 1998.
DIRECTOR COMPENSATION
Directors who are also employees of the Company or its subsidiaries
receive no compensation in their capacities as directors. Nonemployee
directors receive an annual retainer of $25,000 ($30,000 if they chair a
Committee), plus a fee of $1,000 for each Board meeting and $500 for each
Committee meeting in which the director participates. All directors are
reimbursed for expenses connected with attendance at Board or Committee
meetings. In addition, nonemployee directors receive annual automatic grants
of stock options to purchase $50,000 of Common Stock (based on market value
on the date of grant).
For fiscal 1998, the Company (i) paid Messrs. Bateman, Berry, Feldberg,
Handel, Mittman, Roche, Williams and Ms. Ilitch, $31,000, $34,000, $39,500,
$39,500, $33,500, $34,500, $31,916 and $34,000, respectively, and (ii)
granted each of Messrs. Bateman, Berry, Feldberg, Handel, Mittman, Roche,
Williams and Ms. Ilitch options to purchase 1,436 shares of Common Stock at
an exercise price of $34.81 per share. For his services as Chairman of the
Board of Directors during fiscal 1998, Mr. Bateman received an additional
$69,000 as an annual salary.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES FOR
DIRECTOR NAMED HEREIN.
7
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
Company's executive officers. Officers are elected annually by the Board of
Directors and serve at its discretion.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---------------------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
James F. Halpin. . . . . . . . . . . . . 47 President, Chief Executive Officer and Director
Harold F. Compton. . . . . . . . . . . . 51 Executive Vice President, Chief Operating Officer and President--
CompUSA Stores
J. Samuel Crowley. . . . . . . . . . . . 48 Executive Vice President--Operations
Ronald J. Gilmore. . . . . . . . . . . . 43 Executive Vice President--Marketing
Lawrence N. Mondry . . . . . . . . . . . 38 Executive Vice President--Merchandising
Paul B. Poyfair. . . . . . . . . . . . . 46 Executive Vice President--New Business Development
James E. Skinner . . . . . . . . . . . . 45 Executive Vice President, Chief Financial Officer, Treasurer
and Assistant Secretary
Anthony A. Weiss . . . . . . . . . . . . 31 Executive Vice President--Business Solutions
Paul F. Ewert. . . . . . . . . . . . . . 50 Senior Vice President--Merchandising
Harold D. Greenberg. . . . . . . . . . . 51 Senior Vice President--Inventory Management
Melvin D. McCall . . . . . . . . . . . . 53 Senior Vice President--Human Resources
Barry C. McCook. . . . . . . . . . . . . 50 Senior Vice President--Operations
Stuart M. Needleman. . . . . . . . . . . 50 Senior Vice President and President--CompUSA Direct
Honorio J. Padron. . . . . . . . . . . . 46 Senior Vice President--Process Engineering
and Chief Information Officer
Robert N. Sayewitz . . . . . . . . . . . 43 Senior Vice President--Operations
Robert S. Seay . . . . . . . . . . . . . 35 Senior Vice President--Operations
Ronald D. Strongwater. . . . . . . . . . 55 Senior Vice President--Real Estate
Mark R. Walker . . . . . . . . . . . . . 41 Senior Vice President--General Counsel and Secretary
Gary M. Bale . . . . . . . . . . . . . . 41 Vice President--Merchandising
Aka A. DeMesa. . . . . . . . . . . . . . 47 Vice President--Commercial Products
Richard H. Foster. . . . . . . . . . . . 54 Vice President--Direct Sales
Rick L. Fountain . . . . . . . . . . . . 45 Vice President--Technical Services
Ronald E. Freeman. . . . . . . . . . . . 50 Vice President--Distribution and Configuration
J. Robert Gary . . . . . . . . . . . . . 43 Vice President--Finance
Robert M. Howe . . . . . . . . . . . . . 51 Vice President and General Manager-CompUSA PC
Edmund G. Jurica, Jr. . . . . . . . . . 42 Vice President--Process Engineering
Richard W. Levine. . . . . . . . . . . . 48 Vice President--Systems Solutions
John S. Lostroscio . . . . . . . . . . . 41 Vice President--Merchandising
Leslie C. Marshall . . . . . . . . . . . 53 Vice President--Loss Prevention
Kellie J. McCluskey. . . . . . . . . . . 40 Vice President--Advertising
Robert J. Verhagen . . . . . . . . . . . 47 Vice President--Technology Training
Catherine C. Witt. . . . . . . . . . . . 47 Vice President--Systems Operations
</TABLE>
See "Proposal No. 1 -- Election of Directors" for biographical
information regarding Mr. Halpin.
Harold F. Compton has served as Executive Vice President and Chief
Operating Officer since January 1995. In July 1996, Mr. Compton was promoted
to the additional position of President--CompUSA Stores. He served as
Executive Vice President--Operations from August 1994 to January 1995. Prior
to joining the Company, Mr. Compton served as President and Chief Operating
Officer of Central Electric Inc., an electronics retail company, from
December 1993 to August 1994. Previously, Mr. Compton had served as
Executive Vice President--Operations & Human Resources of HomeBase, a home
center warehouse retailer, from 1989 to 1993. Mr. Compton is also a director
of Jumbo Sports, Inc., Linens 'N Things, Inc., and Stage Stores, Inc.
8
<PAGE>
J. Samuel Crowley has served as Executive Vice President--Operations
since March 1995. He served as Vice President--Operations, East from April
1994 to March 1995, as Vice President--Retail Sales from July 1993 to April
1994 and as a Regional Manager from 1989 to July 1993. Prior to joining the
Company, Mr. Crowley was employed by The Federated Group, a chain of consumer
electronics stores, for eight years, serving as Vice President/General
Manager from 1987 to 1988 and as Regional Vice President from 1984 to 1987.
Mr. Crowley is also a director of United States Cellular Corporation.
Ronald J. Gilmore has served as Executive Vice President--Marketing
since May 1997. He served as Senior Vice President--Marketing & Advertising
from May 1994 to May 1997 and as Vice President--Advertising & Sales
Promotion from July 1993 to April 1994. Prior to joining the Company, Mr.
Gilmore served as Vice President--Marketing of the Good Guys!, Inc., a
consumer electronics retailer, from April 1993 to July 1993. Mr. Gilmore was
employed by HomeBase from April 1991 to April 1993, serving as Vice
President--Marketing & Advertising. From April 1990 to April 1991, Mr.
Gilmore was employed by Montgomery Ward, Inc., a chain of retail department
stores, as Media Director, and from 1989 to 1990, he was employed by Harte
Hanks Communications, Inc., serving as Director of Advertising Sales of the
Boston Newspaper Group.
Lawrence N. Mondry has served as Executive Vice President--Merchandising
since December 1993. He served as Senior Vice President and General
Merchandise Manager from 1990 to December 1993. Prior to joining the
Company, Mr. Mondry was employed by Highland Superstores, Inc., a chain of
retail appliance and consumer electronics stores, from 1983 to 1990, serving
as Vice President and National Merchandise Manager from 1988 to 1990.
Paul B. Poyfair has served as Executive Vice President--New Business
Development since May 1998. He served as Executive Vice President--Services
and New Businesses from May 1997 to May 1998, as Senior Vice
President--Services & Administration from October 1995 to May 1997, as Senior
Vice President--Human Resources, Training and Administration from December
1993 to October 1995 and as Vice President--Human Resources from September
1993 to December 1993. Prior to joining the Company, Mr. Poyfair was
employed by HomeBase from October 1990 to September 1993, serving as Vice
President--Human Resources, and by Kenworth Truck Company, a manufacturer of
heavy duty trucks, from 1986 to 1990, serving as Director of Human Resources.
James E. Skinner has served as Executive Vice President, Chief Financial
Officer and Treasurer since September 1994. He served as Senior Vice
President--Finance and Planning and Chief Accounting Officer from December
1993 to September 1994, as Vice President--Finance and Planning and Chief
Accounting Officer from June 1992 to December 1993, and as Vice President and
Chief Accounting Officer from September 1991 to June 1992. Mr. Skinner
served as Assistant Treasurer from October 1992 to September 1994 and has
also served as Assistant Secretary since October 1992. Prior to joining the
Company, Mr. Skinner was a partner of Ernst & Young, an international public
accounting firm, where he had been employed since 1975. Mr. Skinner is a
Certified Public Accountant.
Anthony A. Weiss has served as Executive Vice President--Business
Solutions since May 1998. He served as Senior Vice President--Sales,
Distribution and Support from May 1997 to May 1998 and as Vice
President--Direct Sales from September 1995 to May 1997. Mr. Weiss joined
the Company in 1988 and served in various positions, including the positions
of Regional Manager from 1992 to February 1995 and Senior Director--Direct
Sales from February 1995 to September 1995.
Paul F. Ewert has served as Senior Vice President--Merchandising since
May 1997. He served as Vice President--Merchandising & General Merchandise
Manager from February 1996 to May 1997. From January 1994 to February 1996,
he served as Vice President--Merchandising, and from 1991 to January 1994, he
served as Senior Director of Hardware Merchandising. Prior to joining the
Company, Mr. Ewert served as Vice President--Fashion Accessories of Broadway
Department Stores, a regional chain of retail department stores, from 1990 to
1991. Mr. Ewert served as General Manager and Regional Merchandiser of
Target from 1983 to 1990.
Harold D. Greenberg has served as Senior Vice President--Inventory
Management since May 1997. He served as Vice President--Inventory Management
from April 1994 to May 1997. Prior to joining the Company, he was employed
by Ames Department Stores, Inc., a regional chain of discount department
stores, where he served in several positions from 1989 to December 1993, most
recently as Director of Planning and Analysis.
9
<PAGE>
Melvin D. McCall has served as Senior Vice President--Human Resources
since October 1995. He served as Vice President--Human Resources from May
1995 to October 1995. Prior to joining the Company, he was a principal of HR
Partners, a human resources consulting firm, from 1991 to May 1995. From
1987 to 1991, Mr. McCall served as Senior Vice President of Human Resources
and Administration of Dominick's Finer Foods, a regional supermarket chain.
Barry C. McCook has served as Senior Vice President--Operations since
May 1997. He served as Vice President--Operations, East from March 1995 to
May 1997. Mr. McCook also served as Regional Manager of the Southeast from
February 1994 to March 1995, as Vice President--Retail Sales from July 1993
to February 1994, and as Regional Manager from 1990 to July 1993.
Stuart M. Needleman has served as Senior Vice President of the Company
and President of CompUSA Direct since June 1997. Prior to joining the
Company, Mr. Needleman was President of Work 'N Gear, a work wear chain,
since October 1993. From 1989 to 1993, he served as Chief Operating Officer
at Casual Male, a retail clothing store chain. From 1972 to 1989, Mr.
Needleman was employed by Zayre Corp., where he last held the position of
Senior Vice President of Distribution Services.
Honorio J. Padron has served as Senior Vice President--Engineering
Processes and Chief Information Officer since November 1997. Prior to joining
the Company, Mr. Padron was Senior Vice President and Chief Information
Officer for Pepsico Restaurants, a fast food restaurant chain, from August
1996 to November 1997. From February 1995 to August 1996 he held the position
of Senior Vice President of Business Engineering and Technology and Chief
Information Officer for Flagstar, a restaurant management company. From 1988
to 1995, Mr. Padron was employed by Burger King Corporation, a fast-food
restaurant chain, where he held various positions including Senior Director
of Research and Development, Director of Reengineering, and Director of
Profit and Loss Improvements. From 1982 to 1985, he was Owner and Chief
Executive Officer of H&A Restaurant Management Company.
Robert N. Sayewitz has served as Senior Vice President--Operations since
September 1998. He served as a Regional Manager of the Company from August
1993 to September 1998. Mr. Sayewitz also served as General Manager of a
CompUSA Computer Superstore from June 1992 to August 1993. Prior to joining
the Company, Mr. Sayewitz was employed by The Computer Factory, Inc., a
computer reseller, where he last held the position of Vice President--Sales
from May 1991 to June 1992.
Robert S. Seay has served as Senior Vice President--Operations since
November 1997. He served as Vice President--Technical Training from May 1997
to November 1997. Mr. Seay has been employed by the Company since 1991 and
has held various field operation positions, including General Manager of a
CompUSA Computer Superstore, Regional Manager and most recently as Senior
Director--Training from November 1996 to May 1997. From 1984 to 1991, he was
employed by Home Depot, Inc., a home center warehouse retailer, in
operations.
Ronald D. Strongwater has served as Senior Vice President--Real Estate
since January 1998. He served as Vice President--Real Estate from April 1994
to January 1998. Prior to joining the Company, he served as President of The
RDS GROUP, a nationwide real estate/management services consulting firm, from
1990 to April 1994. Mr. Strongwater also served as Senior Vice
President--Real Estate of Wickes Companies, Inc. from 1982 to 1990.
Mark R. Walker has served as Senior Vice President--General Counsel and
Secretary since November 1995. He served as Vice President--General Counsel
and Secretary from August 1993 to November 1995. Prior to joining the
Company, he was employed as Vice President, Secretary and General Counsel
from May 1990 to February 1993 by AmeriCredit Corp., an indirect consumer
finance company. Mr. Walker practiced general corporate and securities law
from 1986 to 1990 with Mayer, Brown & Platt in Chicago, Illinois.
Gary M. Bale has served as Vice President--Merchandising since September
1998. He served as Merchandise Manager--Software from December 1994 to
September 1998. Mr. Bale joined the Company in July 1993 and served in
various buyer roles until December 1994, most recently as computer and
monitor buyer. Prior to joining the Company, Mr. Bale was employed from
January 1993 to July 1993 by Tops Appliance City, an appliance and TV
retailer, as an appliance buyer.
10
<PAGE>
Aka A. DeMesa has served as Vice President--Commercial Products since
April 1996. From July 1995 to April 1996, he served as Senior
Director--Commercial Products for the Company. Prior to joining the Company,
Mr. DeMesa served as Vice President of Product Line Management & Purchasing
of CompuCom Systems, Inc., a corporate computer reseller, from 1992 to July
1995. From 1990 to 1992, he was Vice President of Product Management for The
Computer Factory, Inc., a CompuCom Systems, Inc. subsidiary.
Richard H. Foster has served as Vice President--Direct Sales since July
1998. He served as Senior Director--Direct Sales from April 1998 to July
1998 and as Regional Director--Direct Sales from October 1996 to April 1998.
Prior to joining the Company, Mr. Foster was Regional Manager for Avnet,
Inc., a corporate computer reseller, from January 1995 to February 1996. From
October 1991 to December 1995, he was Vice President of Sales for Compucom
Systems, Inc., a corporate computer reseller.
Rick L. Fountain has served as Vice President--Technical Services since
July 1996. From September 1994 to July 1996, he served as Senior
Director--Technical Services and from February 1990 to September 1994, he
served as the East Coast Regional Manager of the Company. Prior to joining
the Company, he was employed by Federated Electronics Superstores, a chain of
retail appliance and consumer electronics stores, from 1985 to 1990, where he
last held the position of Vice President--Operations.
Ronald E. Freeman has served as Vice President--Distribution and
Configuration since June 1998. He served as a Senior Director--Distribution
and Configuration from July 1997 to June 1998. Prior to joining the Company,
Mr. Freeman was employed from 1989 to 1997 by Babbage's Etc., a computer
software specialty retailer, where he last held the position of Vice
President--Distribution. From 1981 to 1989, he served as Director of
Transportation and Logistics for Cullum Cos. Inc., a grocery retailer.
J. Robert Gary has served as Vice President--Finance since May 1996.
Prior to joining the Company, Mr. Gary served as Senior Vice President and
Chief Financial Officer of Wireless One, Inc., an owner and operator of
wireless cable television systems, from September 1995 to May 1996, and from
1992 to September 1995, he was Executive Vice President, Chief Operating
Officer, and Chief Financial Officer of Greentree Software, Inc., a developer
of advanced purchasing and material management software solutions. From
1990 to 1992, Mr. Gary was employed as Vice President--Business Manager of
the Trade Division of Simon & Schuster.
Robert M. Howe has served as Vice President and General Manager--CompUSA
PC since November 1997. Prior to joining the Company, Mr. Howe was Vice
President--Strategic Planning for Packard Bell/NEC, a computer manufacturer,
from March 1997 to November 1997. From March 1996 to August 1996, he held the
position of General Manager/Worldwide PC Channel Sales and Marketing Consumer
Division for International Business Machines Corporation. From July 1994 to
January 1996, he served as Vice President--Worldwide PC Marketing for AT&T.
From May 1992 to September 1993, Mr. Howe served as Senior Vice
President--Sales, Marketing and Service for Dell Computer Corporation, a
computer manufacturer and marketer. Mr. Howe held the position of Vice
President--Vendor Relations for Microage, a retailer of personal computer
products and accessories, from November 1990 to May 1992. From May 1984 to
October 1990, Mr. Howe was Vice President--Marketing for Computer Bay, a PC
distributor.
Edmund G. Jurica, Jr. has served as Vice President--Process Engineering
since January 1998. He served as Senior Director of Information Services from
October 1997 to January 1998. Mr. Jurica joined the Company in December 1994
and has held various other management positions including Director of
Strategy and Technology and Director of Client Services. Prior to joining
the Company, Mr. Jurica worked from October 1986 to December 1994 at Siemens,
a technology solutions company, where he last held the position of Software
Development Manager.
Richard W. Levine has served as Vice President--Systems Solutions since
March 1998. Prior to joining the Company, Mr. Levine was Founder, Chairman of
the Board and President of Restaurant Re-Engineering Services and
Technologies, Inc., a computer systems consulting and business reengineering
services company, from August 1995 to March 1998. From September 1990 to July
1995 he was Manager--Technology and Systems for Burger King Corporation. From
1986 to 1990, Mr. Levine was Director--Systems Planning and Review for the
National Association of Security Dealers, Inc.
11
<PAGE>
John S. Lostroscio has served as Vice President--Merchandising since
September 1998. He served as Divisional Merchandise Manager--Hardware from
January 1997 to September 1998; as Senior Buyer--Accessories from January
1996 to January 1997 and as an Accessories Buyer from April 1995 to January
1996. Prior to joining the Company, Mr. Lostroscio was employed from January
1992 to April 1995 by Sound Advice, Inc., a consumer electronics specialty
retailer, where he held the position of Merchandise Manager.
Leslie C. Marshall has served as Vice President--Loss Prevention since
July 1996. From 1992 to July 1996, he served as Senior Director--Loss
Prevention of the Company. Prior to joining the Company, Mr. Marshall served
as Director of Risk Management and Loss Prevention for Pic-"N"-Save
Corporation, an inventory close-out retailing chain, from 1986 to 1991.
Kellie J. McCluskey has served as Vice President--Advertising since July
1998. She served as Senior Director--Advertising from March 1998 to July
1998. Prior to joining the Company, Ms. McCluskey worked for Home Depot where
she last held the position of Advertising Manager--West Coast Division from
July 1993 to March 1998. From 1985 to 1993 she was Manager of Print
Advertising for HomeBase, a home center warehouse retailer.
Robert J. Verhagen has served as Vice President--Technology Training
since July 1998. He served as Senior Director--New Store Market Concepts from
June 1997 to July 1998. Mr. Verhagen joined the Company in September 1990 and
has held various field operation positions, including General Manager of a
CompUSA Computer Superstore and Regional Operations Manager. Prior to joining
the Company, Mr. Verhagen worked for Home Depot where he last held the
position of Regional Operations Manager, from 1982 to 1990.
Catherine C. Witt has served as Vice President--Information Systems
Operations since March 1998. She served as Director of Operations and
Telecommunications from October 1994 to March 1998 and as Manager of Data
Processing from July 1993 to October 1994. Prior to joining the Company, Ms.
Witt was employed from 1981 to 1983 by Haggar Apparel Co., a clothing
manufacturer, where she last held the position of Manager of Network
Operations.
12
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
Recommendations regarding base salary and annual incentive compensation for
executive officers are prepared by the Compensation Committee and presented to
the Board of Directors for final approval. The Compensation Committee, which is
composed entirely of nonemployee directors, has access to independent
compensation data and has available to it advice and reports from outside
compensation consultants.
The objectives of the Company's executive compensation program are to:
- Support the achievement of desired Company performance.
- Provide competitive compensation that will attract and retain superior
talent and reward performance.
- Align the executive officers' interests with those of the stockholders
by placing a portion of their pay at risk because it is dependent upon
corporate performance, including the attainment of performance goals.
To achieve the above objectives, the Company's executive compensation
policies integrate annual base compensation with bonuses based on overall
corporate performance and individual initiatives and performance. The
measurement of corporate performance and the award of bonuses to officers of the
Company may be based on the performance of the Company generally (in the
absolute or compared to its peers) or the performance of a particular officer or
the performance of the subsidiary, division or other unit to which an officer is
assigned. Performance goals may vary between officers and will be weighted to
reflect their relative importance to the Company. For other key management
personnel the award of bonuses is based primarily upon the achievement of
Company performance goals that are reviewed and approved annually by the
Compensation Committee. For years in which performance goals are achieved or
exceeded, executive compensation tends to be higher than for years in which
performance goals are not achieved. Annual cash compensation, together with the
payment of long-term equity-based incentive compensation through stock options,
restricted stock and other equity-based awards, is designed to attract and
retain qualified executives and to ensure that such executives have a continuing
stake in the long-term success of the Company.
The executive compensation program is designed to provide an overall level
of compensation that is competitive within the retail industry, as well as with
a broader group of companies of comparable size and complexity. The actual
compensation levels of the Company's executive officers may be greater or less
than average compensation levels in other companies based upon annual and
long-term overall Company performance as well as individual performance. The
Compensation Committee uses its discretion to set executive compensation at
levels warranted in its judgment by external, internal and individual
circumstances.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation including the Officers' Bonus Plan,
long-term incentive compensation in the form of stock options, restricted stock
and other equity-based awards, and various benefits, including a 401(k) plan,
deferred compensation plan and an executive medical plan.
BASE SALARY
Subject to the provisions of any applicable employment agreements, in
fiscal 1998 base salary levels for the Company's executive officers, including
the Chief Executive Officer, were competitively set relative to companies in the
retail industry and other comparable companies. See "--Employment Agreements."
In determining salaries, the Compensation Committee took into account individual
experience and performance and specific issues particular to the Company,
counseled with an outside compensation consultant, and reviewed independent
compensation data to establish base salary levels that were within the range of
persons holding positions of comparable responsibility at other similarly
situated companies, both regionally and nationally.
13
<PAGE>
OFFICERS' BONUS PLAN
The CompUSA Inc. Officers' Bonus Plan (the "Bonus Plan") provides incentive
compensation opportunities for officers of the Company that are designed to
attract, motivate, and retain talented officers and to align the officers'
interests with those of the stockholders by placing a portion of their pay at
risk depending upon corporate performance and to support the achievement of
desired Company performance. The awards granted pursuant to the Bonus Plan are
determined according to a formula based on several factors, including target
performance goals, threshold levels of performance, individual target award
levels, and the participant's base earnings. At the beginning of the year, the
Compensation Committee establishes target award levels expressed as a percentage
of a participant's base earnings for the year, as well as the performance goals
and the respective threshold and target levels of performance associated with
each. Different performance goals may be established for different participants.
Each participant's award is determined by multiplying the target award by the
performance score. The maximum award that may be paid to any single participant
for a fiscal year is $5,000,000. Additionally, the Compensation Committee has
discretion to grant ad hoc bonuses pursuant to the Bonus Plan to any participant
or group of participants in such amounts as it determines to be appropriate.
ANNUAL CASH INCENTIVE COMPENSATION
The Company maintains an annual incentive compensation plan for other key
management personnel. Generally, incentive bonuses are based on the Company
achieving its targeted earnings per share (the "EPS Target"). For example, if
the EPS Target is achieved, other key management personnel receive awards
ranging from 12.5% to 25% of their respective base salaries (each an "Award").
If the EPS Target is surpassed, an individual's Award increases 2% to 12% for
each percentage point by which reported earnings per share exceeds the EPS
Target, with no limit. If the EPS Target is not achieved, an individual's Award
decreases by 6.67% for each percentage point by which reported earnings per
share falls below the EPS Target. Thus, if reported earnings per share falls
15% or more below the EPS Target, all Awards are eliminated.
LONG-TERM INCENTIVE PLAN
The Long-Term Incentive Plan has been the Company's long-term incentive
plan for executive officers since 1990. The objectives of the Long-Term
Incentive Plan are to align executive and stockholder long-term interests by
creating a strong and direct link between executive compensation and stockholder
return and to enable executives to develop and maintain a significant long-term
ownership position in the Common Stock. The Long-Term Incentive Plan provides
for awards of stock options, restricted stock, stock appreciation rights,
performance shares and stock units, or any combination thereof. A further
purpose of the Long-Term Incentive Plan is to provide a means by which the
Company may attract able persons to become directors of the Company and to
provide directors with additional incentive and reward opportunities designed to
strengthen their concern for the welfare of the Company and its stockholders.
The total number of shares of Common Stock issuable pursuant to the Long-Term
Incentive Plan is 16,788,736. As of the Record Date, 1,306,915 shares of Common
Stock remained available for awards under the Long-Term Incentive Plan. In
administering the Long-Term Incentive Plan, the Compensation Committee has
discretion to determine, among other things, the specific types of awards to be
granted, to whom they will be granted and the number of shares of Common Stock
subject to such awards.
COMPSAVINGS PLAN FOR EMPLOYEES OF COMPUSA INC.
The CompSavings Plan for Employees of CompUSA Inc. (the "401(k) Plan")
is intended to enable employees of the Company and its subsidiaries who are
at least 21 years of age to accumulate capital for their future economic
security, encourage eligible employees to remain in the service of the
Company and provide incentives for employee performance on behalf of the
Company. Effective April 1, 1998, eligible employees may become participants
as of the first day of the next calendar quarter after their hire date. An
eligible employee may elect to make pre-tax contributions to the 401(k) Plan
through payroll deductions in an amount up to 15% of such employee's
compensation, subject to certain limitations contained in the Internal
Revenue Code of 1986 (the "Code"). The 401(k) Plan provides for Company
matching contributions equal to 25% of an eligible employee's pre-tax
contributions with respect to the first 5% of such employee's compensation.
Company matching contributions are made one-fourth in cash and the remaining
three-fourths in Common Stock. In addition, the Company may elect to make
supplemental matching contributions in an amount based on the Company's
profitability for the fiscal year that ends within the 401(k) Plan's fiscal
year. The 401(k) Plan is a defined contribution retirement plan within the
meaning of Section 401(a) of the Code. Participants in the 401(k) Plan may
14
<PAGE>
direct the investment of their 401(k) Plan accounts among specified investment
funds, including a fund that invests primarily in Common Stock. The 401(k) Plan
is administered by the CompSavings Plan Committee, which is comprised of Harold
F. Compton, James E. Skinner and Melvin D. McCall.
COMPUSA INC. DEFERRED COMPENSATION PLAN
The CompUSA Inc. Deferred Compensation Plan (the "SERP") is a supplemental
executive retirement plan maintained in conjunction with the 401(k) Plan that is
intended to provide certain benefits to a select group of the Company's
management and highly compensated employees. The SERP is a nonqualified plan
for federal income tax purposes that allows eligible employees to make pre-tax
contributions through payroll deductions in excess of certain limitations
imposed on pre-tax contributions by these employees to the 401(k) Plan.
Eligible employees who make pre-tax contributions to the SERP are eligible to
receive an allocation of Company matching contributions on the same basis as
Company matching contributions to the 401(k) Plan. The SERP is administered by
the CompSavings Plan Committee.
PCS COMPLEAT, INC. PLANS
In connection with its acquisition of PCs Compleat, Inc., which has been
integrated into the Company's CompUSA Direct division, the Company assumed all
outstanding obligations under PCs Compleat's stock option and 401(k) plans. The
Company has reserved 650,826 shares of Common Stock for issuance upon exercise
of options granted under the PCs Compleat stock option plan. The Company does
not intend to issue any additional stock options or make any additional
contributions under these plans.
Effective February 26, 1998, the defined contribution plan sponsored by PCs
Compleat was consolidated with the Company's 401(k) Plan and all plan assets
were transferred to the Company's 401(k) Plan on that date.
BENEFITS
The Company provides medical benefits to its executive officers pursuant to
an executive medical plan.
This report of the Compensation Committee on executive compensation is
submitted by the current members of the committee as noted below:
Warren D. Feldberg
Leonard L. Berry, Ph.D.
Denise Ilitch
Kevin J. Roche
15
<PAGE>
SUMMARY COMPENSATION TABLE
The following contains information concerning the compensation earned by,
awarded to or paid to the Company's Chief Executive Officer and each of the
other four most highly compensated executive officers of the Company
(collectively, the "Named Officers") for services rendered to the Company during
fiscal years 1996 through 1998.
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------------------
Annual Compensation Awards Payouts
-------------------------------------- ----------------------------------------------
Securities
Restricted Underlying
Other Annual Stock Options/ LTIP All Other
Fiscal Salary Bonus Compensation Award(s) SARS Payouts Compensation
Name and Principal Position Year ($) ($)(1) ($)(2) ($)(3) (#)(4) ($) ($)(5)
- ------------------------------------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James F. Halpin 1998 959,615 -- -- 367,870 122,951 -- 3,150
President and Chief 1997 836,544 744,851 -- 248,751 1,331,591 -- 4,750
Executive Officer 1996 653,078 1,496,003 -- -- 142,276 -- 9,370
Harold F. Compton 1998 796,154 -- -- 375,066 104,508 -- 3,150
Executive Vice President and 1997 584,619 521,926 -- 213,216 955,597 -- 4,750
Chief Operating Officer and 1996 420,193 842,189 203,195 (6) -- 40,652 -- 9,370
President--CompUSA Stores
J. Samuel Crowley 1998 332,500 -- -- 112,773 19,590 -- 2,996
Executive Vice President-- 1997 275,038 184,018 -- 81,540 348,572 -- 4,750
Operations 1996 204,404 351,038 -- -- 15,204 -- 8,501
Lawrence N. Mondry 1998 385,192 -- -- 112,773 19,590 -- 3,150
Executive Vice President-- 1997 344,425 229,692 -- 81,540 348,572 -- 4,750
Merchandising 1996 273,264 469,924 -- -- 15,204 -- 7,750
James E. Skinner 1998 336,538 -- -- 112,773 19,590 -- 2,375
Executive Vice President, 1997 293,071 195,854 -- 81,540 348,572 -- 4,750
Chief Financial Officer, 1996 220,769 379,500 -- -- 15,204 -- 8,501
Treasurer and Assistant
Secretary
</TABLE>
- --------------------
(1) Includes bonuses earned in fiscal 1996 and 1997 under the incentive
compensation plans of the Named Officers that were paid in fiscal 1997 and
1998, respectively. No bonuses were earned by the Named Officers in fiscal
1998.
(2) Except for the compensation for Mr. Compton noted in (6) below, no
compensation was paid to any of the Named Officers during fiscal 1996, 1997
or 1998 that constituted Other Annual Compensation. In fiscal 1996, 1997
and 1998, the value of perquisites and other personal benefits, if any, did
not equal or exceed the lesser of $50,000 or 10% of the total amount of
annual salary and bonus for any Named Officer.
(3) The aggregate value of the restricted stock awards at the end of fiscal
1998 is: $547,817, $514,256, $173,726, $173,726 and $173,726 for Messrs.
Halpin, Compton, Crowley, Mondry and Skinner, respectively. The number of
shares of restricted stock held by Messrs. Halpin, Compton, Crowley, Mondry
and Skinner at the end of the last fiscal year was 29,512; 27,704; 9,359;
9,359; and 9,359, respectively. Restrictions lapse after five years,
subject to accelerated vesting if specific performance goals are met;
however, such vesting period will not be less than three years. Holders
of restricted stock are entitled to receive any dividends paid to holders
of Common Stock.
(4) Options to acquire shares of Common Stock under the Long-Term Incentive
Plan. See "EXECUTIVE COMPENSATION -- Executive Officer Compensation
Program -- Long-Term Incentive Plan."
(5) Reflects the Company's contributions to the 401(k) Plan and the SERP in
respect of these individuals.
(6) Of this amount, $86,628 constitutes reimbursement of relocation expenses
and $98,073 constitutes reimbursement of additional federal income taxes
incurred by Mr. Compton due to his receipt of certain payments in respect
of his relocation in fiscal 1995.
16
<PAGE>
OPTION GRANTS DURING FISCAL 1998
The following table sets forth information regarding stock options granted
to Named Officers during fiscal 1998 pursuant to the Long-Term Incentive Plan.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------
Potential Realizable
Number of Value at Assumed Annual
Securities % of Total Rates of Stock Price
Underlying Options/SARs Appreciation For Option
Options/SARs Granted to Exercise or Term (1)
Granted Employees in Base Price Expiration -----------------------
Name (#)(2)(3) Fiscal Year (2) ($/Share) (4) Date 5% ($) 10% ($)
- -------------------- ------------------------------------------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
James F. Halpin 122,951 14.7% 31.00 2/02/08 2,397,422 6,075,501
Harold F. Compton 104,508 12.5% 31.00 2/02/08 2,037,801 5,164,158
J. Samuel Crowley 19,590 2.3% 31.00 2/02/08 381,985 968,020
Lawrence N. Mondry 19,590 2.3% 31.00 2/02/08 381,985 968,020
James E. Skinner 19,590 2.3% 31.00 2/02/08 381,985 968,020
</TABLE>
- --------------------
(1) The potential realizable values shown in the table illustrate the values
that might be realized upon exercise of the options immediately prior to
the expiration of their terms, based on the difference between the
appreciated value of the Common Stock over the ten-year term of the options
(assuming the specified compounded rates of appreciation) and the exercise
price of the options. These amounts do not take into account provisions
providing for termination of options following termination of employment,
nontransferability or vesting over periods of up to four years.
(2) The Company has not granted any stock appreciation rights (SARs).
(3) All options have ten-year terms. Options vest with respect to one-third or
one-fourth of the shares covered thereby annually, beginning on the first
anniversary of the date of grant. In the event of a change in control of
the Company (as defined in the Long-Term Incentive Plan), however, any
unexercisable portion of the options will become immediately exercisable.
Except for incentive stock options covering an aggregate of 9,675 shares
granted to Mr. Halpin, an aggregate of 3,612 shares granted to Mr. Compton,
an aggregate of 9,030 shares granted to Mr. Crowley and an aggregate of
4,077 shares granted to Mr. Mondry, all options set forth in the table are
nonqualified options.
(4) The exercise price was equal to the fair market value of the Common Stock
on the date of grant.
17
<PAGE>
AGGREGATED OPTION EXERCISES DURING FISCAL 1998 AND FISCAL YEAR END OPTION VALUES
The following table provides information regarding options exercised by the
Named Officers during fiscal 1998 and the number and value of options held at
fiscal year end. The Company does not have any outstanding stock appreciation
rights.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Fiscal Year Options/SARs at Fiscal Year
Shares Value End (#) End ($) (2)
Acquired on Realized --------------------------- ----------------------------
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
James F. Halpin 280,000 7,424,992 1,448,536 891,438 9,911,907 460,919
Harold F. Compton -- -- 739,824 641,793 4,481,507 131,708
J. Samuel Crowley 26,780 800,431 258,639 203,007 1,003,514 78,146
Lawrence N. Mondry -- -- 230,723 200,373 805,327 49,254
James E. Skinner 15,000 478,125 238,505 200,373 867,219 49,254
</TABLE>
- --------------------
(1) Value is calculated based on the difference between the closing price of
the Common Stock on the date of exercise and the per share option exercise
price multiplied by the number of shares to which the exercise relates.
(2) The closing price of the Common Stock on the NYSE on June 27, 1998, was
$18.5625 per share. In-the-money option values are calculated on the basis
of the difference between $18.5625 and the per share option exercise price
multiplied by the number of shares of Common Stock purchasable under the
option.
EMPLOYMENT AGREEMENTS
HALPIN AGREEMENT. The Company is a party to an employment agreement with
James F. Halpin (the "Halpin Agreement") dated August 16, 1996, pursuant to
which Mr. Halpin currently serves as President and Chief Executive Officer.
The Halpin Agreement provides for annual salary increases at the sole
discretion of the Compensation Committee of the Board of Directors. Mr.
Halpin's current annual base salary is $1,000,000. In addition, Mr. Halpin
is eligible to receive in respect of each fiscal year an incentive bonus
determined in accordance with any management incentive bonus plan then
maintained by the Company. See "Report of the Compensation Committee on
Executive Compensation --EXECUTIVE OFFICER COMPENSATION PROGRAM -Officers'
Bonus Plan." The term of employment under the Halpin Agreement will expire
on August 15, 2000. Mr. Halpin has agreed to certain noncompetition
restrictions with the Company during the term of the Halpin Agreement and for
two years thereafter. The Halpin Agreement provides for certain severance
arrangements. See "--Severance Arrangements."
COMPTON AGREEMENT. The Company is a party to an employment agreement with
Harold F. Compton (the "Compton Agreement") dated August 16, 1996, pursuant
to which Mr. Compton currently serves as Executive Vice President, Chief
Operating Officer and President--CompUSA Stores. The Compton Agreement provides
for annual salary increases at the sole discretion of the Compensation Committee
of the Board of Directors. Mr. Compton's current annual base salary is
$850,000. In addition, Mr. Compton is eligible to receive in respect of each
fiscal year an incentive bonus determined in accordance with any management
incentive bonus plan then maintained by the Company. See "Report of the
Compensation Committee on Executive Compensation -- EXECUTIVE OFFICER
COMPENSATION PROGRAM -Officers' Bonus Plan." The term of employment under the
Compton Agreement will expire on August 15, 2000. Mr. Compton has agreed to
certain noncompetition restrictions with the Company during the term of the
Compton Agreement and for two years thereafter. The Compton Agreement provides
for certain severance arrangements. See "--Severance Arrangements."
CROWLEY AGREEMENT. The Company is a party to an employment agreement with
J. Samuel Crowley (the "Crowley Agreement") dated May 1, 1998, pursuant to
which Mr. Crowley currently serves as Executive Vice President--Operations. The
Crowley Agreement provides for annual salary increases at the sole discretion of
the Compensation Committee of the Board of Directors. Mr. Crowley's current
annual base salary is $350,000. In addition, Mr. Crowley is eligible to receive
in respect of each fiscal year an incentive bonus determined in accordance with
any management incentive bonus plan then maintained by the Company. See "Report
of the Compensation Committee on Executive Compensation -- EXECUTIVE OFFICER
COMPENSATION PROGRAM -Officers' Bonus Plan." The term of employment under the
Crowley Agreement will expire on May 1, 2000. Mr. Crowley has agreed to certain
noncompetition restrictions with the Company during the term of the Crowley
18
<PAGE>
Agreement and for two years thereafter. The Crowley Agreement provides for
certain severance arrangements. See "--Severance Arrangements."
MONDRY AGREEMENT. The Company is a party to an employment agreement with
Lawrence N. Mondry (the "Mondry Agreement") dated May 1, 1998, pursuant to
which Mr. Mondry currently serves as Executive Vice President--Merchandising.
The Mondry Agreement provides for annual salary increases at the sole discretion
of the Compensation Committee of the Board of Directors. Mr. Mondry's current
annual base salary is $400,000. In addition, Mr. Mondry is eligible to receive
in respect of each fiscal year an incentive bonus determined in accordance with
any management incentive bonus plan then maintained by the Company. See "Report
of the Compensation Committee on Executive Compensation -- EXECUTIVE OFFICER
COMPENSATION PROGRAM -Officers' Bonus Plan." The term of employment under the
Mondry Agreement will expire on May 1, 2000. Mr. Mondry has agreed to certain
noncompetition restrictions with the Company during the term of the Mondry
Agreement and for two years thereafter. The Mondry Agreement provides for
certain severance arrangements. See "--Severance Arrangements."
SKINNER AGREEMENT. The Company is a party to an employment agreement with
James E. Skinner (the "Skinner Agreement") dated May 1, 1998, pursuant to
which Mr. Skinner currently serves as Executive Vice President and Chief
Financial Officer. The Skinner Agreement provides for annual salary
increases at the sole discretion of the Compensation Committee of the Board
of Directors. Mr. Skinner's current annual base salary is $362,000. In
addition, Mr. Skinner is eligible to receive in respect of each fiscal year
an incentive bonus determined in accordance with any management incentive
bonus plan then maintained by the Company. See "Report of the Compensation
Committee on Executive Compensation -- EXECUTIVE OFFICER COMPENSATION PROGRAM
- -Officers' Bonus Plan." The term of employment under the Skinner Agreement
will expire on May 1, 2000. Mr. Skinner has agreed to certain noncompetition
restrictions with the Company during the term of the Skinner Agreement and
for two years thereafter. The Skinner Agreement provides for certain
severance arrangements. See "--Severance Arrangements."
SEVERANCE ARRANGEMENTS
The Halpin, Compton, Crowley, Mondry and Skinner Agreements provide for
severance payments to such officers upon termination of their employment by the
Company other than for "cause," as defined in the agreements. Under the Halpin
Agreement, Mr. Halpin is entitled to receive the amount of his monthly base
salary (at the rate in effect immediately prior to termination of employment) as
severance pay for a period of 48 months following termination of employment.
Under the Compton Agreement, Mr. Compton is entitled to receive the amount of
his monthly base salary (at the rate in effect immediately prior to termination
of employment) as severance pay for a period of 36 months following termination
of employment. Under the Crowley, Mondry and Skinner Agreements, each is
entitled to receive the amount of his monthly base salary (at the rate in effect
immediately prior to termination of employment) as severance pay for a period of
18 months following termination of employment.
The agreements provide for lump sum severance payments in lieu of the
foregoing payments upon termination of employment in connection with a "change
in control" (as defined in the agreements) of the Company. The Company's
obligations under the agreements apply to specified employment terminations
during the 90-day period preceding a change in control and to any employment
termination (other than one due to death) during the 12-month period following a
change in control. The amount of the lump sum severance payment is equal to
2.99 times the sum of the following: (i) the terminated executive's annual base
pay, (ii) two times the terminated executive's target bonus for the bonus period
in which the change in control occurs and (iii) the terminated executive's
annualized automobile allowance, all determined at the time of employment
termination. The lump sum payment also includes a payment in lieu of continued
group insurance coverage and an amount necessary to reimburse the terminated
executive for excise taxes, if any, that the executive may be expected to incur
as a result of the severance payments. Under the agreements, the Company is
obligated to reimburse the executive for outplacement consulting service costs
incurred during the two-year period following employment termination in
connection with a change in control. The agreements provide that Messrs.
Halpin, Compton, Crowley, Mondry and Skinner, if requested by the Company, will
enter into consulting agreements with the Company for a period of six months
following termination of employment in connection with a change in control.
Modified noncompetition restrictions apply for a period of two years under the
agreements in the event of employment termination in connection with a change in
control.
19
<PAGE>
Officers of the Company who are not Named Officers have employment
agreements that provide for severance payments upon termination by the Company
of employment other than for "cause" as defined in the agreements. The
agreements provide for severance payments for periods of 18, 12 and six months
following termination of employment of Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents, respectively. The agreements also provide for
lump sum severance payments in lieu of the foregoing payments upon termination
of employment in connection with a change in control of the Company. The change
in control severance provisions of the agreements with officers of the Company
who are not Named Officers are substantially similar to the change in control
severance provisions of the Named Officers; provided that for Vice Presidents,
(i) the amount of the lump sum severance payments will be equal to 1.00 times
the sum of the items enumerated in the preceding paragraph, (ii) consulting
agreements are not required and (iii) modified noncompetition restrictions apply
for a period of one year.
Key employees not covered by employment agreements were covered by a plan
containing severance provisions substantially similar to the change in control
severance provisions contained in the agreements of the Named Officers, except
that the amount of the lump sum severance payments were equal to .50 times the
sum of the terminated employee's annual base pay, target bonus and annualized
automobile allowance. Key employees not covered by employment agreements were
not required to enter into consulting agreements following termination of
employment in connection with a change in control and were not subject to
noncompetition restrictions at any time. The severance plan for key employees
expired May 1, 1998.
CERTAIN TRANSACTIONS
James F. Halpin, Jr., son of the Company's President and Chief Executive
Officer, is the owner and President of OMO Marketing, Inc., which acts as a
sales representative for Ferris Marketing, Inc., a parent holding company for
Worldwide Marketing, Inc., Compaccessories, Inc. and TR Systems, Inc.
(collectively, "Ferris Marketing"). The Company purchases import products from
Ferris Marketing in the ordinary course of business, and during fiscal 1998 made
aggregate purchases totaling $6,153,085 from Ferris Marketing. During fiscal
1998, OMO Marketing, Inc. received $48,928 from Ferris Marketing for services
rendered in connection with purchases made from Ferris Marketing by the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and officers, and persons who own more than 10%
of a registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the Commission. Based solely on its
review of the copies of such forms received by it, and written representations
from certain reporting persons, the Company believes that during fiscal 1998 all
filing requirements applicable to its directors, officers and greater than 10%
beneficial owners were complied with, except that Paul Poyfair, Executive Vice
President--New Business Development of the Company, filed two erroneous reports.
Such reports, although filed within the specified time periods, erroneously
reported a number of shares sold that, in the aggregate, was 1,800 shares less
than the number actually sold.
20
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on Common
Stock with the cumulative total return on the stocks comprising the NYSE
Composite Index (the "NYSE Index") and the Standard & Poor's Retail Composite
Index (the "Peer Group Index") for the periods from June 26, 1993 through June
27, 1998 (assuming the investment of $100 on June 26, 1993, in Common Stock and
the stocks comprising the NYSE Index and the Peer Group Index, and reinvestment
of all dividends).
The companies whose stocks comprise the Peer Group Index are Albertsons,
Inc.; American Stores Company; AutoZone, Inc.; Charming Shoppes; Circuit City
Stores, Inc.; Costco Companies, Inc.; CVS Corp.; Dayton Hudson Corp.; Dillards,
Inc.; Federated Department Stores; GAP, Inc.; Giant Food, Inc.; Great Atlantic &
Pacific Tea Company; Harcourt General, Inc.; Home Depot, Inc.; K-Mart Corp.;
Kroger Company; Limited, Inc.; Longs Drug Stores, Inc.; Lowe's Companies, Inc.;
May Department Stores Companies; Mercantile Stores Company, Inc.; Nordstrom,
Inc.; J.C. Penney Company; Pep Boys-Manny, Moe & Jack; Rite Aid Corporation;
Sears Roebuck & Company; Sherwin-Williams Company; Tandy Corporation; TJX
Companies, Inc.; Toys R Us, Inc.; Venator Group, Inc.; Wal-Mart Stores; Walgreen
Company; and Winn-Dixie Stores, Inc.
COMPARISON OF CUMULATIVE TOTAL RETURN ON COMMON STOCK,
PEER GROUP INDEX AND NYSE INDEX
<TABLE>
<CAPTION>
FISCAL YEAR ENDING JUNE
---------------------------------------------------------
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
CompUSA Inc Common Stock 100.00 26.64 92.66 210.81 265.64 223.94
Peer Group Index 100.00 96.06 103.58 126.21 152.00 239.66
NYSE Index 100.00 103.48 123.53 154.54 201.87 257.25
</TABLE>
21
<PAGE>
PROPOSAL NO. 2
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee and subject to ratification
by the stockholders at the Meeting, the Board of Directors has selected Ernst &
Young LLP to audit the consolidated financial statements of the Company for
fiscal 1999. Ernst & Young LLP has served the Company in this capacity since
1988. Representatives of Ernst & Young LLP are expected to be present at the
Meeting, will have the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
VOTE REQUIRED
Ratification of the selection of the Company's independent auditors
requires the affirmative vote of a majority of the shares of Common Stock
present or represented at the Meeting and voting thereon. Unless otherwise
instructed or restricted, it is the intent of the persons named in the Proxy to
vote Proxies FOR ratification of the selection of the Company's independent
auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO
RATIFY THE SELECTION OF THE COMPANY'S INDEPENDENT AUDITORS.
STOCKHOLDERS' PROPOSALS
Stockholders may submit proposals on matters appropriate for stockholder
action at subsequent annual meetings of the Company consistent with Rule 14a-8
promulgated under the Exchange Act and the Company's Bylaws. For such a
proposal to be considered for inclusion in the Proxy Statement and Proxy
relating to the 1999 annual meeting of stockholders, the proposal must contain
the information required by the Company's Bylaws and must be received by the
Company not later than May 28, 1999 in accordance with Rule 14a-8. In addition,
the Company's Bylaws provide that a stockholder desiring to submit a proposal to
an annual meeting of stockholders generally must deliver written notice of such
proposal, together with the information required by the Bylaws, to the Secretary
of the Company no later that 75 days prior to the date on which, in the
immediately preceding year, the annual meeting of stockholders was held. For
such a proposal to be considered for inclusion on the agenda for the 1999 annual
meeting of stockholders, the proposal and the required information must be
received by the Company no later than August 21, 1999. Such proposals should be
directed to CompUSA Inc., 14951 North Dallas Parkway, Dallas, Texas 75240,
Attention: Secretary.
OTHER BUSINESS
The Board of Directors knows of no matters other than those described
herein that will be presented for consideration at the Meeting. However, should
any other matters properly come before the Meeting or any adjournments thereof,
it is the intention of the persons named in the Proxy to vote on such matters in
accordance with their best judgment in the interest of the Company.
22
<PAGE>
MISCELLANEOUS
All costs incurred in the solicitation of Proxies will be borne by the
Company. In addition to solicitation by mail, employees of the Company may
solicit Proxies by telephone, or personally, without additional compensation.
The Company may also make arrangements with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of shares of Common Stock held of record by
such persons, and the Company may reimburse such brokerage houses and other
custodians, nominees and fiduciaries for their out-of-pocket expenses incurred
in connection with these activities. In addition, Corporate Investor
Communications, Inc. ("CIC") may be retained by the Company to aid in the
solicitation of Proxies. If CIC is so retained, it would solicit Proxies by
mail, telephone, telegraph and personal interview and may request brokerage
houses and other custodians, nominees and fiduciaries to forward soliciting
material to beneficial owners of shares of Common Stock held of record by such
persons. For these services, CIC would be paid fees not to exceed $6,000 and
would be reimbursed for its expenses.
ANNUAL REPORT
Accompanying this Proxy Statement is a copy of the Company's Annual Report
to Stockholders for the fiscal year ended June 27, 1998.
By Order of the Board of Directors
/s/ MARK R. WALKER
Mark R. Walker
SENIOR VICE PRESIDENT--GENERAL
COUNSEL AND SECRETARY
Dallas, Texas
September 25, 1998
23
<PAGE>
COMPUSA INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD NOVEMBER 4, 1998
The undersigned hereby appoints James F. Halpin and Harold F. Compton, each
with the power to act without the other and with full power of substitution, as
Proxies to vote, as designated below, all stock of CompUSA Inc. owned by the
undersigned at the Annual Meeting of Stockholders to be held at the Hotel
Inter-Continental, 15201 North Dallas Parkway, Dallas, Texas on Wednesday,
November 4, 1998, at 8:00 a.m., local time, and at any adjournments of the
meeting, upon such business as may properly come before the meeting,
including the following:
1. Election as directors of the three nominees listed below.
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote
(except as indicated to the for all nominees listed below
contrary below): (TO WITHHOLD AUTHORITY TO VOTE
FOR ANY NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME
BELOW):
Giles H. Bateman Leonard L. Berry, Ph.D. Morton E. Handel
2. Approval of the selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending June 26, 1999.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion on any other matter that may properly come before the
meeting and any adjournments thereof.
(CONTINUED, AND TO BE SIGNED AND DATED, ON THE REVERSE SIDE)
- -------------------------------------------------------------------------------
<PAGE>
The shares represented by this proxy will be voted as directed. WHERE NO
DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
NAMED IN PROPOSAL NO. 1 AND FOR THE APPROVAL OF PROPOSAL NO. 2.
Please sign below, date and return promptly.
Dated: ___________________,1998
--------------------------------------
Signature
--------------------------------------
(Signature if held jointly)
IMPORTANT: Please sign exactly as name
appears to the left. When signing on
behalf of a corporation, partnership,
estate, trust or in other representative
capacity, please sign name and title. If
executed by a corporation, the proxy
should be signed by a duly authorized
officer. If executed by a partnership,
please sign in the partnership name by
an authorized person. For joint
accounts, each joint owner must sign.
THIS PROXY MAY BE REVOKED PRIOR TO THE EXERCISE OF THE POWERS CONFERRED BY
THE PROXY.
