<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
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 Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SPORTMART, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
SPORTMART, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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> 2
May 28, 1996
To the Stockholders of
SPORTMART, INC.
You are cordially invited to attend the Annual Meeting of Stockholders of
Sportmart, Inc. (the "Company") to be held at The Westin Hotel - O'Hare, 6100
River Road, Rosemont, Illinois, on Friday, June 28, 1996 at 10:00 a.m. local
time.
The attached notice of Annual Meeting and Proxy Statement fully describe
the formal business to be transacted at the Annual Meeting, which includes the
following matters:
1. Election of two Class I directors.
2. A proposal to ratify and approve an Amendment to the Company's Stock
Option Plan to provide for an increase in the number of shares
of Class A Common Stock available for option grants under the Stock
Option Plan.
The members of the Board of Directors have unanimously determined that the
proposals summarized above are in the best interest of the Company and strongly
recommend that you vote "FOR" each of them. The reasons for the Board of
Directors' recommendations and other important information are contained in the
accompanying Proxy Statement. Because of the importance of the issues
involved, you are urged to read the Proxy Statement carefully.
Directors and officers of the Company will be present to help host the
Annual Meeting and to respond to any questions that our stockholders may have.
By attending the Annual Meeting, you will have the opportunity to hear the
plans for our Company's future, to meet your officers and directors and to
participate in the business of the Annual Meeting.
It is important that your shares be represented and voted at the Annual
Meeting, whether or not you plan to attend in person. Please sign, date and
mail the enclosed proxy card at your earliest convenience.
LARRY J. HOCHBERG
Chairman and Chief Executive Officer
<PAGE> 3
SPORTMART, INC.
1400 SOUTH WOLF ROAD
WHEELING, ILLINOIS 60090
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 28, 1996
The Annual Meeting of Stockholders of Sportmart, Inc., a Delaware
corporation (the "Company"), will be held on Friday, June 28, 1996 at 10:00
a.m. (local time) at The Westin Hotel - O'Hare, 6100 River Road, Rosemont,
Illinois. Stockholders who desire to attend the Annual Meeting should mark the
appropriate box on the enclosed proxy card. Persons who do not indicate
attendance at the Annual Meeting on the proxy card will be required to present
acceptable proof of stock ownership for admission to the meeting.
The Annual Meeting will be held for the following purposes:
1. Election of two Class I directors.
2. A proposal to ratify and approve an Amendment to the Company's Stock
Option Plan to provide for an increase in the number of shares
of Class A Common Stock available for option grants under the Stock
Option Plan.
Only stockholders of record at the close of business on April 30, 1996 are
entitled to notice of and to vote at the Annual Meeting. The list of
stockholders entitled to vote at the Annual Meeting will be open to examination
of any stockholder during the ten days prior to the Annual Meeting at the
Company's offices, 1400 South Wolf Road, Wheeling, Illinois 60090, during
normal business hours.
Whether or not you expect to attend the Annual Meeting, please complete,
sign, date and mail your proxy in the enclosed envelope, which requires no
postage if mailed within the United States. If you are present at the Annual
Meeting, you may, if you wish, withdraw your proxy and vote your shares
personally.
By Order of the Board of Directors
JOHN A. LOWENSTEIN
Corporate Secretary
May 28, 1996
<PAGE> 4
SPORTMART, INC.
1400 SOUTH WOLF ROAD
WHEELING, ILLINOIS 60090
(847) 520-0100
------------
PROXY STATEMENT
------------
ANNUAL MEETING OF STOCKHOLDERS
JUNE 28, 1996
------------
SOLICITATION AND REVOCABILITY OF PROXY
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Sportmart, Inc. (the "Company") to be used
at the Annual Meeting of Stockholders, and any adjournment or postponement
thereof (the "Meeting"), to be held on the date, at the time and place, and for
the purposes set forth in the foregoing notice. This Proxy Statement, the
foregoing notice and the enclosed Proxy are first being mailed to stockholders
on or about May 28, 1996.
A Proxy in the accompanying form which is properly signed, dated, returned
and not revoked will be voted in accordance with the instructions contained
therein. Unless authority to vote for the election of directors (or for any
one or more nominees) is withheld, Proxies will be voted for the slate of two
directors proposed by the Board, and, if no contrary instructions are given,
Proxies will be voted for approval of each of the remaining items on the Proxy.
The Board does not intend to bring any matter before the Meeting except as
specifically indicated in the notice, nor does the Board know of any matters
which anyone else proposes to present for action at the Meeting. However, if
any other matters properly come before the Meeting, the persons named in the
enclosed Proxy, or their duly constituted substitutes acting at the Meeting,
will be authorized to vote or otherwise act thereon in accordance with their
judgment and discretion.
The Company's Annual Report to Stockholders for the year ended January 28,
1996, including financial statements, is enclosed with this Proxy Statement.
However, the Annual Report to Stockholders does not constitute a part of this
Proxy Statement.
The cost of soliciting Proxies in the accompanying form has been, or will
be, paid by the Company. In addition to the solicitation of Proxies by the use
of the mails, certain officers and associates (who will receive no compensation
therefor in addition to their regular salaries) may be used to solicit Proxies
personally and by telephone and telegraph. In addition, banks, brokers and
other custodians, nominees and fiduciaries will be requested to forward copies
of the Proxy material
<PAGE> 5
to their principals and to request authority for the execution of Proxies.
The Company will reimburse such persons for their expenses in so doing.
The Proxy may be revoked at any time before it is exercised by providing
written notice of such revocation to Sportmart, Inc., 1400 South Wolf Road,
Wheeling, Illinois 60090, Attention: Corporate Secretary. The Proxy also may
be revoked by the attendance and voting by a stockholder at the Meeting or by
the execution and delivery to the Company of a Proxy dated subsequent to a
prior Proxy.
RECORD DATE; VOTING
The Board of Directors has fixed the close of business on April 30, 1996
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting. As of the record date of the Meeting, there were
outstanding 5,148,833.5 shares of Voting Common Stock and 7,625,537.5 shares of
Class A Common Stock. The outstanding shares of Voting Common Stock constitute
the only outstanding voting securities of the Company entitled to be voted at
the Meeting. Each holder of Voting Common Stock is entitled to one vote for
each share held by such person with respect to each matter (including election
of directors) to be voted on at the Meeting.
REQUIRED VOTE
The vote of a plurality of the shares cast in person or by Proxy is
required to elect nominees for director. The vote of a majority of the shares
present in person or by Proxy and entitled to vote is required to approve the
proposed amendments to the Stock Option Plan.
Due to their ownership of a majority of the outstanding shares of Voting
Common Stock, Larry J. Hochberg, Barbara P. Hochberg, Andrew S. Hochberg, John
A. Lowenstein and Amy Lowenstein (collectively, the "Hochberg Family") together
have sufficient voting power to elect the nominees proposed by the Board of
Directors and to approve the other proposals described in this statement and
they have advised the Board of Directors that they intend to vote their shares
in favor of the election of such nominees and such other proposals.
ABSTENTIONS AND BROKER NON-VOTES
The presence at the Annual Meeting in person or by Proxy of the holders of
a majority of the outstanding shares of Voting Common Stock is necessary to
constitute a quorum. Abstentions and broker non-votes will be included in
determining the presence of a quorum. Neither abstentions nor broker non-votes
will have any effect on the proposal to elect directors. Abstentions will be
considered present and entitled to vote with respect to the proposals to amend
the Stock Option Plan and will have the same effect as votes against such
proposals. Broker non-votes will not be considered present and entitled to
vote with respect to such proposals and will have no effect on the voting of
such proposals.
-2-
<PAGE> 6
PROXIES
Larry J. Hochberg and Andrew S. Hochberg, the persons named as proxies on
the Proxy accompanying this Proxy Statement, have been selected by the Board of
Directors of the Company to serve in such capacity. They are both directors of
the Company. Each executed and returned Proxy will be voted in accordance with
the directions indicated thereon, or if no direction is indicated, such Proxy
will be voted in accordance with the recommendations of the Board of Directors
contained in this Proxy Statement.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Board of Directors consists of seven directors. The
Restated Certificate of Incorporation of the Company currently in effect
provides that the members of the Board of Directors shall be divided into three
classes, as nearly equal in number as possible, with one class being elected
each year. At the Meeting, two persons will be elected as Class I directors,
each to be elected for a term of three years expiring at the 1999 Annual
Meeting or until their successors are elected and qualified. All nominees are
currently serving as directors and have consented to serve for new terms. The
Board of Directors recommends that the stockholders vote in favor of the
election of the two nominees named in this Proxy Statement to serve as
directors of the Company.
If any nominee becomes unavailable for any reason, the persons named in
the form of Proxy are expected to consult with management of the Company in
voting the shares represented by them. Management has no reason to doubt the
availability of any of the nominees to serve and no reason to believe that any
of the nominees will be unavailable or unwilling to serve if elected to office.
To the knowledge of management, the nominees intend to serve the term for
which election is sought. A plurality of the votes cast in person or by proxy
at the Meeting or any adjournment thereof will be required to elect the
nominees for directors. Each stockholder is entitled to one vote per share
held as of the record date. Stockholders will not be allowed to cumulate their
votes in the election of directors.
NOMINEES
The names of the nominees for the office of director, together with
certain information concerning such nominees, are set forth below:
Position With the Company and
Name Age Principal Occupation Director Since
- - ------------------ --- ----------------------------- --------------
John A. Lowenstein 34 Executive Vice President - 1992
Operations
Charles G. Cooper 68 Director; Senior Vice 1990
President and Director,
Helene Curtis Industries,
Inc.
John A. Lowenstein has been with the Company since 1988. He was promoted
in March 1995 to Executive Vice President, Operations. From February 1994 to
March 1995, Mr. Lowenstein served as Senior Vice President, Marts, and from
January 1992 to February 1994, Mr. Lowenstein
-3-
<PAGE> 7
served as Midwest Regional Vice President. Mr. Lowenstein has been a Director
of the Company since February 1992 and was named Secretary to the Board of
Directors in 1996. He previously served as Executive Vice President of the
Chapel Hill Garden Cemetery Association from 1984 to 1986. In 1990, he
graduated from the Northwestern University School of Law. Mr. Lowenstein is
the son-in-law of Larry J. Hochberg and the brother-in-law of Andrew S.
Hochberg.
Charles G. Cooper has been a Director of the Company since 1990. In 1993
he was named Senior Vice President of Helene Curtis Industries, Inc., a
publicly held international personal care products company. From 1985 to 1993,
he was the Executive Vice President and Chief Operating Officer of Helene
Curtis Industries, Inc. Mr. Cooper also has been a Director of Helene Curtis
Industries, Inc. since 1984.
OTHER DIRECTORS
The following persons will continue to serve as directors of the Company
after the Annual Meeting until their terms of office expire (as indicated
below) or until their successors are elected and qualified.
<TABLE>
<CAPTION>
Position With the Company and Director Term to
Director's Name Age Principal Occupation Since Expire
- - ------------------- ---- ------------------------------------ --------- ------
<S> <C> <C> <C> <C>
Larry J. Hochberg 58 Chairman and Chief Executive Officer 1970 1998
Andrew S. Hochberg 33 President 1986 1998
Stuart C. Nathan 54 Director; Executive Vice President, 1972 1998
JMB Realty Corporation
Jerome S. Gore 76 Director, Chairman Emeritus, 1986 1997
Hartmarx, Corporation
Dr. Lawrence J. Ring 47 Director, Professor of Business 1995 1997
Administration, College of William
& Mary
</TABLE>
Larry J. Hochberg is Chairman and Chief Executive Officer. Mr. Hochberg
has been a Director since he co-founded the Company in 1970. Mr. Hochberg also
co-founded Children's Bargain Town (now part of Toys "R" Us), which he sold in
1969. He currently serves on the Executive Committee and the Board of
Directors of the International Mass Retailing Association. Mr. Hochberg is the
father of Andrew S. Hochberg and the father-in-law of John A. Lowenstein.
Andrew S. Hochberg was promoted to President in February 1995 from his
previous position as Executive Vice President, which position he held from 1993
until 1995. From 1990 to 1993 he was Senior Vice President and Chief Financial
Officer. Mr. Hochberg joined Sportmart in 1987 as Director of Real Estate and
has been a Director of the Company since 1986. Prior to joining the Company in
1987, Mr. Hochberg graduated from the Northwestern University School of Law and
the University of Pennsylvania, Wharton School of Business. Mr. Hochberg is
the son of Larry J. Hochberg and the brother-in-law of John A. Lowenstein.
-4-
<PAGE> 8
Stuart C. Nathan has been a Director of the Company since 1972. Since
1972, he has been Executive Vice President and a Director of JMB Realty
Corporation, a national real estate development and management firm. Mr.
Nathan is also the President of JMB Development Corporation and JMB Urban
Development Co.
Jerome S. Gore has been a Director of the Company since 1986. He is
currently the Chairman Emeritus of Hartmarx Corporation, a publicly held
manufacturer and retailer of apparel. He previously served as a Director of
Hartmarx Corporation until 1989 and as a Director of Peoples Energy Corp. until
1989.
Dr. Lawrence J. Ring was elected to the Board of Directors in 1995. He is
a Professor of Business Administration at the College of William and Mary in
Williamsburg, Virginia. Dr. Ring's teaching and research focus on marketing
and retailing strategy and marketing management. He is the author of the book
Decisions in Marketing as well as a variety of scholarly articles. In addition
to his work at William and Mary, Dr. Ring teaches in numerous executive
development programs worldwide. His current consulting activities include
assignments with Walt Disney World Company, IBM Corporation, Dylex, Ltd.
(Canada), Office Depot, Sears, Roebuck and Company and Victoria's Secret
Stores. Over the years, Dr. Ring has had numerous other consulting assignments
with retailers such as R.H. Macy, Saks Fifth Avenue, Marshall Field's Company,
T. Eaton and Company (Canada), Coles Myer (Australia), Cada Department Stores
(Venezuela), Macintosh Group (Netherlands and Portugal), ICA (Sweden) and Kesko
(Finland). Professor Ring has previously held academic appointments at the
University of Toronto, the University of Virginia and Purdue University.
MEETINGS
The Board of Directors meets regularly and may schedule
additional special meetings upon request of the Chairman of the Board, the
President of the Company or one-half of the whole Board of Directors. During
fiscal 1995, the Board of Directors met 4 times in person and one time by
telephone. Each director attended at least 75% of the Board meetings and
meetings of Board committees on which he served that were held during fiscal
1995.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee currently composed of
Charles G. Cooper and Jerome S. Gore. The Audit Committee generally has
responsibility for recommending independent accountants to the Board for
selection, reviewing the plan and scope of the accountants' audit, reviewing
the Company's audit and control functions and reporting to the full the Board of
Directors regarding all of the foregoing. The Audit Committee had two meetings
and conferred by telephone on a number of occasions in fiscal 1995.
The Board of Directors' Compensation Committee is currently composed of
Charles G. Cooper, Jerome S. Gore and Stuart C. Nathan. The Compensation
Committee determines the compensation of Larry J. Hochberg, Andrew S. Hochberg,
and John A. Lowenstein, while the compensation of the Company's other executive
officers is determined by the Company in a manner consistent with prior years.
The Compensation Committee also has responsibility for the administration of
the Stock Option Plan, the Stock Purchase Plan and the Key Employee Incentive
-5-
<PAGE> 9
Plan, including designating participants and awarding options under each of the
foregoing plans. The Compensation Committee took action by written consent on
ten occasions and conferred by telephone on a number of occasions in fiscal
1995.
The Company does not have a Nominating Committee.
COMPENSATION OF DIRECTORS
Cash Compensation. A director who is an employee of the Company is not
compensated for service as a member of the Board of Directors or a committee of
the Board. For the fiscal year ended January 28, 1996, non-employee directors
received cash compensation consisting of an annual retainer of $15,000, with
additional cash compensation of $1,000 per day for each committee meeting they
attended.
For fiscal 1996, cash compensation for non-employee directors shall
consist of an annual retainer of $15,000. Non-employee directors also will
receive $1,000 per day for each committee meeting they attend.
Directors' Stock Option Plan. The Sportmart, Inc. Directors' Stock Option
Plan (the "Director Plan") was adopted by the Board of Directors on August 4,
1992 and approved by the Company's stockholders on September 25, 1992. The
Director Plan provides for the granting of options to purchase an aggregate of
75,000 shares (subject to adjustment in certain circumstances) of Voting Common
Stock to members of the Board of Directors who are not also employees of the
Company or any of its subsidiaries (the "Outside Directors"). The Director
Plan is designed to promote the interests of the Company by providing an
increased opportunity for existing and potential new directors to acquire an
investment in the Company, thereby maintaining and strengthening their desire
to remain with or join the Company's Board of Directors and align their
interest with those of the stockholders.
Effective October 6, 1992 (the "Initial Grant Date"), each of the Outside
Directors of the Company was granted non-qualified stock options ("NQSOs") to
purchase 3,000 shares of Voting Common Stock at the initial public offering
price. On each anniversary of the Initial Grant Date, NQSOs to purchase 3,000
shares of Voting Common Stock have been and will be granted to each of the
Outside Directors (with a limit of options to acquire a total of 15,000 shares
to be granted to any Outside Director). New Outside Directors will be granted
options to acquire 3,000 shares of Voting Common Stock at the first meeting of
directors held subsequent to their election and, thereafter, options to acquire
3,000 shares at each anniversary of such date if the person is still serving as
a director on such date (with a limit of options to acquire a total of 15,000
shares to be granted to any Outside Director). All options granted under the
Directors' Plan are exercisable immediately upon grant and, for options other
than those granted as of the Initial Grant Date, at a price per share equal to
the closing price of the Voting Common Stock as reported on the Nasdaq National
Market on the date of grant or, if the market is closed on such date, the next
business day. Once granted, options may not be canceled.
If any options under the Director Plan are surrendered before exercise or
lapse without exercise, in whole or in part, the shares reserved for grant will
revert to the status of available shares.
-6-
<PAGE> 10
All options expire on the earlier to occur of (a) seven years following the
Grant Date and (b) two years after the first date on which the Outside Director
is no longer serving as a director of the Company.
The Board of Directors may amend the plan from time to time, but not more
than once every six months, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act or the rules
thereunder. Furthermore, any amendment to the Director Plan shall be subject
to approval by the stockholders of the Company if the amendment would: (i)
materially increase the benefits accruing to the participants under the
Director Plan; (ii) materially increase the number of securities which may be
issued under the Director Plan; and (iii) materially modify the requirements as
to eligibility for participation under the Director Plan.
EXECUTIVE OFFICERS
The following persons are executive officers of the Company who are not
identified in the tables entitled "Election of Directors -- Nominees" or "--
Other Directors."
<TABLE>
<CAPTION>
Name Age Position
- - ---------------------- --- ---------------------------------------------------
<S> <C> <C>
C. Mark Scott 43 Executive Vice President - Merchandising &
Marketing
Thomas T. Hendrickson 41 Senior Vice President and Chief Financial Officer
Joseph A. DeFalco, Jr. 42 Senior Vice President - Human Resources
Michelle K. Garvey 37 Senior Vice President - Management Information
Systems
Mitchell P. Kahn 35 Senior Vice President - Corporate Development
Gregory E. Fix 37 Vice President - General Counsel
Robert Morrison 40 Vice President - Marts
Matthew Powell 44 Vice President - Merchandising - Fitness
Vice President - International
</TABLE>
Mr. Scott joined the Company in July 1995 as Executive Vice President -
Merchandising & Marketing. He previously was Executive Vice President -
Merchandising & Marketing for Bombay Company from June 1993 until July 1995.
From June 1990 until June 1993, Mr. Scott was Executive Vice President -
Merchandising & Stores for Mark Cross.
Mr. Hendrickson joined the Company in January 1993 as Vice President -
Financial Operations. In March 1993, he was named Chief Financial Officer and
in March 1995 he was named Senior Vice President and Chief Financial Officer.
Prior to joining the Company, Mr. Hendrickson was employed as the Vice
President and Controller by Millers Outpost Stores from 1987 to his hiring at
Sportmart.
-7-
<PAGE> 11
Mr. DeFalco joined the Company in 1987 as Director of Human Resources, and
was promoted to Vice President - Human Resources in 1993. In November 1995 he
was named Senior Vice President - Human Resources. Prior to joining the
Company, Mr. DeFalco was employed by Wieboldt Stores, Inc. as Director of Human
Resources.
Ms. Garvey joined the Company in 1991 as Vice President-Management
Information Systems. In November 1995 she was named Senior Vice President -
Management Information Systems. She was previously Vice President, Systems
Development for Ames Department Stores from 1987 to 1991.
Mr. Kahn joined the Company in 1992 as Vice President - Real Estate. In
November 1995 he was promoted to Senior Vice President - Corporate Development.
From 1989 to 1991, he was a partner in the law firm of Levenstein and Resnick
as an attorney specializing in real estate law. From 1987 to 1989, Mr. Kahn
was associated with the law firm of Nagelberg and Resnick.
Mr. Fix joined the Company in 1990 as Corporate Counsel, and was promoted
to Vice President - General Counsel in 1994. From 1987 until 1990, Mr. Fix was
associated with the law firm of Kroesch & Kavanagh.
Mr. Morrison joined the Company in September 1995. Previously Mr.
Morrison was employed as Director of Factory Stores for Ann Taylor from March
1993 until September 1995. Prior to March 1993 he was Senior Vice President of
Stores, Regional Director for Ann Taylor.
Mr. Powell joined the Company in 1991 as Vice President - General
Merchandise Manager with the Company's No Contest division. In 1995, Mr.
Powell was named Vice President - Merchandising - Fitness and Vice President -
International. Prior to 1991, Mr. Powell was employed as Senior Vice President
and Regional Director of Stores and Vice President - Store Manager for Jordan
Marsh, Inc.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than ten percent
(10%) of the Company's stock, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission and NASDAQ.
Executive officers, directors, and greater than ten percent (10%) beneficial
owners are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers, directors, and greater than ten percent (10%)
beneficial owners were complied with, except for the late reporting on a Form
of the acquisition of shares of Company stock by a limited partnership in
which Andrew Hochberg has an ownership interest.
-8-
<PAGE> 12
EXECUTIVE COMPENSATION
The following table provides information concerning the annual and
long-term compensation for services in all capacities to the Company for 1995,
1994, and 1993 for those persons who were at January 28, 1996 (i) the chief
executive officer (ii) the four other most highly compensated (combined salary
and bonus) executive officers of the Company , and (iii) two additional
individuals who would have been among the other four most highly compensated
executive officers but for the fact that they were not executive officers at
the end of fiscal 1995 (collectively, the "Named Officers")
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ----------------------------------------
Securities
Restricted Stock Underlying Options All Other
Name and Principal Position Year Salary ($) Bonus ($) Award($) (#)(1) Compensation ($)(2)
- - --------------------------- ---- ---------- --------- ---------------- ------------------ ---------------------
<S> <C> <C> <C> <C> <C> <C>
Larry J. Hochberg 1995 151,309 - - 30,000 1,323
Chairman and Chief 1994 360,776 - - - 1,868
Executive Officer 1993 343,440 - - 20,000 4,113
Sanford Cantor (3) 1995 225,143 - 5,000 1,385
Vice Chairman and Secretary 1994 220,848 - - 7,500 1,908
1993 224,956 - - - 4,046
Andrew S. Hochberg 1995 139,692 - - 30,000 2,078
President 1994 191,370 15,000 - - 2,196
1993 175,000 - - 20,000 3,654
James D. Peters (4) 1995 106,893 2,137 - 10,000 1,563
Senior Vice 1994 199,450 - 2,137 5,000 2,996
President-Marketing 1993 181,539 10,175 - 12,950 141,740
David M. Hendler (5) 1995 163,319 2,305 - 15,000 5,185
Senior Vice President - 1994 155,314 - 2,305 5,000 2,189
Operations 1993 138,538 7,682 - 9,940 3,656
Thomas T. Hendrickson 1995 173,531 3,000 - 15,000 1,087
Senior Vice President & 1994 131,958 9,500 3,000 6,500 695
Chief Financial Officer 1993 126,370 12,000 - 18,881 40,312
C. Mark Scott (6) 1995 275,000 50,000 - 50,000 34,357
Executive Vice President - 1994 - - - - -
Merchandising & Marketing 1993 - - - - -
</TABLE>
- - ------------
(1) The securities underlying all options in this table are shares of the
Company's Voting Common Stock and Class A Common Stock. The securities
underlying the options grants made in fiscal years 1993 and 1994 are for
the purchase of shares of the Company's Voting Common Stock, except for an
option grant to Mr. Hendrickson made in 1994 to purchase 2,500 shares of
the Company's Class A Common Stock. The securities underlying the option
grants made in fiscal 1995 are for the purchase of shares of the Company's
Class A Common Stock.
(2) Detail of amounts reported in the "All Other Compensation" column for
1995 is provided in the table below.
(3) Mr. Cantor retired from the Company and the Board of Directors
effective February 1, 1996.
-9-
<PAGE> 13
(4) Mr. Peters resigned effective July 21, 1995; the salary set forth for
fiscal 1995 is the actual base salary Mr. Peters received in fiscal 1995.
Had Mr. Peters remained an executive officer through the end of fiscal
1995, he would have been among the other four most highly compensated
executive officers.
(5) Mr. Hendler resigned effective April 15, 1995; the amount set forth for
fiscal 1995 is the base salary Mr. Hendler actually received through the
effective date of his resignation along with the amount of a consulting
fee for services rendered following such date.
(6) Mr. Scott became an employee of the Company effective July 24, 1995; the
salary set forth for fiscal 1995 is the base salary Mr. Scott would have
received for the full fiscal year; Mr. Scott actually received $182,212 in
salary and bonus in fiscal 1995.
<TABLE>
<CAPTION>
Item L. Hochberg S. Cantor A. Hochberg J. Peters D. Hendler
- - ---------------------------- ----------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Company Contribution to
Profit Sharing Plan $461 $461 $461 $461 $461
Company Match for 401(k)
Plan 862 924 1,617 1,102 589
Other Compensation -0- -0- -0- -0- 4,135(1)
----------- --------- ----------- --------- ----------
Total All Other Compensation $1,323 $1,385 $2,078 $1,563 $5,185
=========== ========= =========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Item T. Hendrickson M. Scott
- - --------------------------- -------------- -----------
<S> <C> <C>
Company Contribution to
Profit Sharing Plan $460 $-0-
Company Match for 401(k)
Plan 555 -0-
Other Compensation 72(2) 34,357(3)
-------------- -----------
Total All Other Compensation $1,087 $34,357
============== ===========
</TABLE>
(1) Represents $1,135 paid by the Company on behalf of the employee for a
term life insurance policy and $3,000 paid by the Company to reimburse
employee for professional services and expenses.
(2) Represents group life and health insurance premium paid by the Company on
behalf of the employee.
(3) Represents moving and temporary living payments made on behalf of Mr.
Scott in connection with his relocation to the Chicago area.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on grants of stock options during
fiscal 1995 to the Named Officers pursuant to the Stock Option Plan. The
securities underlying all options in this table are shares of the Company's
Class A Common Stock.
-10-
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (2)
---------------------------------------------------------------------------------- ---------------------
Number of shares Percent of Total
of Class A Common Options Granted to
Stock Underlying Employees in Fiscal Exercise or Base
Name Options Granted Year (%) Price(1) Expiration Date 5% 10%
- - --------------------- ----------------- ------------------- ---------------- --------------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Larry J. Hochberg 30,000(3) 3.83% $6.125 03/27/05 $115,530 $292,851
Sanford Cantor 5,000(3) 0.64 6.125 03/27/05 19,255 48,809
Andrew S.Hochberg 30,000(3) 3.83 6.125 03/27/05 115,530 292,851
James D. Peters 10,000(3) 1.28 6.125 03/27/05 38,510 97,617
David M. Hendler 15,000(3) 1.92 6.125 03/27/05 57,765 146,426
Thomas T. Hendrickson 15,000(3) 1.92 6.125 03/27/05 57,765 146,426
C. Mark Scott 50,000(4) 6.40 7.25 07/31/05 227,995 577,730
</TABLE>
- - ----------------
(1) Price of the Company's stock on the date of the grant of stock options.
(2) Potential realizable value is presented net of the option exercise price
but before any federal or state income taxes associated with exercise.
These amounts represent certain assumed rates of appreciation only.
Actual gains are dependent on the future performance of the common stock
and the option holder's continued employment throughout the vesting
period. The amounts reflected in the table may not necessarily be
achieved.
(3) Options granted are exercisable starting on March 27, 1996, with options
to purchase 20% of the shares of Class A Common Stock covered thereby
becoming exercisable at that time and with options to purchase an
additional 20% of the shares of Class A Common Stock becoming exercisable
on each successive March 27 with full vesting occurring on March 27, 2000.
(4) Options granted are exercisable starting on July 31, 1996, with options
to purchase 20% of the shares of Class A Common Stock covered thereby
becoming exercisable at that time and with options to purchase an
additional 20% of the shares of Class A Common Stock becoming exercisable
on each successive July 31 with full vesting occurring on July 31, 2000.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides information on the Named Officers'
unexercised options at January 28, 1996. None of the Named Officers exercised
any options during fiscal 1995.
-11-
<PAGE> 15
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Numbers of Shares of Numbers of Shares of Value of Shares
Voting Common Stock Class A Common Stock Underlying Unexercised
Underlying Unexercised Underlying Unexercised In-the-Money Options at
Options at FY-End Options at FY-End FY-End (1)
------------------------- ------------------------- -------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable Exercisable/Unexercisable
- - --------------------- ------------------------- ------------------------- -------------------------
<S> <C> <C> <C>
Larry J. Hochberg 8,000/12,000 0/30,000 -/-
Sanford Cantor 1,500/6,000 0/5,000 -/-
Andrew S. Hochberg 8,000/12,000 0/30,000 -/-
James D. Peters 0/0 0/0 -/-
David M. Hendler 0/0 0/15,000 -/-
Thomas T. Hendrickson 10,720/12,161 500/17,000 -/-
C. Mark Scott 0/0 0/50,000 -/-
</TABLE>
- - --------------
(1) The exercise price of each of the referenced options exceeded the closing
prices of both the Company's Voting Common Stock of $4.9375 and the
Company's Class A Common Stock of $3.375 as reported on the Nasdaq
National Market on January 26, 1996.
REPORT OF THE BOARD OF DIRECTORS AND COMPENSATION COMMITTEE
Traditionally, annual compensation and bonuses for the Company's executive
officers (other than the chief executive officer, president and executive vice
president - operations) has been determined by the Company's chief executive
officer and president due to the relatively small number of executive officers
and the chief executive officer's and president's personal knowledge of the
relative performance and responsibilities of each executive officer. Option
grants to such executives are determined by the Compensation Committee.
Executive compensation for the Company's executive officers for the fiscal year
ended January 28, 1996 was established in this manner. The compensation of the
chief executive officer, the president and the executive vice president -
operations, is set by the Compensation Committee of the Board of Directors.
The compensation policy of the Company is to provide a total compensation
package that is comparable to the market. The "market" is defined as companies
against which the Company competes for human resources talent. This includes
other sporting goods retailers and other discount specialty retailers occupying
large volume stores like the Company. "Comparable" to the market means setting
pay levels at or near the 50th percentile. Executive compensation consists of
both annual and long-term compensation. Annual compensation decisions are
based partly on short-term performance measures and partly on the cumulative
long-term performance of the Company during the executive's tenure in a
position. Long-term compensation through the grant of stock options is
intended to compensate executives primarily for their contributions to
long-term increases in stockholder value.
Annual compensation consists of a base salary and an annual bonus. All
executive officers participate in the Key Employee Incentive Plan (the "KEIP"),
a corporate-level executive bonus
-12-
<PAGE> 16
program. Salary levels and bonus criteria and plans for the Company's executive
officers are examined each year to take into account factors discussed above
and other additional factors believed appropriate at the time. Executive
compensation structures and levels are determined following meetings between
the chief executive officer and the other executive officers. Department
budgets and targeted performance goals are also reviewed.
Pursuant to the KEIP, the Compensation Committee determines target annual
bonus opportunities for executives under the Plan. Each Participant's target
annual bonus opportunity is based in part on overall Company performance as
well as achievement of measurable goals and strategic goals. Measurable goals
are mutually pre-set and quantifiable. Strategic goals, on the other hand,
while pre-set mutually, are based upon individual goals set by each executive.
In fiscal 1995, the annual bonus for a participant was to be awarded in cash.
Several executives earned bonuses in fiscal 1995, based on the achievement
of certain departmental and individual goals. However, based on overall
Company performance, no bonuses were awarded under the KEIP for fiscal 1995.
Instead, management determined it was appropriate to make limited stock option
grants to certain executive officers and other executives and managers of the
Company based upon attainment of certain departmental or individual goals that
management believes were not appropriately weighted under the KEIP.
Compensation for the chief executive officer, the president and the
executive vice president - operations was set by the Compensation Committee in
fiscal 1995. The Compensation Committee based its decision on the report of a
compensation consultant as well as the above criteria. After the close of the
fiscal year the Compensation Committee, in agreement with the chief executive
officer, president and executive vice president - operations, determined to
substantially reduce the annual salaries for fiscal 1995 of these executive
officers. This decision was reached in view of the fact that no executives of
the Company were receiving cash bonuses for fiscal 1995. Thus, in a show of
solidarity with executives and managers of the Company, these three executive
officers returned in the aggregate approximately $377,000 of their fiscal 1995
salaries to the Company. In March 1995, 30,000 stock options were granted to
both the chief executive officer and the president and 20,000 stock options
were granted to the executive vice president - operations. In addition, other
executive officers and other officers and managers were granted stock options
in varying amounts as part of the Company's annual stock option grant as well
as at other times throughout the fiscal year. Survey data as to customary award
sizes for stock options was reviewed as well as the potential value of options
to the executive officers under various scenarios of growth in stock price,
which in turn were related to incumbents' base salaries. The Board believes
this form of compensation helps ensure an alignment of an executive's interests
with the interests of stockholders.
The Board of Directors currently intends for all compensation paid to the
Named Officers to be tax deductible to the Company pursuant to Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"). Section 162(m)
of the Code provides that compensation paid to the Named Officers in excess of
$1,000,000 cannot be deducted by the Company for Federal income tax purposes
unless, in general, such compensation is performance based, is established by
an independent committee of directors, is objective and the plan or agreement
providing for
-13-
<PAGE> 17
such performance based compensation has been approved in advance by
stockholders. In the future, however, if, in the judgment of the Board, the
benefits to the Company of a compensation program that does not satisfy the
arbitrary and inflexible conditions of Section 162(m) of the Code outweigh the
costs to the Company of the failure to satisfy these conditions, the Board may
adopt such a program.
BOARD OF DIRECTORS COMPENSATION COMMITTEE
(AS OF JANUARY 28, 1996) (AS OF JANUARY 28, 1996)
Larry J. Hochberg Charles G. Cooper
Sanford Cantor Jerome S. Gore
Andrew S. Hochberg Stuart C. Nathan
John A. Lowenstein
Charles G. Cooper
Jerome S. Gore
Stuart C. Nathan
Lawrence J. Ring
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Company, the NASDAQ-U.S. Companies Index and the NASDAQ Retail Trade Index
during the period commencing October 6, 1992, the date of the Company's initial
public offering, and ending on January 28, 1996, the close of the Company's
fiscal year. The comparison assumes $100.00 was invested on October 6, 1992 in
the Company's Common Stock, the NASDAQ-U.S. Companies Index and the NASDAQ
Retail Trade Index and assumes the reinvestment of all dividends, if any.
[GRAPH]
SPORTMART
DATES AND DOLLARS USED FOR SPORTMART'S SEMI-ANNUAL PERFORMANCE GRAPH
<TABLE>
<CAPTION>
DATE SPORTMART, INC. PEER GROUP INDEX NASDAQ MARKET INDEX
<S> <C> <C> <C>
10/06/92 $100.00 $100.00 $100.00
01/29/93 $104.92 $110.41 $122.22
07/28/93 $65.57 $107.05 $123.72
01/28/94 $113.12 $117.78 $139.84
07/28/94 $101.64 $104.11 $125.33
01/27/95 $64.73 $105.58 $134.76
07/28/95 $54.73 $122.65 $179.85
01/26/96 $28.37 $116.22 $186.28
</TABLE>
-14-
<PAGE> 18
APPROVAL OF AMENDMENTS TO THE
STOCK OPTION PLAN
(PROPOSAL 2)
The Board of Directors has approved certain amendments (the "Plan
Amendments") to the Sportmart, Inc. Stock Option Plan (the "Stock Option Plan")
subject to the approval of stockholders. The Plan Amendments proposed for
stockholder approval are an increase in the number of shares potentially
subject to option grants under the Stock Option Plan. In accordance with Rule
16b-3(b), promulgated by the SEC pursuant to the Exchange Act, the Board of
Directors is submitting to the stockholders at the Annual Meeting a proposal to
ratify and approve the Plan Amendment. Approval of the Plan Amendment requires
the affirmative vote of holders of the majority of the shares of Voting Common
Stock present, in person or by Proxy, at the Annual Meeting entitled to vote.
A copy of the proposed amendments to the Stock Option Plan is attached as
Exhibit A to this Proxy Statement. A description of each of the Plan
Amendment, as approved by the board of Directors, is set forth below. All
descriptions of the Plan Amendments are qualified in their entirety by
reference to the Plan Amendment.
STOCK OPTION PLAN
The Stock Option Plan currently provides for the grant of options of up to
1,125,000 shares of Voting Common Stock and up to 565,000 shares of Class A
Common Stock, provided that (i) the number of shares of Voting Common Stock
reserved for issuance under the Stock Option Plan would be reduced from time to
time by the number of shares of Class A Common Stock for which options are
granted, and (ii) the number of shares of Class A Common Stock reserved for
issuance under the Stock Option Plan would be reduced from time to time by the
number of shares of Voting Common Stock for which options are granted after the
effective date of the Plan Amendments. Thus, the current Stock Option Plan
allows the Compensation Committee to grant options for up to a maximum of
1,125,000 shares of either the Voting Common Stock or the Class A Common Stock.
The purpose of this amendment is to increase the number of shares of Class
A Common Stock potentially subject to option grants under the Stock Option
Plan. The proposed amendment to the Stock Option Plan would provide for the
grant of up to an additional 625,000 shares of Class A Common Stock and thus
would allow the Compensation Committee to grant options for up to a maximum of
1,125,000 shares of Voting Common Stock or 1,750,000 shares of Class A Common
Stock. The amendment will permit the grant of options in accordance with the
Stock Option Plan's purpose of providing incentives to officers and key
employees.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSED AMENDMENT TO THE STOCK OPTION PLAN.
BOARD OF DIRECTOR INTERLOCKS AND INSIDER PARTICIPATION
Larry J. Hochberg, the Chairman and Chief Executive Officer of the
Company, Andrew S. Hochberg, the President of the Company, and John A.
Lowenstein, Executive Vice President - Operations and Secretary of the
Company, are members of the Board of Directors.
-15-
<PAGE> 19
CERTAIN TRANSACTIONS
From time to time the Company has transacted business with entities in
which its principal stockholders or management or other affiliates of the
Company have an interest.
PROPERTY LEASES
As of January 28, 1996, nine of the Company's 67 marts (Niles, Lombard,
Calumet City, Schaumburg, Chicago (Lakeview), Wheeling, Merrillville, North
Riverside, and Vernon Hills) and the Company's No Contest stores in Ferguson,
Missouri and Crestwood, Missouri are leased from partnerships or land trusts in
which the following members of management and their families own, in the
aggregate, all of the beneficial interests through various partnerships: Larry
Hochberg, Barbara Hochberg, Andrew Hochberg, John Lowenstein, Amy Lowenstein,
and Mitchell Kahn. Additionally, the Company believes that the occupancy costs
to the Company under each lease are no higher than those which would be charged
by an unrelated third party under similar circumstances. Each of the lease
agreements provides for the Company, as tenant, to pay monthly fixed rent,
percentage rent based upon sales in excess of stipulated amounts and its pro
rata share of all utilities, insurance, taxes and other common area costs
associated with the property (other than free standing stores which pay all of
the costs associated with the property). The leases for the locations at
Vernon Hills, Illinois and Crestwood, Missouri were approved by the outside
members of the Board of Directors. Additionally, a partnership in which
members of management and their families indirectly own the general partner and
hold up to a one-third interest as limited partners owns the property on which
the Chicago (River North), Illinois mart is located. The aggregate lease
payments (net of utilities, insurance, taxes and other common area costs) for
the above locations in fiscal years 1995, 1994, and 1993 were approximately
$3.9, $3.6, and $4.0 million, respectively.
In fiscal 1995, the Company determined to discontinue the operation of its
No Contest division and to close its River North and Wheeling Illinois
locations. Notwithstanding the discontinuance of No Contest operations and the
closing of the two Sportmart locations, the Company is still obligated on the
leases for these locations and is actively marketing them to potential
substitute tenants.
COMPANY GUARANTEES AND INTERIM FINANCING OF PARTNERSHIPS
The Company has provided interim financing to certain management-owned
partnerships to cover expenses incurred by the partnerships in connection with
the purchase and initial development of newly-acquired properties. Each
partnership reimburses the Company for such advances, including accrued
interest, as and when the partnership obtains a construction loan or other
third-party financing. As of January 29, 1995, the total amount owed by such
partnerships was approximately $695,900.
MISCELLANEOUS
Each of the management-owned partnerships which lease property to the
Company pays a management fee to the Company equal to 2.5% of the gross rent
for the particular property as
-16-
<PAGE> 20
reimbursement for property management services provided by the Company. For
fiscal 1995, total management fees were $115,406.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 1, 1996, certain information
with respect to the beneficial ownership of the Company's Class A Common Stock
and Voting Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of either class of Common
Stock (ii) each director of the Company, (iii) the Named Officers and (iv) all
executive officers and directors as a group.
<TABLE>
<CAPTION>
VOTING COMMON STOCK CLASS A COMMON STOCK
------------------------------ ------------------------------
NO. OF SHARES PERCENTAGE NO. OF SHARES PERCENTAGE
NAME OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED OF TOTAL BENEFICIALLY OWNED OF TOTAL
- - ------------------------------------- ------------------ ---------- ------------------ ----------
<S> <C> <C> <C> <C>
Larry J. Hochberg (2)(8) ............ 2,679,849 52.0% 1,940,043 25.4%
Barbara P. Hochberg (3) ............. 102,000 2.0 1,566,200 20.5
Andrew S. Hochberg (4)(8) ........... 436,344 8.5 726,209 9.5
John A. Lowenstein (5)(9) ........... 155,307 3.0 295,248 3.9
Charles G. Cooper (6) ............... 12,000 * 1,000 *
Jerome S. Gore (6) .................. 12,000 * 3,000 *
Stuart C. Nathan (6) ................ 12,000 * -- *
Lawrence J. Ring (7) ................ 3,000 * 500 *
Directors and Executive Officers
as a Group (10) (15 persons) ....... 3,429,678 66.6% 3,111,165 40.8%
</TABLE>
__________________
*Less than 1%
(1) The address of each stockholder listed is c/o Sportmart, Inc., 1400 South
Wolf Road, Wheeling, Illinois 60090.
(2) Excludes 131,700 shares of Class A Common Stock and 102,000 shares of
Voting Common Stock beneficially owned by Larry J. Hochberg's wife,
Barbara P. Hochberg, of which shares Larry J. Hochberg disclaims
beneficial ownership. Excludes 126,732 shares of Class A Common Stock
which are held by Barbara P. Hochberg and John A. Lowenstein as Trustees
of the AHL Investment Trust U/A/D 12/7/90, of which shares Larry J.
Hochberg disclaims beneficial ownership. Excludes 555,424 shares of Class
A Common Stock and 275,329 shares of Voting Common Stock held by Barbara
P. Hochberg and Andrew Hochberg, as Trustees of AH Investment Trust U/A/D
6/3/87, of which shares Larry J. Hochberg disclaims beneficial ownership.
Includes 1,434,500 shares of Class A Common Stock, which shares are held
in a Delaware limited partnership of which a revocable trust, of which
Larry J. Hochberg and Barbara P. Hochberg are grantors and trustees, is a
limited partner and general partner. Includes 5,792 shares of Class A
Common Stock and 792 shares of Voting Common Stock held in a irrevocable
trust of which Larry J. Hochberg is co-trustee. Includes 312,500 shares
Voting Common Stock beneficially owned by Sanford Cantor, which shares are
subject to a voting agreement pursuant to which Larry J. Hochberg may vote
such shares; Larry J. Hochberg disclaims beneficial ownership of such
shares.
(3) Excludes 493,751 shares of Class A Common Stock and 2,358,557 shares of
Voting Common Stocks beneficially owned by Barbara P. Hochberg's husband,
Larry J. Hochberg. Excludes 126,732 shares of Class A Common Stock held
by Barbara P. Hochberg and John A. Lowenstein, as Trustees of the AHL
Investment Trust U/A/D 12/7/90. Excludes 555,424 shares of Class A Common
Stock and 275,329 shares of Voting Common Stock held by Barbara P.
Hochberg and Andrew S. Hochberg, as Trustees of the AH Investment Trust
U/A/D 6/3/87, with respect to which shares Barbara P. Hochberg and Andrew
S. Hochberg share voting power. Excludes 5,792 shares of Class A Common
Stock and 792 shares of Voting Common Stock held in an irrevocable trust
of which Larry J. Hochberg is co-trustee. Includes 1,434,500 shares of
Class A Common Stock, which shares are held in a Delaware limited
partnership of which a revocable trust, of which Larry J. Hochberg and
Barbara P. Hochberg are grantors and trustees, is a limited partner and a
general partner.
(4) Excludes 100,000 shares of Class A Common Stock held by John A.
Lowenstein and Andrew S. Hochberg, as Trustees of the AHL Annuity Trust
U/A/D 03/27/95, with respect to which shares John A. Lowenstein and Andrew
S. Hochberg share voting power. Includes 555,424 shares of Class A Common
Stock and 275,329 shares of Voting Common Stock held by Andrew S. Hochberg
and Barbara P. Hochberg, as Trustees of the AH Investment Trust U/A/D
6/3/87, with respect to which shares Andrew S. Hochberg and Barbara P.
Hochberg share voting power. Includes 68,515 shares of Class A Common
Stock and 138,015 shares of Voting Common Stock held by Andrew Hochberg,
as Trustee of the Andrew Hochberg Revocable Trust. Includes 64,500 shares
of Class A Common Stock held in a limited partnership in which a trust, of
which Andrew
-17-
<PAGE> 21
S. Hochberg is trustee, is the general partner. Includes 5,000 and 3,313
shares of Class A Common Stock respectively held by the spouse and child
of Andrew S. Hochberg, and excludes 5,792 shares of Class A Common Stock
and 792 shares of Voting Common Stock held in an irrevocable trust of
which Mr. Hochberg's wife is co-trustee. Andrew S. Hochberg disclaims
beneficial ownership of all these shares.
(5) Includes 126,732 shares of Class A Common Stock held by Barbara P.
Hochberg and John A. Lowenstein, as Trustees of the AHL Investment Trust
U/A/D 12/7/90. Includes 100,000 shares of Class A Common Stock held by
John A. Lowenstein and Andrew S. Hochberg, as Trustees of the AHL Annuity
Trust U/A/D 03/27/95. Includes 38,807 share of Class A Common Stock and
138,807 shares of Voting Common Stock beneficially owned by John A.
Lowenstein's wife. Includes 2,957 and 13,252 shares of Class A Common
Stock respectively held by the spouse and children of John A. Lowenstein.
(6) Includes 12,000 shares of Voting Common Stock which are currently
issuable on or before June 29, 1996 upon exercise of options pursuant to
the Directors' Plan.
(7) Includes 3,000 shares of Voting Common Stock currently issuable on or
before June 29,1996 upon exercise of options pursuant to the Directors'
Plan.
(8) Includes 8,000 shares of Voting Common Stock and 6,000 shares of Class A
Common Stock which are currently issuable on or before June 29, 1996 upon
exercise of options pursuant to the Stock Option Plan.
(9) Includes 4,000 shares of Voting Common Stock and 4,000 shares of Class A
Common Stock which may be acquired on or before June 29, 1996 upon
exercise of options pursuant to the Stock Option Plan.
(10) Includes 72,520 of Voting Common Stock and 27,500 shares of Class A Common
Stock which may be acquired on or before June 29, 1996 upon exercise of
options pursuant to the Stock Option Plan and Director's Plan.
GENERAL
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be considered at the 1997 Annual
Meeting of Stockholders must be received by the Corporate Secretary of the
Company not less than 120 days nor more than 150 days prior to May 30, 1997.
FORM 10-K
The Company will furnish without charge to each person whose Proxy is
being solicited, upon request of any such person, a copy of the Annual Report
of the Company on Form 10-K for the fiscal year ended January 28, 1996 as filed
with the Securities and Exchange Commission, including the financial statements
and schedules. Such report was filed with the Securities and Exchange
Commission on April 29, 1996. Requests for copies of such reports should be
directed to Sportmart, Inc., Attention: Investor Relations, 1400 South Wolf
Road, Wheeling, Illinois 60090.
Please date, sign and return the enclosed Proxy at your earliest
convenience in the enclosed envelope. No postage is required for mailing in
the United States. A prompt return of your Proxy will be appreciated.
By Order of the Board of Directors,
John A. Lowenstein
Corporate Secretary
-18-
<PAGE> 22
EXHIBIT A
THIRD AMENDMENT TO THE SPORTMART, INC.
STOCK OPTION PLAN
The Company has reserved the right to amend the Sportmart, Inc. Stock
Option Plan ("Plan"), and does by this Third Amendment hereby amend the Plan
effective ____, 1996 as follows:
I.
Section 4.2 of the Plan is amended to read as follows:
"4.2 Number of Shares Subject to the Plan" The stock subject to the
Options granted under this Plan shall be the Company's Voting Common Stock,
Class A Common Stock, or a combination of Voting Common Stock or Class A Common
Stock or other security authorized for issuance under the Plan. Unless
otherwise amended by the Board and approved by the stockholders of the Company
to the extent required by law, a maximum number of 1,125,000 shares of Voting
Common Stock and a maximum number of 1,750,000 shares of Class A Common Stock
of the Company (or such number of shares of either Voting Common Stock or Class
A as may result following any adjustment pursuant to Section 6.3) shall be
reserved and available for Options granted under the Plan. The grant of an
Option in respect of shares of Voting Common Stock after July 1, 1994, shall
reduce on a one-for-one basis (or on such proportional basis as the Committee
shall determine is consistent with the authorization) the number of shares of
Class A Common Stock reserved and available for issuance under the Plan. The
grant of an Option in respect of shares of Class A Common Stock shall reduce on
a one-for-one basis (or on such proportional basis as the Committee shall
determine is consistent with the authorization) the number of shares of Voting
Common Stock reserved and available for issuance under the Plan. The shares
issued with respect to Options under the Plan may be authorized and unissued
shares, or shares issued and reacquired by the Company."
II.
Section 4.3 is amended by adding the following at the end thereof:
"If any share of Voting Common Stock is again available to be granted or
otherwise applied to this Plan, a share of Class A Common Stock (or such
proportionate number of shares of Class A Common Stock as the Committee
determines is consistent with the authorization) shall also be available to be
granted or otherwise applied under this Plan. If any share of Class A Common
Stock is again available to be granted or otherwise applied to this Plan, a
share of Voting Common Stock (or such proportionate number of shares of Voting
Common Stock as the Committee determines is consistent with the authorization)
shall also be available to be granted or otherwise applied under this Plan."
-1-
<PAGE> 23
Except as herein amended the Plan shall remain in full force and effect.
EXECUTED effective ____________________.
SPORTMART, INC.
By: ______________________
<PAGE> 24
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PROXY SPORTMART, INC. THIS PROXY IS
Corporate Square, 1400 South Wolf Road, Suite 200, Wheeling, SOLICITED
Illinois 60090 ON BEHALF OF THE
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS BOARD OF DIRECTORS
TO BE HELD ON JUNE 28, 1996
</TABLE>
TO VOTE AT THE ANNUAL MEETING IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF SPORTMART, INC., SIGN AND
DATE THE REVERSE SIDE OF THIS CARD WITHOUT CHECKING ANY BOX.
The undersigned holder of Voting Common Stock of Sportmart, Inc.
(the "Company") hereby appoints Larry J. Hochberg and Andrew S.
Hochberg, or either of them, with full power of substitution, as
proxies to cast all votes which the undersigned stockholder is
entitled to cast at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Friday, June 28, 1996, at 10:00 a.m. local
time, at The Westin Hotel -- O'Hare, 6100 River Road, Rosemont,
Illinois and at any adjournments thereof, upon the following matters.
The undersigned stockholder hereby revokes any proxy or proxies
heretofore given.
<TABLE>
<S> <C>
1. Election of Class I Directors
/ / FOR all nominees listed below (except as listed to / / WITHHOLD AUTHORITY to vote for all nominees listed below
the contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN
THE LIST BELOW.)
John A. Lowenstein Jerome S. Gore
If a nominee becomes unavailable for election or unable to serve as a director, the votes will be cast for a person
that will be designated by the
Board of Directors of the Company.
2. PROPOSAL TO RATIFY AND APPROVE THE AMENDMENT TO THE STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the
Annual Meeting, or any
adjournments hereof.
</TABLE>
/ / I AM PLANNING TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS.
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(continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER AS
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. UNLESS CONTRARY
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 IN
ACCORDANCE WITH THE DETERMINATION OF THE BOARD OF DIRECTORS AS TO
OTHER MATTERS. THE UNDERSIGNED STOCKHOLDER MAY REVOKE THIS PROXY AT
ANY TIME BEFORE IT IS VOTED BY DELIVERING TO THE CORPORATE SECRETARY
OF THE COMPANY EITHER A WRITTEN REVOCATION OF THE PROXY OR A DULY
EXECUTED PROXY BEARING A LATER DATE, OR BY APPEARING AT THE ANNUAL
MEETING AND VOTING IN PERSON. THE UNDERSIGNED STOCKHOLDER HEREBY
ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT.
Dated:
--------------------------------
Signature
--------------------------------
Signature (if held jointly)
PLEASE MARK, SIGN, DATE AND
RETURN THIS CARD PROMPTLY USING
THE ENCLOSED ENVELOPE. IF YOU
RECEIVE MORE THAN ONE PROXY
CARD, PLEASE SIGN AND RETURN ALL
CARDS IN THE ENCLOSED ENVELOPE.
Please date and sign exactly as
the name appears hereon. When
signing as executor,
administrator, trustee,
guardian, attorney-in-fact or
other fiduciary, please give
title as such. When signing as
corporation, please sign in full
corporate name by President or
other authorized officer. If you
sign for a partnership, please
sign in partnership name by an
authorized person.
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