<PAGE>
BRAUN'S FASHIONS CORPORATION
2400 XENIUM LANE NORTH
PLYMOUTH, MINNESOTA 55441
-------------
PROXY STATEMENT
-------------
ANNUAL MEETING OF SHAREHOLDERS - JULY 26, 2000
INFORMATION CONCERNING SOLICITATION
AND VOTING
This Proxy Statement is furnished by the Board of Directors of Braun's
Fashions Corporation (the "Company") in connection with the solicitation of
proxies to be used at the Annual Meeting of Shareholders (the "Meeting") of the
Company to be held on Wednesday, July 26, 2000, at 2:00 p.m. Central Time, at
2800 LaSalle Plaza, 800 LaSalle Avenue, Minneapolis, Minnesota, and at all
adjournments thereof for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Shareholders. ANY PROXY IN WHICH NO DIRECTION IS
SPECIFIED WILL BE VOTED IN FAVOR OF EACH OF THE MATTERS TO BE CONSIDERED. This
Proxy Statement and the Notice of Meeting and Proxy are being mailed to
shareholders on or about June 9, 2000.
The close of business on May 26, 2000 has been fixed as the record date
for the determination of shareholders entitled to receive notice of and to vote
at the Meeting. At that date, the Company's outstanding voting securities
consisted of 6,803,385 shares of common stock, par value $.01 per share (the
"Common Stock"). On all matters which will come before the Meeting, each
shareholder or his proxy will be entitled to one vote for each share of Common
Stock of which such shareholder was the holder of record on the record date. The
aggregate number of votes cast by all shareholders present in person or by proxy
at the Meeting will be used to determine whether a motion is carried. Thus, an
abstention from voting on a matter by a shareholder, while included for purposes
of calculating a quorum for the Meeting, has no effect on the item on which the
shareholder abstained from voting. In addition, although broker "non-votes" will
be counted for purposes of attaining a quorum, they will have no effect on the
vote. Broker non-votes occur when brokers, who hold their customers' shares in
street name, sign and submit proxies for such shares and vote such shares on
some matters, but not others. This would occur when brokers have not received
any instructions from their customers, in which case the brokers, as the holders
of record, are permitted to vote on "routine" matters, which include the
election of directors, but not on non-routine matters.
Any Proxy given pursuant to this solicitation may be revoked by the
person giving it at any time prior to its use by (i) delivering to the principal
office of the Company a written notice of revocation, (ii) filing with the
Company a duly executed Proxy bearing a later date or (iii) attending the
Meeting and voting in person.
The costs of this solicitation will be borne by the Company. The
Company will request brokerage houses and other nominees, custodians and
fiduciaries to forward soliciting material to
<PAGE>
beneficial owners of the Company's Common Stock. The Company will reimburse
brokerage firms and other persons representing beneficial owners for their
expenses in forwarding solicitation materials to beneficial owners.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of May 19, 2000: (i) by
each of the executive officers included in the Summary Compensation Table set
forth under the caption "Executive Compensation;" (ii) by each director; (iii)
by all directors and executive officers of the Company as a group; and (iv) by
each person known to the Company to be the beneficial owner of more than 5% of
the outstanding shares of the Company's Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF SHARES
NAME BENEFICIALLY OWNED BENEFICIALLY OWNED
---- ------------------ ------------------
OFFICERS AND DIRECTORS
----------------------
<S> <C> <C>
William J. Prange 196,500 (1) 2.8
Joseph E. Pennington 94,001 (2) 1.4
Ralph C. Neal 74,499 (3) 1.1
Kathryn R. Gangstee 42,300 (4) *
Andrew K. Moller 55,800 (5) *
Nicholas H. Cook 50,400 *
Marc C. Ostrow 125,500 (6)(7) 1.8
James J. Fuld, Jr. 93,670 (7)(8) 1.4
Donald D. Beeler 37,500 (9) *
Larry C. Barenbaum 43,000 (7) *
Anne L. Jones 0 *
5% SHAREHOLDERS
---------------
Benson Associates, LLC 617,750 (10) 9.1
All directors and executive
officers as group (11 persons) 813,170 (11) 11.3
</TABLE>
-----------------------------
*Less than 1%
(1) Includes 196,500 shares issuable pursuant to options granted.
(2) Includes 68,000 shares issuable pursuant to options granted.
(3) Includes 34,500 shares issuable pursuant to options granted.
(4) Includes 42,300 shares issuable pursuant to options granted.
(5) Includes 10,500 shares issuable pursuant to options granted.
(6) Mr. Ostrow's address is c/o Pennwood Capital Corporation, 477 Madison
Avenue, New York, New York 10022.
(7) Includes 15,000 shares issuable pursuant to options granted.
(8) Mr. Fuld's address is c/o James J. Fuld, Jr. Corp., 605 Third Avenue,
Suite 3500, New York, New York 10158.
(9) Includes 17,500 shares issuable pursuant to options granted.
(10) The address of Benson Associates, LLC is 111 S.W. Fifth Avenue, Suite
2130, Portland, Oregon 97204.
(11) This figure includes outstanding shares and options described in the
preceding footnotes.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
The Company's Certificate of Incorporation provides that the Board of
Directors be divided into three classes of directors of as nearly equal size as
possible. The Company's Bylaws further provide that the total number of
directors will be determined exclusively by the Board of Directors. Directors
are elected for a term of three years and the terms are staggered. William J.
Prange and James J. Fuld, Jr. are the directors in the class whose term expires
at the Meeting. Management and the Board of Directors have nominated and
recommended that William J. Prange and James J. Fuld, Jr. be reelected as Class
3 directors, to hold office until the 2003 Annual Meeting of Shareholders and
until their respective successors are duly elected and qualified. Management and
the Board of Directors further recommend that the shareholders ratify the
appointment of Anne L. Jones as a Class 1 director to hold office until the 2001
Annual Meeting of Shareholders and until her successor is duly elected and
qualified. Further, management and the Board of Directors recommends that the
shareholders ratify the appointment of Joseph E. Pennington as a Class 2
director to hold office until the 2002 Annual Meeting of Shareholders and until
his successor is duly elected and qualified. All of the nominees are members of
the Board of Directors of the Company and have served in that capacity since
originally elected or designated as indicated below.
There is no family relationship among the nominees or between any
nominee and any of the Company's other directors.
VOTING INFORMATION
Proxies solicited by the Board of Directors will, unless otherwise
directed, be voted to elect Messrs. Prange and Fuld and to ratify the
appointment of Ms. Jones and Mr. Pennington. The affirmative vote of the
majority of shares of Common Stock present and entitled to vote at the Meeting
is necessary to elect each nominee. A shareholder submitting a Proxy may vote
for all or any of the nominees for election to the Board of Directors or may
withhold his or her vote from all or any of such nominees. IF A SUBMITTED PROXY
IS PROPERLY SIGNED BUT UNMARKED IN RESPECT OF THE ELECTION OF DIRECTORS, IT IS
INTENDED THAT THE PROXY AGENTS NAMED IN THE PROXY WILL VOTE THE SHARES
REPRESENTED THEREBY FOR THE ELECTION OF ALL OF THE NOMINEES. All of the nominees
have agreed to serve the Company as a director if elected. However, should any
nominee become unwilling or unable to serve if elected, the Proxy Agents named
in the Proxy will exercise their voting power in favor of such other person as
the Board of Directors of the Company may recommend. The Company's Certificate
of Incorporation prohibits cumulative voting and requires that each director be
elected by a majority of the voting power of the shares represented and voted at
the Meeting.
3
<PAGE>
The table below gives certain information concerning the nominees and
other directors:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE NOMINEE OR CONTINUING DIRECTOR IN TERM SINCE
---- --- -------------------------------------- -------
<S> <C> <C> <C>
William J. Prange (3)............... 46 Director; nominee with term expiring in 2000 1998
James J. Fuld, Jr.(1)............... 52 Director; nominee with term expiring in 2000 1986
Anne L. Jones ...................... 54 Director; nominee with term expiring in 2001 2000
Nicholas H. Cook.................... 59 Director with term expiring in 2001 1987
Marc C. Ostrow(2)................... 54 Director with term expiring in 2001 1986
Joseph E. Pennington ............... 54 Director; nominee with term expiring in 2002 1999
Larry C. Barenbaum(1)(2)(3)......... 53 Director with term expiring in 2002 1992
Donald D. Beeler(1)(2).............. 64 Director with term expiring in 2002 1992
</TABLE>
-------------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
(3) Member of Nominating Committee
NOMINEES AND DIRECTORS
CLASS 3 NOMINEES
WILLIAM J. PRANGE has served the Company as Chairman since September
1999. From March 1998 through August 1999, he was President and Chief Executive
Officer. He has served as a director of the Company since September 1998. From
July 1997 through February 1998, Mr. Prange was President and Chief
Merchandising Officer and from April 1995 through June 1997, he was Senior Vice
President and General Merchandising Manager of the Company. From April 1994
through March 1995, Mr. Prange served as Vice President and General
Merchandising Manager of the Company. From 1989 to 1994, he was President and
General Merchandise Manager of American Specialty Stores (dba the id). From 1987
to 1989, he was Vice President and General Merchandise Manager of American
Specialty Stores. From 1985 to 1987, Mr. Prange was Vice President and General
Merchandise Manager of Prange Department Stores.
JAMES J. FULD, JR. has served as a director of the Company since 1986.
From November 1986 to December 1990, he served as Secretary of the Company.
Since December 1979, Mr. Fuld has been the Chairman, President and sole
shareholder of James J. Fuld, Jr. Corp., a private financial and management
consulting firm.
4
<PAGE>
CLASS 1 NOMINEE
ANNE L. JONES has served as a director of the Company since January
2000. From 1979 to the present, Ms. Jones has served as Chief Executive Officer
of Jones Consulting Group, Inc., an organizational development consulting firm.
Prior thereto, Ms. Jones served in various sales and product development
capacities with IBM. Ms. Jones also serves on the Board of Directors of Goodhue
County National Bank and River Region Health Care Systems, both of Red Wing,
Minnesota.
CLASS 1 DIRECTORS
NICHOLAS H. COOK has been a director since October 1987. Mr. Cook was
Chairman of the Board from 1992 through August 1999 and Chief Executive Officer
from December 1990 through February 1998. From December 1990 to June 1994, he
also served as the Company's President and from February 1987 to December 1990,
he was a Vice President. Mr. Cook retired from the Company in August 1999.
MARC C. OSTROW has served as a director of the Company since 1986.
From November 1986 until November 1991, Mr. Ostrow served as Chairman of the
Board of the Company, and from 1992 until April 1999, Mr. Ostrow served as
Chairman of the Company's Compensation Committee. Since 1979, Mr. Ostrow has
been Chairman and Chief Executive Officer of Pennwood Capital Corporation, a
private investment and strategic management firm. Mr. Ostrow also serves as
Vice Chairman and Treasurer of Global Wireless Holdings, Inc., a wireless
data communications company he co-founded in 1997, which focuses on emerging
markets in Latin America and Asia.
CLASS 2 NOMINEE
JOSEPH E. PENNINGTON has served as director, President and Chief
Operating Officer of the Company since September 1999. From March 1998 through
August 1999, Mr. Pennington was Executive Vice President and Chief Operating
Officer. Mr. Pennington was a Vice President of the Company from February 1997
through February 1998. From April 1996 through January 1997, Mr. Pennington was
self-employed, providing consulting services to retail companies including the
Company. Mr. Pennington was President and Chief Executive Officer of American
Specialty Corp., d/b/a the id, from June 1994 through March 1996. From January
1990 through May 1994, he was a Vice President of the id. From 1976 through
1989, Mr. Pennington held various positions with Foxmoor Stores, including Vice
President from 1984 through 1989.
CLASS 2 DIRECTORS
LARRY C. BARENBAUM has served as a director of the Company since March
1992. Since November 1991, Mr. Barenbaum has engaged in investment activities
and has provided consulting services to various companies in the specialty
retail and services industries. From 1986 to November 1991, Mr. Barenbaum was
President and Chief Executive Officer of Lawrence Jewelry Company, a fashion,
wholesale jewelry distribution company he founded in 1970. Mr. Barenbaum also
served
5
<PAGE>
as President of ACII Corp., a distributor of fashion accessories, which filed
under Chapter 7 of the United States Bankruptcy Code on December 26, 1996. Mr.
Barenbaum also serves on the Board of Directors of Signal Bank, United Community
Bancshares Holding Company and Park National Bank.
DONALD D. BEELER has served as a director of the Company since March
1992. From 1986 to October, 1999, Mr. Beeler was Chairman and Chief Executive
Officer of Snyder's Drug Stores, Inc. ("Snyder's"), a Minneapolis-based retailer
which operates a chain of 56 stores. In addition, Snyder's operated a wholesale
program, by contract, which supplied over 800 independent retailers in the
United States. In October, 1999, Snyder's was sold to Katz Enterprises, Inc. and
Mr. Beeler retired.
The Company operated its business as debtor-in-possession under Chapter
11 of the United States Bankruptcy Code from July 1996 until December 1996, when
the Company's Plan of Reorganization was approved by creditors and shareholders
and was confirmed by the Bankruptcy Court. All of the nominees and directors
served as directors of the Company during this period, with the exception of
Messrs. Prange and Pennington and Ms. Jones.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended February 26, 2000, the Board of Directors
held four meetings. Each director attended at least 75% of the aggregate total
number of meetings of the Board of Directors plus the total number of meetings
of all committees of the Board on which he served.
The Audit Committee recommends to the Board of Directors the selection
of independent accountants and reviews the activities and reports of the
independent accountants as well as the internal accounting controls of the
Company. The Audit Committee was comprised of Messrs. Beeler (Chair), Ostrow and
Barenbaum and held two meetings during the last fiscal year.
The Compensation Committee determines the compensation for executive
officers of the Company and establishes the Company's compensation policies and
practices. The Compensation Committee also grants stock options to employees of
the Company, including officers who are not directors of the Company, pursuant
to the Company's Stock Option Plan. The Compensation Committee was comprised of
Messrs. Fuld (Chair), Barenbaum and Beeler and held three meetings during the
last fiscal year.
The Nominating Committee identifies and presents qualified persons for
election and re-election to the Board of Directors. The committee does not
intend to consider nominees recommended by shareholders. The Nominating
Committee is comprised of Messrs. Prange and Barenbaum and held three meetings
during the last fiscal year.
COMPENSATION OF DIRECTORS
In fiscal 2000, the Company compensated directors who are not employed
by the Company $12,000 per year, payable quarterly, plus expenses. Committee
members also received $1,000 per year for serving on a committee and committee
chairpersons received $2,000 per year.
6
<PAGE>
1998 DIRECTOR STOCK OPTION PLAN
Effective April 8, 1998, the Company established the 1998 Director
Stock Option Plan (the "1998 Director Plan"), which provides for the issuance by
the Company of a maximum of 150,000 shares of Common Stock to non-employee
directors upon the exercise of options.
The 1998 Director Plan provides for the automatic grant of
non-qualified options to purchase 7,500 shares of Common Stock, at an exercise
price equal to the fair market value of the shares, in the month following each
annual meeting of shareholders, to each non-employee director. The 1998 Director
Plan is administered by the Compensation Committee. Unless previously terminated
by or with the approval of the Board of Directors, the 1998 Director Plan will
terminate on April 8, 2008. Options which expire, or are cancelled or terminated
without having been exercised, may be regranted to other non-employee directors
under the 1998 Director Plan.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 as amended (the
"Securities Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership on Form 3 and changes in ownership on
Forms 4 or 5 with the Securities and Exchange Commission (the "Commission") and
The NASDAQ Stock Market. Such officers, directors and ten percent shareholders
are also required by the Commission's rules to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or representation from certain reporting persons that no Forms 5 were required
for such persons, the Company believes that during the fiscal year ended
February 26, 2000, all Section 16(a) filing requirements applicable to its
officers, directors and ten percent stockholders were complied with.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions and recommendations regarding the compensation of the
Company's executives are made by a three member Compensation Committee (the
"Committee") composed entirely of non-employee directors. The Committee has
responsibility to review, establish and change compensation programs for the
Company's officers to most accurately reflect the current needs of the Company
and best measure and reward the performances of its executives. The following is
a report of the Compensation Committee of the Company describing the
compensation policies and rationale applicable to the Company's executive
officers with respect to the compensation paid to such executive officers for
the year ended February 26, 2000.
7
<PAGE>
TO THE BOARD OF DIRECTORS:
COMPENSATION PHILOSOPHY
The Company's executive compensation programs are designed to attract
and retain highly qualified executives and to motivate them to maximize
shareholder value by achieving strategic Company goals. The Committee attempts
to balance short and long-term considerations in appropriately rewarding
individuals who are responsible for the Company's profitability, growth and
enhancement of shareholder value. Compensation for executive officers consists
of: (i) base salary, (ii) an annual cash incentive award, and (iii) a long-term
incentive, through a stock option plan. The Committee strongly believes that
management's compensation should be structured to emphasize the relationship
between pay and performance by placing a portion of compensation at risk and
subject to the achievement of financial goals and objectives. Additionally, such
qualitative factors as leadership skills, planning initiatives, technical
skills, and employee development have been deemed to be important factors to
take into account in considering levels of compensation.
COMPONENTS OF COMPENSATION
BASE COMPENSATION - It is the Company's policy to pay competitive base
compensation to its executive officers, as measured against the norms for
similar positions in companies of similar size and characteristics. The
Committee annually reviews and, if appropriate, adjusts executive officers'
salaries based on an evaluation of each officer's performance as well as the
performance of the Company as a whole. In making individual base salary
recommendations, the Committee considers the executive's sustained performance
against his or her individual job responsibilities including, where appropriate,
the impact of such performance on the business results of the Company, as well
as the executive's experience, management and leadership ability and potential
for advancement, his or her compensation history and the Company's performance.
CASH INCENTIVE AWARDS - To encourage performance and to provide a
direct link with executive compensation, the Company pays annual cash bonuses in
accordance with the Braun's Management Bonus Plan (the "Plan"). Under the Plan,
bonuses are primarily based on the Company's performance as measured against the
Company's business plan and increased earnings. Annual pre-tax, pre-bonus
earnings targets are set by the Committee based on the Company's pre-tax,
pre-bonus earnings budget. Actual annual incentive payments are based upon a
pre-bonus, pre-tax earnings performance formula. The Committee may also make
discretionary bonuses based on individual achievement.
LONG-TERM INCENTIVE COMPENSATION - The Committee believes that granting
stock options to executive officers and key employees provides an incentive for
them to make decisions which are in the long-term best interest of the Company.
In determining stock option grants, the Committee considers the executive's
current option program; his or her contribution to the Company's performance and
anticipated future contributions toward meeting the Company's long-term
strategic goals; and competitive industry practice.
8
<PAGE>
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The base salary of William J. Prange, the Company's Chairman and Chief
Executive Officer, under his employment agreement was $350,000 in fiscal 2000.
In accordance with the Company's bonus plan, Mr. Prange received a bonus of
$727,829 last year. Although the Committee did not award Mr. Prange options to
purchase shares of Common Stock in fiscal 2000, the Committee believes Mr.
Prange has received option grants in prior years which provide a substantial
incentive and further align his interest with those of the shareholders.
May 19, 2000 Members of the Compensation Committee
James J. Fuld, Jr., Chairman
Larry C. Barenbaum
Donald D. Beeler
9
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth, the cash and noncash compensation for
each of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the other four most highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
=============================================================================================================================
ANNUAL COMPENSATION LONG-TERM
--------------------------------------------------------- COMPENSATION
-----------------------------------------------------------------------------------------------------------------------------
AWARDS ALL OTHER
OTHER ANNUAL ------ COMPENSATION
NAME AND FISCAL SALARY BONUS COMPENSATION OPTIONS ------------
PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) (#)(3) ($)(4)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William J. Prange 2000 339,583 727,829 -- 0 20,705
Chairman and Chief 1999 300,000 171,133 -- 150,000 14,736
Executive Officer 1998 203,333 121,794 -- 15,000 6,341
---------------------------------------------------------------------------------------------------------------------
Joseph E. 2000 214,583 558,002 -- 0 7,704
Pennington 1999 175,000 114,089 -- 82,500 4,268
President and Chief 1998 141,667 76,121 -- 37,500 0
Operating Officer
---------------------------------------------------------------------------------------------------------------------
Ralph C. Neal 2000 193,750 485,219 -- 0 5,508
Executive Vice 1999 175,000 114,089 -- 67,500 3,050
President of 1998 156,667 76,121 -- 37,500 600
Store Operations
---------------------------------------------------------------------------------------------------------------------
Kathryn R. Gangstee 2000 125,000 225,600 -- 0 2,902
Senior Vice President 1999 125,000 45,635 -- 22,500 1,948
and General 1998 100,000 22,050 -- 22,500 1,500
Merchandising
Manager
---------------------------------------------------------------------------------------------------------------------
Andrew K. Moller 2000 116,667 266,871 -- 37,500 2,246
Senior Vice President 1999 85,000 45,635 -- 22,500 1,650
and Chief Financial 1998 60,000 25,000 -- 15,000 900
Officer
=============================================================================================================================
</TABLE>
(1) Reflects bonus earned during the fiscal year.
(2) "Other Annual Compensation" includes the following, to the extent that
the aggregate amount thereof exceeds the lesser of $50,000 or 10% of
the total annual salary and bonus reported for the individual: personal
benefits received by the named individuals and amounts reimbursed the
individuals during the year for payment of taxes.
(3) On December 14, 1999, the Company effected a 3-for-2 stock split. The
option award amounts above reflect the effect of the stock split.
(4) "All Other Compensation" includes the following amounts contributed by
the Company during the fiscal year under the Company's Retirement
Savings Plan for each of the named officers: $3,600, $2,000, and $2,375
for Mr. Prange in 2000, 1999 and 1998, respectively, $3,600 and $2,000,
for Mr. Pennington for 2000 and 1999, respectively, $3,600, $2,000 and
$600 for Mr. Neal in 2000, 1999 and 1998, respectively, $2,902, $1,948
and $1,500 for Ms. Gangstee for 1999, 1998 and 1997, respectively, and
$2,246, $1,650 and $900 for Mr. Moller in 2000, 1999 and 1998,
respectively. Life insurance premiums were paid on behalf of each named
executive officer in the amount of $17,105 for Mr. Prange, $4,104 for
Mr. Pennington and $1,908 for Mr. Neal in 2000, $12,736 for Mr. Prange,
$2,268 for Mr. Pennington and $1,050 for Mr. Neal in 1999, and $3,966
for Mr. Prange in 1998.
10
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal
2000 to the named executive officers:
<TABLE>
<CAPTION>
Individual Grants
Potential Realizable
% of Value at Assumed
Total Annual Rates of Stock
Options/ Price Appreciation for
Options/ SARs Exercise Option Term (2)
SARs Granted to or Base --------------------------
Granted Employees Price Expiration
Name (#) in Fiscal ($/sh) (1) Date 5% 10%
Year (1)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William J. Prange -- -- -- -- -- --
Joseph E. Pennington -- -- -- -- -- --
Ralph C. Neal -- -- -- -- -- --
Kathryn R. Gangstee -- -- -- -- -- --
Andrew K. Moller 37,500 21.6% 9.0833 6-17-09 $214,015 $542,546
</TABLE>
(1) The Company granted 174,000 options to employees during fiscal 2000. On
December 14, 1999, the Company effected a 3-for-2 stock split. The
option grant amount and share price above reflect the effect of the
stock split.
(2) The dollar amounts under these columns are the result of calculations
at the assumed 5% and 10% rates mandated by the Securities and Exchange
Commission and, therefore, are not intended to forecast possible future
appreciation, if any, of the Company's stock price. The Company did not
use an alternative formula for a grant date valuation, as the Company
is not aware of any formula which will determine with reasonable
accuracy a present value based on future unknown or volatile factors.
No gain to the optionees is possible without an increase in stock price
which will benefit all stockholders commensurably.
The following table sets forth, for each of the executive officers
named in the Summary Compensation Table above, the year-end value of unexercised
options.
11
<PAGE>
OPTION EXERCISES AND VALUE OF OPTIONS AT END OF FISCAL 2000
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT END OF IN-THE-MONEY OPTIONS
SHARES FISCAL 2000 (#) AT END OF FISCAL 2000 (2)
ACQUIRED --------------- -------------------------
ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------- -------- ----------- ------------- ----------- -------------
(#) ($)(1)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William J. Prange 0 N/A 142,250 150,250 $1,587,208 $1,242,792
Joseph E. Pennington 25,001 194,587 44,000 88,500 $365,230 $681,751
Ralph C. Neal 0 N/A 53,499 76,500 $529,551 $593,250
Kathryn R. Gangstee 0 N/A 30,300 28,500 $305,813 $227,625
Andrew K. Moller 16,400 95,319 0 61,500 $0 $391,750
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated based on the closing price of the Company's Common Stock on
the exercise date less the exercise price.
(2) Calculated based on the closing price of the Company's Common Stock on
February 25, 2000.
EMPLOYMENT AND OTHER AGREEMENTS
In March 1998, the Company entered into three-year employment
agreements with Messrs. Prange, Pennington and Neal. In March 2000, the Company
entered into new three-year employment agreements with Messrs. Prange and
Pennington. On January 1, 2000, the Company entered into a two-year employment
agreement with Tammy Leomazzi Boyd.
The foregoing Employment Agreements provide that each executive is
entitled to certain severance benefits in the event that their employment is
terminated by the Company "without cause" or by such executive following a
"change of control" (both as defined in the Employment Agreements). With respect
to Messrs. Prange and Pennington, the executive would receive his salary for the
longer of (i) the remaining term of the Employment Agreement or (ii) one year
from notice of termination, less any cash compensation earned by the executive
by other reemployment during the period. With respect to Mr. Neal and Ms. Boyd,
the executive would receive his or her salary for one year following notice of
termination, less any cash compensation earned by the executive by other
reemployment during the period. Each of the Employment Agreements contains a
covenant not to compete with the Company for (i) the period during which they
receive severance benefits in the event of their termination by the Company
"without cause" or at their election upon a "change of control," and (ii) a
period of one year in the event of their termination for any other reason. The
Employment Agreements also provide for the immediate vesting of unvested stock
options in the event of a change of control.
On March 1, 2000, the Company entered into an Executive Severance
Agreement with Respect to Change of Control with Andrew Moller. This Agreement
provides that Mr. Moller is entitled to his salary for one year following a
"change of control" (as defined in the Agreement) and immediate vesting of
unvested stock options.
12
<PAGE>
MANAGEMENT BONUS PLAN
Under the Braun's Management Bonus Plan (the "Bonus Plan") certain key
management employees of the Company, including all executive officers, are
eligible to receive annual bonuses. Bonuses under the Bonus Plan are based on a
comparison of actual pre-tax, pre-bonus earnings to the Company's targeted
pre-tax, pre-bonus earnings as determined on an annual basis by the Compensation
Committee. In the event that actual pre-tax earnings are less than or equal to
the hurdle rate set by the Compensation Committee at the end of each fiscal
year, no bonuses are paid by the Company. In fiscal 2000, Messrs. Prange,
Pennington, Neal, Gangstee and Moller earned bonuses of $727,829, $558,002,
$485,219, $225,600 and $266,871, respectively.
SECTION 401(k) PLAN
Effective March 1991, the Company established the Braun's Fashions,
Inc. Retirement Savings Plan, a voluntary tax deferred retirement plan qualified
under Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"401(k) Plan"). Pursuant to the 401(k) Plan, eligible employees (employed at the
Company for more than one year) may elect to contribute up to 16% of their
compensation, subject to limitations under the Internal Revenue Code, to the
401(k) Plan. Effective March 1, 1999, the Company amended the 401(k) Plan to
allow for fixed quarterly Company matching contributions of 50% of the first 3%
of the participant's pre-tax contributions and 25% of the next 3% of the
participant's pre-tax contributions. Matching contributions vest at a rate of
25% per year. Neither employee nor Company contributions to the 401(k) Plan are
taxable to the employee until such amounts are distributed to the employee, and
Company contributions are tax deductible by the Company at the time of
contribution. The Company made a contribution for fiscal 2000 in the amount of
$134,708, including $3,600 on behalf of Mr. Prange, Mr. Pennington and Mr. Neal,
$2,902 on behalf of Ms. Gangstee and $2,246 on behalf of Mr. Moller.
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COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company since February 25, 1995 to the cumulative total
shareholder return over such period of (i) the Nasdaq Stock Market (U.S.
Companies) index and (ii) the Nasdaq Retail Trade index. The information
contained in this graph shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission, nor shall such information
be incorporated by reference into any future filing under the Securities Act or
the Exchange Act, except to the extent that the Company specifically
incorporates it by reference into any such filing.
[GRAPH]
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PROPOSAL TWO
APPROVAL OF AMENDMENT TO
INCREASE THE NUMBER OF AUTHORIZED SHARES
Article IV of the Company's Certificate of Incorporation provides that
the aggregate number of shares of all classes of stock which the Company shall
have authority to issue is Fifteen Million (15,000,000) shares: Fourteen Million
(14,000,000) shares of Common Stock and One Million (1,000,000) shares of
Preferred Stock. Upon management's recommendation, the Board of Directors
recommends to the shareholders that Article IV of the Company's Certificate of
Incorporation be amended to increase the number of authorized shares of Common
Stock to Twenty-Nine Million (29,000,000) shares, thereby increasing to Thirty
Million shares (30,000,000) the aggregate number of shares of all classes of
stock which the Company shall have authority to issue. No shareholder of the
Company has any preferential, preemptive or other rights of subscription to any
shares of the Company allotted or sold or to be allotted or sold, or to any
obligations or securities convertible into stock of the Company.
Of the Fourteen Million (14,000,000) shares of the Company's Common
Stock now authorized for issuance, 6,803,385 shares were issued and outstanding
as of May 19, 2000, and an additional 1,428,047 shares of Common Stock were
reserved for issuance pursuant to the Company's stock option plans and 552,000
shares were held as treasury shares. This leaves the Company with only 5,216,568
authorized but unissued, unreserved, and uncommitted shares of Common Stock, not
held as treasury stock, available for issuance. Management and the Board of
Directors believe that it is desirable to increase the number of authorized
shares of Common Stock available for issuance as recommended to enable the
Company to finance its business through issuance and sale of shares of Common
Stock, for issuance in respect of stock dividends that may subsequently be
declared, for issuance in respect of acquisition opportunities which may
subsequently become available (management knows of none as of the date hereof),
for issuance in respect of employee stock option plans and for general corporate
purposes.
Accordingly, the Board of Directors recommends adoption by the
shareholders of the following amended Article IV of the Certificate of
Incorporation.
ARTICLE IV
FOURTH: The total number of shares of all classes of
Stock that the Corporation shall have authority to issue is
thirty million (30,000,000) shares, of which (a) one million
(1,000,000) shares shall be undesignated preferred stock
having a par value of $.01 per share (the "Preferred Stock"),
and (b) twenty-nine million (29,000,000) shares shall be
common stock with the par value of $.01 per share (the "Common
Stock"). Notwithstanding the foregoing, the Corporation shall
not issue nonvoting equity securities, whether in the form of
Common Stock or other equity securities.
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The holders of shares of Common Stock shall have one (1) vote for each
share of Common Stock held of record on each matter submitted to the holders of
shares of Common Stock.
It should be noted that the additional shares of Common Stock could be
used to dilute the percentage stock ownership of persons seeking to obtain
control of the Company. In this sense, the proposal to increase the number of
authorized shares of Common Stock may have an anti-takeover effect.
BOARD RECOMMENDATION AND SHAREHOLDER VOTE REQUIRED
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO ADOPT THE
AMENDMENT TO INCREASE THE NUMBER OF SHARES UNDER THE COMPANY'S CERTIFICATE OF
INCORPORATION. The affirmative vote of a majority of the shares of Common Stock
represented and voted at the Meeting on this item of business is necessary to
approve the proposal. Proxies solicited by the Board of Directors will, unless
otherwise directed, be voted to approve the proposal. Shares held by persons who
abstain from voting on the proposal and broker "non-votes" will not be voted for
or against the proposal. Shares held by persons abstaining and broker
"non-votes" will be counted in determining whether a quorum is present for the
purpose of voting on the proposal.
PROPOSAL THREE
APPROVAL OF AMENDMENT TO EFFECT
A CORPORATE NAME CHANGE TO
CHRISTOPHER & BANKS CORPORATION
The Company is asking shareholders to vote on a proposal to amend and
restate the Company's Certificate of Incorporation in order to change the name
of the Company from Brauns Fashions Corporation to Christopher & Banks
Corporation.
The Company desires to change the name of the Company because
management believes the name Christopher & Banks more adequately reflects the
Company's business operations. The Company has developed the Christopher & Banks
private brand over a number of years. The Company's stores presently exclusively
feature Christopher & Banks merchandise. Management believes that the Company's
success in part is attributable to the recognition and loyalty the Company's
customers have to the Christopher & Banks brand. In connection with its
expansion plans, the Company opened 33 new Christopher & Banks stores in
fiscal 2000. The Company also converted 23 of its existing stores from Brauns
to Christopher & Banks. The Company anticipates that approximately 50% of its
stores will operate under the name Christopher & Banks by December 2000. By
December 2002, management intends to convert substantially all of the
remaining stores to the name Christopher & Banks.
If the proposed name change is adopted, the Company's Common Stock will
be traded under the symbol "CHBS."
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Accordingly, the Board of Directors recommends adoption by the
shareholders of the following amended Article I of the Certificate of
Incorporation.
ARTICLE I
FIRST: The name of the corporation is Christopher &
Banks Corporation.
BOARD RECOMMENDATION AND SHAREHOLDER VOTE REQUIRED
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND
ARTICLE I OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY
NAME TO CHRISTOPHER & BANKS CORPORATION. The affirmative vote of a majority of
the shares of Common Stock represented and voted at the Meeting on this item of
business is necessary to approve the proposal. Proxies solicited by the Board of
Directors will, unless otherwise directed, be voted to approve the proposal.
Shares held by persons who abstain from voting on the proposal and broker
"non-votes" will not be voted for or against the proposal. Shares held by
persons abstaining and broker "non-votes" will be counted in determining whether
a quorum is present for the purpose of voting on the proposal.
PROPOSAL FOUR
RATIFICATION AND APPROVAL OF THE
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors selected the accounting firm of
PricewaterhouseCoopers LLP to serve as its independent auditor for the fiscal
year ending March 3, 2001. PricewaterhouseCoopers LLP has audited the Company's
financial statements since the fiscal year ended March 2, 1991. A proposal to
ratify the appointment for the current year will be presented at the Meeting.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Meeting. They will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions from shareholders.
BOARD RECOMMENDATION AND SHAREHOLDER VOTE REQUIRED
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
SELECTION OF THE INDEPENDENT AUDITOR. Ratification of the selection requires the
affirmative vote by a majority of the shares of Common Stock represented and
voted at the Meeting. Shares held by persons who abstain from voting on the
proposal and broker "non-votes" will not be voted for or against the proposal.
Shares held by persons abstaining and broker "non-votes" will be counted in
determining whether a quorum is present for purposes of voting on the proposal.
If the appointment is not ratified by the shareholders, the Board of Directors
is not obligated to appoint other auditors, but the Board of Directors will give
consideration to such unfavorable vote.
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SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's
next annual meeting of shareholders must be received by the Company at its
office located at 2400 Xenium Lane North, Plymouth, Minnesota 55441 on or before
January 31, 2001 to be considered for inclusion in the Company's proxy statement
and form of proxy relating to such meeting.
OTHER MATTERS
A copy of the Company's Annual Report on Form 10-K for the year ended
February 26, 2000, is included with this Proxy Statement.
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Meeting in accordance with the directions
given. In voting by proxy in regard to the election of the two Class 3 directors
to serve until the 2003 Annual Meeting of Shareholders, the election of the one
Class 2 director, and the election of one Class 1 director, shareholders may
vote in favor of the nominees or withhold their votes as to the nominees or
withhold their votes as to specific nominees. With respect to other items to be
voted upon, shareholders may vote in favor of the item or against the item or
may abstain from voting. Shareholders should specify their choices on the
enclosed Proxy. Any Proxy in which no direction is specified will be voted in
favor of each of the matters to be considered.
The Board of Directors does not intend to bring any matters before the
Meeting other than as stated in this Proxy Statement and is not aware that any
other matters will be presented for action at the Meeting. Should any other
matters be properly presented, the person named in the enclosed form of Proxy
will vote the Proxy with respect thereto in accordance with their best judgment,
pursuant to the discretionary authority granted by the Proxy.
By Order of the Board of Directors,
William J. Prange
Chairman of the Board
June , 2000
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Minneapolis, Minnesota
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