<PAGE> 1
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BED BATH & BEYOND INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of security to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[BED BATH & BEYOND INC. LETTERHEAD]
May 16, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Bed Bath & Beyond Inc., which will be held at the Headquarters Plaza Hotel, 3
Headquarters Plaza, Morristown, New Jersey on Thursday, June 26, 1997, at 9:00
a.m., local time.
At the meeting, you will be asked to elect five directors, approve an
amendment to the Company's Certificate of Incorporation to classify the Board of
Directors and ratify the appointment of auditors. These proposals are more fully
discussed in the accompanying Proxy Statement, which you are urged to read
carefully. Your Board of Directors recommends a vote FOR each of the proposals.
It is important that your shares are represented and voted at the
meeting, whether or not you plan to attend. Accordingly, you are requested to
sign, date and mail the enclosed proxy in the envelope provided at your earliest
convenience.
On behalf of the Board of Directors, thank you for your cooperation and
continued support.
Sincerely,
Warren Eisenberg,
Chairman and
Co-Chief Executive Officer
Leonard Feinstein,
President and
Co-Chief Executive Officer
<PAGE> 3
BED BATH & BEYOND INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 26, 1997
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of Bed Bath
& Beyond Inc. will be held at the Headquarters Plaza Hotel, 3 Headquarters
Plaza, Morristown, New Jersey on Thursday, June 26, 1997 at 9:00 a.m. (local
time), for the following purposes:
1. To elect five directors to the Board of Directors (Proposal 1).
2. To amend the Company's Certificate of Incorporation to provide
for the classification of the Board of Directors into three
separate classes (Proposal 2).
3. To ratify the appointment of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending February 28,
1998 (Proposal 3).
4. To transact such other business as may properly be brought
before the meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on May 9, 1997 are
entitled to notice of the meeting and to vote at it or any adjournment or
adjournments thereof.
WARREN EISENBERG,
Chairman and
Co-Chief Executive Officer
LEONARD FEINSTEIN,
President and
Co-Chief Executive Officer
Union, New Jersey
May 16, 1997
PLEASE COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARD AND MAIL IT
PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
<PAGE> 4
BED BATH & BEYOND INC.
650 LIBERTY AVENUE
UNION, NEW JERSEY 07083
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Bed Bath & Beyond Inc., a New York
corporation (the "Company"), for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on June 26, 1997. This Proxy Statement and form of
proxy are being mailed to shareholders on or about May 16, 1997. A copy of the
1996 Annual Report to Shareholders is being mailed with this Proxy Statement.
Sending in a signed proxy will not affect a shareholder's right to
attend the Annual Meeting and vote in person. A proxy may be revoked at any time
before it is exercised by delivering a written notice to the Secretary of the
Company stating that the proxy is revoked, by executing a subsequent proxy and
presenting it to the Secretary of the Company or by attending the Annual Meeting
and voting in person. All properly executed proxies not revoked will be voted at
the meeting in accordance with the instructions contained therein.
It is proposed that action will be taken at the Annual Meeting: (i) to
elect five directors to the Board of Directors; (ii) to amend the Company's
Certificate of Incorporation to provide for the classification of the Board of
Directors into three separate classes; and (iii) to ratify the appointment of
KPMG Peat Marwick LLP as independent auditors for the fiscal year ending
February 28, 1998 ("fiscal 1997"). The Board of Directors knows of no other
business to come before the Annual Meeting. If any other matters are properly
presented at the Annual Meeting or any adjournment or adjournments thereof, it
is the intention of the persons named in the proxy to vote, or otherwise to act,
in accordance with their judgment on such matters.
The expense of this proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph or other means by directors or employees of the Company or
its subsidiaries without additional compensation or, at the Company's request,
D.F. King & Co., Inc. ("D.F. King"). The Company has engaged D.F. King to assist
in the solicitation of proxies for a fee of $10,000 plus reimbursement for out
of pocket expenses and certain additional fees for other services rendered by
D.F. King in connection with such solicitation. In addition, the Company will
reimburse brokerage firms and other nominees, custodians and fiduciaries for
costs incurred by them in mailing proxy materials to the beneficial owners of
shares held of record by such persons.
<PAGE> 5
VOTING
Only shareholders of record at the close of business on May 9, 1997 will
be entitled to notice of and to vote at the Annual Meeting. As of that date, the
Company had outstanding 68,646,640 shares of Common Stock, each share entitled
to one vote. A majority of such shares represented at the Annual Meeting, in
person or by proxy, will constitute a quorum at the Annual Meeting.
Directors will be elected at the Annual Meeting by a plurality of the
votes cast (i.e., the five nominees receiving the greatest number of votes will
be elected as directors). The ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors for fiscal 1997 requires the approving vote
of a majority of the votes cast with respect to such matter. Neither abstentions
nor broker non-votes will be considered votes "cast" for purposes of the
foregoing and, accordingly, neither abstentions nor broker non-votes will affect
the vote with respect to either of these matters. The amendment of the Company's
Certificate of Incorporation to classify the Board of Directors into three
separate classes requires the approving vote of shareholders holding a majority
of the issued and outstanding shares of the Company's Common Stock entitled to
vote at the Annual Meeting.
2
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and the notes thereto sets forth, as of May 9, 1997,
certain information regarding the beneficial ownership of the Common Stock of
the Company with respect to (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) the
executive officers of the Company named in the Summary Compensation Table that
appears under "Executive Compensation," (iii) each of the Company's directors,
and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK PERCENT
NAME OF SHAREHOLDER POSITION BENEFICIALLY OWNED (a) OF CLASS
- ----------------------- ----------------------------- ---------------------- --------
<S> <C> <C> <C>
Warren Eisenberg Chairman, Co-Chief Executive 9,942,796(b) 14.48%
Officer and a Director
Leonard Feinstein President, Co-Chief Executive 9,957,182(c) 14.50%
Officer and a Director
Klaus Eppler Director 996 *
Robert S. Kaplan Director 392 *
Robert J. Swartz Director 800 *
Steven H. Temares Executive Vice President-- 73,000(d) *
Chief Operating Officer
Ronald Curwin Chief Financial Officer and 25,000(e) *
Treasurer
Putnam Investments, 8,974,922(f) 13.07%
Inc.
All Directors and 18,348,764(g) 26.73%
Executive Officers as a
group (Seven Persons)
</TABLE>
- -----------------
* Less than 1% of Class.
(a) The shares "beneficially owned" by a person are determined in accordance
with the definition of "beneficial ownership" set forth in the regulations
of the Securities and Exchange Commission (the "Commission").
(b) This total includes: (i) 6,293,957 shares owned of record by Warren
Eisenberg individually; (ii) 1,651,402 shares owned of record by a
partnership of which Mr. Eisenberg is a general partner
3
<PAGE> 7
and members of his family (who do not share the same home as Mr.
Eisenberg) are limited partners; (iii) 711,737 shares owned of record by
a trust for the benefit of Mr. Eisenberg and his family members; (iv)
1,000,000 shares owned of record by Mr. Eisenberg's wife; and (v) 285,700
shares owned of record by a not-for-profit charitable foundation of which
Mr. Eisenberg is a trustee. Mr. Eisenberg has sole voting power with
respect to the shares held by him individually. Mr. Eisenberg disclaims
beneficial ownership of any of the shares not owned of record by him
individually.
(c) This total includes: (i) 7,290,543 shares owned of record by Leonard
Feinstein individually; (ii) 1,651,402 shares owned of record by a
partnership of which Mr. Feinstein is a general partner and members of his
family (who do not share the same home as Mr. Feinstein) are limited
partners; (iii) 711,737 shares owned of record by a trust for the
benefit of Mr. Feinstein and his family members; and (iv) 303,500 shares
owned of record by a not-for-profit charitable foundation of which Mr.
Feinstein is a trustee. Mr. Feinstein has sole voting power with respect
to the shares held by him individually. Mr. Feinstein disclaims beneficial
ownership of any of the shares not owned of record by him individually.
(d) This total includes 64,000 shares issuable pursuant to stock options that
are or become exercisable within 60 days of May 9, 1997.
(e) This total includes 20,000 shares issuable pursuant to stock options that
are or become exercisable within 60 days of May 9, 1997.
(f) Information regarding Putnam Investments, Inc. ("Putnam") was obtained
from a Schedule 13G, as amended, filed by Putnam with the Commission. Such
Schedule 13G states that Putnam and its parent corporation, Marsh &
McLennan Companies, Inc., are deemed to have beneficial ownership of
8,974,922 shares of Common Stock, with shared voting power over 227,500 of
such shares and shared dispositive power over all of such shares. The
Schedule 13G also states that (i) 8,514,122 of such shares are owned of
record by registered investment companies and/or other investment advisory
clients in accounts managed by Putnam Investment Management, Inc., a
registered investment adviser and a subsidiary of Putnam, and (ii) 460,800
of such shares are owned of record by registered investment companies
and/or other investment advisory clients in accounts managed by The Putnam
Advisory Company, Inc., a registered investment adviser and a subsidiary
of Putnam. The Schedule 13G also states that Putnam and Marsh & McLennan
Companies, Inc. disclaim beneficial ownership of such shares.
(g) Includes shares of Common Stock as indicated in the preceding footnotes.
The 1,651,402 shares owned of record by a partnership of which Messrs.
Eisenberg and Feinstein are general partners are included in both
footnotes (b) and (c) because these shares may be considered to be
beneficially owned by each of Mr. Eisenberg and Mr. Feinstein. These
shares are included only once in the total of shares owned by all
Directors and Executive Officers as a group.
4
<PAGE> 8
ELECTION OF DIRECTORS
(Proposal 1)
Five directors are to be elected at the Annual Meeting. All nominees
have consented to be named and to serve if elected. All of the nominees are
currently directors of the Company. In the event that any nominee of the Company
is unable or declines to serve as a director at the time of the Annual Meeting,
the proxies will be voted in the discretion of the persons acting pursuant to
the proxy for any nominee who shall be designated by the current Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as director.
As set forth below (see Proposal 2), the Board of Directors also is
proposing to stagger the terms of directors of the Company by classifying the
Board into three separate classes. If Proposal 2 is approved, the Board of
Directors will be divided into three separate classes of three or more directors
each, as nearly equal in number as possible, with one class being elected each
year to serve a staggered three-year term. Vacancies on the Board of the
Directors may be filled by persons elected by a majority of the total
number of directors then in office. A director elected by the Board of Directors
to fill a vacancy (including a vacancy created by an increase in the Board of
Directors) will serve for the remainder of the full term of the class of
directors in which the vacancy occurred and until such director's successor is
elected and qualified. The Board of Directors has not yet identified any of
the four individuals who would fill the vacancies that initially would exist
if Proposal 2 is approved.
If Proposal 2 is approved, the Board of Directors intends to place one
director, Robert J. Swartz, in the class whose term of office will expire in
1998, two directors, Warren Eisenberg and Robert S. Kaplan, in the class whose
term of office will expire in 1999 and two directors, Leonard Feinstein and
Klaus Eppler, in the class whose term of office will expire in 2000.
If Proposal 2 is not approved, the five directors to be elected at the
Annual Meeting will hold office until the next annual meeting and until their
successors have been elected and qualified.
Set forth below is certain information concerning the nominees.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
- ---- --- -------- --------------
<S> <C> <C> <C>
Warren Eisenberg 66 Chairman, Co-Chief 1971
Executive Officer and a Director
Leonard Feinstein 60 President, Co-Chief 1971
Executive Officer and a Director
Robert J. Swartz 71 Director 1992
Klaus Eppler 67 Director 1992
Robert S. Kaplan 39 Director 1994
</TABLE>
5
<PAGE> 9
WARREN EISENBERG, a co-founder of the Company, has been an officer of
the Company since the Company commenced operations in 1971 (serving as President
and Co-Chief Executive Officer until April 9, 1992, and Chairman and Co-Chief
Executive Officer since that date).
LEONARD FEINSTEIN, a co-founder of the Company, has been an officer of
the Company since the Company commenced operations in 1971 (serving as Co-Chief
Executive Officer, Treasurer and Secretary until April 9, 1992, and as President
and Co-Chief Executive Officer since that date). He is also a director of
Reckson Associates Realty Corp.
ROBERT J. SWARTZ is a certified public accountant and has been a
financial consultant to various businesses, including the Company, since April
1991. Mr. Swartz is Executive Vice President and a director of Alco Capital
Group, Inc. For more than five years prior to April 1991, he was a partner in
the accounting firm of KPMG Peat Marwick LLP (and its predecessors). He is also
a director of Standard Motor Products, Inc., United Merchants and Manufacturers
Inc. and Reunited Holdings, Inc.
KLAUS EPPLER is a practicing attorney and has been a partner in the law
firm of Proskauer Rose Goetz & Mendelsohn LLP, counsel to the Company, since
1965. Such firm received fees for legal services from the Company during the
fiscal year ended March 1, 1997 ("fiscal 1996"), and it is anticipated that such
firm will provide certain legal services to the Company during fiscal 1997. He
is also a director of Inovision Corporation and of The Dress Barn, Inc.
ROBERT S. KAPLAN is a Managing Director of Goldman, Sachs & Co., an
investment banking firm. Goldman, Sachs & Co. was one of the representatives of
the U.S. Underwriters for the Company's public offerings of Common Stock in 1992
and 1993, and Goldman Sachs International Limited, one of the representatives of
the International Underwriters of such public offerings, is an affiliate of
Goldman, Sachs & Co. Mr. Kaplan has been a Managing Director of or employed by
Goldman, Sachs & Co. for more than five years.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors held six meetings during fiscal 1996.
The Board of Directors has an Audit Committee, currently consisting of
Messrs. Swartz, Eppler and Kaplan. The functions of this Committee include
recommending to the Board the engagement or discharge of independent auditors,
directing investigations into matters relating to audit functions, and reviewing
the Company's internal accounting controls and the results of the audit with the
auditors. The Audit Committee held one meeting during fiscal 1996.
The Board of Directors has no standing nominating or compensation
committees. The Bed Bath & Beyond Inc. 1992 Stock Option Plan and 1996 Stock
Option Plan are administered by two Stock Option Committees. One committee
("Committee A") consists of Messrs. Eisenberg and Feinstein. Committee A is
authorized to grant stock options to all eligible employees of the Company,
except the following persons (collectively, "Senior Persons") (i) any officer or
director of the Company, (ii) any district manager, regional manager or general
merchandise manager, or any other more senior manager than store manager, or
(iii) consultants or advisors to the Company or other persons or entities
providing goods or services to the Company to acquire a proprietary interest in
the Company through the ownership of common stock of the Company. The other
committee ("Committee B") currently consists of Messrs. Swartz and Kaplan.
Committee B, each of whose members is an "outside director" as defined in Rule
16b-3 under the Securities Exchange Act of 1934 and Section 162(m) of the
Internal Revenue Code, is
6
<PAGE> 10
authorized to grant stock options to all eligible Senior Persons. Neither
Committee A nor Committee B held any formal meetings during fiscal 1996 but
acted by written consent.
Each of the directors attended 75% or more of the meetings of the Board
of Directors and the Committees of which he was a member during fiscal 1996.
No family relationships exist between any of the executive officers or
directors of the Company.
7
<PAGE> 11
EXECUTIVE COMPENSATION
The following table shows the aggregate compensation paid or accrued by
the Company to its two Co-Chief Executive Officers and to each other executive
officer of the Company who was paid salary and bonus in 1994, 1995 or 1996 in
excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
---------------------- -------------------------
Restricted Securities
NAME AND Stock Underlying All Other
PRINCIPAL POSITION Year Salary($) Bonus($) Award(s)($) Options(#) Compensation
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Warren Eisenberg............. 1996 750,000(a) -- -- -- 319,574(b)
Chairman and 1995 750,000(a) -- -- -- 323,456(b)
Co-Chief Executive Officer 1994 750,000(a) -- -- -- 241,851(b)
- -------------------------------------------------------------------------------------------------------------
Leonard Feinstein............ 1996 750,000(c) -- -- -- 258,828(d)
President and 1995 750,000(c) -- -- -- 260,055(d)
Co-Chief Executive Officer 1994 750,000(c) -- -- -- 209,295(d)
- -------------------------------------------------------------------------------------------------------------
Steven H. Temares 1996 199,000(e) -- -- 25,000 --
Executive Vice President-- 1995 166,000 -- -- 60,000 --
Chief Operating Officer 1994 142,000 -- -- 40,000 --
- -------------------------------------------------------------------------------------------------------------
Ronald Curwin................ 1996 121,000 -- -- 10,000 --
Chief Financial Officer and 1995 121,000 -- -- -- --
Treasurer 1994 35,442(f) -- -- 50,000 --
</TABLE>
- --------------------
(a) Mr. Eisenberg is employed by the Company pursuant to an employment
agreement which has a term ending June 30, 1997 and provides, among
other things, for a base salary (which may be increased by the Board of
Directors) at the rate of $750,000 per annum. See "Agreements with
Messrs. Eisenberg and Feinstein" below.
(b) Includes: (i) certain personal benefits provided by the Company to Mr.
Eisenberg in fiscal 1994, 1995 and 1996 (such as the use of Company
cars for non-business purposes and tax preparation services) at an
aggregate cost to the Company of approximately $12,000, $14,480, and
$15,154, respectively; (ii) insurance premiums in the amount of
approximately $7,000, $2,200 and $2,400 in fiscal 1994, 1995 and 1996,
respectively, paid by the Company in respect of certain insurance
policies; (iii) in fiscal 1994, approximately $5,000 of Company
payments on behalf of Mr. Eisenberg to cover the premiums attributable
to the term life insurance portion of the Insurance Policies; and (iv)
other premium payments under the Insurance Policies of $217,851 in
fiscal 1994 (which included a non-recurring payment of $100,000),
$306,776 in fiscal 1995 and $302,020 in fiscal 1996. See "Agreements
with Messrs. Eisenberg and Feinstein" below.
(c) Mr. Feinstein is employed by the Company pursuant to an employment
agreement which has a term ending June 30, 1997 and provides, among
other things, for a base salary (which may be increased by the Board of
Directors) at the rate of $750,000 per annum. See "Agreements with
Messrs. Eisenberg and Feinstein" below.
(d) Includes: (i) certain personal benefits provided by the Company to Mr.
Feinstein in fiscal 1994, 1995 and 1996 (such as the use of Company
cars for non-business purposes and tax preparation services) at an
aggregate cost to the Company of approximately $12,000, $12,908, and
$15,138, respectively; (ii) insurance premiums in the amount of
approximately $5,500, $2,200 and $2,400 in fiscal 1994, 1995, and 1996,
respectively, paid by the Company in respect of certain insurance
policies; (iii) in fiscal 1994, approximately $2,500 of Company
payments
8
<PAGE> 12
on behalf of Mr. Feinstein to cover the premiums attributable to the
term life insurance portion of the Insurance Policies; and (iv) other
premium payments under the Insurance Policies of $189,295 in fiscal
1994 (which included a non-recurring payment of $100,000), $244,947 in
fiscal 1995 and $241,290 in fiscal year 1996. See "Agreements with
Messrs. Eisenberg and Feinstein" below.
(e) Mr. Temares was elected Executive Vice President -- Chief Operating
Officer in January 1997.
(f) Mr. Curwin was hired in September 1994; compensation for 1994
reflects a partial year's salary.
STOCK OPTIONS
The following table sets forth information as of March 1, 1997 for
each of the executive officers of the Company named in the Summary Compensation
Table with respect to options granted and their potential value at the end of
the option term, assuming certain levels of appreciation of the Company's Common
Stock.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE
SECURITIES TOTAL AT ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM(1)
GRANTED EMPLOYEES IN BASE PRICE --------------------------
NAME (#) FISCAL YEAR ($/SHARE) EXPIRATION DATE 5%($) 10%($)
- ------------------- ---------- ------------ ----------- --------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Warren Eisenberg... -- -- -- -- -- --
Leonard Feinstein.. -- -- -- -- -- --
Steven H. Temares.. 25,000(2) 3.05% 19.75 7/15/2006 310,515 786,913
Ronald Curwin...... 10,000(3) 1.22% 19.75 7/15/2006 124,206 314,765
</TABLE>
- ----------------------------------------
(1) The dollar amounts under these columns are the result of calculations
at the hypothetical rates of 5% and 10% set by the Commission and
therefore are not intended to forecast possible future appreciation,
if any, of the Company's Common Stock price.
(2) Options to purchase 25,000 shares were granted to Mr. Temares on July
15, 1996 and are exercisable with respect to 5,000 shares on July 15,
1999, and with respect to an additional 5,000 shares on each of
July 15, 2000, July 15, 2001, July 15, 2002 and July 15, 2003.
(3) Options to purchase 10,000 shares were granted to Mr. Curwin on July
15, 1996 and are exercisable with respect to 2,000 shares on July 15,
1997, and with respect to an additional 2,000 shares on each of
July 15, 1998, July 15, 1999, July 15, 2000 and July 15, 2001.
9
<PAGE> 13
FISCAL YEAR-END OPTION VALUES
The following table sets forth information for each of the named
executive officers with respect to option exercises during fiscal 1996 and the
value of outstanding and unexercised options held as of March 1, 1997.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT MARCH 1, 1997 AT MARCH 1, 1997(1)
ACQUIRED VALUE ---------------------------- ----------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- -------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Warren Eisenberg.... -- -- -- -- -- --
Leonard Feinstein... -- -- -- -- -- --
Steven H. Temares 36,000 788,750 36,000 153,000 600,750 2,275,620
Ronald Curwin....... -- -- 20,000 40,000 255,000 445,000
</TABLE>
- ----------------------------------------
(1) Represents the difference between the closing market price of the
Common Stock at February 28, 1997 of $26.00 per share and the exercise
price per share of the options, multiplied by the number of shares
underlying the options.
DIRECTORS' COMPENSATION
In fiscal 1996, each outside director was paid at the rate of $2,500
per quarter. In fiscal 1996, the Company adopted a plan to permit directors to
receive all or a portion of such payments in the form of Common Stock.
AGREEMENTS WITH MESSRS. EISENBERG AND FEINSTEIN
Messrs. Eisenberg and Feinstein are employed pursuant to employment
agreements for terms ending June 30, 1997 providing for the Company to pay each
of Messrs. Eisenberg and Feinstein a base salary (which may be increased by the
Board of Directors) at the rate of $750,000 per annum and to provide each of
them with a car. These agreements also provide that, in the event that the
Company discharges the executive other than for cause or if he leaves the
Company upon the relocation of the corporate or merchandise office of the
Company to an area that is not in the State of New Jersey or New York or not
within 40 miles of New York City, the executive will be entitled to continuance
of his base salary for one year after the termination of his employment. Under
these agreements, based on current salary levels, aggregate termination payments
would be $1,500,000.
The Company has entered into "split-dollar" agreements with trusts
established by each of Messrs. Eisenberg and Feinstein and their wives pursuant
to which the Company has agreed to pay the premiums on life insurance policies
on the joint lives of each of Mr. Eisenberg and his wife and Mr. Feinstein and
his wife, each with aggregate face values of $30 million, for the benefit of
their respective beneficiaries (the "Insurance Policies") until the earliest of
(a) such time as the cash value of each Insurance Policy is
10
<PAGE> 14
sufficient to pay the premiums thereof, (b) the termination of the arrangement
by surrender of the policies or payment to the Company of the entire amount of
the premiums previously paid, and (c) the date of death of the later to die of
Mr. Eisenberg and his wife, with respect to Mr. Eisenberg's Insurance Policies,
and the later to die of Mr. Feinstein and his wife, with respect to Mr.
Feinstein's Insurance Policies.
Under the "split-dollar" agreements, the premiums paid by the Company
are to be returned to the Company, without interest, no later than the earlier
to occur of (a) the death of the last spouse to die of the insured persons under
each Insurance Policy, and (b) the surrender or termination of each Insurance
Policy. Consequently, the Insurance Policies should not result in an expense to
the Company, except to the extent of costs incurred (if any) for advancing the
premiums. The repayment of premiums paid by the Company will be made either out
of the insurance proceeds (if paid) or the cash surrender value of the Insurance
Polices (if insurance proceeds are not paid). In the latter case, Messrs.
Eisenberg and Feinstein and their wives are personally liable to the Company for
the excess, if any, of the total amount of premiums paid by the Company for the
respective Insurance Polices over the cash surrender values thereof.
COMPENSATION REPORT OF THE BOARD OF DIRECTORS
Messrs. Eisenberg and Feinstein are employed by the Company pursuant
to employment agreements entered into before the Company's initial public
offering of Common Stock. Because the compensation of Messrs. Eisenberg and
Feinstein during fiscal 1996 has been solely pursuant to these employment
agreements, the Board of Directors has not formulated specific policies
concerning compensation of the Co-Chief Executive Officers.
While decisions regarding salary levels for management personnel,
other than the Co-Chief Executive Officers, have been left to the Co-Chief
Executive Officers, the Board of Directors has formulated general policies
designed to enable the Company to reward qualified management personnel and to
provide longer term incentives. The Board of Directors believes that long term
stock options will tend to provide incentives to management personnel as well as
to align such incentives with shareholder return. Accordingly, the Stock Option
Committees of the Board of Directors have granted options to management
personnel, from department manager through Executive Vice President, with the
specific number of options granted being commensurate with the degree of
responsibility of the grantee's position.
BOARD OF DIRECTORS
Warren Eisenberg
Leonard Feinstein
Robert J. Swartz
Klaus Eppler
Robert S. Kaplan
11
<PAGE> 15
CERTAIN TRANSACTIONS
Until October 31, 1996, the Company had obtained certain
payroll-related services from Raymond Eisenberg Associates, an accounting firm
in which Raymond Eisenberg, the brother of Warren Eisenberg, was a partner.
During fiscal 1996, the Company had paid fees to Raymond Eisenberg Associates of
approximately $137,000. On November 1, 1996, the Company retained Petitti,
Eisenberg & Gamache, an accounting firm in which Todd Eisenberg, the nephew of
Warren Eisenberg, is a partner, to perform the payroll-related services
previously handled by Raymond Eisenberg Associates. During fiscal 1996, the
Company paid fees to Petitti, Eisenberg & Gamache of approximately $76,000.
In fiscal 1996, the Company made charitable contributions to the Mitzi
and Warren Eisenberg Family Foundation, Inc. and the Feinstein Family
Foundation, Inc. in the aggregate amount of $240,000. These not-for-profit
charitable foundations, of which Messrs. Eisenberg and Feinstein and their
family members are the trustees and officers, also received charitable
contributions from Messrs. Eisenberg and Feinstein and made distributions to
charities in excess of the amounts contributed by the Company.
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on
the Common Stock of the Company, from June 5, 1992 (the date of the commencement
of the Company's initial public offering) through March 1, 1997, with the
cumulative total return on the Standard & Poor's 500 Index and the Standard &
Poor's Specialty Retail Index over the same period (assuming the investment of
$100 in the Company's Common Stock, the Standard & Poor's 500 Index and the
Standard & Poor's Specialty Retail Index on June 5, 1992, and the reinvestment
of all dividends).
COMPARISON OF CUMULATIVE TOTAL RETURN*
FROM JUNE 5, 1992 THROUGH MARCH 1, 1997
AMONG BED BATH & BEYOND INC., THE S&P 500 INDEX
AND THE S&P SPECIALTY RETAIL INDEX
<TABLE>
<CAPTION>
INVESTMENT 6/5/92 2/28/93 2/27/94 2/26/95 2/25/96 3/1/97
<S> <C> <C> <C> <C> <C> <C>
Bed Bath & Beyond Inc. 100 178 321 312 503 612
S&P 500 Index 100 110 119 128 177 216
S&P Specialty Retail Index 100 116 108 86 74 88
</TABLE>
* $100 invested on 6/5/92 in Stock or Index -- including reinvestment of
dividends.
12
<PAGE> 16
AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
TO PROVIDE FOR THE CLASSIFICATION OF THE BOARD OF DIRECTORS
INTO THREE SEPARATE CLASSES
(Proposal 2)
BACKGROUND
At present, the Company's Board of Directors is comprised of a single
class of five directors, all of whom are elected at each annual meeting of
shareholders. The Business Corporation Law of the State of New York (the
"Business Corporation Law") provides, however, that a corporation organized
under the Business Corporation Law may, in its certificate of incorporation,
provide for a board of directors classified into three or more classes of not
fewer than three directors each, with one class at a time elected at each annual
meeting of shareholders.
At the time of the Company's initial public offering in 1992, the
Company contemplated creating a Board of Directors with three classes. However,
the Company did not then wish immediately to expand the size of the Board of
Directors from five to at least nine directors, which would have been required
in order to create a classified Board of Directors in accordance with the
Business Corporation Law. At the time, the Company was advised that an amendment
of the Business Corporation Law then under consideration by the New York
legislature would, like the corporation laws of Delaware and many other
jurisdictions, permit a classified board of directors to be comprised of classes
with fewer than three directors each. The creation of a Board of Directors
comprised of such classes would not, of course, have required an increase in the
size of the Board of Directors. Accordingly, in contemplation of the initial
public offering, the Company's Certificate of Incorporation (the "Certificate of
Incorporation") was amended to provide for the creation of a classified Board of
Directors, with three separate classes of directors, at such time as the
Business Corporation Law was amended to permit each class to be comprised of
fewer than three directors.
In the approximately five years following the 1992 amendment of the
Certificate of Incorporation referred to above, the Business Corporation Law has
not, in fact, been amended to permit each class of directors to be comprised of
fewer than three directors. With the passage of time and the growth of the
Company, however, it has become more appropriate and practicable to consider
expanding the Board of Directors to at least nine members. Accordingly, in order
to effect the classification of the Board of Directors that has been
contemplated since 1992, the Board of Directors has unanimously approved for
submission to a vote of the shareholders of the Company an amendment to the
Company's Certificate of Incorporation (the "Classified Board Amendment").
THE CLASSIFIED BOARD AMENDMENT
The Classified Board Amendment would provide for the classification of
the Board of Directors into three separate classes as nearly equal in number as
possible, with one class being elected each year to serve a staggered three-year
term. Members in each class would be elected at the Annual Meeting. Directors
initially elected in Class A (i.e., Robert J. Swartz) would serve until the
annual meeting of shareholders in 1998; directors initially elected in Class B
(i.e., Warren Eisenberg and Robert S. Kaplan) and Class C (i.e., Leonard
Feinstein and Klaus Eppler) would serve until the annual meetings of
shareholders in 1999 and 2000, respectively. Following the subsequent election
of directors, each class of directors would be elected for a three-year term.
Any vacancy on the Board could be filled only by shareholders at a meeting or by
the Board itself; any director elected to fill a vacancy not resulting from
13
<PAGE> 17
an increase in the number of directors would have the same term as the class of
his predecessor. The four individuals who would fill the vacancies that
initially would exist have not yet been identified.
In order to prevent the purposes underlying the Classified Board
Amendment from being circumvented, the Classified Board Amendment also would
require that any amendment to the Certificate of Incorporation that amended or
modified, or had the effect of amending or modifying, the Classified Board
Amendment would require the affirmative vote of 80% of all the outstanding
shares entitled to vote, voting together as a single class, and that the
provisions of the By-laws relating to the Board of Directors or meetings of
shareholders may be amended or modified only by an affirmative vote of either
(a) a majority of the total number of directors then in office or (b) 80% of all
outstanding shares entitled to vote, voting together as a single class.
REASONS FOR THE CLASSIFIED BOARD AMENDMENT
The Board of Directors believes that classification of the Board of
Directors would promote continuity of membership and stability of management and
policies. Although the Board of Directors is not aware of, and has not
encountered, difficulties in the past with respect to continuity and stability,
the Board of Directors believes a classified board would decrease the likelihood
of such difficulties in the future. Absent the removal or resignation of
directors, two annual elections would be required to replace a majority of a
classified Board of Directors and effect a forced change in the business and
affairs of the Company. The proposed amendment may therefore discourage an
individual or entity from acquiring a significant position in the stock of the
Company with the intention of obtaining immediate control of the Board of
Directors. The acquiror, however, could immediately effect a change of control
by amending the Certificate of Incorporation to eliminate classification of the
Board of Directors with the vote of 80% of all the outstanding shares entitled
to vote.
The Board of Directors believes that, to insure the integrity of the
Classified Board Amendment, an 80% vote should be required to amend or modify
the Certificate of Incorporation in a manner inconsistent with the Classified
Board Amendment. The vote of a majority of the votes entitled to be cast by the
shareholders is currently required to amend the Certificate of Incorporation. If
the Classified Board Amendment is adopted, such an amendment or modification
could be made only with the affirmative vote of the holders of 80% of the shares
entitled to vote. If the Classified Board Amendment is adopted, the holders of
20% of the shares entitled to vote could prevent such an amendment or
modification, even if such amendment or modification were desired by the holders
of a majority (but less than 80%) of the outstanding shares.
The existing Certificate of Incorporation contains no provisions for
the adoption, amendment or modification of By-laws. The existing By-laws provide
that the By-laws may be amended or repealed or new By-laws may be adopted by a
majority vote of either the Board of Directors or the shareholders of the
Company. The Classified Board Amendment requires either (a) a majority of the
total number of directors then in office or (b) 80% of all the outstanding
shares entitled to vote, voting together as a single class, to amend or modify
the provisions of the By-laws relating to the Board of Directors or meetings of
shareholders. This element of the Classified Board Amendment was adopted by the
Board of Directors because it is required to prevent the Classified Board
Amendment from being circumvented by a change in the By-Laws that would expose
the Company, its management and its shareholders to the disadvantages the
Classified Board Amendment was designed to protect against.
14
<PAGE> 18
By raising the vote required to amend or modify the provisions of the
By-laws relating to the Board of Directors or meetings of shareholders,
shareholders will have more difficulty eliminating such provisions. If the
Classified Board Amendment is adopted, amendments or modifications of the
provisions of the By-laws may be made by shareholders only with the affirmative
vote of the holders of 80% of the outstanding shares. The Board of Directors
would continue to have the power to adopt, amend or repeal the By-laws.
EFFECT OF THE CLASSIFIED BOARD AMENDMENT
The Classified Board Amendment is intended to encourage persons
seeking to acquire control of the Company to initiate such an acquisition
through arms-length negotiations with the Company's management and Board of
Directors. If adopted, the Classified Board Amendment also could have the effect
of discouraging a third party from making a tender offer or otherwise attempting
to obtain control of the Company, even though such an attempt might be
beneficial to the Company and its shareholders. In addition, the Classified
Board Amendment could discourage accumulations of large blocks of the Company's
stock and fluctuations in the market price of the Company's stock caused by such
accumulations; as a consequence, shareholders could be deprived of certain
opportunities to sell their shares at temporarily higher prices.
The Classified Board Amendment would make more difficult or discourage
a proxy contest or the assumption of control of the Company by a holder of a
substantial block of the Company's outstanding shares or the removal of
incumbent directors or the change of control of the Board of Directors and could
thus have the effect of entrenching incumbent management. At the same time, the
Classified Board Amendment would ensure that the Board of Directors and
management, if confronted by a surprise proposal from a third party who had
acquired a block of the Company's stock, would have time to review the proposal
and appropriate alternatives to the proposal and possibly to attempt to
negotiate a better transaction. The Board of Directors believes the Classified
Board Amendment would reduce the possibility that a third party could effect a
sudden or surprise change in control of the Board of Directors without the
support of the then incumbent Board of Directors.
The Board of Directors believes that, if a takeover bidder purchased a
significant or controlling interest in the Company, its ability to remove the
Company's directors and obtain control of the Board and thereby to remove the
Company's management would severely curtail the Company's ability to negotiate
effectively with that party. The threat of obtaining control of the Board of
Directors would deprive the Board of the time and information necessary to
evaluate the proposal or transaction, to study alternative proposals and to help
ensure that the best price is obtained in any transaction involving the Company.
At present, Warren Eisenberg and Leonard Feinstein have voting control
of an aggregate of approximately 27% of all the outstanding shares and could,
therefore, by acting together, prevent shareholders of the Company from
effecting any amendment or modification to the Classified Board Amendment or the
provisions of the By-laws relating to the Board of Directors and meetings of
shareholders.
The Board of Directors is asking shareholders to consider and adopt
the Classified Board Amendment to discourage undesirable forced transactions
that involve an actual or threatened change of control of the Company. The
Classified Board Amendment is designed to make it more difficult and
time-consuming to change majority control of the Board of Directors and thus to
reduce the vulnerability of the Company to an unsolicited takeover proposal,
particularly a proposal that does not contemplate the acquisition of all the
Company's outstanding shares, or an unsolicited proposal for the restructuring
or sale
15
<PAGE> 19
of all or part of the Company. The Board of Directors believes that the
Classified Board Amendment would encourage any person intending to attempt such
a takeover or restructuring to try first to negotiate with the Board and
management of the Company and that the Board and management would therefore be
better able to protect the interests of all shareholders.
---------------
The foregoing summary description of the Classified Board Amendment is
not intended to be complete and is qualified in its entirety by reference to
Exhibit A, which contains the complete text of the Classified Board Amendment.
VOTE REQUIRED FOR APPROVAL
The affirmative vote, in person or by proxy, of a majority of the
outstanding shares of Common Stock is required for approval of Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS
PROPOSAL.
16
<PAGE> 20
APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal 3)
Upon the recommendation of the Audit Committee, the Board of Directors
has appointed the firm of KPMG Peat Marwick LLP, Certified Public Accountants,
as independent auditors to examine the consolidated financial statements of the
Company for fiscal 1997. The Board of Directors recommends to shareholders that
they ratify this appointment. In the event that the shareholders fail to ratify
this appointment, other certified public accountants will be considered upon
recommendation of the Audit Committee. Even if this appointment is ratified, the
Board of Directors, in its discretion, may direct the appointment of a new
independent accounting firm at any time during the year, if the Board believes
that such a change would be in the best interest of the Company and its
shareholders.
A representative of KPMG Peat Marwick LLP is expected to be present at
the Annual Meeting to respond to appropriate questions and such representative
will have the opportunity to make a statement if he or she desires to do so.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder intended to be presented at the
Company's annual meeting of shareholders expected to be held in June 1998 must
be received by the Company no later than January 16, 1998 for inclusion in the
proxy statement and form of proxy for that meeting.
WARREN EISENBERG,
Chairman and
Co-Chief Executive Officer
LEONARD FEINSTEIN,
President and
Co-Chief Executive Officer
Union, New Jersey
May 16, 1997
17
<PAGE> 21
EXHIBIT A
PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
Paragraph SEVENTH is hereby deleted in its entirety and the
following is hereby substituted for it:
SEVENTH: (a) The number of directors comprising the entire
Board of Directors shall be fixed from time to time in accordance with the
specific provisions of the By-laws of the corporation.
(b) The Board of Directors shall be divided into three
classes, each class to be as nearly equal in number as possible. The classes
shall be designated as Class A, Class B and Class C. The term of office of the
initial Class A directors shall expire at the 1998 annual meeting of
shareholders; that of the initial Class B directors at the 1999 annual meeting
of shareholders; and that of the initial Class C directors at the 2000 annual
meeting of shareholders. At each annual meeting of shareholders, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding annual meeting of shareholders
after their election. Each director shall be elected by a plurality of votes
cast at the annual meeting of shareholders by the holders of shares entitled to
vote thereon to serve until his or her respective successor is duly elected and
qualified. Except as otherwise provided by law, if the number of directors is
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal as possible;
provided, however, that. no decrease in the number of directors shall shorten
the term of any incumbent director. Any vacancies in the Board of Directors that
occur for any reason prior to the expiration of the term of office of the class
in which the vacancy occurs, including vacancies that occur by reason of an
increase in the number of directors, may be filled only by a plurality of the
votes cast at a meeting of shareholders by the holders of shares entitled to
vote thereon or by the Board of Directors of the corporation, acting by the
affirmative vote of a majority of the remaining directors then in office (even
if less than a quorum). A director elected to fill a vacancy shall hold office
during the term to which his or her predecessor had been elected and until his
or successor shall have been elected and shall qualify, or until his or her
earlier death, resignation or removal.
(c) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, any amendment or modification of this Paragraph
SEVENTH, or any amendment of modification of this Certificate of Incorporation
that has the effect of amending or modifying this Paragraph SEVENTH, shall
require the affirmative vote of the holders of at least 80% of voting power of
all the then-outstanding shares of voting stock of the corporation entitled to
vote at an election of directors ("Voting Stock"), voting together as a single
class.
(d) The provisions of the By-laws of the corporation relating
to the Board of Directors and meetings of shareholders may be amended or
modified only by (i) the affirmative vote of the holders of at least 80% of
voting power of all the then-outstanding shares of Voting Stock, voting together
as a single class, or (ii) the affirmative vote of a majority of the total
number of directors then in office.
A-1
<PAGE> 22
PROXY
BED BATH & BEYOND INC.
650 Liberty Avenue
Union, New Jersey 07083
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Warren Eisenberg and Leonard
Feinstein, or either one of them acting singly, each with the power to appoint
his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of Common Stock of Bed
Bath & Beyond Inc. held of record by the undersigned on May 9, 1997 at the
Annual Meeting of Shareholders to be held on June 26, 1997 or any adjournment
thereof.
(Continued on Reverse Side)
<PAGE> 23
<TABLE>
<CAPTION>
<S> <C>
__________ /X/ Please mark your
COMMON votes as in
this example.
</TABLE>
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.
1. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
<S> <C> <C>
FOR all nominees WITHHOLD Nominees:
contrary) nominees listed W. Eisenberg
at right L. Feinstein
R. Swartz
/ / / / K. Eppler
R. Kaplan
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line below).
_________________________________________________
2. PROPOSAL TO AMEND THE CORPORATION'S CERTIFICATE OF INCORPORATION to
provide for the classification of the Board of Directors into three
separate classes.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG Peat Marwick LLP as the
independent auditors of the Corporation.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly be brought before the meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR proposals 1, 2, and 3.
Please sign exactly as name appears herein. When shares are held by joint
tenants, both should each sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
DATED:_____________________________,1997
________________________________________
Signature
________________________________________
Signature if held jointly
PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
