SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12
UNITED RETAIL GROUP, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
UNITED RETAIL GROUP, INC.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:*..............................
4) Proposed maximum aggregate value of transaction:..................
*Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] 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:_____________________________________________________
April 21, 2000
Dear Stockholder:
I wish to extend a cordial invitation to the eighth Annual Meeting
of the stockholders of United Retail Group, Inc., which will be held at the
Marriott Glenpointe Hotel in Teaneck, New Jersey, at 11 o'clock on Tuesday
morning, May 23, 2000.
Formal notice of the Annual Meeting and the Proxy Statement are
contained on the following pages. I urge that you read the Proxy Statement
and then cast your vote on the accompanying proxy. The Annual Report of the
Company for 1999 is enclosed.
Please be sure to mark, date, sign and return the proxy promptly,
so that your shares will be represented at the meeting.
I look forward to greeting you at the meeting and reporting on the
Company's business and outlook.
Sincerely yours,
/s/ Raphael Benaroya
Raphael Benaroya
Chairman
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IMPORTANT: To ensure the presence of a quorum at the meeting, it is
important that your stock be represented, whether or not you plan to
attend. Please mark, date and sign the accompanying proxy and return it
promptly in the enclosed postpaid envelope. This proxy is solicited by the
Board of Directors of the Company.
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UNITED RETAIL GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 2000
The eighth Annual Meeting of the stockholders of United Retail
Group, Inc. will be held at the Marriott Glenpointe Hotel, 100 Frank W.
Burr Boulevard, Teaneck, New Jersey, (201) 836-0600, on Tuesday, May 23,
2000, at 11 o'clock in the morning, for the following purposes:
o electing nine directors; and
o transacting any and all other business that may
properly come before the meeting.
A list of stockholders may be examined during business hours at
the Marriott Glenpointe during the 10 days preceding the date of the Annual
Meeting of Stockholders.
The Board of Directors has fixed April 12, 2000 as the record date
for the determination of stockholders entitled to vote at this meeting and
only stockholders of record on that date shall be entitled so to vote.
By Order of the Board of Directors,
/s/ George R. Remeta
George R. Remeta
April 21, 2000 Secretary
UNITED RETAIL GROUP, INC.
365 WEST PASSAIC STREET
ROCHELLE PARK, NEW JERSEY 07662
PROXY STATEMENT
DATED APRIL 21, 2000
ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 2000
The accompanying proxy is solicited by the Board of Directors of United
Retail Group, Inc. (the "Company") to be voted at the Annual Meeting of
Stockholders to be held May 23, 2000, and any adjournments thereof. When
the proxy is properly executed and returned, the shares it represents will
be voted at the meeting as directed. If no specification is indicated, the
shares will be voted "for" election of the nominees named in this Proxy
Statement.
Any stockholder giving a proxy, however, has the power to revoke it prior
to its exercise by notice of revocation to the Company in writing or by
execution of a subsequent proxy (provided that such action must be taken in
sufficient time to permit the necessary examination and tabulation of the
subsequent proxy or revocation before the vote is taken) or by voting in
person at the Annual Meeting. If a stockholder wishes to give a proxy to
someone other than the individuals named as proxies in the proxy card, he
or she may cross out the names appearing in the enclosed proxy card, insert
the name of some other person, initial the insertion, sign and date the
proxy card and give it to that person for use at the meeting.
The shares entitled to vote at the meeting consist of shares of Common
Stock of the Company, with each share entitling the holder of record to one
vote. At the close of business on April 12, 2000, the record date for the
Annual Meeting, there were outstanding 13,297,033 shares of Common Stock.
This Proxy Statement and the accompanying form of proxy are first being
sent to stockholders on or about April 21, 2000.
ELECTION OF DIRECTORS
NOMINEES
Nine nominees for the Board of Directors of the Company will be elected at
the Annual Meeting of Stockholders for a term expiring at the Annual
Meeting of Stockholders in 2001 or until their successors are elected and
qualified. In the event any of the nominees shall be unable to serve as a
Director, it is intended that the proxies will be voted for the election of
a person nominated by the Board of Directors in substitution. The Company
has no reason to believe that any nominee for the Board of Directors will
be unable to serve as a Director if elected.
Stockholders of record on the record date who wished to nominate persons
for election as Directors were able to have done so by delivering a notice
of nomination to the Secretary of the Company by hand or by mail not less
than 90 days prior to the anniversary date of the immediately preceding
Annual Meeting of Stockholders. No person may be elected as a Director
unless nominated by a stockholder in the manner just described or by the
Board of Directors.
No person has been nominated for election as a Director except those named
in the section captioned "Business and Professional Experience." There are nine
nominees for election to the nine seats on the Board of Directors. Proxies
that withhold authority to vote will be counted only for quorum purposes.
A quorum is a majority of the outstanding shares. Broker non-votes will not
be counted for any purpose.
BUSINESS AND PROFESSIONAL EXPERIENCE
The nominees proposed by the Board of Directors are listed below.
Mr. Raphael Benaroya, age 52, has been the Company's Chairman of the Board,
President and Chief Executive Officer since before 1995. Mr. Benaroya is a
director of Russ Berrie and Company, Inc.
Mr. George R. Remeta, age 50, has been the Vice Chairman of the Board,
Chief Financial Officer and Secretary of the Company since before 1995. In
1999, he was named to the additional post of Chief Administrative Officer
of the Company.
Mr. Joseph A. Alutto, age 59, a Director of the Company since December
1992, has been the Dean of the Max M. Fisher School of Business at Ohio
State University since before 1995. Mr. Alutto is a director of Comptek
Research, Inc.
Mr. Russell Berrie, age 67, a Director of the Company since December 1992,
founded Russ Berrie and Company, Inc., an international toy manufacturer,
in 1963 and since then has been its Chairman of the Board and Chief
Executive Officer.
Mr. Joseph Ciechanover, age 66, a Director of the Company since May 1995,
has been Chairman of the Board of El Al Israel Airlines Ltd. since February
1995.
Mr. Michael Goldstein, age 58, has been Chairman of the Board of Toys "R"
Us since February 1998 and was Chief Executive Officer of that company from
before 1995 to February 1998 and from September 1999 to January 2000. Mr.
Goldstein is a director of Finlay Enterprises, Inc. and Houghton Mifflin
Co.
Mr. Ilan Kaufthal, age 52, a Director of the Company since December 1992,
is a Vice Chairman of Schroder & Co. Incorporated, an investment banking
firm, and has been an executive there since before 1995. Mr. Kaufthal is a
director of ASI Solutions, Inc., Cambrex Corporation, Pro.Team.Com, Inc.
and Russ Berrie and Company, Inc.
Mr. Vincent P. Langone, age 57, a Director of the Company since February
1994, has been the Chairman of the Board, President and Chief Executive
Officer of Formica Corporation, a manufacturer of Formica(R)brand laminate,
since 1998 and also served in those positions in 1995. In 1997, he was
President and Chief Executive Officer of Interbuild International, Inc., a
venture capital firm. In 1996, he was Chairman of the Board of L&S
Associates, Inc., a management consulting firm. Mr. Langone is a director
of Brand Scaffolding Services, Inc. and Summit Bank.
Richard W. Rubenstein, Esq., age 55, a Director of the Company since
December 1991, has been a partner at Squire, Sanders & Dempsey, a law firm,
since before 1995. Mr. Rubenstein is a director of AmeriLink Corporation.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
The Company's Board of Directors held seven meetings in Fiscal 1999.
During Fiscal 1999, all of the Directors attended 75% or more of the total
number of meetings of the Board and of committees of the Board on which
they served except Joseph Ciechanover.
Subject to approval by the Board, standing committees of Directors take
action in their respective areas of responsibility.
The Compensation Committee of the Board recommends executive compensation.
See, "Compensation Committee Report" regarding the Directors who served on
the Compensation Committee in Fiscal 1999. The Compensation Committee held
five meetings in Fiscal 1999.
The Audit Committee of the Board reviews and confirms the selection of the
Company's independent public accountants. The Audit Committee was composed
of Mr. Kaufthal, as Chairman of the Committee, and Messrs. Langone and
Rubenstein until the organizational meeting of the Board of Directors in
May 1999, when the membership was changed to Mr. Kaufthal, as Chairman of
the Committee, and Messrs. Alutto and Langone. The Audit Committee held
three meetings in Fiscal 1999.
The Nominating Committee of the Board nominates suitable persons for
election as Directors of the Company. Its members since before Fiscal 1999
have been Mr. Benaroya, as Chairman of the Committee, and Messrs. Berrie
and Rubenstein. Stockholders of record are permitted to nominate persons
for election (see "ELECTION OF DIRECTORS-Nominees" above); therefore, no
formal procedures exist for stockholders to make nominee recommendations to
the Nominating Committee. The Nominating Committee held one meeting in
Fiscal 1999. Nominees for election as Directors at the eighth Annual
Meeting of Stockholders were selected by the Nominating Committee in Fiscal
2000.
DIRECTOR COMPENSATION
Each Director who is not employed by the Company receives $3,000 for each
Board meeting that he attends and a $2,000 quarterly retainer. In addition,
a nonmanagement Director receives $1,000 for each additional day on which
he attends a committee meeting.
Each Director who is not employed by the Company receives an award in May
of each year under the Company's 1999 Stock Option Plan of nonqualified
options to purchase 3,000 shares of Common Stock exercisable at the then
current market price for a term of 10 years. Each option becomes
exercisable as to 600 shares on completion of each full year of service as
a Director after the date of grant, provided, however, that each option
becomes fully exercisable in the event that the Company enters into certain
transactions, including certain mergers or the sale of all or substantially
all of the Company's assets, and becomes fully exercisable upon retirement
from the Board in the discretion of the Compensation Committee of the
Board. In addition, commencing in May 2000 each nonmanagement Director will
receive an award under the Company's Stock Appreciation Rights Plan that
provides for a cash payment by the Company when the Director exercises the
stock option granted at the same time under the 1999 Plan. The payment will
be an amount equivalent to the equity in the option that is being
exercised, that is, the excess of the then current market price of the
shares issued over the exercise price paid by the Director.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 31, 2000, certain information
with respect to the beneficial ownership of shares of Common Stock of the
Chief Executive Officer of the Company, the four most highly compensated
executive officers of the Company and its subsidiaries in Fiscal 1999 other
than the Chief Executive Officer, each Director, and all Officers and
Directors as a group, and their percentage ownership. Except as noted
below, each of the persons listed has sole investment and voting power with
respect to the shares indicated. All information was determined in
accordance with Rule 13d-3 under the Exchange Act based on information
furnished by the persons listed.
<TABLE>
<CAPTION>
Name of Beneficial Amount of Percent of
Owner or Beneficial Outstanding
Identity of Group Ownership Shares
-------------------------------------------------------------------------------------
<S> <C> <C>
Mr. Raphael Benaroya(1).................................................. 2,486,203 18.4%
Mr. George R. Remeta(2).................................................. 434,039 3.2%
Kenneth P. Carroll, Esq.(3).............................................. 94,022 *
Ms. Ellen Demaio(4)...................................................... 44,800 *
Ms. Carrie Cline-Tunick(5)............................................... 10,000 *
Mr. Joseph A. Alutto(6).................................................. 13,590 *
Mr. Russell Berrie (7) ................................................. 42,000 *
Mr. Joseph Ciechanover(8)................................................ 9,000 *
Mr. Michael Goldstein (9)................................................ 5,100 *
Mr. Ilan Kaufthal(6) (10) (11)........................................... 77,000 *
Mr. Vincent P. Langone(12)............................................... 45,000 *
Richard W. Rubenstein, Esq.(13).......................................... 16,000 *
All Officers and Directors as a group ................................... 3,485,074 25.0%
(23 persons) (14)
</TABLE>
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(1) Includes 186,472 shares which may be acquired within 60 days by the
exercise of stock options. Excludes 90,000 shares held by a private
charitable foundation, as to which he disclaims beneficial
ownership.
(2) Includes 92,000 shares which may be acquired within 60 days by the
exercise of stock options.
(3) Includes 78,000 shares which may be acquired within 60 days by the
exercise of stock options.
(4) Consists of 44,800 shares which may be acquired within 60 days by
the exercise of stock options.
(5) Consists of 10,000 shares which may be acquired within 60 days by
the exercise of stock options.
(6) Includes 12,000 shares which may be acquired within 60 days by the
exercise of stock options.
(7) Includes 17,000 shares which may be acquired within 60 days by the
exercise of stock options.
(8) Includes 3,600 shares which may be acquired within 60 days by the
exercise of stock options.
(9) Includes 600 shares which may be acquired within 60 days by the
exercise of stock options.
(10) The outstanding shares are held jointly with his wife.
(11) Excludes shares held by Schroder & Co. Incorporated, of which Mr.
Kaufthal is a Vice Chairman, and as to which he disclaims beneficial
ownership.
(12) Includes 12,000 shares which may be acquired within 60 days by the
exercise of stock options. Also includes 400 shares held by a
partnership, as to which he disclaims beneficial ownership.
(13) Includes 15,800 shares which may be acquired within 60 days by the
exercise of stock options.
(14) Includes 628,472 shares which may be acquired within 60 days by the
exercise of stock options and shares held jointly with the spouses
of certain members of the group.
* Less than one percent.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation awarded to,
earned by or paid to the Company's Chief Executive Officer and each of the
other four most highly compensated executive officers of the Company and
its subsidiaries in the fiscal years indicated.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation Awards
Securities Underlying
Name and Annual Compensation(1) Options(3) All Other
Principal Positions Year Salary Bonus(2) (numbers of shares) Compensation(4)
- ------------------- ---- ------ -------- --------------------- ----------------
<S> <C> <C> <C> <C> <C>
Mr. Raphael Benaroya, 1999 $550,000 $195,000 -0- $ 95,000
Chairman of the Board, 1998 $550,000 $660,000 200,000 $ 105,000
President and Chief 1997 $550,000 $330,000 -0- $ 64,000
Executive Officer(5)
Mr. George R. Remeta, 1999 $401,000 $125,000 -0- $ 57,000
Vice Chairman of the 1998 $376,000 $376,000 100,000 $ 59,000
Board, Chief Administrative 1997 $350,000 $175,000 -0- $ 36,000
Officer, Secretary and
Director(5)
Ms. Ellen Demaio, 1999 $275,000 $ 65,000 -0- $ 33,000
Senior Vice President 1998 $250,000 $200,000 32,000 $ 32,000
-Merchandise of United 1997 $200,000 $ 80,000 -0- $ 18,000
Retail Incorporated(6)
Ms. Carrie Cline Tunick, 1999 $300,000 $ 35,000 -0- -0-
Vice President 1998 $300,000 $120,000 40,000 -0-
-Product Design 1997 $300,000 $ 60,000 -0- -0-
and Development of
United Retail
Incorporated(7)
Kenneth P. Carroll, Esq., 1999 $240,000 $ 59,000 -0- $ 29,000
Senior Vice 1998 $220,000 $176,000 50,000 $ 29,000
President -General 1997 $210,000 $ 84,000 10,000 $ 19,000
Counsel(8)
</TABLE>
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(1) The amounts shown are rounded and include deferred compensation but
do not include reimbursement of premiums for supplemental disability
insurance, perquisites and other personal benefits, if any, the
value of all of which for each named officer did not exceed the
lesser of $50,000 or 10% of the aggregate salary and bonus
compensation for such officer.
(2) The amounts shown are rounded and include payments as a bonus in a
subsequent year for services rendered in the year indicated.
(3) The Company had no long-term compensation plan other than plans
which provided for options to purchase shares of Common Stock. The
exercise price of each option listed in the table was at the current
market price per share of Common Stock on the date of action by the
Board of Directors or the Compensation Committee, as the case may
be.
(4) The amounts shown are rounded and consist principally of
contributions by the Company to the Retirement Savings Plan and
Supplemental Retirement Savings Plan based on the salary and bonus
paid in the year indicated and, in the case of Messrs. Benaroya and
Remeta, reimbursement for premiums they paid on individual term life
insurance policies and income taxes on such reimbursement. In Fiscal
1999, the respective amounts of approximately $13,000 and $3,000
were reimbursed to Mr. Benaroya and Mr. Remeta with respect to such
premiums and taxes.
(5) In 1998, the stockholders approved nonqualified stock options
exercisable at a price of $6.3125 for a term of 10 years with five
year vesting. Vesting of options is subject to acceleration in
accordance with the provisions of the stock option agreements and
the Employment Agreements between the Company and Mr. Benaroya and
Mr. Remeta, respectively.
(6) Stock options to purchase 38,000 shares have the benefit of an
arrangement in which the Company will pay Ms. Demaio the difference
if $34.28 exceeds the market price per share at the time of
exercise. The payment is conditioned, among other things, on the
Company's retail stores achieving annual net sales of $1 billion and
operating income of at least 7% of net sales. In no event, however,
shall the payment exceed $1 million. The options granted are
exercisable at a price of $5.875, are incentive stock options and
provide for a term of 10 years and five year vesting. Vesting of
options is subject to acceleration in accordance with the provisions
of the Plan. United Retail Incorporated is the Company's operating
subsidiary.
(7) The options granted are exercisable at a price of $5.875, are
incentive stock options and provide for a term of 10 years and five
year vesting. Vesting of options is subject to acceleration in
accordance with the provisions of the Plan. See, "Employment
Agreements" for additional information about the options.
(8) The options granted in 1997 are incentive stock options exercisable
at a price of $3.125. The options granted in 1998 are exercisable at
a price of $5.875, of which options to purchase 30,000 shares are
nonqualified options with the remainder being incentive stock
options. All the foregoing options provide for a term of 10 years
with five year vesting. Vesting of options is subject to
acceleration in accordance with the provisions of the respective
Plans and the Employment Agreement between the Company and Mr.
Carroll.
EMPLOYMENT AGREEMENTS
The Company has Employment Agreements with Messrs. Benaroya, Remeta and
Carroll, dated as of November 20, 1998 and with terms ending on August 3,
2003. Annual base salaries are $550,000 for Mr. Benaroya, $425,000 for Mr.
Remeta and $260,000 for Mr. Carroll. Under the Agreements, annual base
salaries are adjusted for inflation and may be increased further by the
Compensation Committee of the Board of Directors. See, "Summary
Compensation Table" and "Report of Compensation Committee." The Agreements
also provide for the award of bonuses ("Incentive Compensation Bonuses")
with respect to each Spring season and each Fall season based on meeting or
exceeding seasonal earnings targets. The contractual earnings targets
established by the Compensation Committee of the Board were the same
operating income targets applicable under the Company's incentive program
for other officers. The potential bonus ranges from nothing to a specified
percentage of the officer's base salary. The potential bonus ranges up to
120% of seasonal base salary for Mr. Benaroya, up to 100% for Mr. Remeta
and up to 80% for Mr. Carroll.
If the Company terminates the employment of Mr. Benaroya, Mr. Remeta or Mr.
Carroll without cause (as defined in his Employment Agreement) before the
end of the contractual term, the Company must pay him, in addition to
accrued salary and benefits, (a) an amount equal to three times the sum of
(i) then current annual base salary, plus (ii) the amount of Incentive
Compensation Bonuses with respect to the two most recently completed
seasons plus (iii) $20,000 in the case of Mr. Benaroya and $4,000 in the
case of Mr. Remeta, (b) a pro-rata Incentive Compensation Bonus for the
season in which termination occurs and (c) a tax gross-up ("Excise Tax
Gross-Up") which reimburses him for any federal excise taxes owed to the
extent that Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), applies to the payments.
If Mr. Benaroya, Mr. Remeta or Mr. Carroll resigns his employment within 10
business days after first receiving notice of change of control (as defined
in his Employment Agreement) of the Company, the Company must pay him, in
addition to accrued salary and benefits, (a) an amount equal to three times
the sum of (i) the then current annual base salary plus (ii) $20,000 in the
case of Mr. Benaroya and $4,000 in the case of Mr. Remeta, (b) a pro-rata
Incentive Compensation Bonus for the season in which resignation occurs and
(c) an Excise Tax Gross-Up.
United Retail Incorporated has an Employment Agreement with Ms.
Cline-Tunick, dated as of March 26, 1998 and with a term ending on March
26, 2003. The Agreement provides for annual base salary of $300,000 and an
Incentive Compensation Bonus up to 40% of seasonal base salary. If United
Retail Incorporated terminates her employment without cause (as defined in
her Employment Agreement) before the end of the contractual term, she is
entitled, in addition to accrued salary and benefits, to one year's base
salary as severance pay and a pro-rata Incentive Compensation Bonus for the
season in which termination occurs. Under the Employment Agreement, the
options granted to Ms. Cline-Tunick to purchase an aggregate of 50,000
shares of Company Common Stock have the benefit of an arrangement in which
the Company will pay Ms. Cline-Tunick the difference if $20 exceeds the
equity in each option to purchase one share, that is, the excess over the
exercise price of the market price per share at the time of exercise. The
payment is conditioned, among other things, on the Company's having
operating income in any fiscal year in excess of $50 million and equivalent
to more than 10% of net sales.
The Employment Agreements also contain covenants not to compete during
employment or afterwards for 18 months in the case of Messrs. Benaroya,
Remeta and Carroll and for 12 months in the case of Ms. Cline-Tunick. The
officers are expressly under no obligation to seek other employment during
the noncompetition period, and there would be no offset against any amounts
due to them on account of any subsequent permitted employment. The officers
are also obligated not to disclose confidential information at any time
during or after employment.
RETIREMENT SAVINGS PLAN
The Company has a profit-sharing plan qualified under the Code, the
Retirement Savings Plan (the "RSP"), in which all employees who have
completed one year of service are eligible to participate. Each participant
is entitled to direct that a contribution of 1%, 2% or 3% of his
compensation be made under the RSP as a basic contribution that reduces his
compensation under the Code. For each participant who makes a basic
contribution, the Company makes a matching cash contribution equal to
one-half of the basic contribution or such greater or lesser amount as the
Company may determine in its sole discretion, provided, however, that in no
event shall the matching contribution for a participant exceed certain
maximum limits imposed by governmental regulations applicable to qualified
plans. All contributions made by the Company are for the exclusive benefit
of participants and vest 100% after seven years of service with the Company
and in lesser percentages after six, five, four and three years of service
with the Company.
The Company has a nonqualified supplemental retirement plan (the "SRSP").
Under the SRSP the Company makes cash contributions to a separate trust
fund equal to the amount of contributions that it otherwise would have made
pursuant to the terms of the RSP but which were disallowed by governmental
regulations limiting contributions to qualified plans. The Company also
makes cash retirement contributions to the trust fund under the SRSP equal
to 6% of each participant's compensation, provided, however, that the
Company may contribute a greater or lesser amount in its sole discretion
and provided, further, that retirement contributions to the SRSP are
limited to employees who earn $100,000 per annum or more and who were
employed by the Company before 1993. Messrs. Benaroya, Remeta and Carroll
and Ms. Demaio are the beneficiaries of retirement contributions under the
SRSP.
The Benefits Committee of the Board of Directors oversees the RSP and SRSP.
In Fiscal 1999, the Company's Chief Executive Officer and the four other
most highly compensated executive officers of the Company and its
subsidiaries received no grants of stock options.
The following table sets forth information with respect to option exercises
and total options held by the Company's Chief Executive Officer and the
four other most highly compensated executive officers of the Company and
its subsidiaries.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND FISCAL 1999 YEAR END OPTION VALUES
Number of Securities Underlying Value of Unexercised
Unexercised Options At In-The-Money Options At
Fiscal 1999 Year End Fiscal 1999 Year End(1)
Shares
Acquired
On Value
Name Exercise Realized Exercisable Non-Exercisable Exercisable Non-Exercisable
- ---- -------- -------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Raphael Benaroya 250,000 $1,187,500 164,706 185,294 $299,111 $610,560
George R. Remeta 100,000 $ 475,000 72,000 88,000 $144,996 $298,746
Ellen Demaio -0- -0- 32,400 37,600 $122,424 $189,261
Carrie Cline-Tunick 14,000 $ 111,250 -0- 36,000 -0- $148,123
Kenneth P. Carroll -0- -0- 53,000 72,000 $259,905 $330,247
- ----------------
(1) Fair market value of the Common Stock at Fiscal 1999 year end was $9.9062 per share.
</TABLE>
REPORT OF COMPENSATION COMMITTEE
MEMBERSHIP; AUTHORITY
The Compensation Committee of the Board of Directors of the Company has
been composed of Vincent P. Langone, as Chairman, Joseph A. Alutto and
Joseph Ciechanover.
In May 1999, subject to approval by the Board of Directors, the
Compensation Committee determined the cash compensation of the Company's
Vice Chairman and Chief Administrative Officer. In February 1999, the
Compensation Committee reviewed the total budget for cash compensation of
officers and other managers of the Company or its subsidiaries whose
individual base salary and potential cash bonus could have exceeded
$150,000 per annum. During Fiscal 1999, option grants were made from time
to time by the Compensation Committee pursuant to the Company's 1999 Stock
Option Plan.
Insurance, retirement savings plans and other benefits were overseen by the
Benefits Committee but were taken into account by the Compensation
Committee. The Audit Committee reviewed transactions between the Company
and its subsidiaries and their officers and their affiliates. See, "Certain
Transactions."
POLICIES
The principal objective of the Company's Fiscal 1999 executive compensation
program was to motivate officers and other senior managers to maximize the
Company's operating income and thereby to increase stockholder returns. The
program was intended to be competitive and thereby to encourage associates
to remain in the Company's employ. Finally, the program was designed to be
equitable. The principal components of the executive compensation program
for Fiscal 1999 were:
o base salary with merit increases for certain associates
o formula-based cash bonus awards for achieving a seasonal
(six-month) operating income target
o matching retirement savings contributions by the Company
with a maximum of 1.5% of combined base salary and cash
bonus
o stock options exercisable at fair market value on the date
action was taken by the Compensation Committee.
In addition, Company retirement savings contributions generally equal to 6%
of combined base salary and cash bonus were made for the benefit of certain
officers (see, "Executive Compensation - Retirement Savings Plan").
Except for base salaries, all the components of the executive compensation
program were affected by the Company's operating income. In this way, the
economic interests of the officers and other senior managers were aligned
with those of the stockholders.
The operating income target (which the Company deems to be proprietary and
confidential) for the bonus awards program was met in one of the two
seasons of Fiscal 1999. Bonuses were paid in accordance with the program
formula. Additional one-time bonuses were paid to certain new associates as
part of their hiring arrangements.
CEO COMPENSATION
In Fiscal 1996, Fiscal 1997, Fiscal 1998 and Fiscal 1999, the base salary
of the Company's Chairman of the Board, President and Chief Executive
Officer, Raphael Benaroya, was approximately $550,000 per annum, as he
voluntarily declined to be considered for a raise and voluntarily waived
current payment of the annual cost of living increases that he was entitled
to receive under his Employment Agreement. Mr. Benaroya participated in the
Company's bonus award program and received a bonus award with respect to
Fiscal 1999 in accordance with the program formula, which applies to all
program participants. See, "Executive Compensation - Employment Agreements."
Respectfully submitted,
Dated: April 10, 2000 Compensation Committee
/s/ Vincent P. Langone, Chairman
/s/ Joseph A. Alutto
/s/ Joseph Ciechanover
--------------------
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors of the Company has
been composed of Vincent P. Langone, as Chairman, Joseph A. Alutto and
Joseph Ciechanover.
Raphael Benaroya, the Chairman of the Board, President and Chief Executive
Officer of the Company, is a member of the Compensation Committee of the
Board of Directors of Russ Berrie and Company, Inc. Russell Berrie is the
Chairman of the Board and Chief Executive Officer of Russ Berrie and
Company, Inc. and is a Director of the Company.
STOCKHOLDER RETURN GRAPH
The following graph shows the change at January 29, 2000 in the value of
$100 invested in Common Stock of the Company five years earlier compared
with the changes since then in the Standard & Poor's 500 Composite Stock
Index, which includes companies that sell products other than women's
apparel, and the Standard & Poor's Retail Specialty Apparel Stock Index and
a peer group index composed of Ann Taylor Stores Corp., The Cato
Corporation, Charming Shoppes, Inc. and Dress Barn Inc.
<TABLE>
<CAPTION>
1/95 1/96 1/97 1/98 1/99 1/00
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
United Retail Group, Inc. 100.00 48.44 39.06 67.19 124.22 124.22
S & P 500 100.00 138.67 175.20 222.34 294.58 342.26
S & P RETAIL (SPECIALTY APPAREL) 100.00 119.08 150.78 273.72 464.89 443.29
Peer Group Cumulative
Total Return Weighted
Average By Market 100.00 51.28 72.95 85.88 104.33 99.23
Value
</TABLE>
The Company prepared a peer group index composed of retail apparel
companies with a market capitalization smaller than the companies included
in the Standard & Poor's Retail Specialty Apparel Stock Index. The Company
believes that the larger capitalization companies included in the Standard
& Poor's Retail Specialty Apparel Stock Index are not as representative of
the Company's stock market sector as the smaller capitalization companies
included in the peer group index.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors of the Company and officers of the Company and its subsidiaries
are required to file with the Securities and Exchange Commission Statements
of Changes in Beneficial Ownership with respect to the Company's Common
Stock, designated as Form 4's. The Form 4's are required to be filed
monthly, with certain exceptions, if a reporting person acquires or
disposes of beneficial ownership of the Company's Common Stock. Former
officers are also required to file Form 4's for up to six months after
leaving the Company's employ. Transactions not included on a Form 4, either
pursuant to an exemption under the rules or through inadvertence, are
required to be reported after the end of the fiscal year on Annual
Statements of Changes In Beneficial Ownership, designated as Form 5's.
Based on copies of Form 4's and Form 5's received by the Company from
reporting persons with respect to transactions in Fiscal 1999 it appears
that former officers of United Retail Incorporated, Kevin Burke and Alan
Jones, did not file a required Form 5 with respect to the cancellation of
employee stock options after resignation from employment.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of shares of Common Stock of the Company by persons
who were known by the Company to be the beneficial owners of more than 5%
of the outstanding shares. All information was determined in accordance
with Rule 13d-3 under the Exchange Act based on information in filings by
the persons listed with the Securities and Exchange Commission. All
information about beneficial ownership amounts is as of December 31, 1999,
except as noted below, and the percents of outstanding shares are as of
March 31, 2000.
<TABLE>
<CAPTION>
Amount and Percent of
Name and Address Nature of Beneficial Outstanding
of Beneficial Owner Ownership Shares
-------------------------------------------------------------------------- ------------
<S> <C> <C>
Mr. Raphael Benaroya (1) ............................. 2,486,203 18.4%
c/o United Retail Group, Inc.
365 West Passaic Street
Rochelle Park, New Jersey 07662
Limited Direct Associates, L.P. (2) .................. 1,600,000 12.0%
Three Limited Parkway
Columbus, Ohio 43230
Cramer Rosenthal McGlynn, LLC (3)..................... 1,269,700 9.5%
707 Westchester Avenue
White Plains, New York 10604
Franklin Advisory Services, Inc. (3).................. 877,100 6.6%
One Parker Plaza
Fort Lee, New Jersey 07024
FMR Corp. (4)......................................... 829,300 6.2%
82 Devonshire Street
Boston, Massachusetts 02109
Dimensional Fund Advisors, Inc. (3)................... 791,100 5.9%
1299 Ocean Avenue
Santa Monica, California 90401
Cumberland Associates LLC (5) ........................ 708,600 5.3%
1114 Avenue of the Americas
New York, New York 10036
- ------------------
(1) As of March 31, 2000. Includes 186,472 shares which may be acquired
within 60 days by the exercise of stock options. Excludes 90,000
shares held by a private charitable foundation, as to which he
disclaims beneficial ownership. Mr. Benaroya has the sole right to
vote and dispose of these shares.
(2) As of February 10, 2000. Limited Direct Associates, L.P. ("LDA") is
an affiliate of The Limited, Inc. LDA has the sole right to vote and
dispose of these shares.
(3) An investment adviser with the sole right to vote and dispose of
these shares.
(4) FMR Corp. has the sole right to dispose of all these shares and the
sole right to vote 420,000 of these shares.
(5) Cumberland Associates LLC has the sole right to vote and dispose of
681,000 of these shares and shared voting power and dispositive
power for the remainder.
</TABLE>
CERTAIN TRANSACTIONS
Before July 1989, the Company was an indirect, wholly-owned subsidiary of
The Limited, Inc. ("The Limited"), which has retained an interest in the
Company. See, "Security Ownership of Principal Stockholders."
One AVENUE store was subleased by United Retail Incorporated from a
subsidiary of The Limited in Fiscal 1999 pursuant to an Amended and
Restated Master Affiliate Sublease Agreement, dated as of July 17, 1989.
United Retail Incorporated was charged approximately $0.1 million as its
share of the rent in Fiscal 1999.
American Licensing Group, Inc., which is a subsidiary of The Limited,
granted to United Retail Incorporated pursuant to agreements dated as of
April 30, 1989, as amended (the "Accessories Sublicensing Agreements"),
non-exclusive trademark sublicenses to manufacture and sell accessories
with a national brand name. During Fiscal 1999, United Retail Incorporated
made payments to American Licensing Group, Inc. under the Accessories
Sublicensing Agreements of approximately $0.4 million, of which American
Licensing Group, Inc. paid approximately $0.3 million to the licensor of
the trademark.
Management believes that the terms of the Restated Master Affiliate
Sublease Agreement and the Accessories Sublicensing Agreements are not more
favorable to The Limited's affiliates than the terms that would be
available in arm's length transactions between unaffiliated parties.
American Licensing Group, L.P. ("ALGLP") provides management and
administrative services to American Licensing Group, Inc. under a
management services agreement between ALGLP and American Licensing Group,
Inc. dated as of August 26, 1989 (the "Management Services Agreement") for
a base fee and a share of the net profits of American Licensing Group, Inc.
The partners of ALGLP are an affiliate of The Limited, which owns a 20%
limited partnership interest, and Raphael Benaroya, Inc., an affiliate of
Raphael Benaroya, the Chairman of the Board, President and Chief Executive
Officer of the Company, which owns an 80% partnership interest. Mr.
Benaroya has advised the Company that he believes the arrangements made to
have ALGLP provide management and administrative services to American
Licensing Group, Inc., including the execution and delivery of the
Management Services Agreement, were not more favorable to ALGLP than the
arrangements that would have been available to American Licensing Group,
Inc. in a transaction with a service provider unaffiliated with Mr.
Benaroya.
ALGLP granted to United Retail Incorporated pursuant to agreements dated as
of March 11, 1994, as amended, and March 17, 1995, respectively (the "ALGLP
Sublicensing Agreements"), non-exclusive trademark sublicenses to sell
foundations and sleepwear with a national brand name. During Fiscal 1999,
United Retail Incorporated made payments to ALGLP under the ALGLP
Sublicensing Agreements of approximately $0.4 million, of which ALGLP paid
approximately $0.3 million to the licensor of the trademark. ALGLP
subleases a two-room suite of offices from United Retail Incorporated,
which also provides certain office services and supplies to ALGLP at
estimated cost. During Fiscal 1999, ALGLP paid approximately $6,000 rent
and reimbursed United Retail Incorporated approximately $29,000 (on a cash
rather than an accrual basis) for office services and supplies. At January
29, 2000, the account receivable from ALGLP was approximately $8,000.
Management believes that the terms of the business arrangements between
United Retail Incorporated and ALGLP are not more favorable to ALGLP than
the arrangements that would be available in arm's length transactions
between unaffiliated parties.
The father of Raphael Benaroya is employed by United Retail Incorporated.
His salary in Fiscal 1999 was approximately $63,000. Management believes
that the terms of employment of Mr. Benaroya's father are not more
favorable to him than the terms that would have been available to him from
an employer unaffiliated with Mr. Benaroya.
The Company is required to bear the expenses of registering shares of
Common Stock under the Securities Act as follows. Raphael Benaroya, the
Chairman of the Board, President and Chief Executive Officer of the
Company, and the Company are among the parties to the Restated
Stockholders' Agreement. Pursuant to the Restated Stockholders' Agreement,
Limited Direct Associates, L.P. ("LDA"), an affiliate of The Limited, has
the right ("Demand Registration Right") on two occasions to require the
Company to prepare and file a registration statement under the Securities
Act with respect to not more than 2,500,000 shares of Common Stock. Mr.
Benaroya has a similar Demand Registration Right exercisable on one
occasion with respect to an offering of not more than 2,687,500 shares of
Common Stock. Further, in the event that the Company proposes to register
any of its securities under the Securities Act for its own account (subject
to certain exceptions), or pursuant to the exercise of a Demand
Registration Right, the other parties to the Restated Stockholders'
Agreement, including George R. Remeta, the Vice Chairman and Chief
Administrative Officer of the Company, Ellen Demaio, the Senior Vice
President-Merchandise of United Retail Incorporated, and certain other
stockholders are entitled to include shares in such registration, subject
to the right of the underwriters of any such offering to limit the number
of shares included in such registration.
Raphael Benaroya, the Chairman of the Board, President and Chief Executive
Officer of the Company, borrowed money from the Company to finance taxes
arising from exercises of employee stock options and to pay interest on the
advances. (The advances had previously been authorized by the Compensation
Committee.) In Fiscal 1998, an advance was made of approximately $1.6
million. In Fiscal 1999, additional advances of approximately $0.1 million
and $0.7 million were made. Interest is now payable annually in cash at the
prime rate. The largest amount outstanding, which remains outstanding, was
approximately $2.4 million. The advances mature in November 2003 subject to
acceleration under certain circumstances and to a call by the Company with
respect to half of the principal amount in November 2001. Payment of the
advances is secured by a pledge of the 899,719 shares of the Company's
Common Stock issued upon the option exercises. The advances are full
recourse obligations.
An advance was made to George R. Remeta, the Vice Chairman and Chief
Administrative Officer of the Company, in the amount of $0.2 million in
Fiscal 1998 to finance payment of income taxes incurred in connection with
the exercise of stock options. Mr. Remeta repaid the advance with interest
at the prime rate in Fiscal 1999 by surrendering shares of the Company's
Common Stock having an equivalent market value.
The option exercises by Messrs. Benaroya and Remeta referred to under the
caption "Aggregated Option Exercises in Fiscal 1999 and Fiscal 1999 Year
End Option Values" were non-cash exercises with the exercise price paid by
surrendering shares of the Company's Common Stock held by them having a
market value at the time equal to the exercise price of approximately $1.3
million in the case of Mr. Benaroya and $0.5 million in the case of Mr.
Remeta. Mr. Remeta financed the taxes arising from his option exercises by
surrendering shares of the Company's Common Stock that he held having a
market value at the time equal to the taxes, approximately $0.2 million.
-------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
During Fiscal 1999, PricewaterhouseCoopers LLP served as the Company's
independent public accountants and in that capacity rendered an opinion on
the Company's consolidated financial statements as of and for the year
ended January 29, 2000. The Company has selected PricewaterhouseCoopers LLP
as its independent public accountants for the current fiscal year.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting. They will be available to respond to appropriate
questions and may make a statement if they so desire.
-------------------------
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting of Stockholders. However, if other matters should come
before the meeting, it is the intention of each of the persons named in the
proxy to vote in accordance with his judgment on such matters.
-------------------------
STOCKHOLDER PROPOSALS
Any proposals of stockholders that are intended to be presented at the 2001
Annual Meeting of Stockholders, but which are not received by the Secretary
of the Company at the principal executive offices of the Company on or
before (i) December 24, 2000 may not be included by the Company in the
proxy statement and form of proxy relating to the meeting and (ii) February
23, 2001 may not properly be brought before the meeting.
-------------------------
EXPENSES OF SOLICITATION
The expenses of preparing, assembling, printing and mailing the proxy and
the material used in solicitation of proxies will be paid by the Company.
In addition to the use of the mails, solicitation may be made by associates
of the Company by telephone, e-mail, facsimile and personal interview. The
Company does not expect to pay any compensation for the solicitation of
proxies.
By Order of the Board of Directors,
/s/ Raphael Benaroya
Raphael Benaroya
Chairman of the Board
2000proxy
UNITED RETAIL GROUP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints RAPHAEL BENAROYA and GEORGE R. REMETA and
each of them, with power of substitution in each, proxies to represent the
undersigned and to vote, as noted below, all the common stock of UNITED
RETAIL GROUP, INC. (the "Company"), which the undersigned would be entitled
to vote if personally present at the Annual Meeting of Stockholders to be
held on May 23, 2000 at 11:00 A.M., or any adjournments thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all Nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
Nominees: Joseph A. Alutto, Raphael Benaroya, Russell Berrie,
Joseph Ciechanover, Michael Goldstein, Ilan Kaufthal,
Vincent Langone, George R. Remeta and Richard W. Rubenstein
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- ------------------------------------------------------------------------------
2. IN THEIR DISCRETION: (i) AS TO THE ELECTION OF DIRECTORS, IF THE
APPROPRIATE BOX ABOVE IS NOT MARKED, (ii) for the election of a
substitute for any of the nominees listed above who become(s) unable to
serve, and (iii) on matters incidental to the conduct of the meeting.
(Continued and to be signed on opposite side)
UNITED RETAIL GROUP, INC.
The shares represented hereby will be voted as instructed by the
undersigned. IF THE APPROPRIATE BOX IS NOT MARKED, THE PROXIES APPOINTED
HEREBY INTEND TO VOTE FOR ALL THE NOMINEES LISTED.
Please specify your vote by marking the appropriate box and date and
sign your name(s) below.
Dated . . . . . . . . . . . ., 2000
Signature(s) . . . . . . . . . . .
. . . . . . . . . . .
