<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BARNES & NOBLE, INC.
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
Barnes & Noble, Inc.
122 FIFTH AVENUE
NEW YORK, NEW YORK 10011
May 1, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Barnes & Noble, Inc. The meeting will be held at 10:00 a.m., New York City
time, on Wednesday, June 9, 1999 at the Marriott Marquis, 1535 Broadway at West
45th Street, New York, New York.
Information about the meeting and the various matters on which the
stockholders will act is included in the Notice of Annual Meeting of
Stockholders and Proxy Statement which follow. Also included is a Proxy Card and
postage paid return envelope.
Whether or not you plan to attend the meeting, we hope you will have your
shares represented at the meeting by completing, signing and returning your
Proxy Card in the enclosed postage paid return envelope promptly.
Sincerely,
/s/ Michael N. Rosen
MICHAEL N. ROSEN
Secretary
<PAGE>
Barnes & Noble, Inc.
122 FIFTH AVENUE
NEW YORK, NEW YORK 10011
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 9, 1999
The Annual Meeting of Stockholders of Barnes & Noble, Inc. (the "Company")
will be held at the Marriott Marquis, 1535 Broadway at West 45th Street, New
York, New York, at 10:00 a.m., New York City time, on Wednesday, June 9, 1999
for the following purposes:
1. To elect three Directors to serve until the 2002 annual meeting of
stockholders and until their respective successors are duly elected and
qualified;
2. To ratify the appointment of BDO Seidman, LLP as independent certified
public accountants for the Company's fiscal year ending January 29,
2000; and
3. To transact such other business as may be properly brought before the
meeting and any adjournment or postponement thereof.
Only holders of record of Common Stock as of the close of business on April
21, 1999 are entitled to notice of and to vote at the meeting and at any
adjournment or postponement thereof.
MICHAEL N. ROSEN
Secretary
New York, New York
May 1, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD.
<PAGE>
BARNES & NOBLE, INC.
122 FIFTH AVENUE
NEW YORK, NEW YORK 10011
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 9, 1999
INTRODUCTION
This Proxy Statement and enclosed Proxy Card are being furnished commencing
on or about May 1, 1999 in connection with the solicitation by the Board of
Directors of Barnes & Noble, Inc., a Delaware corporation (the "Company"), of
proxies for use at the Annual Meeting of Stockholders to be held on June 9, 1999
(the "Meeting") for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. Any proxy given pursuant to such solicitation and
received in time for the Meeting will be voted as specified in such proxy. If no
instructions are given, proxies will be voted FOR the election of the nominees
listed below under the caption "Election of Directors--Information Concerning
the Directors and Nominees--Nominees for Election as Director," FOR the
ratification of the appointment of BDO Seidman, LLP as independent certified
public accountants for the Company's fiscal year ending January 29, 2000
(collectively, the "Proposals"), and in the discretion of the proxies named on
the Proxy Card with respect to any other matters properly brought before the
Meeting and any adjournments thereof. Any proxy may be revoked by written notice
received by the Secretary of the Company at any time prior to the voting thereof
by submitting a subsequent proxy or by attending the Meeting and voting in
person.
Only holders of record of the Company's voting securities as of the close
of business on April 21, 1999 are entitled to notice of and to vote at the
Meeting. As of the record date, 69,092,730 shares of Common Stock, par value
$.001 per share ("Common Stock"), were outstanding. Each share of Common Stock
entitles the record holder thereof to one vote on each of the Proposals and on
all other matters properly brought before the Meeting. The presence of a
majority of the combined outstanding shares of the Common Stock represented in
person or by proxy at the Meeting will constitute a quorum.
The three nominees for Director receiving the highest vote totals will be
elected as Directors of the Company to serve until the 2002 annual meeting of
stockholders.
The proposal to ratify the appointment of the Company's independent
certified public accountants, and all other matters to be voted on at the
Meeting, will be decided by the affirmative vote of a majority of the shares of
Common Stock voting on the proposal in person or by proxy at the Meeting. Thus,
abstentions and broker non-votes will not be included in vote totals with
respect to such proposals and will have no effect on the outcome of the votes
with respect thereto. It should be noted that all of the Directors and executive
officers of the Company, together with principal stockholders of the Company
with which they are affiliated, own or control the voting power of approximately
28.2% of the Common Stock outstanding as of April 21, 1999, and have advised the
Company that they intend to vote in favor of all of the Proposals.
A Proxy Card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE
ACCOMPANYING ENVELOPE, which is postage paid if mailed in the United States.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF
GIVEN OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE OF THIS PROXY STATEMENT.
2
<PAGE>
ELECTION OF DIRECTORS
PROPOSAL 1
INFORMATION CONCERNING THE DIRECTORS AND NOMINEES
The Board of Directors currently consists of nine Directors. The Directors
currently are divided into three classes, consisting of three members whose
terms expire at the Meeting, three members whose terms expire at the 2000 annual
meeting of stockholders and three members whose terms expire at the 2001 annual
meeting of stockholders.
Background information with respect to the Board of Directors and nominees
for election as Directors, all of whom are incumbent Directors, appears below.
See "Security Ownership of Certain Beneficial Owners and Management" for
information regarding such persons' holdings of equity securities of the
Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITION
- ------------------------------------------ --- -------- ------------------------------------------------------
<S> <C> <C> <C>
Leonard Riggio(1)......................... 58 1986 Chairman of the Board and Chief Executive
Officer
Stephen Riggio............................ 44 1997 Vice Chairman
Matthew A. Berdon(2)(3)................... 79 1992 Director
William Dillard, II(1).................... 54 1993 Director
Jan Michiel Hessels(2).................... 56 1990 Director
Irene R. Miller........................... 47 1995 Director
Margaret T. Monaco(2)..................... 51 1995 Director
Michael N. Rosen.......................... 58 1986 Secretary and Director
William Sheluck, Jr.(1)(2)(3)............. 58 1993 Director
</TABLE>
- ------------------
(1) Member of Nominating Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
At the Meeting, three Directors will be elected, each to hold office for a
term of three years and until his or her successor is elected and qualified.
Stephen Riggio, Matthew A. Berdon and Margaret T. Monaco are nominees for
election as Directors at the Meeting, each to hold office for a term of three
years until the annual meeting of stockholders to be held in 2002. The terms of
William Dillard II, Irene R. Miller and Michael N. Rosen expire in 2000, and the
terms of Leonard Riggio, Jan Michiel Hessels and William Sheluck, Jr. expire in
2001. Each of the nominees has consented to serve, if elected. However, if any
nominee is unable to stand for election, proxies may be voted for a substitute
designated by the Board of Directors.
Nominees for Election as Director
The following individuals are nominees for Director at the Meeting:
STEPHEN RIGGIO has been a Director of the Company since April 1997 and was
appointed Vice Chairman of the Company in December 1997. Mr. Riggio was Chief
Operating Officer of the Company from February 1995 until December 1997. From
February 1997 to December 1998, Mr. Riggio was Chief Executive Officer of
barnesandnoble.com inc., ("barnesandnoble.com"), the Company's internet
subsidiary and Mr. Riggio has been a director of barnesandnoble.com since its
inception in February 1997. Mr. Riggio has been President of B. Dalton
Bookseller, Inc. ("B. Dalton"), a wholly owned subsidiary, from July 1993 to
February 1995, and he was Executive Vice President, Merchandising of the Company
from January 1987 to February 1995. For 13 years prior to January 1987,
Mr. Riggio held various merchandising and marketing positions at Barnes & Noble
College Bookstores, Inc. ("B&N College"), one of the largest operators of
college bookstores in the country.* Mr. Riggio is Leonard Riggio's brother.
- ------------------
* Based upon sales reported in trade publications and public filings
3
<PAGE>
MATTHEW A. BERDON has been a Director of the Company since June 1992. As of
January 1998, Mr. Berdon had been a partner in the certified public accounting
firm of Ferro Berdon & Company ("Ferro Berdon") for more than five years. In
January 1998, Ferro Berdon merged into the accounting firm of Urbach, Kahn &
Werlin, and Mr. Berdon became Chairman of the New York Division of that firm.
Mr. Berdon is also a director of B&N College and a trustee of Beth Israel
Hospital.
MARGARET T. MONACO has been a Director of the Company since May 1995.
Ms. Monaco has been the Vice President and Chief Administrative Officer of
KECALP, Inc., a wholly owned subsidiary of Merrill Lynch & Co., Inc. since April
1998. KECALP, Inc. is the general partner for a number of limited partnerships
which are operated exclusively for the benefit of Merrill Lynch employees.
Ms. Monaco had been the Principal of Probus Advisors, a management and financial
consulting firm, from July 1993 to April 1998, and Vice President and Treasurer
of The Limited, Inc., a national specialty retailing firm, from October 1987 to
June 1993.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE. PROXIES SOLICITED HEREBY WILL
BE VOTED FOR EACH NOMINEE NAMED ABOVE UNLESS A VOTE AGAINST A NOMINEE OR AN
ABSTENTION IS SPECIFICALLY INDICATED.
Other Directors whose Terms of Office Continue after the Meeting
LEONARD RIGGIO has been Chairman of the Board, Chief Executive Officer and
a principal stockholder of the Company since its inception in 1986. Mr. Riggio
has also been Chairman of the Board of barnesandnoble.com since its inception in
February 1997. Since 1965, Mr. Riggio has been Chairman of the Board, Chief
Executive Officer and the principal stockholder of B&N College. For more than
the past five years, Mr. Riggio has been Chairman of the Board and a principal
beneficial owner of MBS Textbook Exchange, Inc. ("MBS"), one of the nation's
largest wholesalers of college textbooks.* Mr. Riggio is also the principal
member and sole Manager of Babbage's Etc. LLC, a national retailer of personal
computer software and video games.
JAN MICHIEL HESSELS has been a Director of the Company since October 1990.
Mr. Hessels has been the Chief Executive Officer of Vendex International N.V.
("Vendex") since June 1990. Vendex is a multi-billion dollar Netherlands-based
corporation with substantial international retailing operations. From January
1985 until January 1990, Mr. Hessels was President and Chief Executive Officer
of N.V. Deli-Maatschappij, an international trading company, as well as a
director of its parent company, Universal Corp. Mr. Hessels is also a director
of Amsterdam Stock Exchange, BAM Holding N.V., Yule Catto Plc., Schiphol
Airport, Royal Van Ommeren, Staal Bank and Royal Philips Electronics N.V.
WILLIAM SHELUCK, JR. has been a Director of the Company since November
1993. Mr. Sheluck formerly was the President, Chief Executive Officer and a
director of Nationar, a New York State-chartered commercial bank providing
services to financial institutions and corporations, from 1983 until his
retirement in April 1993. Mr. Sheluck is also the Treasurer and a director of
New Life of New York City, Inc., a not-for-profit organization which provides
services to disadvantaged teenagers.
WILLIAM DILLARD, II has been a Director of the Company since November 1993.
Mr. Dillard is the Chief Executive Officer of Dillard's, Inc., and he has been a
director of Dillard's since 1968. Mr. Dillard is also a director of Simon
Property Group, Texas Commerce Bancshares, Inc. and Acxiom Corp.
IRENE R. MILLER has been a Director of the Company since May 1995.
Ms. Miller was Chief Financial Officer of the Company from September 1993 to
June 1997 and Vice Chairman of the Company from September 1995 to June 1997. She
joined the Company in January 1991 and held various positions until she was
appointed Chief Financial Officer in 1993. From July 1986 to December 1990,
Ms. Miller held various positions in the Retail Industry Group for Morgan
Stanley & Co. Incorporated's Investment Banking Department, most recently as a
Principal. From 1982 to 1986, she was a Vice President of Corporate Finance at
Rothschild, Inc. Ms. Miller is also a director of Benckiser N.V. and Oakley,
Inc.
MICHAEL N. ROSEN has been Secretary and a Director of the Company since its
inception in 1986 and a senior member of Robinson Silverman Pearce Aronsohn &
Berman LLP, counsel to the Company, for more than the past five years.
Mr. Rosen is also a director of barnesandnoble.com, B&N College and MBS.
- ------------------
* Based upon sales reported in trade publications and public filings
4
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met eight times during the fiscal year ended January
30, 1999. All Directors attended at least 75% of all of the meetings of the
Board of Directors and the committees thereof on which they served during the
fiscal year ended January 30, 1999, except for Jan Michael Hessels.
The Board of Directors has three standing committees: the Audit Committee,
the Compensation Committee and the Nominating Committee.
Audit Committee. The Audit Committee has the principal function of
reviewing the adequacy of the Company's internal system of accounting controls,
conferring with the independent certified public accountants concerning the
scope of their examination of the books and records of the Company, recommending
to the Board of Directors the appointment of independent certified public
accountants, reviewing related party transactions and considering other
appropriate matters regarding the financial affairs of the Company. The current
members of the Audit Committee are Messrs. Sheluck (Chairman) and Berdon, none
of whom is, or has ever been, an officer or employee of the Company. The Audit
Committee met twice during the fiscal year ended January 30, 1999.
Compensation Committee. The principal function of the Compensation
Committee is to make recommendations to the Board of Directors with respect to
matters regarding the approval of employment agreements, management and
consultant hiring and executive compensation. The Compensation Committee also is
responsible for determining grants of options to purchase Common Stock and of
restricted shares of Common Stock under the Barnes & Noble, Inc. 1991 Employee
Incentive Plan and the Barnes & Noble, Inc. 1996 Incentive Plan, as awarded (the
"1996 Incentive Plan"). The current members of the Compensation Committee are
Mr. Berdon (Chairman), Mr. Hessels, Ms. Monaco and Mr. Sheluck, none of whom is,
or has ever been, an officer or employee of the Company. The Compensation
Committee met twice times during the fiscal year ended January 30, 1999 and
acted by unanimous written consent on six additional occasions. As of March
1997, the Compensation Committee assumed the principal function of the former
Incentive Plan Committee.
Nominating Committee. The function of the Nominating Committee is to seek
qualified individuals as Directors of the Company. The current members of the
Nominating Committee are Messrs. Riggio (Chairman), Dillard and Sheluck. The
Nominating Committee did not meet during the fiscal year ended January 30, 1999.
COMPENSATION OF DIRECTORS
Non-employee Directors receive an annual fee of $20,000 with no additional
fees for attendance at Board or committee meetings. In addition, on March 3,
1999 non-employee Directors received options to purchase 20,000 shares of common
stock under the 1996 Incentive Plan at an exercise price of $26.00 per share,
such options to vest in 4 equal annual installments on the first through fourth
anniversaries of the date of the grant. All Directors of the Company are
reimbursed for travel, lodging and related expenses incurred in attending Board
meetings.
5
<PAGE>
EXECUTIVE OFFICERS
The Company's executive officers, as well as additional information with
respect to such persons, is set forth in the table below:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- --------------------------------------------------
<S> <C> <C>
Leonard Riggio............................ 58 Chairman of the Board and Chief Executive Officer
Stephen Riggio............................ 44 Vice Chairman
J. Alan Kahn.............................. 52 Chief Operating Officer
Mitchell S. Klipper....................... 41 Executive Vice President, and President of Barnes
& Noble Development
Marie J. Toulantis........................ 45 Executive Vice President, Finance and Chief
Financial Officer
Thomas A. Tolworthy....................... 44 Vice President, and President of Barnes & Noble
Booksellers
David K. Cully............................ 46 Vice President, and President of Barnes & Noble
Distribution
David S. Deason........................... 40 Vice President, Real Estate
Maureen H. Golden......................... 48 Vice President, Marketing and Advertising
Joseph Giamelli........................... 49 Vice President and Chief Information Officer
Mary Ellen Keating........................ 42 Senior Vice President, Corporate Communications
and Public Affairs
Michael N. Rosen.......................... 58 Secretary
</TABLE>
Information with respect to executive officers of the Company who also are
Directors is set forth in "Information Concerning the Directors and Nominees"
above.
J. ALAN KAHN joined the Company as Chief Operating Officer in December
1997. He joined B&N College in 1988 as President and Chief Operating Officer and
was made Chief Executive Officer in 1995. Prior to that, he was Executive Vice
President of B&N Trade and Mail Order from 1978 to 1988, and Vice President of
Merchandising for B. Dalton from 1971 to 1978.
MITCHELL S. KLIPPER has been President of Barnes & Noble Development, the
group responsible for selecting the Company's new store locations, since
December 1995 and is an Executive Vice President of the Company. From March 1993
to December 1995, Mr. Klipper was President of Barnes & Noble Booksellers, Inc.
("B&N Booksellers"), a wholly owned subsidiary of the Company. Until September
1993, Mr. Klipper also was Chief Financial Officer of the Company, a position to
which he was elected in September 1988. He was Vice President, Chief Financial
Officer of B&N College from June 1986 to September 1988. Prior to June 1986,
Mr. Klipper was an Audit Manager at the certified public accounting firm of KMG
Main Hurdman.
MARIE J. TOULANTIS became Chief Financial Officer in March 1999 and also
remains an Executive Vice President, Finance, a position she has held since
joining the Company in July 1997. Prior to that she was Senior Vice President of
The Chase Manhattan Bank ("Chase") from May 1996 to June 1997, where she was
responsible for managing the bank's relationships with major accounts, including
the Company's. Prior to that she held the position of Vice President at Chase
from 1987 to May 1996.
THOMAS A. TOLWORTHY became President of B&N Booksellers in December 1995
and is also a Vice President of the Company. Prior to December 1995,
Mr. Tolworthy was President of B. Dalton. He was Vice President of Store
Operations of B. Dalton from September 1991 to February 1995 and was a Regional
Director of B. Dalton from July 1989 to September 1991. Prior to 1989,
Mr. Tolworthy was Stores Director for Duckwall/Alco Stores, Inc., a general
merchandise retailer.
DAVID K. CULLY has been Vice President of the Company and President of
Barnes & Noble Distribution, the group responsible for the Company's
distribution center operations, since June 1992. Prior to June 1992, he was Vice
President, General Merchandise Manager of the Company. Prior to joining the
Company in 1989, Mr. Cully was Executive Vice President, General Merchandise
Manager for Egghead Discount Software, Inc., a software retailer.
DAVID S. DEASON joined the Company in January 1990 as a Director of Real
Estate and became Vice President, Real Estate in January 1997. Prior to joining
the Company, Mr. Deason was a Director of Real Estate for S&A Restaurant
Corporation, a national restaurant chain.
6
<PAGE>
MAUREEN H. GOLDEN became Vice President, Marketing and Advertising in
September 1997. Prior to that, she had been Vice President, General Merchandise
Manager of the Company from June 1992 to September 1997. She joined B&N College
in July 1976 and has held various positions in buying and merchandising for the
Company since 1987 and for B&N College from 1976 to 1987.
JOSEPH GIAMELLI joined the Company in October 1998 as Vice President and
Chief Information Officer. Prior to joining the Company, he was Vice President
and Chief Information Officer of Toys R Us from May 1985 to September 1998.
Prior to that he was a Vice President at Citibank NA from September 1976 to
April 1985.
MARY ELLEN KEATING joined the Company as Senior Vice President, Corporate
Communications and Public Affairs in January 1998. Previously, she was an
executive with Hill and Knowlton, Inc., a worldwide public relations firm, from
1991 to 1998, where she served as Executive Vice President and General Manager
of Hill and Knowlton's flagship New York Office.
The Company's officers are elected annually by the Board of Directors and
hold office at the discretion of the Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock, as of April 21, 1999, by each person known
by the Company to own beneficially more than five percent of the Company's
outstanding Common Stock, by each Director and nominee for Director, by each
executive officer named in the Summary Compensation Table contained in
"Executive Compensation," and by all Directors and executive officers of the
Company as a group. Except as otherwise noted, each person named in the table
has sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by him, her or it.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) BENEFICIALLY OWNED(1)
- ------------------------------------------------------------------------- -------------- ----------------------
<S> <C> <C>
Leonard Riggio .......................................................... 16,436,722(2) 23.3%
c/o Barnes & Noble, Inc.
122 Fifth Avenue
New York, New York 10011
Forstmann-Leff Associates, Inc .......................................... 9,952,430(3) 14.4%
55 East 52nd Street
New York, New York 10055
Neuberger & Berman, L.L.C ............................................... 3,688,000(4) 5.3%
605 Third Ave.
New York, New York 10158
Stephen Riggio........................................................... 2,024,629(5) 2.8%
Mitchell S. Klipper...................................................... 1,420,145(5) 2.0%
J. Alan Kahn............................................................. 132,236(6) *
Marie J. Toulantis....................................................... 137,075(5) *
Matthew A. Berdon........................................................ 107,000(7) *
William Dillard, II...................................................... 60,000(5) *
Jan Michiel Hessels...................................................... 42,000(8) *
Irene R. Miller.......................................................... 322,290(5) *
Margaret T. Monaco....................................................... 46,000(8) *
Michael N. Rosen......................................................... 52,000(9) *
William Sheluck, Jr...................................................... 72,640(10) *
All directors and executive officers as a group (18 persons)............. 21,206,899(10) 28.2%
</TABLE>
- ------------------
* Less than 1%.
(1) Shares of Common Stock that an individual or group has a right to acquire
within 60 days after April 21, 1999 pursuant to the exercise of options,
warrants or other rights are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual or group, but are not
deemed to be outstanding for computing the percentage ownership of any
other person or group shown in the table.
(Footnotes continued on next page)
7
<PAGE>
(Footnotes continued from previous page)
(2) Includes(i) 2,652,334 shares owned by B&N College (Mr. Riggio owns all of
the voting securities of B&N College), (ii) 1,548,500 shares owned by The
Riggio Foundation, a charitable trust established by Mr. Riggio, with
himself and his wife as trustees, and (iii) 1,318,750 shares issuable upon
the exercise of stock options. The shares of Common Stock owned by
Mr. Riggio are, and in the future may be, pledged as collateral for certain
loans, including loans which were used to purchase Common Stock. The
failure of Mr. Riggio to repay such loans, together with any sale by the
pledgees of the pledged common stock, could result in a change of control
of the Company.
(3) Forstmann-Leff Associates, Inc. ("FLA"), a New York corporation, is a
registered investment adviser under Section 203 of the Investment Advisers
Act of 1940 (the "1940 Act"), and has sole voting power with respect to
2,449,830 of its shares. FLA shares voting power with respect to 559,300 of
its shares, and dispositive power with respect to 1,934,700 of its shares,
with its subsidiary, FLA Asset Management, Inc. ("FLA Management"), a
registered investment adviser under the 1940 Act. FLA shares voting and
dispositive power with respect to 48,900 of its shares with its subsidiary
Stamford Advisers Corp., a registered investment adviser under the 1940
Act. FLA shares voting and dispositive power with respect to 109,300 of its
shares with Forstmann-Leff Associates, L.P., a registered investment
adviser under the 1940 Act. FLA Management is the general partner of
Forstmann-Leff Associates L.P. FLA shares voting and dispositive power with
respect to 4,889,800 of its shares with FLA Advisers L.L.C., a New York
limited liability company. FLA Advisers L.L.C. is a registered investment
adviser under the 1940 Act whose managing members are principals of FLA.
The foregoing information is based upon a Schedule 13G filed by FLA with
the Company in February 1999.
(4) Neuberger & Berman, L.L.C. ("N&B") has sole voting power with respect to
33,100 of its shares, and shares voting and dispositive power with respect
to 3,653,600 of its shares with unrelated third parties. Of the 3,653,600
shares for which voting and dispositive power is shared, 2,739,600 shares
are beneficially owned by Neuberger & Berman Guardian Portfolio, a series
of Equity Managers Trust. N&B and Neuberger & Berman Management, Inc. ("N&B
Management") are deemed to be beneficial owners of these shares since they
both have shared power to make decisions whether to retain or dispose of
the securities. N&B and N&B Management serve as sub-adviser and investment
manager, respectively, of Neuberger & Berman Guardian Portfolio. The
foregoing information is based upon a Schedule 13G filed by N&B with the
Company in February 1999.
(5) All of these shares are issuable upon the exercise of stock options.
(6) Of these shares, 131,236 shares are issuable upon the exercise of options.
(7) Of these shares, 60,000 are issuable upon the exercise of stock options.
One thousand shares are owned by Mr. Berdon's wife. Mr. Berdon disclaims
any beneficial ownership of those shares.
(8) Of these shares, 40,000 are issuable upon the exercise of stock options.
(9) Of these shares, 40,000 shares are issuable upon the exercise of stock
options. Of the other 12,000 shares, 10,000 are owned by Mr. Rosen's wife
and 2,000 are owned by Mr. Rosen's daughter. Mr. Rosen disclaims any
beneficial ownership of these shares.
(10) Of these shares, 60,000 are issuable upon the exercise of stock options. Of
the other 12,640 shares, Mr. Sheluck shares voting and dispositive power
with respect to 8,000 of these shares with his wife, and the remaining
4,640 shares are owned by minor children of Mr. Sheluck.
(11) Includes 6,008,287 shares issuable upon the exercise of stock options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Board of Directors
are Mr. Berdon (Chairman), Mr. Hessels, Mr. Sheluck and Ms. Monaco, none of whom
is an officer or employee or former officer or employee of the Company. See
"Meetings and Committees of the Board--Compensation Committee."
8
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the years indicated to the Company's Chief
Executive Officer and the Company's four other most highly compensated executive
officers. The Company did not grant any restricted stock awards or free-standing
stock appreciation rights or make any long-term incentive plan payouts during
the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
FISCAL YEAR ------------
ENDED ON OR ANNUAL COMPENSATION SECURITIES
ABOUT --------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION JANUARY 31 SALARY BONUS OPTIONS/SARS COMPENSATION(1)
- ------------------------------------------- ----------- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Leonard Riggio ............................ 1999 $773,077(2) $450,000 -- $ --
Chairman of the Board and Chief Executive 1998 900,000 540,000 -- --
Officer 1997 900,000(3) 540,000 -- --
Stephen Riggio ............................ 1999 493,846 300,000 22,949 5,573(4)
Vice Chairman 1998 460,000 276,000 215,300 5,860
1997 448,462(3) 276,000 14,384 9,636
J. Alan Kahn .............................. 1999 500,000 300,000 24,945 9,232(6)
Chief Operating Officer 1998 48,077(7) 125,000 500,000 1,357
1997 -- -- -- --
Mitchell S. Klipper ....................... 1999 493,846 300,000 22,949 8,842(5)
Executive Vice President, and President 1998 460,000 276,000 15,300 8,987
of Barnes & Noble Development 1997 448,462(3) 276,000 14,384 8,279
Marie J. Toulantis ........................ 1999 300,000 180,000 14,967 3,173
Executive Vice President, Finance and 1998 190,385(8) 435,385(9) 200,000 --
Chief Financial Officer 1997 -- -- -- --
</TABLE>
- ------------------
(1) Except as set forth in notes 4,5 and 6 below, "All Other Compensation" for
the fiscal year ended January 30, 1999 is comprised of the Company's
contributions to the Barnes & Noble, Inc. 401(k) Savings Plan (the "401(k)
Plan").
(2) Effective March 28, 1999, Mr. Riggio voluntarily reduced his annual salary
to $500,000.
(3) Reflects annual salary for a 52-week period. The Company's fiscal year ended
February 1, 1997 included 53 weeks. Salaries paid for that 53-week period
were $917,308 for Leonard Riggio, and $457,308 for each of Stephen Riggio
and Mitchell S. Klipper.
(4) Represents (a) $3,635 paid by the Company as a contribution to Mr.
Riggio's 401(k) Plan, and (b) $1,938 paid by the Company as a premium on
a term life insurance policy for the benefit of Mr. Riggio.
(5) Represents (a) $3,635 paid by the Company as a contribution to Mr.
Klipper's 401(k) Plan, (b) $1,938 paid by the Company as a premium on a
term life insurance policy for the benefit of Mr. Klipper and (c) $3,269,
paid by the Company as a premium on a long-term disability insurance
policy for the benefit of Mr. Klipper.
(Footnotes continued on next page)
9
<PAGE>
(Footnotes continued from previous page)
(6) Represents (a) $3,760 paid by the Company as a contribution to Mr. Kahn's
401(k) Plan, and (b) $5,472 paid by the Company as a premium on a term
life insurance policy for the benefit of Mr. Kahn.
(7) Mr. Kahn joined the Company in December 1997. Salary for the fiscal year
ended January 31, 1998 represents his partial-year compensation.
(8) Ms. Toulantis joined the Company in July 1997. Salary for the fiscal year
ended January 31, 1998 represents her partial-year compensation.
(9) Reflects (a) 1998 annual bonus of $120,000 and (b) one-time sign-on bonus of
$315,385.
The following table sets forth certain information concerning options
granted during the 52 weeks ended January 30, 1999 to the executive officers
named in the Summary Compensation Table above. The Company did not grant any
free-standing stock appreciation rights during the 52 weeks ended January 30,
1999.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------
PERCENTAGE
NUMBER OF OF TOTAL
SECURITIES OPTIONS/SARS PRESENT VALUE OF GRANT
UNDERLYING GRANTED TO AT DATE OF GRANT USING
OPTIONS/SARS EMPLOYEES IN EXERCISE PRICE EXPIRATION THE BLACK-SCHOLES
NAME GRANTED FISCAL 1998 PER SHARE DATE MODEL(1)
- --------------------------------- ------------ ------------ -------------- ---------- ----------------------
<S> <C> <C> <C> <C> <C>
Leonard Riggio................... -- --% $ -- -- $ --
J. Alan Kahn..................... 24,945 1.36% 34.75 3/02/08 384,403
Stephen Riggio................... 22,949 1.25% 34.75 3/02/08 353,644
Mitchell S. Klipper.............. 22,949 1.25% 34.75 3/02/08 353,644
Marie J. Toulantis............... 14,967 0.81% 34.75 3/02/08 230,641
</TABLE>
- ------------------
(1) Calculated using the Black-Scholes option-pricing model with the following
assumptions: volatility of 35.0%, risk-free interest rate of 5.57% and an
expected life of six years. The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options which have
no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions
including the expected stock price volatility. Because the Company's stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
Black-Scholes model does not necessarily provide a reliable measure of the
fair value of the Company's stock options.
The following table sets forth information concerning option exercises and
the value of unexercised options as of January 30, 1999 for the executive
officers named in the Summary Compensation Table above.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT JANUARY 30, IN-THE-MONEY OPTIONS/SARS
SHARES 1999 AT JANUARY 30, 1999
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leonard Riggio..................... -- $ -- 1,318,750 -- $33,759,080 $ --
J. Alan Kahn....................... -- -- 125,000 399,945 1,832,025 5,563,115
Stephen Riggio..................... 200,000 6,578,429 1,986,972 189,219 55,260,353 3,437,537
Mitchell S. Klipper................ -- -- 1,505,788 39,219 39,607,884 390,662
Marie J. Toulantis................. -- -- 66,666 148,301 1,120,822 2,281,902
</TABLE>
10
<PAGE>
EMPLOYEES' RETIREMENT PLAN
The Company's Employees' Retirement Plan (the "Retirement Plan") is a
defined benefit pension plan covering all employees whose services are performed
within the United States (including Puerto Rico) who are at least 21 years of
age and who have completed at least one year of service and work a minimum of
1,000 hours per year. Vesting occurs after five years of service. The Retirement
Plan provides Company-funded benefits based upon an employee's years of service
and highest average annual salary for any five consecutive years in the last ten
years of service.
A participant's annual benefit is determined for an employee, including an
officer, generally as (i) 0.7% of the participant's average annual pay as
determined in accordance with the Retirement Plan up to Social Security-covered
compensation, multiplied by the participant's years of credited service, plus
(ii) 1.3% of the participant's average annual pay as determined in accordance
with the Retirement Plan in excess of Social Security-covered compensation,
multiplied by the participant's years of credited service. A participant's
maximum benefit is limited pursuant to Section 415 of the Internal Revenue Code
of 1986, as amended (the "Code") to $130,000 for 1998, indexed annually.
Compensation recognized under the Retirement Plan is limited to $160,000 for
1998, indexed annually in accordance with Section 404(l) of the Code.
Credited years of service under the Retirement Plan as of January 30, 1999
for the individuals named in the Summary Compensation Table above are: Leonard
Riggio--11 years; J. Alan Kahn--1 year; Stephen Riggio--11 years; Mitchell S.
Klipper--10 years; and Marie J. Toulantis--2 years.
The following table illustrates the maximum annual amounts payable at age
65 under the Retirement Plan, based on various levels of highest average annual
salary and years of credited service:
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
----------------------------------------------
ASSUMED HIGHEST AVERAGE SALARY 15 20 25 30 35
- ------------------------------------------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$125,000............................................... 21,405 28,540 35,675 42,810 49,945
$150,000............................................... 26,280 35,040 43,800 52,560 61,320
$160,000 and above(1).................................. 28,230 37,640 47,050 56,460 65,870
</TABLE>
- ------------------
(1) The benefits shown corresponding to this compensation reflect the
compensation limit under Section 401(a)(17) of the Code. A participant's
compensation in excess of $150,000 (as adjusted to reflect cost-of-living
increases) is disregarded for purposes of determining highest average
earnings in plan years beginning in 1994 through 1996; a participant's
compensation in excess of $160,000 (as adjusted to reflect cost-of-living
increases) is disregarded for purposes of determining highest average
earnings in plan years beginning in or after 1997. Benefits accrued as of
the last day of the plan year beginning in 1993 on the basis of compensation
in excess of $150,000 are preserved.
EMPLOYMENT AGREEMENTS
Stephen Riggio and Mitchell S. Klipper have employment agreements which
expire in 2000. The agreements with Mr. Riggio and Mr. Klipper provide for their
employment at an annual salary determined by the Company, subject to certain
minimums. Each is entitled to an annual bonus determined in accordance with the
Barnes & Noble, Inc. Supplemental Compensation Plan. The agreements also provide
for life and long-term disability insurance, a two-year severance arrangement
and a two-year post-employment, non-competition agreement. The agreements renew
annually, unless terminated by either party on 12 months prior notice.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive officer compensation program is administered by the
Compensation Committee of the Board of Directors, consisting of the four
non-employee directors listed below. The program is based upon the following
guiding principles:
1. The pay and benefits provided by the Company to its executive
officers should be competitive and allow the Company to attract and retain
individuals whose skills are critical to the long-term success of the
Company.
11
<PAGE>
2. The compensation offered by the Company should reward and motivate
individual and team performance in attaining business objectives and
maximizing stockholder value.
The Compensation Committee reviews the Company's executive compensation
program each year. This review includes a comparison of the Company's executive
compensation, corporate performance, stock appreciation and total return to the
stockholders with that of other companies, including other retailers.
The key elements of the Company's executive compensation package consist of
base salary, annual bonus and stock options. The Company's policies with respect
to each of these elements are discussed below. In addition, while the elements
of compensation described below are considered separately, the Compensation
Committee also considers and reviews the full compensation package afforded by
the Company to its executive officers, including pension, insurance and other
benefits. The Compensation Committee makes its determinations after receiving
and considering the recommendations of the Company's chief executive officer.
Base Salaries. An executive officer's base salary is determined by
evaluating the responsibilities of the position held, the individual's
experience and the competitive marketplace for executive talent. The base salary
is intended to be competitive with base salaries paid to executive officers with
comparable qualifications, experience and responsibilities at other companies.
Annual Bonuses. In addition to a base salary, each executive officer is
eligible for an annual cash bonus. Bonuses for senior executive officers of the
Company are based upon annual net earnings of the Company and are determined
pursuant to the Barnes & Noble, Inc. Supplemental Compensation Plan (the
"Supplemental Compensation Plan"), which was approved by the Company's
shareholders at their annual meeting on May 31, 1995.
The Supplemental Compensation Plan provides that senior executive officers
designated by the Compensation Committee are entitled to a cash bonus in
accordance with a sliding scale formula based on the extent to which a
preestablished earnings-per-share target is attained. In general, not later than
90 days after the commencement of each fiscal year of the Company (and before
25% of the relevant period of service has elapsed), the Compensation Committee
establishes in writing a target earnings-per-share (the "Target"), the
attainment of which is substantially uncertain. The Target which is established
for each fiscal year must exceed the earnings-per-share for the immediately
previous fiscal year. Targets are subject to adjustment for recapitalizations,
dividends, stock splits and reverse splits, reorganizations, issuances of
additional shares, redemptions of shares, option or warrant exercises,
reclassifications, significant acquisitions and divestitures and other
extraordinary events.
Each participating executive officer is entitled to receive a cash bonus
based on a percentage of his or her base salary for the fiscal year ("Base
Salary") as follows:
<TABLE>
<CAPTION>
THEN THE AMOUNT OF
IF ACTUAL EARNINGS-PER-SHARE ARE: THE CASH BONUS IS:
- --------------------------------- -------------------
<S> <C>
Less than 80% of Target................................................ None
80% or more but less than 91% of Target................................ 30% of Base Salary
91% or more but less than 100% of Target............................... 45% of Base Salary
100% or more but less than 109% of Target.............................. 60% of Base Salary
109% or more but less than 118% of Target.............................. 70% of Base Salary
118% or more of Target................................................. 80% of Base Salary
</TABLE>
Notwithstanding the foregoing, in no event will the maximum cash bonus
payable to any participating executive officer under the Supplemental
Compensation Plan exceed $900,000 with respect to any fiscal year. In addition,
no participating executive officer is entitled to receive any bonus under the
Supplemental Compensation Plan with respect to any fiscal year unless the
Company's actual earnings-per-share for such fiscal year (subject to adjustment
as provided above) exceeds earnings-per-share for the prior fiscal year. No
bonuses are paid until the Compensation Committee certifies the extent to which
the Target has been attained.
Leonard Riggio, Stephen Riggio, J. Alan Kahn, Mitchell S. Klipper and Marie
J. Toulantis are the senior executive officers of the Company currently
participating in the Supplemental Compensation Plan.
12
<PAGE>
Stock Options. The general purpose of long-term awards, currently in the
form of stock options, is to align the interests of the executive officers with
the interests of the Company's stockholders. Additionally, long-term awards
offer executive officers an incentive for the achievement of superior
performance over time and foster the retention of key management personnel. In
determining annual stock option grants, the Incentive Plan Committee has based
its decision on the individual's performance and potential to improve
stockholder value. The issuance of options at 100 percent of the fair market
value also assures that executives will receive a benefit only when the stock
price increases.
Compensation of Chief Executive Officer. Leonard Riggio's compensation is
determined pursuant to the principles noted above, including a bonus as
determined by the Supplemental Compensation Plan. Specific consideration is
given to Mr. Riggio's responsibilities and experience in the industry and the
compensation package awarded to chief executive officers of other comparable
companies.
Impact of Section 162(m) of the Internal Revenue Code. The Compensation
Committee has considered the potential impact of Section 162(m) of the Code,
adopted under the Revenue Reconciliation Act of 1993. This section disallows a
tax deduction for any publicly held corporation, for individual compensation
exceeding $1,000,000 in any taxable year paid to its chief executive officer or
any of its four other highest paid officers unless (i) the compensation is
payable solely on account of the attainment of performance goals, (ii) the
performance goals are determined by a compensation committee of two or more
outside directors, (iii) the material terms under which compensation is to be
paid are disclosed to and approved by stockholders and (iv) the compensation
committee certifies that the performance goals were met. Because it is in the
best interests of the Company to qualify to the maximum extent possible the
compensation of its executives for deductibility under applicable tax laws, the
Company has implemented the Supplemental Compensation Plan, which provides for
the payment of compensation in compliance with the above guidelines.
COMPENSATION COMMITTEE
Matthew A. Berdon, Chairman
Jan Michiel Hessels
Margaret T. Monaco
William Sheluck, Jr.
13
<PAGE>
PERFORMANCE GRAPH
Performance Graph. The following table compares the cumulative total
stockholder return on the Common Stock for the period commencing January 28,
1994 through January 29, 1999 (the last trading date during the Company's
last completed fiscal year) with the cumulative total return on the Standard &
Poor's 500 Stock Index (the, "S&P 500") and the Dow Jones Retailers, Other
Specialty Industry Group Index (the "Dow Jones Specialty Retailers Index") over
the same period. Total return values were calculated based on cumulative total
return assuming (i) the investment of $100 in the Common Stock, the S&P 500 and
the Dow Jones Specialty Retailers Index on January 28, 1994 and
(ii) reinvestment of dividends.
[GRAPHIC]
Barnes & Noble S&P 500 Index Dow Jones Specialty Retailers
1/28/94 100.0 100.0 100.0
1/27/95 140.5 98.3 102.8
1/26/96 131.5 129.9 91.6
1/31/97 148.2 164.2 108.4
1/30/98 302.4 204.8 158.5
1/29/99 356.6 267.4 276.7
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases space for its executive offices in properties in which a
principal shareholder/director/executive officer of the Company has a minority
interest. The space was rented at an aggregate annual rent including real estate
taxes of approximately $1,316,000 in fiscal year ended January 30, 1999 ("Fiscal
1998").
Marboro Books Corp., the Company's mail-order subsidiary, leases a 76,000
square foot office/warehouse from a partnership in which a principal
shareholder/director/executive officer of the Company has a 50% interest,
pursuant to a lease expiring in 2023. Pursuant to such lease, the Company paid
$737,000 in fiscal 1998.
The Company is provided with certain package shipping services by the LTA
Group, Inc. ("LTA"), a company in which the brother of a principal
shareholder/director/executive officer of the Company acquired a 20% interest
during fiscal 1996. The Company paid LTA $12,571,000 for such services during
fiscal 1998.
The Company leases retail space in a building in which B&N College, a
company owned by a principal shareholder/director/executive officer of the
Company, subleases space for its executive offices. Occupancy costs allocated by
the Company to B&N College for this space totaled $725,000 for fiscal 1998.
B&N College also allocated certain operating costs it incurred on behalf of
the Company. These charges are included in the accompanying consolidated
statements of operations and approximated $48,000 in fiscal 1998. The Company
charged B&N College $972,000 in fiscal 1998 for capital expenditures, business
insurance, and other operating costs incurred on their behalf.
The Company uses a jet aircraft owned by B&N College and pays for the costs
and expenses of operating the aircraft based upon the Company's usage. Such
costs which include fuel, insurance, personnel and other costs, approximated
$1,760,000 in fiscal 1998 and are included in the accompanying consolidated
statements of operations.
On November 27, 1996, Babbage's Etc. LLC ("Babbage's"), a company owned by
a principal shareholder/director/executive officer of the Company, acquired
substantially all of the assets of Software Etc. Stores, Inc., a company
(formerly a division of the Company) in which two principal
shareholders-directors had ownership interest, and assumed the operations of 14
retail software departments located within Barnes & Noble stores. As of January
30, 1999, there are 13 of these departments remaining. The Company pays all rent
related to these properties for which it receives a license fee from Babbage's
equal to 7.0% of the gross sales of such departments. The Company also provides
real estate and construction services to Babbage's and purchases business
insurance on its behalf for which the Company is reimbursed for its incremental
costs to provide such services. The Company charged Babbage's, $1,396,000 in
fiscal 1998 for such services, license fees, rent, operating costs, insurance
costs and benefits coverage. Babbages also purchases merchandise from the
Company at prices equal to the Company's cost to obtain and ship the
merchandise.
Michael N. Rosen, the Secretary and a Director of the Company, is a senior
member of Robinson Silverman Pearce Aronsohn & Berman LLP, which law firm has
represented the Company since its organization.
The Company believes that the transactions discussed above, as well as the
terms of any future transactions and agreements (including renewals of any
existing agreements) between the Company and its affiliates, are and will be at
least as favorable to the Company as could be obtained from unaffiliated
parties. The Board of Directors will be advised in advance of any such proposed
transaction or agreement and will utilize such procedures in evaluating the
terms and provisions of such proposed transaction or agreement as are
appropriate in light of the fiduciary duties of directors under Delaware law. In
addition, the Board of Directors has established an Audit Committee, which
consists of two independent directors. One of the responsibilities of the Audit
Committee is to review related party transactions. See "Election of
Directors--Meetings and Committees of the Board--Audit Committee."
15
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
PROPOSAL 2
The Board of Directors has appointed the firm of BDO Seidman, LLP, which
firm was engaged as independent certified public accountants for the fiscal year
ended January 30, 1999, to audit the financial statements of the Company for the
fiscal year ending January 29, 2000. A proposal to ratify this appointment is
being presented to the stockholders at the Meeting. A representative of BDO
Seidman, LLP will be present at the Meeting and will have the opportunity to
make a statement and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS CONSIDERS BDO SEIDMAN, LLP TO BE WELL QUALIFIED AND
RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION. PROXIES SOLICITED HEREBY
WILL BE VOTED FOR THE PROPOSAL UNLESS A VOTE AGAINST THE PROPOSAL OR ABSTENTION
IS SPECIFICALLY INDICATED.
OTHER MATTERS
The Company does not intend to present any other business for action at the
Meeting and does not know of any other business intended to be presented by
others. If any matters other than the matters described in the Notice of Annual
Meeting of Stockholders and this Proxy Statement should be presented for
stockholder action at the Meeting, it is the intention of the persons designated
in the proxy to vote thereon according to their best judgment.
Proxy Solicitation. Solicitation may be made personally, by telephone, by
telegraph or by mail by officers and employees of the Company who will not be
additionally compensated therefor. The Company will request persons such as
brokers, nominees and fiduciaries holding stock in their names for others, or
holding stock for others who have the right to give voting instructions, to
forward proxy materials to their principals and request authority for the
execution of the proxy. The Company will reimburse such persons for their
expenses in so doing.
Financial and Other Information. The Company's Annual Report for the
fiscal year ended January 30, 1999, including financial statements, is being
sent to stockholders together with this Proxy Statement.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934, as amended requires the Company's executive
officers and Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file initial statements
of beneficial ownership (Form 3), and statements of changes in beneficial
ownership (Forms 4 and 5), of Common Stock of the Company with the Securities
and Exchange Commission. Executive officers, Directors and greater than
ten-percent stockholders are required to furnish the Company with copies of all
such forms they file.
To the Company's knowledge, based solely on its review of the copies of
such forms received by it, or written representations from certain reporting
persons that no additional forms were required, all filing requirements
applicable to its executive officers, Directors, and greater than ten-percent
stockholders were complied with, except that Joseph Giamelli failed to file a
Form 3, Stephen Riggio filed a late Form 4 with respect to a series of related
transactions in March 1998, Maureen Golden filed a late Form 4 with respect to
one transaction, David Cully reported two Form 4 transactions late on his
Form 5 and Thomas Tolworthy reported one Form 4 transaction late on his Form 5.
Stockholder Proposals. Proposals of stockholders intended to be presented
at the Annual Meeting of Stockholders to be held in 2000 must be received by the
Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011, no
later than January 2, 2000.
In addition, the Company's By-Laws provide that, in order for a stockholder
to nominate a person for election to the Board of Directors at an annual meeting
of stockholders or to propose business for consideration at such meeting, such
stockholder must give written notice to the Secretary of the Company not less
than 30 days
16
<PAGE>
nor more than 60 days prior to the meeting; provided, however, that in the event
that less than 40 days notice or prior public disclosure of the date of the
meeting is given to stockholders, notice by the stockholder must be given not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. Such notice must contain the proposing stockholder's record name and
address, and the class and number of shares of the Company which are
beneficially owned by such stockholder. Such notice must also contain: (1) in
the case of nominating a person for election to the Board of Directors, all
information relating to such nominee that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended, including such person's written consent to being a nominee and to
serving as a director if elected; and (2) in the case of proposing business for
consideration, (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, and (ii) any material interest of the proposing stockholder in
such business.
STOCKHOLDERS ARE URGED TO FORWARD THEIR PROXIES WITHOUT DELAY. A PROMPT
RESPONSE WILL BE GREATLY APPRECIATED.
By Order of the Board of Directors
LEONARD RIGGIO
Chairman
May 1, 1999
17
<PAGE>
BARNES & NOBLE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This undersigned hereby appoints Leonard Riggio and Stephen Riggio, and
each of them, as his true and lawful Agents and Proxies, with full power of
substitution in each, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of common stock of Barnes
& Noble, Inc. held of record by the undersigned on April 21, 1999, at the Annual
Meeting of Stockholders to be held on June 9, 1999, and any adjournments or
postponements thereof, with the same effect as if the undersigned were present
and voting such shares, on all matters as further described in the accompanying
Proxy Statement.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders dated May 1, 1999 and the accompanying Proxy Statement.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" EACH OF THE BOARD OF
DIRECTORS' NOMINEES, AND "FOR" PROPOSAL 2. THE PROXIES, IN THEIR DISCRETION, ARE
AUTHORIZED TO VOTE UPON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
ANNUAL MEETING.
By executing this proxy, the undersigned hereby revokes all prior proxies.
(Continued, and to be signed and dated on the reverse side.)
BARNES & NOBLE, INC.
P.O. BOX 11280
NEW YORK, N.Y. 10203-0280
<PAGE>
Attn: Diana Ajjan
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees | | WITHHOLD AUTHORITY to vote | | EXCEPTIONS | |
listed below for all nominees listed below
</TABLE>
Nominees: Stephen Riggio, Matthew A. Beroon and Margaret T. Monaco.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided
below.)
"Exceptions
------------------------------------------------------
2. RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP,
as the independent certified public accountants of the company
for the fiscal year ending January 29, 2000.
FOR | | AGAINST | | ABSTAIN | |
Change of Address and or Comments Mark Here | |
Please sign exactly as name appears to the left. When shares are held by
joint tenants, both should 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: , 1999
----------------------------------------
-----------------------------------------------------
Signature
-----------------------------------------------------
Signature if held jointly
Votes MUST be indicated
(x) in Black or Blue ink. |_|
Please Mark, Sign, Date and Return this Proxy Card Promptly
Using the Enclosed Envelope.
