<PAGE>
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
SPORT CHALET, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO OF SPORT CHALET]
June 29, 2000
Dear Stockholder:
On behalf of your Company, I want to cordially invite you to attend the
annual meeting of the stockholders of Sport Chalet, Inc. to be held at the
Pasadena Hilton Hotel, 150 South Los Robles Avenue, Pasadena, California 91101,
on Tuesday, August 1, 2000 at 9:00 a.m. (local time).
The principal business of the annual meeting is the election of the
Company's two Class 2 directors. The attached Notice of Annual Meeting and
Proxy Statement fully describe the business to be transacted.
The directors and certain officers of the Company will be present to help
host the annual meeting, respond to any questions that our stockholders may
have, and discuss the Company's operating results and future. I therefore
encourage you to attend in order to meet your officers and directors and to
participate in the business of the meeting. However, if it is not possible for
you to attend, please sign, date and promptly return the enclosed proxy card
immediately to ensure that your shares will be voted.
Finally, you will find enclosed a 20% off coupon for your use at any of our
22 store locations. As in the past, I encourage you to try our stores and to
write me regarding your shopping experiences, what you liked about our stores
and any suggestions you may have for improvement.
Sincerely,
/s/ Norbert J. Olberz
Norbert J. Olberz,
Chairman of the Board
<PAGE>
SPORT CHALET, INC.
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 1, 2000
___________
TO OUR STOCKHOLDERS:
Notice hereby is given that the annual meeting (the "Meeting") of the
stockholders of Sport Chalet, Inc. (the "Company") will be held at the Pasadena
Hilton Hotel located at 150 South Los Robles Avenue, Pasadena, California 91101,
on Tuesday, August 1, 2000 at 9:00 a.m. (local time) for the following purposes:
1. Election of Directors. To elect two Class 2 directors to hold office
until the annual meeting of stockholders to be held in 2003, and until
their respective successors have been elected and qualified; and
2. Other Business. To transact such other business as properly may come
before the Meeting or any adjournments or postponements thereof.
Only holders of record of the Common Stock of the Company at the close of
business on June 12, 2000 (the "Stockholders") are entitled to notice of and to
vote in person or by proxy at the Meeting and at any adjournments or
postponements thereof. For a period of at least ten days prior to the Meeting, a
complete list of stockholders entitled to vote at the Meeting will be open to
the examination of any stockholder during ordinary business hours at the
Company's executive offices at 920 Foothill Boulevard, La Canada, California
91011.
The Proxy Statement which accompanies this Notice contains additional
information regarding the proposals to be considered at the Meeting, and
Stockholders are encouraged to read it in its entirety.
As set forth in the enclosed Proxy Statement, proxies are being solicited
by and on behalf of the Board of Directors of the Company. All proposals set
forth above are proposals of the Company. It is expected that these materials
first will be mailed to Stockholders on or about June 29, 2000.
By Order of the Board Of Directors
SPORT CHALET, INC.
/s/ Howard K. Kaminsky
Howard K. Kaminsky,
Secretary
La Canada, California
June 29, 2000
TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE.
IF YOU DO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON. THE PROXY MAY BE REVOKED AT ANY TIME BEFORE ITS EXERCISE.
<PAGE>
SPORT CHALET, INC.
920 Foothill Boulevard
La Canada, California 91011
(818) 790-2717
________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 1, 2000
________________
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sport Chalet, Inc., a Delaware corporation
(the "Company"), for use at the annual meeting of stockholders of the Company
(the "Meeting") to be held at the Pasadena Hilton Hotel located at 150 South Los
Robles Avenue, Pasadena, California 91101, on Tuesday, August 1, 2000 at 9:00
a.m. (local time) and at any adjournments or postponements thereof, for the
purposes set forth herein and in the attached Notice of Annual Meeting of
Stockholders. Accompanying this Proxy Statement is a proxy card (the "Proxy"),
which you may use to indicate your vote on the proposals described in this Proxy
Statement. Only holders of record of the Common Stock of the Company (the
"Stockholders") at the close of business on June 12, 2000 (the "Record Date")
are entitled to notice of and to vote in person or by proxy at the Meeting and
any adjournments or postponements thereof. This Proxy Statement and the enclosed
Proxy first will be mailed to Stockholders on or about June 29, 2000.
Matters to be Considered
The matters to be considered and voted upon at the Meeting will be:
1. Election of Directors. To elect two Class 2 directors to hold office
until the annual meeting of stockholders to be held in 2003, and until
their respective successors have been elected and qualified. The
following persons are the Board of Directors' nominees for Class 2
directors:
John R. Attwood
Craig L. Levra
2. Other Business. To transact such other business as properly may come
before the Meeting or any adjournments or postponements thereof.
Cost of Solicitation of Proxies
This Proxy solicitation is made by the Board of Directors of the Company,
and the Company will bear the costs of this solicitation, including the expense
of preparing, assembling, printing and mailing this Proxy Statement and any
other material used in this solicitation of Proxies. The solicitation of Proxies
will be made by mail and may be supplemented by telephone or other personal
contact to be made without special compensation by regular officers and
employees of the Company. If it should appear desirable to do so to ensure
adequate representation at the Meeting, officers and regular employees may
communicate with Stockholders, banks, brokerage houses, custodians, nominees and
others, by telephone, facsimile transmissions or telegraph, or in person, to
request that Proxies be furnished. The Company will reimburse banks, brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
expenses in forwarding proxy materials to their principals. The total estimated
cost of the solicitation of Proxies is $20,000.
<PAGE>
Outstanding Securities and Voting Rights; Revocability of Proxies
The authorized capital of the Company consists of (i) 15,000,000 shares of
common stock, $0.01 par value ("Common Stock"), of which 6,577,000 shares were
issued and outstanding on the Record Date, and (ii) 2,000,000 shares of
preferred stock, $0.01 par value, none of which were issued and outstanding on
the Record Date. One-third of the outstanding shares of the Common Stock
constitutes a quorum for the conduct of business at the Meeting.
Each Stockholder is entitled to one vote, in person or by proxy, for each
share of Common Stock standing in his or her name on the books of the Company as
of the Record Date on any matter submitted to the Stockholders.
The Company's Amended and Restated Certificate of Incorporation does not
authorize cumulative voting. In the election of directors, the candidates
receiving the highest number of votes will be elected. Abstentions and broker
non-votes will be included in the number of shares present at the Meeting for
the purpose of determining the presence of a quorum. Abstentions will be counted
toward the number of votes cast on proposals submitted to the Stockholders and
will have the effect of a negative vote, while broker non-votes will not be
counted as votes cast for or against such matters.
Of the shares of Common Stock outstanding on the Record Date, 4,379,617
shares of Common Stock (or approximately 66.6% of the issued and outstanding
shares of Common Stock) were owned indirectly by Norbert J. Olberz, Chairman of
the Board, as the co-trustee with his wife, Irene Olberz, of the Olberz Family
Trust, a revocable grantor trust. As a result, Mr. Olberz will have the power to
determine the outcome of any matter submitted to the Stockholders. Mr. Olberz
has indicated that he intends to vote all shares owned by him "FOR" the election
of the Board of Directors' nominees.
A Proxy for use at the Meeting is enclosed. The Proxy must be signed and
dated by you or your authorized representative or agent. Telegraphed, cabled or
telecopied Proxies are also valid. You may revoke a Proxy at any time before it
is exercised at the Meeting by submitting a written revocation to the Secretary
of the Company or a duly executed Proxy bearing a later date or by voting in
person at the Meeting. John R. Attwood and Craig L. Levra, the designated
proxyholders (the "Proxyholders"), are members of the Company's Board of
Directors.
Unless revoked, the shares of Common Stock represented by Proxies will be
voted in accordance with the instructions given thereon. In the absence of any
instruction in the Proxy, such shares of Common Stock will be voted "FOR" the
election of the Board of Directors' nominees. If you hold Common Stock in
"street name" and you fail to instruct your broker or nominee as to how to vote
such Common Stock, your broker or nominee may, in its discretion, vote such
Common Stock "FOR" the election of the Board of Directors' nominees.
Recently, the Securities and Exchange Commission (the "SEC") amended its
rule governing a company's ability to use discretionary proxy authority with
respect to stockholder proposals which were not submitted by the stockholders in
time to be included in the proxy statement. As a result of that rule change, in
the event a stockholder proposal was not submitted to the Company prior to May
12, 2000, the enclosed Proxy will confer authority on the Proxyholders to vote
the shares in accordance with their best judgment and discretion if the proposal
is presented at the Meeting. As of the date hereof, no stockholder proposal has
been submitted to the Company, and management is not aware of any other matters
to be presented for action at the Meeting. However, if any other matters
properly come before the Meeting, the Proxies solicited hereby will be voted by
the Proxyholders in accordance with the recommendations of the Board of
Directors. Such authorization includes authority to appoint a substitute nominee
for any Board of Directors' nominee identified herein where death, illness or
other circumstance arises which prevents such nominee from serving in such
position and to vote such Proxy for such substitute nominee.
Security Ownership of Principal Stockholders and Management
The following table sets forth as of the Record Date certain information
relating to the ownership of the Common Stock by (i) each person known by the
Company to be the beneficial owner of more than five percent of the outstanding
shares of the Common Stock (other than depositories), (ii) each of the Company's
directors,
2
<PAGE>
(iii) each of the Named Executive Officers (as defined below) and (iv) all of
the Company's executive officers and directors as a group.
<TABLE>
<CAPTION>
Number of Shares of
Common Stock Beneficially
Name and Address(1) Owned(2) Percent(3)
-------------------- ---------------------------------- ----------
<S> <C> <C>
Norbert J. Olberz............................................ 4,379,617 (4) 66.6%
John R. Attwood.............................................. 11,000 (5) *
Eric S. Olberz............................................... 267,736 (6) 4.1
Kenneth Olsen................................................ 19,433 (7) *
Frederick H. Schneider....................................... 21,666 (8) *
Craig L. Levra............................................... 108,333 (9) 1.6
Dennis D. Trausch............................................ 108,753 (10) 1.6
Howard K. Kaminsky........................................... 116,673 (11) 1.8
Ronald G. Mann............................................... 20,667 (12) *
Directors and executive officers as a group
(9 persons).................................................. 5,053,878 (13) 73.7
</TABLE>
_______________
* Less than 1%.
(1) The address of each person listed is in care of the Company, 920 Foothill
Boulevard, La Canada, California 91011.
(2) Except as may be set forth below and subject to applicable community
property laws, each such person has the sole voting and investment power
with respect to the shares of Common Stock owned.
(3) Under Rule 13d-3, certain shares may be deemed to be beneficially owned by
more than one person (if, for example, a persons shares the power to vote
or the power to dispose of the shares). In addition, shares are deemed to
be beneficially owned by a person if the person has the right to acquire
the shares (for example, upon exercise of an option) within 60 days of the
date as of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed to
include the amount of shares beneficially owned by such person (and only
such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does
not necessarily reflect the person's actual ownership or voting power with
respect to the number of shares of Common Stock actually outstanding at the
Record Date.
(4) Consists of shares held by the Olberz Family Trust, a revocable grantor
trust of which Mr. Olberz and his wife are co-trustees.
(5) Includes 3,000 shares of Common Stock issuable upon the exercise of stock
options which first become exercisable on or before August 11, 2000.
(6) Includes 6,333 shares of Common Stock issuable upon the exercise of stock
options which first become exercisable on or before August 11, 2000.
Excludes 1,667 shares issuable upon the exercise of stock options which
first become exercisable after that date.
(7) Includes 6,333 shares of Common Stock issuable upon the exercise of stock
options which first become exercisable on or before August 11, 2000.
Excludes 1,667 shares issuable upon the exercise of stock options which
first become exercisable after that date.
(8) Includes 1,666 shares of Common Stock issuable upon the exercise of stock
options which first become exercisable on or before August 11, 2000.
Excludes 3,334 shares issuable upon the exercise of stock options which
first become exercisable after that date.
(9) Includes 83,333 shares of Common Stock issuable upon the exercise of stock
options which first become exercisable on or before August 11, 2000.
Excludes 141,667 shares issuable upon the exercise of stock options which
first become exercisable after that date.
(Footnotes continued on next page)
3
<PAGE>
(Footnotes continued from previous page)
(10) Includes 82,267 shares of Common Stock issuable upon the exercise of stock
options which first become exercisable on or before August 11, 2000.
Excludes 54,733 shares issuable upon the exercise of stock options which
first become exercisable after that date.
(11) Includes 84,267 shares of Common Stock issuable upon the exercise of stock
options which first become exercisable on or before August 11, 2000.
Excludes 57,733 shares issuable upon the exercise of stock options which
first become exercisable after that date.
(12) Includes 15,667 shares of Common Stock issuable upon the exercise of stock
options which first become exercisable on or before August 11, 2000.
Excludes 49,333 shares issuable upon the exercise of stock options which
first become exercisable after that date.
(13) Includes 282,866 shares of Common Stock issuable upon the exercise of stock
options which first become exercisable on or before August 11, 2000.
Excludes 310,134 shares issuable upon the exercise of stock options which
first become exercisable after that date.
PROPOSAL 1
ELECTION OF DIRECTORS
Directors and Executive Officers
The Bylaws of the Company provide that the number of directors of the
Company shall be fixed from time to time by the Board of Directors, but shall
not be less than three. The Board of Directors has fixed the number of directors
at six. The Amended and Restated Certificate of Incorporation of the Company
provides that the Board of Directors shall be divided into three classes, as
nearly equal in number as possible, which are elected for staggered three-year
terms. The term of each class expires at the annual meeting of stockholders in
the year 2002 (Class 1), the year 2000 (Class 2) and the year 2001 (Class 3).
Only the members of Class 2, John R. Attwood and Craig L. Levra, both of
whom currently are members of the Board of Directors, are nominees for election
to the Board of Directors at the Meeting, to serve until the annual meeting of
stockholders to be held in 2003, and until their successors have been elected
and qualified.
Each nominee has indicated his willingness to serve and, unless otherwise
instructed, the Proxyholders will vote the Proxies received by them for the
nominees of the Board of Directors. If any nominee is unable or unwilling to
serve as a director at the time of the Meeting or any postponement or
adjournment thereof, the Proxies will be voted for such other nominee(s) as
shall be designated by the current Board of Directors to fill any vacancy. The
Company has no reason to believe that any nominee will be unable or unwilling to
serve if elected as a director. The two nominees for election as Class 2
directors at the Meeting who receive the highest number of affirmative votes
will be elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES.
None of the directors, nominees for director or executive officers were
selected pursuant to any arrangement or understanding, other than with the
directors and executive officers of the Company acting within their capacity as
such. Except as set forth below, there are no family relationships among
directors or executive officers of the Company and, as of the date hereof, no
directorships are held by any director in a company which has a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or subject to the requirements of Section
15(d) of the Exchange Act or any company registered as an investment company
under the Investment Company Act of 1940. Officers serve at the discretion of
the Board of Directors.
4
<PAGE>
The following table sets forth certain information with respect to the
nominees, continuing directors and executive officers of the Company as of the
Record Date:
<TABLE>
<CAPTION>
Name Age Class Position
---- --- ----- --------
<S> <C> <C> <C>
Eric S. Olberz....................... 37 1 Director and a member of the Audit Committee and
the Compensation Committee since 1992. Mr. Olberz
recently received a Bachelors Degree with an
emphasis in accounting from National University and
sat for the Certified Public Accountants
Examination. Mr. Olberz was President and owner of
Camp 7, Inc., a soft goods manufacturing operation
located in Santa Ana, California, from July 1995 to
October 1996 and Vice Chairman of the Company from
October 1994 to July 1995, Vice President from 1984
to October 1994 and Secretary from October 1992 to
July 1995. Mr. Olberz resigned as an officer and
employee concurrently with Camp 7, Inc.'s
acquisition of the Company's soft goods
manufacturing operations in July 1995. Mr. Olberz
is the son of Norbert J. Olberz, the founder of the
Company and Chairman of the Board.
Frederick H. Schneider............... 43 1 Director and member of the Audit Committee since
May 2000. Mr. Schneider currently is an
independent private equity investor. He served as
Chief Financial Officer and Principal of Leonard
Green & Partners, L.P., a merchant banking firm,
from September 1994 to January 1998, where he
played a key role in various acquisitions. From
June 1978 to September 1994, he was employed by
KPMG Peat Marwick, including as an Audit and Due
Diligence Partner from June 1989 to September 1994.
John R. Attwood...................... 70 2 Director, Chairman of the Compensation Committee
and a member of the Audit Committee since February
1993. Mr. Attwood is the President of Attwood
Enterprises, a consulting business. He was the
Chairman of Coca-Cola Bottling of Los Angeles and a
Senior Vice President and a Group President of
Beatrice Companies, Inc., the parent company of
Coca-Cola Bottling of Los Angeles, until his
retirement in 1986. Mr. Attwood currently serves
on the Board of Directors of Verdugo Hills
Hospital, a nonprofit organization.
Craig L. Levra....................... 41 2 Director since November 1998, President and Chief
Operating Officer since November 1997 and Chief
Executive Officer since August 1999. Prior to
joining the Company, Mr. Levra was employed by The
Sports Authority, the nation's largest sporting
goods retailer. During his five-year tenure with
that company, he held positions of increasing
responsibility in merchandising and operations and
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C> <C>
was Vice President of Store Operations at the time
of his departure. Mr. Levra received a Bachelors
Degree and a Masters Degree in Business
Administration from the University of Kansas.
Norbert J. Olberz.................... 75 3 The Company's founder and Chairman of the Board
since it was founded in 1959, Interim President
from April 1995 to November 1997 and Interim Chief
Executive Officer from April 1995 to August 1999.
Kenneth Olsen........................ 82 3 Director, Chairman of the Audit Committee and a
member of the Compensation Committee since June
1994. Mr. Olsen served as President and Chief
Executive Officer of the Vons Company, Inc., a
leading grocery store chain, from 1974 to 1983, at
which time he retired from full-time
responsibilities after thirty-eight years with that
company. Mr. Olsen currently serves as a director
of several nonprofit organizations and is a
management consultant advising national and
international firms on marketing and merchandising
consumer products.
Dennis D. Trausch.................... 50 -- Executive Vice President since June 1988. Since
joining the Company in 1976, Mr. Trausch has served
in various positions starting as a salesperson and
assuming positions of increasing responsibility in
store and Company operations. He oversees all
store and distribution center operations including
human resources and customer service, as well as
being responsible for site selection and leasing.
Howard K. Kaminsky................... 42 -- Chief Financial Officer since joining the Company
in 1985, Executive Vice President - Finance since
May 2000 and Secretary since July 1995. Mr.
Kaminsky served as Vice President-Finance from
January to April 1997, Senior Vice
President-Finance from April 1997 to May 2000 and
Treasurer from October 1992 to January 1997. Prior
to joining the Company, Mr. Kaminsky was employed
in the auditing division of Ernst & Young LLP. He
is a Certified Public Accountant and received a
Bachelors Degree in Business Administration from
California State University, Northridge. Mr.
Kaminsky is a member of the California Society of
Certified Public Accountants and the Retail
Financial Executives Professional Association.
Ronald G. Mann....................... 49 -- Senior Vice President-General Merchandise Manager
since August 1998. Prior to joining the Company,
Mr. Mann was employed by Big 5 Corp., a large
sporting goods retailer, since 1976, where he held
positions of increasing responsibility in
operations and merchandising and was the Assistant
Merchandise Manager at the time of his departure.
Mr. Mann received a Bachelors Degree from
California State University, Northridge immediately
prior to joining Big 5.
</TABLE>
6
<PAGE>
Board Meetings and Committees
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee currently consists of Messrs. Attwood, Olsen, Schneider
and Eric S. Olberz. The primary purposes of the Audit Committee are (i) to
review the scope of the audit and all non-audit services to be performed by the
Company's independent certified public accountants and the fees incurred by the
Company in connection therewith, (ii) to review the results of such audit,
including the independent accountants' opinion and letter of comment to
management and management's response thereto, (iii) to review with the Company's
independent accountants the Company's internal accounting principles, policies
and practices and financial reporting, (iv) to make recommendations regarding
the selection of the Company's independent accountants and (v) to review the
Company's quarterly and annual financial statements prior to public issuance. On
March 7, 2000, the Board of Directors of the Company, on the recommendation of
the Audit Committee, adopted a written Audit Committee Charter, a copy of which
is attached hereto as Appendix "A." Five meetings of the Audit Committee were
held during the year ended March 31, 2000.
The Compensation Committee currently consists of Messrs. Attwood, Olsen and
Eric S. Olberz. The primary purposes of the Compensation Committee are (i) to
review and recommend to the Board of Directors the salaries, bonuses and
perquisites of the Company's executive officers, (ii) to determine the
individuals to whom, and the terms upon which, awards under the Company's
incentive compensation plans will be granted, (iii) to make periodic reports to
the Board of Directors as to the status of such plans and (iv) to review and
recommend to the Board of Directors additional compensation plans. Five meetings
of the Compensation Committee were held during the year ended March 31, 2000.
The Board of Directors held six meetings during the year ended March 31,
2000. No director attended less than 75% of all the meetings of the Board of
Directors and those committees on which he served in the year ended March 31,
2000.
Procedures for Stockholder Nominations
The Board of Directors does not have a standing nominating committee. The
procedures for nominating directors are set forth in the Bylaws. Nominations for
the election of directors may be made by the Board of Directors or a committee
appointed by the Board of Directors or by any stockholder entitled to vote in
the election of directors generally. However, any stockholder entitled to vote
in the election of directors generally may nominate one or more persons for
election as directors at a meeting only if written notice of such stockholder's
intent to make such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Company not later than the close of business on the tenth day following the date
on which notice of such meeting is first given to stockholders with respect to
an election to be held at an annual or special meeting of stockholders. Each
such notice shall set forth: (a) the name and address of the stockholder who
intends to make the nomination and of the person or persons to be nominated; (b)
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the notice;
(c) a description of all arrangements or understandings between the stockholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder; (d) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (e)
the consent of each nominee to serve as a director of the Company if so elected.
The presiding officer of the meeting may refuse to acknowledge the nomination of
any person not made in compliance with the foregoing procedure.
Compensation of Directors
Directors who are employees of the Company are compensated as officers of
the Company and receive no separate compensation for serving as directors. Non-
employee directors receive $22,000 for attending or participating in up to six
Board or Committee meetings during the fiscal year plus an additional $3,000 for
each additional day they attend or participate in Board or Committee meetings
and $750 for each day they attend or
7
<PAGE>
participate in a meeting with the Company's management. Directors also receive
reimbursement of expenses incurred in attending meetings. The Board of Directors
may modify such compensation in the future. For the fiscal year ended March 31,
2000, each non-employee director received $22,000 in fees for attending Board or
Committee meetings.
Under the 1992 Plan described below, as amended, each non-employee director
currently is granted automatically upon becoming a director options to purchase
5,000 shares of Common Stock at the fair market value on the grant date. On each
triennial date on which a non-employee director is reelected to the Board,
options for an additional 5,000 shares are granted automatically to the director
subject to an aggregate limit for any one non-employee director of options to
acquire a total of 30,000 shares. All options are exercisable one-third upon
grant and one-third on each of the first and second anniversaries of the date of
grant, and all options expire five years from the date of grant. In accordance
with the terms of the 1992 Plan, Messrs. Olsen, Attwood, Eric S. Olberz and
Schneider have been granted options representing 8,000, 3,000, 11,000 and 5,000
shares, respectively. See "Incentive Compensation Plans -- 1992 Incentive Award
Plan."
Compensation Committee Interlocks and Insider Participation
Except for Eric S. Olberz, no member of the Compensation Committee is or
has been an officer or employee of the Company.
Report of the Compensation Committee on Executive Compensation
The Report of the Compensation Committee of the Board of Directors shall
not be deemed filed under the Securities Act of 1993 (the "Securities Act") or
under the Securities Exchange Act of 1934 (the "Exchange Act").
REPORT OF THE COMPENSATION COMMITTEE
Compensation Policy and Executive Compensation. The Compensation Committee
is responsible for reviewing and making recommendations as to the annual
compensation of the Company's executive officers, including such components as
annual cash compensation, short and long term incentives, and supplemental
benefits.
The Company's compensation policy is based on linking executive
compensation to the Company's objectives of growth through increased earnings
and maximizing long-term stockholder value. This policy traditionally has been
carried out through a compensation program consisting of salaries and short and
long term incentives. The Compensation Committee monitors compensation levels
for comparable retail companies and evaluates annual compensation on the basis
of these compensation trends and the performance of the Company in order to
determine whether adjustments to base salary and bonuses, or both, are
appropriate.
Departing from its former practices, the Company in recent years has
entered into written employment agreements with its executive officers. See
"Employment Agreements."
The various elements of the Company's compensation program are discussed
below.
Annual Salary and Bonus. Annual compensation for Messrs. Olberz, Levra,
Trausch, Kaminsky and Mann (collectively, the "Executive Management Group")
consists of a base salary and an annual bonus. During the fiscal year ended
March 31, 2000, the annual base salaries for Messrs. Olberz, Levra, Trausch,
Kaminsky and Mann were $300,000, $229,167, $170,000, $170,000 and $160,000,
respectively. Based upon information concerning the compensation for comparable
executives generally, the annual base salaries for fiscal 2001 for Messrs.
Levra, Trausch, Kaminsky and Mann have been increased by $25,000, $9,000,
$15,000 and $5,000, respectively. The Compensation Committee believes that the
base salaries for each member of the Executive Management Group is at or below
the base salary for comparable executives.
Beginning in fiscal 1996, the Company adopted a bonus plan under which,
subject to an overall maximum, the executive officers may earn a bonus as a
percentage of their base compensation, if the Company meets the pre-tax profit
objective set by the Compensation Committee at the beginning of the fiscal year.
See "Incentive Compensation Plans -- Executive Bonus Plan." During fiscal 2000,
the profit objective was not met and no bonuses
8
<PAGE>
were paid under the plan. Based upon information concerning the compensation of
comparable executives generally, the Committee believes that, if the Company
achieves anticipated profit levels in fiscal 2001, the Executive Management
Group's total compensation under this bonus plan will fall within the range of
industry averages for the defined labor market.
Long-Term Compensation. On May 11, 2000, Messrs. Levra, Trausch, Kaminsky
and Mann were granted options to purchase 45,000, 20,000, 30,000 and 5,000
shares of Common Stock, respectively, which vest at the rate of 20% per year
over five years. Messrs. Levra, Trausch, Kaminsky and Mann also hold options to
purchase an additional 225,000, 137,000, 142,000 and 65,000 shares of Common
Stock, respectively, exercisable at the market price on the grant date and
vesting on or before April 15, 2002. The Committee believes options provide a
valuable incentive to achieve long-term growth and maximum stockholder value by
linking compensation benefits to the long-term growth in the Company's stock
value. More specific information on option grants is set forth below.
The Committee will continue to review the Company's overall executive
compensation program periodically and, if appropriate, adjust existing
compensation levels or policies in order to meet market demands or changing
corporate objectives.
Compensation of the Chairman. The Committee believes that the $300,000 base
salary paid to Mr. Olberz as Chairman of the Board during fiscal 2000 should
remain unchanged for fiscal 2001, and is reasonable when compared to the
compensation paid by comparable companies whose chairmen are actively involved
in day-to-day operations. Mr. Olberz does not participate in the executive bonus
plan or stock option grants because, in the Committee's view, his significant
stock holdings in the Company already provide sufficient motivation for him to
achieve long-term profitability and maximum stockholder value.
Tax Deductibility of Executive Compensation. The Internal Revenue Code of
1986 was amended in 1993 to limit the deductibility for federal income tax
purposes of non-performance based compensation in excess of $1,000,000 provided
to certain executive officers. As the Company's current compensation structure
does not provide for or contemplate annual compensation to any executive in
excess of $1,000,000, the limitations placed on tax deductions will be
inapplicable to the Company for the foreseeable future.
Dated: June 22, 2000 COMPENSATION COMMITTEE
John R. Attwood
Eric S. Olberz
Kenneth Olsen
Executive Compensation
The following table sets forth, as to the Chief Executive Officer and as to
each of the other four most highly compensated officers whose compensation
exceeded $100,000 during the last fiscal year (the "Named Executive Officers"),
information concerning all cash and non-cash compensation awarded, earned or
paid for services to the Company in all capacities for each of the three years
ended March 31, 1998, 1999 and 2000.
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------- ---------------------------------
Securities
Underlying
Options/ All Other
Name and Position(1) Year Salary ($) Bonus ($) (2) SARs (#) (3) Compensation ($)
-------------------- ---- ----------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Norbert J. Olberz,
Chairman of the Board 2000 300,000 ----- ----- 12,000
and Interim Chief 1999 300,000 200,000 ----- -----
Executive Officer (4)............ 1998 275,000 124,000 ----- -----
Craig L. Levra,
President, Chief Operating 2000 229,167 ----- 100,000 12,638
Officer and Chief Executive 1999 200,000 100,000 ----- -----
Officer (5)..................... 1998 186,923(6) 42,000 125,000 118,700(7)
Dennis D. Trausch, 2000 170,000 ----- 20,000 7,050
Executive Vice 1999 170,000 59,500 ----- -----
President....................... 1998 160,000 56,000 45,000 125,000(8)
Howard K. Kaminsky,
Executive Vice
President-Finance, Chief 2000 170,000 ----- 20,000 7,050
Financial Officer and Secretary 1999 170,000 59,500 ----- -----
(9)............................. 1998 160,000 56,000 50,000 100,000(8)
Ronald G. Mann,
Senior Vice President-General 2000 160,000 ----- 20,000 7,050
Merchandise Manager............. 1999 160,000 42,000 45,000 32,500(10)
</TABLE>
_____________
(1) For a description of the employment agreements between certain officers and
the Company, see "Employment Agreements."
(2) Each Named Executive Officer was entitled to participate in the executive
bonus program, except Mr. Olberz. See "Incentive Compensation Plans --
Executive Bonus Plan."
(3) Represents options granted under the 1992 Plan. Additional options were
granted to certain Named Executive Officers on May 11, 2000 after the end
of the 2000 fiscal year. See "Incentive Compensation Plans -- 1992
Incentive Award Plan."
(4) Mr. Olberz has served as Chairman of the Board since 1959, Interim
President from April 1995 to November 1997 and Interim Chief Executive
Officer from April 1995 to August 1999.
(5) Mr. Levra has served as President and Chief Operating Officer since
November 1998 and Chief Executive Officer since August 1999.
(6) Includes a $100,000 signing bonus paid upon joining the Company in November
1998.
(7) Represents the fair market value on the grant date of 25,000 shares awarded
to Mr. Levra under the 1992 Plan. See "Incentive Compensation Plans --
1992 Incentive Award Plan."
(8) Represents the fair market value on the grant date of 25,000 and 20,000
shares of Common Stock, respectively, awarded to Messrs. Trausch and
Kaminsky under the Principal Stockholder Award Plan. See "Incentive
Compensation Plans -- Principal Stockholder Award Plan."
(9) Mr. Kaminsky has served as Chief Financial Officer since 1985, Executive
Vice President-Finance since May 2000 and Secretary since July 1995. He
served as Vice President-Finance from January to April 1997, Treasurer from
October 1992 to January 1997 and Senior Vice President-Finance from April
1997 to May 2000.
(10) Represents the fair market value on the grant date of 5,000 shares awarded
to Mr. Mann as a signing bonus.
10
<PAGE>
Stock Option Grants
The following table sets forth certain information regarding the grant of
stock options made during the fiscal year ended March 31, 2000 to the Named
Executive Officers.
OPTION/SAR GRANTS IN FISCAL YEAR 2000
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------
Number of Percent of Total Potential Realizable Value
Securities Options/SARs at Assumed Rates of Stock
Underlying Granted To Exercise or Price Appreciation for
Options/SARs Employees In Base Expiration Option
Name of Officer Granted(1) Fiscal Year(2) Price(3) Date Term(4)
--------------- ----------- -------------- -------- ---- --------------------------
5% 10%
-------- --------
<S> <C> <C> <C> <C> <C> <C>
Craig L. Levra....... 100,000 34% $4.438 4/15/09 $279,103 $707,302
Dennis D. Trausch.... 20,000 7 4.438 4/15/09 55,820 141,460
Howard K. Kaminsky... 20,000 7 4.438 4/15/09 55,820 141,460
Ronald G. Mann....... 20,000 7 4.438 4/15/09 55,820 141,460
</TABLE>
_______________
(1) These options first become exercisable at the rate of 33.33% per year.
Upon certain changes in control of Company, these options become fully
exercisable.
(2) Options to purchase an aggregate of 297,000 shares were granted during the
fiscal year ended March 31, 2000.
(3) The exercise price is equal to the closing price of the Company's Common
Stock on the date of grant. The exercise price and tax withholding
obligations related to exercise may be paid by delivery of already owned
shares, subject to certain conditions.
(4) The Potential Realizable Value is the product of (a) the difference between
(i) the product of the last reported sale price per share at the date of
grant and the sum of (A) 1 plus (B) the assumed rate of appreciation of the
Common Stock compounded annually over the term of the option and (ii) the
per share exercise price of the option and (b) the number of shares of
Common Stock underlying the option at March 31, 2000. These amounts
represent certain assumed rates of appreciation only. Actual gains, if
any, on stock option exercises are dependent on a variety of factors,
including market conditions and the price performance of the Common Stock.
There can be no assurance that the rate of appreciation presented in this
table can be achieved.
Option Exercises and Holdings
The following table sets forth, for each of the Named Executive Officers,
certain information regarding the exercise of stock options during the fiscal
year ended March 31, 2000, the number of shares of Common Stock issuable upon
the exercise of stock options held at fiscal year end and the value of options
held at fiscal year end based upon the last reported sale price of the Common
Stock on Nasdaq on March 31, 2000 ($4.6875).
11
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 2000
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-Money
Shares Unexercised Options at March 31, Options at
Acquired on Value 2000 (1) March 31, 2000 (2)
-------------------------------- ----------------------------------
Name of Officer Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
--------------- -------- -------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Craig L. Levra....... -- -- 83,333 141,667 20,833 35,417
Dennis D. Trausch.... -- -- 82,267 54,733 134,867 36,633
Howard K. Kaminsky... -- -- 84,267 57,733 134,867 36,633
Ronald G. Mann....... -- -- 15,667 49,333 1,667 3,333
</TABLE>
_______________
(1) Does not include options to purchase an aggregate of 100,000 shares granted
on May 11, 2000 after the end of the 2000 fiscal year.
(2) The value of unexercised "in-the-money" options is the difference between
the last reported sale price of the Common Stock on March 31, 2000 ($4.6875
per share) and the exercise price of the option, multiplied by the number
of shares subject to the option.
Incentive Compensation Plans
1992 Incentive Award Plan. In October 1992, the Board of Directors adopted
the 1992 Incentive Award Plan (the "1992 Plan") which authorizes the granting of
certain incentive awards including stock appreciation rights, non-qualified
stock options, incentive stock options, restricted stock, dividend equivalents
and performance awards. The 1992 Plan was amended August 6, 1998.
As of the date of this Proxy Statement, there were 760,000 shares of the
Company's Common Stock subject to outstanding options and 363,000 additional
shares available for awards.
The 1992 Plan provides for the grant of incentive stock options (as defined
in Section 422 of the Internal Revenue code of 1986, as amended) to employees of
the Company. The 1992 Plan also provides for the grant of non-qualified stock
options to the Company's officers, employees or consultants. Incentive stock
options may have certain tax advantages for the optionee as compared to a non-
qualified stock options. The exercise price of an incentive stock option may not
be less than 100% of the fair market value of the Company's Common Stock on the
date of grant or 110% of such fair market value in the case of an optionee who
holds more than 10% of the Company's Common Stock. The exercise price of a non-
qualified stock option may not be less than 100% of the fair market value of the
Company's Common Stock on the grant date. Shares subject to an option granted
under the 1992 Plan may be purchased for cash or its equivalent, including
shares of Common Stock. Options expire ten years after the grant date, with the
exception of incentive stock options held by a holder of 10% or more of the
outstanding Common Stock, which expire five years after the grant date.
The Board of Directors authorized the issuance on March 1, 1996 of non-
qualified stock options to certain of the Company's officers, including Messrs.
Trausch and Kaminsky, who agreed to terminate the options they had received
prior to the Company's initial public offering in November 1992. Messrs. Trausch
and Kaminsky each received a non-qualified stock option to purchase 72,000
shares under this grant. Craig L. Levra and Ronald G. Mann were granted non-
qualified stock options to purchase 100,000 and 45,000 shares, respectively, in
connection with their initial employment by the Company. In addition, Mr. Mann
was awarded 5,000 shares of Common Stock. On February 4, 1998, non-qualified
stock options to purchase 225,000 shares were granted to the Company's
12
<PAGE>
executive officers and other key personnel. Of this amount, options to purchase
25,000, 45,000 and 50,000 shares were granted to Messrs. Levra, Trausch and
Kaminsky, respectively. In addition, Mr. Levra was awarded 25,000 shares of
Common Stock. On April 15, 1999, non-qualified stock options to purchase
100,000, 20,000, 20,000 and 20,000 shares were granted to Messrs. Levra,
Trausch, Kaminsky and Mann, respectively. On May 11, 2000, non-qualified stock
options to purchase 45,000, 20,000, 30,000 and 5,000 shares were granted to
Messrs. Levra, Trausch, Kaminsky and Mann, respectively.
Under the 1992 Plan, a total of 101,000 shares of Common Stock have been
reserved for grant of options to non-employee directors of the Company, of which
options for 79,000 shares remain unallocated as of the date of this Proxy
Statement. Options granted to directors are discussed under "Compensation of
Directors."
Executive Bonus Plan. Beginning in fiscal 1996, the Company adopted a bonus
plan under which, subject to an overall maximum, certain executive officers may
earn a bonus as a percentage of their annual base salaries, if the Company meets
the pre-tax profit objective set by the Compensation Committee at the beginning
of the fiscal year. If the profit objective is met or exceeded, each executive
officer, other than Mr. Olberz, is entitled to receive a bonus of between 30%
and 50% of his annual base salary. If 90% or more, but less than 100%, of the
profit objective is achieved, these executives receive 50% of a full annual
bonus plus 5% for each full percentage point above 90% achieved.
401K Plan. Beginning in fiscal 1997, eligible employee participants could
make voluntary contributions to an employee retirement savings plan under
Section 401(k) of the Internal Revenue Code 1986, as amended (the "401K Plan"),
through payroll deductions which are matched, in part, by the Company's
contributions. Such contributions can be used by the participant to purchase
interests in certain mutual funds or shares of the Company's Common Stock.
Each employee is eligible to participate in the 401K Plan on the first day
of the pay period coincident with the semi-annual eligibility computation period
during which he or she shall perform at least 1,000 hours or one year of
service. There are currently approximately 400 employees of the Company who are
eligible to participate in the 401K Plan. Subject to compliance with certain
nondiscrimination tests which limit contributions of or on behalf of "highly
compensated employees" (as such term as defined in the federal tax laws), the
eligible employee may make an annual contribution equal to from 2% up to and
including 15% of their salary compensation. The maximum investment of any plan
participant in Company stock cannot exceed 25% of their total deferral
contributions.
Principal Stockholder Award Plan. On March 31, 1998, Norbert J. Olberz and
his wife Irene Olberz, through the Olberz Family Trust, a revocable grantor
trust, committed 293,625 shares of the Company's Common Stock owned by them for
awards to more than 100 employees and directors pursuant to the terms of that
certain Olberz Family Trust Sport Chalet Restricted Stock Plan (the "Principal
Stockholder Award Plan"). Under the Principal Stockholder Award Plan, selected
employees and directors have been awarded a portion of these shares. All such
awards require no consideration to be paid by the recipient, but are subject to
the restrictions contained in the Principal Stockholder Award Plan. These awards
have been made by Mr. Olberz in appreciation and recognition of and to reward
recipients for their loyalty and service to the Company. The shares so granted
have not been registered under the Securities Act of 1933, as amended.
Accordingly, their subsequent transferability is subject to applicable federal
and state securities laws, including, without limitation, compliance with Rule
144 promulgated by the SEC as well as the restrictions imposed by the Principal
Stockholder Award Plan. Such plan restrictions include prohibition against
transfer for two years and potential forfeiture in the event certain employment
conditions are not fulfilled. Further, for federal tax purposes, the transaction
will more likely than not be treated as a contribution to capital of the Company
and a payment of compensation by the Company to the recipients to the extent of
the fair market value of the stock so awarded, resulting in a tax benefit to the
Company. In recognition of both the financial and employee incentive benefits to
the Company from these awards, the Company has agreed to pay the costs of
administration, implementation and enforcement of the Principal Stockholder
Award Plan. Messrs. Trausch and Kaminsky received 25,000 and 20,000 shares,
respectively, under the Principal Stockholders Award Plan on March 31, 1998,
while Messrs. Levra and Mann have not received any stock awards. Messrs.
Attwood, Olsen and Eric S. Olberz each were awarded 6,000 shares on March 31,
1998. Other shares were awarded to qualified employees of the Company based on
the responsibilities of the eligible employee, the value the employee's services
to the Company, the employee's tenure with the Company and other factors deemed
pertinent by the committee responsible for administering the Principal
Stockholder Award Plan.
13
<PAGE>
Employment Agreements
The Company has entered into an employment agreement with Norbert J.
Olberz. The term of the employment commences on April 1, 2000 and terminates on
March 31, 2014 and automatically renews for an additional twelve months at the
end of the initial term or any renewal term unless 30 days' notice is given by
either party. Mr. Olberz is entitled to (i) receive an annual base salary of
$300,000, (ii) receive a $1,500 monthly automobile allowance, (iii) receive
reimbursement for personal tax and financial advisory services up to $1,500 per
year, (iv) participate in all plans provided to executive officers or employees
generally and (v) receive reimbursement for secretarial assistance up to $2,500
per month. The Company has the right to terminate Mr. Olberz' employment only
for "cause" (as defined in such employment agreement).
The Company has entered into employment agreements, as amended, with each
of Messrs. Levra, Trausch, Kaminsky and Mann. The term of employment of Mr.
Levra commences on April 1, 2000 and terminates on March 31, 2002 and
automatically renews for an additional twelve months on each March 31 unless
notice of termination is given by either party by the preceding February 28. The
term of employment of Messrs. Trausch, Kaminsky and Mann commences on October 1,
1999 and terminates on March 31, 2000 and automatically renews for an additional
twelve months at the end of the initial term or any renewal term unless 30 days'
notice is given by either party. Messrs. Levra, Trausch, Kaminsky and Mann are
entitled to (i) receive an annual base salary of $275,000, $179,000, $185,000
and $165,000, respectively, (ii) participate in the executive bonus program,
(iii) receive a monthly automobile allowance in the amount of $1,200 for Mr.
Levra and $900 for Messrs. Trausch, Kaminsky and Mann, (iv) receive
reimbursement for personal tax and financial advisory services up to $1,200 per
year for Mr. Levra and $750 per year for Messrs. Trausch, Kaminsky and Mann, and
(v) participate in all plans provided to executive officers or employees
generally. In the event employment is terminated by the Company without "cause"
(as defined) or by the employee for specified causes or, in the case of Mr.
Levra, upon the Company's election not to renew, Messrs. Trausch, Kaminsky and
Mann will be entitled to their annual base salary for twelve months and Mr.
Levra will be entitled to his annual base salary for the remainder of the
employment term and to his prorated bonus under the executive bonus plan.
Performance Graph
The following graph compares the yearly percentage change in cumulative
total stockholder return of the Company's Common Stock during the period from
April 1, 1995 to March 31, 2000 with (i) the cumulative total return of the
Nasdaq market index and (ii) the cumulative total return of the S&P Specialty
Retailers Index. The comparison assumes $100 was invested on April 1, 1995 in
the Common Stock and in each of the foregoing indices and the reinvestment of
dividends through March 31, 2000. The stock price performance on the following
graph is not necessarily indicative of future stock price performance.
14
<PAGE>
This graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
INDEXED RETURNS
Base Years Ending
Period
Company / Index Mar 95 Mar 96 Mar 97 Mar 98 Mar 99 Mar 00
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SPORT CHALET INC 100 56.25 62.50 125.00 140.63 117.20
NASDAQ US INDEX 100 135.80 150.95 228.88 309.19 574.04
RETAIL (SPECIALTY)-500 100 101.63 107.37 121.34 96.61 63.47
</TABLE>
Certain Relationships and Related Transactions
From time to time the Company has transacted business with entities in
which Norbert J. Olberz (the "Principal Stockholder") has an interest.
Property Leases. The Company leases from corporations controlled by the
Principal Stockholder its corporate office space in La Canada, its warehouse and
distribution facility in Montclair, and its stores in La Canada, Porter Ranch
and Huntington Beach. The Company has incurred rental expense of $2.1 million,
$1.7 million and $1.5 million payable to the Principal Stockholder or his
affiliated corporations in fiscal 2000, 1999 and 1998, respectively.
During fiscal year 1998, the Company's non-employee directors approved a
proposal to relocate and expand the La Canada store and corporate offices
currently leased from La Canada Properties, Inc., a California corporation under
the control of the Principal Stockholder, to the "Sport Chalet Village," a
shopping center in La Canada currently under development by La Canada
Properties, Inc. The development of the shopping center, however, has been
indefinitely delayed as a result of the problems experienced by La Canada
Properties, Inc. in obtaining permits and entitlements from the City of La
Canada. Assuming the Sport Chalet Village project proceeds on a timely basis,
the existing lease for the La Canada store and corporate offices will be
terminated and under a new lease, the new rental rate during the initial
fifteen-year lease term for the store will be the amount by which four percent
times the monthly gross sales exceeds the $54,250 monthly minimum rent, which is
expected to be less, on a per square foot basis, than under the old store lease.
The new store will be 50,000 square feet and, subject to necessary government
approvals, will contain an outdoor pool area of approximately 1,500 square feet.
The new office rental rate will be $10,850 per month compared to $4,500 under
the old lease. The new office will be 20,000 square feet, compared to the
current 10,000 square feet facility. Management believes that the new
facilities, if built, will result in improved operating efficiencies because the
site will be larger and all functions will be housed under one roof.
Management believes that the occupancy costs under the leases with
corporations controlled by the Principal Stockholder described above are or will
be no higher than those which could be charged by an unrelated third party under
similar circumstances.
Principal Stockholder Award Plan. On March 31, 1998, the Company and the
Olberz Family Trust established the Olberz Family Trust Sport Chalet Restricted
Stock Award Plan (the "Principal Stockholder Award
15
<PAGE>
Plan"), pursuant to which the Olberz Family Trust transferred 293,625 shares of
the Company's Common Stock to the Principal Stockholder Award Plan and the
Principal Stockholder Award Plan concurrently awarded the shares to qualified
employees and certain directors of the Company. For further details, see
"Incentive Compensation Plans --Principal Stockholder Award Plan."
Compliance with Reporting Requirements of Section 16
Under Section 16(a) of the Exchange Act, the Company's directors, executive
officers and any person holding ten percent or more of the Common Stock are
required to report their ownership of Common Stock and any changes in that
ownership to the SEC and to furnish the Company with copies of such reports.
Specific due dates for these reports have been established and the Company is
required to report in this Proxy Statement any failure to file on a timely basis
by such persons. Based solely upon a review of copies of reports filed with the
SEC, each person subject to the reporting requirements of Section 16(a) has
filed timely all reports required to be filed in fiscal 2000.
STOCKHOLDER PROPOSALS
Under certain circumstances, stockholders are entitled to present proposals
at stockholders meetings. Any such proposal to be included in the proxy
statement for the Company's 2001 annual meeting of stockholders must be
submitted by a stockholder prior to April 5, 2001, in a form that complies with
applicable regulations. Recently, the SEC amended its rule governing a company's
ability to use discretionary proxy authority with respect to stockholder
proposals which were not submitted by the stockholders in time to be included in
the proxy statement. As a result of that rule change, in the event a stockholder
proposal is not submitted to the Company prior to May 12, 2001, the proxies
solicited by the Board of Directors for the 2001 annual meeting of the
stockholders will confer authority on the holders of the proxy to vote the
shares in accordance with their best judgment and discretion if the proposal is
presented at the 2001 annual meeting of stockholders without any discussion of
the proposal in the proxy statement for such meeting.
ANNUAL REPORT ON FORM 10-K
The Company's annual report to stockholders for the fiscal year ended March
31, 2000 accompanies or has preceded this Proxy Statement. The annual report
contains financial statements of the Company and the report thereon of Ernst &
Young LLP, the Company's independent auditors.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K, WHICH HAS BEEN FILED WITH THE SEC
FOR THE YEAR ENDED MARCH 31, 2000, WILL BE MADE AVAILABLE TO STOCKHOLDERS
WITHOUT CHARGE UPON WRITTEN REQUEST TO SPORT CHALET, INC., 920 FOOTHILL
BOULEVARD, LA CANADA, CALIFORNIA 91011, ATTENTION: HOWARD K. KAMINSKY.
OTHER BUSINESS
Management knows of no business which will be presented for consideration
at the Meeting other than as stated in the Notice of Meeting. If, however, other
matters are properly brought before the Meeting, it is the intention of the
Proxyholders to vote the shares represented by the Proxies on such matters in
accordance with the recommendation of the Board of Directors and authority to do
so is included in the Proxy.
By Order of the Board of Directors
SPORT CHALET, INC.
/s/ Howard K. Kaminsky
Howard K. Kaminsky,
Secretary
La Canada, California
June 29, 2000
16
<PAGE>
APPENDIX A
----------
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board to assist the Board in monitoring
(1) the integrity of the financial statements of the Company, (2) the compliance
by the Company with legal and regulatory requirements and (3) the independence
and performance of the Company's internal and external auditors.
The members of the Audit Committee shall meet the independence and experience
requirements of the Nasdaq Stock Market, Inc. The members of the Audit Committee
shall be appointed by the Board.
The Audit Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Audit Committee may request
any officer or employee of the Company or the Company's outside counsel or
independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval.
2. Review the annual audited financial statements with management, including
major issues regarding accounting and auditing principles and practices as
well as the adequacy of internal controls that could significantly affect
the Company's financial statements.
3. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements.
4. Review with management and the independent auditor the Company's quarterly
financial statements prior to the filing of its Form 10-Q.
5. Meet periodically with management to review the Company's major financial
risk exposures and the steps management has taken to monitor and control
such exposures.
6. Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditor, internal auditors or
management.
7. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor regarding the
auditor's independence consistent with Independence Standards Board
Standard 1, discuss such reports with the auditor, and if so determined by
the Audit Committee, take or recommend that the Board take appropriate
action to oversee the independence of the auditor.
10. Evaluate together with the Board the performance of the independent auditor
and, if so determined by the Audit Committee, recommend that the Board
replace the independent auditor.
11. Review the appointment and replacement of the senior internal auditing
executive, if any.
A-1
<PAGE>
12. Review any significant reports to management prepared by the internal
auditing department, if any, and management's responses.
13. Meet with the independent auditor prior to the audit to review the planning
and staffing of the audit.
14. Obtain from the independent auditor assurance that Section 10A of the
Securities Exchange Act of 1934 has not been implicated.
15. Obtain reports from management, the Company's senior internal auditing
executive, if any, and the independent auditor that the Company's
subsidiary/foreign affiliated entities are in conformity with applicable
legal requirements and the Company's code of conduct.
16. Discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61 relating to the conduct of the
audit.
17. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
a. Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
b. Any changes required in the planned scope of the audit.
c. The responsibilities, budget and staffing of the internal audit
department, if any.
18. Supervise preparation of the report required by the rules of the Securities
and Exchange Commission to be included in the Company's annual proxy
statement.
19. Advise the Board from time to time with respect to the Company's policies
and procedures regarding compliance with applicable laws and regulations
and with the Company's code of conduct.
20. Meet with the Company's legal counsel to review legal matters that may have
a material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators or
governmental agencies.
21. Meet at least annually with the Chief Financial Officer, the senior
internal auditing executive, if any, and the independent auditor in
separate executive sessions.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Audit Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations and the Company's code of conduct.
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<PAGE>
SPORT CHALET, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 1, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned, a stockholder of SPORT CHALET, INC., a Delaware corporation
(the "Company"), hereby appoints John R. Attwood and Craig L. Levra, and each of
them, the proxies of the undersigned, each with full power of substitution, to
attend, vote and act for the undersigned at the annual meeting of the
stockholders of the Company, to be held on August 1, 2000, and any postponements
or adjournments thereof, and in connection herewith, to vote and represent all
of the shares of the Company which the undersigned would be entitled to vote.
(Continued and to be signed on other side)
--------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS.
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHOLD FOR AGAINST ABSTAIN
For all nominees listed below [_] [_] 2. Other Business. [_] [_] [_]
(except as indicated to the
contrary).
Withhold Authority to vote for all
nominees listed below.
Instructions: To withhold authority
to vote FOR any nominee, line through
or otherwise strike out his name below.
John R. Attwood Craig L. Levra
The undersigned hereby revokes any other proxy to vote at
the Meeting, and hereby ratifies and confirms all that
said attorneys and proxies, and each of them, may
_______________________________________________________________________ lawfully do by virtue hereof. With respect to matters not
known at the time of the solicitation hereof, said
proxies are authorized to vote in accordance with their
best judgment.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS SET FORTH. THIS PROXY WILL BE TREATED
AS A GRANT OF AUTHORITY TO VOTE FOR THE ELECTION OF THE
DIRECTORS NAMED ABOVE AND AS SAID PROXIES SHALL DEEM
ADVISABLE ON SUCH OTHER BUSINESS AS MAY COME BEFORE THE
MEETING, UNLESS OTHERWISE DIRECTED.
The undersigned acknowledges receipt of a copy of the
Notice of Annual Meeting and accompanying Proxy Statement
_______________________________________________________________________ dated June 29, 2000 relating to the Meeting.
</TABLE>
Please sign and date below and return promptly in the enclosed postage-paid
envelope.
______________________________ x________________________ Date:____________, 2000
The signature(s) hereon should correspond exactly with the name(s) of the
Stockholder(s) appearing on the Stock Certificate. If stock is jointly held,
all joint owners should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If signer
is a corporation, please sign the full corporation name, and give title of
signing officer.
