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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
SHOE CARNIVAL, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of 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>
PRELIMINARY COPY
SHOE CARNIVAL, INC.
NOTICE OF ANNUAL MEETING OF COMMON SHAREHOLDERS
TO BE HELD ON JUNE 11, 1998
The annual meeting of common shareholders of Shoe Carnival, Inc. will be
held at the Evansville Airport Marriott, 7101 North U.S. Route 41, Evansville,
Indiana, on Thursday, June 11, 1998, at 10:00 a.m., C.D.T., for the following
purposes:
(1) To elect two Directors to serve until the 2001 annual meeting of
shareholders and until their successors are elected and have qualified, as
set forth in the accompanying Proxy Statement;
(2) To approve or disapprove the appointment of Deloitte & Touche LLP,
as auditors for the Company for fiscal year 1998;
(3) To approve or disapprove an amendment to the Restated Articles of
Incorporation of the Company to establish a par value of $.01 per share for
the Common Stock and the Preferred Stock of the Company; and
(4) To transact such other business as may properly come before the
meeting.
All common shareholders of record at the close of business on April 17,
1998 will be eligible to vote.
It is important that your stock be represented at this meeting. Whether or
not you expect to be present, please fill in, date, sign and return the enclosed
proxy form in the accompanying addressed, postage-prepaid envelope. If you
attend the meeting, your proxy will be canceled at your request.
David A. Kapp, Secretary
(ANNUAL REPORT CONCURRENTLY MAILED)
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<PAGE>
SHOE CARNIVAL, INC.
8233 Baumgart Road
Evansville, Indiana 47711
PROXY STATEMENT
Annual Meeting of Common Shareholders
June 11, 1998
This statement is being furnished to common shareholders on or about May
15, 1998, in connection with a solicitation by the Board of Directors of Shoe
Carnival, Inc. (the "Company") of proxies to be voted at the annual meeting of
common shareholders to be held at 10:00 a.m., C.D.T., Thursday, June 11, 1998,
at the Evansville Airport Marriott, 7101 North U.S. Route 41, Evansville,
Indiana, for the purposes set forth in the accompanying Notice.
At the close of business on April 17, 1998, the record date for the
meeting, there were 13,120,344 shares of Common Stock of the Company outstanding
and entitled to vote at the meeting. On all matters, including the election of
Directors, each common shareholder will have one vote for each share held.
If the enclosed form of proxy is executed and returned, it may nevertheless
be revoked at any time insofar as it has not been exercised. The proxy may be
revoked by giving written notice of revocation to the Company, executing a
subsequently dated proxy that is delivered to the Company, or attending the
annual meeting and voting in person. Unless revoked, a proxy will be voted at
the meeting in accordance with the instructions of the shareholder in the proxy,
or, if no instructions are given, for the election as Directors of the nominees
listed under Proposal 1 and for the proposals shown as Proposals 2 and 3.
Election of the Directors will be determined by the vote of the holders of a
plurality of the shares voting on such election. Approval of Proposals 2 and 3
will be subject to the vote of the holders of a greater number of shares
favoring approval than those opposing it. A proxy may indicate that all or a
portion of the shares represented by such proxy are not being voted with respect
to a specific proposal. This could occur, for example, when a broker is not
permitted to vote shares held in street name on certain proposals in the absence
of instructions from the beneficial owner. Shares that are not voted with
respect to a specific proposal will be considered as not present and entitled to
vote on such proposal, even though such shares will be considered present for
purposes of determining a quorum and voting on other proposals. Abstentions on a
specific proposal will be considered as present, but not as voting in favor of
such proposal. Neither broker non-votes nor abstentions will have any effect on
the vote required to approve any of the proposals.
The Board of Directors knows of no matters, other than those reported
below, which are to be brought before the meeting. However, if other matters
properly come before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote such proxy in accordance with their judgment
on such matters.
The cost of this solicitation of proxies will be borne by the Company.
Proxies may also be solicited personally or by telephone by Company employees
acting without additional compensation.
<PAGE>
ELECTION OF DIRECTORS
Nominees
The Company's bylaws currently provide for five Directors divided into
three classes. Two classes contain two Directors each, with the remaining class
containing one Director. The term of one class expires each year. Generally,
each Director serves until the annual meeting of common shareholders held in the
year that is three years after such Director's election and thereafter until
such Director's successor is elected and has qualified. David H. Russell, who
was the sole Director in the class whose term would expire at the 2000 annual
meeting of shareholders, resigned as a Director on December 8, 1997. Although
the Company intends to fill this vacancy when a suitable candidate is located,
the Company does not currently have a nominee and, accordingly, this vacancy
will not be filled at the annual meeting. The accompanying form of proxy cannot
be voted for a greater number of persons than the two nominees listed below.
The shareholders will be asked to elect two Directors. The Directors whose
terms expire this year are Mark L. Lemond and William E. Bindley. Messrs. Lemond
and Bindley have been nominated by the Board of Directors for reelection as
Directors for a term to expire at the 2001 annual meeting of shareholders and
until their successors are elected and have qualified. It is the intention of
the persons named in the accompanying form of proxy, absent contrary
instructions therein, to vote such proxy for the election to the Board of
Directors of Messrs. Lemond and Bindley.
Unless otherwise indicated in a footnote to the following table, the
principal occupation of each Director has been the same for the last five years,
and each Director possesses sole voting and investment power with respect to the
shares of Common Stock indicated as beneficially owned by him.
<TABLE>
<CAPTION>
Shares
Beneficially
Present Owned on
Principal Director March 31, Percent of
Name Age Occupation Since 1998(1) Class
- ------------------------ --- ----------------------------------- -------- --------------- ----------
NOMINEES FOR DIRECTOR
(Nominees for three-year term to expire at the annual meeting of shareholders in 2001)
<S> <C> <C> <C> <C> <C>
Mark L. Lemond 43 President and Chief Executive 1988 340,466 (2) 2.6%
Officer of the Company (3)
William E. Bindley 57 Chairman of the Board and 1993 1,000 *
Chief Executive Officer of
Bindley Western Industries, Inc.
(pharmaceutical wholesale
distribution company) (4)
DIRECTORS CONTINUING IN OFFICE
(Term expiring at the annual meeting of shareholders in 1999)
J. Wayne Weaver 63 Chairman of the Board of the 1988 4,833,230 (5) 36.9%
Company, Chairman and Chief
Executive Officer of Jacksonville
Jaguars, LTD (professional football
franchise), and Chairman and Chief
Executive Officer of LC Footwear, Inc.
(footwear distributor) (6)
Gerald W. Schoor 63 Merchant Banker 1993 3,000 (7) *
(self-employed) (8)
- -------------
* Less than 1%
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<PAGE>
<FN>
(1) Does not include shares subject to options that are not presently
exercisable (i.e., within 60 days after March 31, 1998).
(2) Includes 1,500 shares directly owned by Mr. Lemond's spouse and 81,666
shares issuable upon the exercise of presently exercisable options granted
under the Company's 1993 Stock Option and Incentive Plan ("1993 Stock
Option Plan").
(3) Mr. Lemond became the President and Chief Executive Officer of the Company
on September 19, 1996. Prior to that time and for at least the past five
years, Mr. Lemond served as the Company's Chief Operating Officer and/or
Chief Financial Officer.
(4) Mr. Bindley also serves on the Board of Directors of Priority Healthcare
Corporation, a distributor and provider to the alternate site healthcare
market.
(5) Includes 2,000,000 shares directly owned by Mr. Weaver's spouse and 833,230
shares owned jointly with Mr. Weaver's spouse.
(6) From 1978 until February 2, 1993, Mr. Weaver's principal occupation was as
president and chief executive officer of Nine West Group, Inc. ("Nine
West"), a designer, developer and marketer of women's footwear.
(7) Represents 3,000 shares held as co-trustee for the benefit of his spouse.
(8) Prior to January 1997 and for at least the past five years, Mr. Schoor was
employed as president of Corporate Finance Associates, St. Louis (financial
intermediary) and as executive vice president of National Industrial
Services, Inc. (industrial asset management company).
</FN>
</TABLE>
The Board of Directors recommends a vote FOR the nominees listed above.
Meetings and Committees
During the 1997 fiscal year, the Board of Directors of the Company held
four meetings. All of the Directors were present at the meetings.
The Company has an Audit Committee, a Compensation Committee and a Stock
Option Committee. The Compensation Committee, which met once during fiscal year
1997, consists of Messrs. Bindley and Schoor. The Stock Option Committee, which
met once in fiscal year 1997, at that time consisted of Messrs. Bindley, Schoor
and Weaver. Currently, the Stock Option Committee consists of Messrs. Bindley
and Schoor. The Audit Committee, which met two times during fiscal year 1997,
consists of Messrs. Bindley, Schoor and Lemond. The Audit Committee is
responsible for recommending independent auditors, reviewing with the
independent auditors the scope and results of the audit engagement, establishing
and monitoring the Company's financial policies and control procedures,
reviewing and monitoring the provision of non-audit services by the Company's
auditors and reviewing all potential conflict of interest situations, including
the Company's relationships with Weaver International Footwear, Inc., LC
Footwear, Inc. and PL Footwear, Inc. The Compensation Committee is responsible
for reviewing, determining and establishing the salaries, bonuses and other
compensation of the executive officers of the Company. The Stock Option
Committee is responsible for administering the Company's 1993 Stock Option Plan
and Employee Stock Purchase Plan. The Board of Directors does not have a
nominating committee. All of the Directors attended all of the meetings of the
committees on which they served during the 1997 fiscal year.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and Directors, and persons who own more than 10% of Common
Stock, to file reports of ownership with the Securities and Exchange Commission.
Executive officers, Directors and greater than 10% shareholders are required to
furnish the Company with copies of all Section 16(a) forms they file.
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<PAGE>
Based solely on its review of copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during fiscal 1997 all
filing requirements applicable to its executive officers, Directors and greater
than 10% shareholders were met.
Summary Compensation Table
The following table sets forth a summary of the compensation paid by the
Company for services rendered in all capacities to the Company during each of
the three most recent fiscal years, to the Company's Chief Executive Officer,
and to each of the Company's five other most highly compensated executive
officers, based on salary and bonuses earned during fiscal 1997 (the "Named
Executive Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
------------
Awards
Annual Compensation (1) ------------
----------------------- Securities
Fiscal Underlying All Other
Name and Principal Position Year(2) Salary Bonus(3) Options (4) Compensation (5)
- --------------------------- --------- ---------- --------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Mark L. Lemond, 1997 $ 350,000 $ 225,000 0 $ 4,181 (6)
President and Chief 1996 293,462 0 85,000 (7) 3,831 (8)
Executive Officer (9) 1995 273,077 0 25,000 3,750 (10)
J. Wayne Weaver, 1997 $ 300,000 $ 0 0 $ 0
Chairman of the Board 1996 300,000 0 0 0
1995 311,539 0 0 0
David H. Russell, 1997 $ 528,942 (11) $ 0 142,000 $ 210,398 (12)
Retired Vice-Chairman of 1996 367,500 0 50,000 4,387 (8)
the Board (13) 1995 382,308 0 25,000 4,266 (10)
Timothy T. Baker, 1997 $ 155,000 $ 30,857 0 $ 2,616 (6)
Senior Vice President-- 1996 145,243 0 15,000 981 (8)
Store Operations 1995 126,048 5,680 7,500 1,421 (10)
Clifton E. Sifford, 1997 $ 112,510 $ 22,275 30,000 $ 23,896 (14)
Senior Vice President-- 1996 0 0 0 0
General Merchandise Manager 1995 0 0 0 0
(15)
Larry L. Linville, 1997 $ 123,077 $ 19,000 0 $ 4,142 (6)
Vice President-- Management 1996 112,692 0 9,000 3,391 (8)
Information Systems 1995 103,846 0 3,000 8,920 (16)
- ---------------
<FN>
(1) The column for Other Annual Compensation is not included (as permitted
under applicable regulations) because the perquisites and other personal
benefits awarded, earned or paid to the Named Executive Officers did not
exceed the lesser of $50,000 or 10% of the salary plus bonus for each Named
Executive Officer for any of the years listed.
(2) As a result of a change in the Company's fiscal year, the 1995 fiscal year
began January 29, 1995 and ended February 3, 1996. All amounts for the
Company's 1995 fiscal year reflect that 53 week period.
(3) Represents bonuses earned during the fiscal year indicated, which bonuses
at times have been paid in the subsequent fiscal year.
(4) All of the amounts reflect option shares. The Company has never granted
SARs.
(5) Except as otherwise indicated, all amounts are compensation related to life
and disability insurance premiums.
(6) Of the amounts shown, $3,048 for Mr. Lemond, $1,669 for Mr. Baker and
$2,565 for Mr. Linville represent the Company's matching contribution under
the Company's 401(k) plan.
(7) Includes option for 35,000 shares granted on September 19, 1996, to replace
option for an identical number of shares granted on February 3, 1994.
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<PAGE>
(8) Of the amounts shown, $3,002 for Mr. Lemond, $3,000 for Mr. Russell, $450
for Mr. Baker and $2,331 for Mr. Linville represent the Company's matching
contribution under the Company's 401(k) plan.
(9) Prior to becoming the Company's President and Chief Executive Officer on
September 19, 1996, Mr. Lemond served as the Company's Executive Vice
President -- Chief Operating Officer and Chief Financial Officer.
(10) Of the amounts shown, $2,983 for Mr. Lemond, $2,942 for Mr. Russell and
$1,023 for Mr. Baker represent the Company's matching contribution under
the Company's 401(k) plan.
(11) Of the amount shown, $430,000 represents a severance payment related to Mr.
Russell's retirement.
(12) Of the amount shown, $209,140 represents debt of Mr. Russell forgiven by
the Company in connection with his retirement from the Company and $775
represents the Company's matching contribution under the Company's 401(k)
plan.
(13) Mr. Russell served as President and Chief Executive Officer until September
19, 1996, when he was elected Vice-Chairman of the Board. On May 1, 1997,
Mr. Russell retired from his position as Vice - Chairman of the Board and
became a non-officer Director. On December 8, 1997, Mr. Russell resigned
from the Board of Directors.
(14) Of the amount shown, $23,370 represents reimbursement for relocation
expenses.
(15) Mr. Sifford joined the Company in April 1997.
(16) Of the amount shown, $7,924 represents reimbursement for relocation
expenses.
</FN>
</TABLE>
Employment, Noncompetition and Consulting Agreements
On April 14, 1997, The Company entered into a two-year employment agreement
with Clifton E. Sifford. Under the terms of the agreement, Mr. Sifford will
receive a base annual salary of $150,000 during the term of the agreement,
subject to increases at the discretion of the Board of Directors, plus certain
other employee benefits. The employment agreement contains noncompetition
provisions which prohibit Mr. Sifford from competing with the Company during the
term of the agreement. Upon termination, if such termination is at the request
of the employee or is for cause, the employee will be entitled to compensation
only through the date of termination. If the Company terminates Mr. Sifford
without cause prior to the expiration of the employment agreement, Mr. Sifford
will be entitled to receive his then current base salary through the term of the
agreement.
Effective May 1, 1997, David H. Russell retired from his position as Vice-
Chairman of the Company and was retained as a paid consultant. Mr. Russell
continued to serve on the Board of Directors until his resignation on December
8, 1997. Pursuant to an agreement between Mr. Russell and the Company, Mr.
Russell will serve as a consultant to the Company's management for a term of
three years beginning May 1, 1997 and will receive consulting fees of $50,000
per year. Other terms of the consulting agreement include a non-compete clause
for the 60 month period following Mr. Russell's retirement and restrictions on
the sale or transfer of shares of the Company's Common Stock acquired pursuant
to a stock option granted on April 24, 1997 for 142,000 shares of the Company's
Common Stock. In conjunction with his retirement, the Company made a lump-sum
payment of $430,000 to Mr. Russell and forgave a loan and other receivables
totaling $209,140.
On January 15, 1993, the Company entered into a noncompetition agreement
with J. Wayne Weaver. Except for his affiliation with Nine West, so long as Mr.
Weaver is an executive officer or Director of the Company he may not engage
directly or indirectly through any other company or entity in the retail shoe
business without the prior approval of the Company's Audit Committee. The Audit
Committee has approved Mr. Weaver's association with LC Footwear, Inc. and PL
Footwear, Inc. Effective February 1, 1993, Mr. Weaver became an employee of the
Company at an annual salary of $300,000. Although Mr. Weaver will continue to be
involved in other business activities and will not devote full time to the
Company, he will devote such time to the Company as he deems necessary or
appropriate to perform his duties as Chairman of the Board.
The Company does not have employment or noncompetition agreements with any
other officers.
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<PAGE>
Compensation of Directors
During 1997, the Company paid non-officer Directors an annual retainer of
$15,000 per year and a fee of $1,000 for each meeting of the Board or a
committee thereof attended. All Directors receive reimbursement of reasonable
out-of-pocket expenses incurred in connection with meetings of the Board. No
Director who is an officer or employee of the Company receives compensation for
services rendered as a Director.
Stock Options
From August 1989 through February 1992, the Company granted options to
purchase an aggregate of 1,500,000 shares of the Company's Common Stock to 14
officers, Directors and key employees of the Company under its 1989 Stock Option
Plan. The exercise price for each option was $.18 per share. Effective November
1, 1992, all such options were exercised by the holders. At that time, the
Company loaned an aggregate of $632,800 to the 14 officers, Directors and key
employees to permit them to pay the taxes due as a result of the stock option
exercise. The loans bear interest at the rate of 6% per annum and were payable
in four equal annual installments commencing December 31, 1993. The principal
amounts of the loans made to the Named Executive Officers in the Summary
Compensation Table above were as follows: Mr. Russell--$316,440; Mr.
Lemond--$126,580 and Mr. Baker--$6,320. In 1996, Mr. Baker paid the remaining
amount of principal and interest due pursuant to his loan from the Company. Mr.
Russell and Mr. Lemond paid the first two principal installments relating to
their loans with the final two payments being extended. Mr. Russell's remaining
loan balance of $158,220 was forgiven in conjunction with his retirement from
the Company. All remaining loan balances, including Mr. Lemond's, were paid in
March 1998.
The Company's Board of Directors and shareholders approved the 1993 Stock
Option Plan, effective January 15, 1993, and amended it at the 1997 annual
meeting of shareholders. The 1993 Stock Option Plan reserves for issuance
1,500,000 shares of the Company's Common Stock (subject to adjustment for
subsequent stock splits, stock dividends and certain other changes in the Common
Stock) pursuant to incentive awards granted by the Stock Option Committee of the
Board of Directors which administers the 1993 Stock Option Plan. The 1993 Stock
Option Plan provides for the grant to officers and other key employees of the
Company of incentive awards in the form of stock options or restricted stock.
Stock options granted under the plan may be either options intended to qualify
for federal income tax purposes as "incentive stock options" or options not
qualifying for favorable tax treatment ("nonqualified stock options").
The following table sets forth information with respect to options granted
by the Company under the 1993 Stock Option Plan to the Named Executive Officers
during the fiscal year ended January 31, 1998.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants (1)
---------------------------------------------------------
% of Total
Number of Options Potential Realizable Value at Assumed
Securities Granted to Annual Rates of Stock Price
Underlying Employees in Exercise or Appreciation for Option Term (2)
Options Fiscal Base Price Expiration -------------------------------------
Name Granted(#) Year ($/Sh) Date 5% ($) 10% ($)
- --------------- ------------ ------------ ------------ ------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Lemond --- --- --- --- --- ---
J. Wayne Weaver --- --- --- --- --- ---
David H. Russell 142,000 68.1% 6.00 04/23/07 (3) 536,760 1,360,360
Timothy T. Baker --- --- --- --- --- ---
Clifton E. Sifford 30,000 14.4% 6.00 04/13/07 (4) 113,400 287,400
Larry L. Linville --- --- --- --- --- ---
- ---------------
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<PAGE>
<FN>
(1) During fiscal 1997, options to purchase an aggregate of 208,500 shares were
granted to 24 employees at exercise prices equal to or above the market
price on the respective grant dates. Such options have a term of ten years,
subject to earlier expiration at or following termination of employment in
certain circumstances.
(2) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, of the Company's stock price. The Company did not use an alternative
formula for a grant date valuation, as the Company is not aware of any
formula which will determine with reasonable accuracy a present value based
on future unknown or volatile factors.
(3) These options became exercisable on April 24, 1997.
(4) These options become exercisable in fourths on April 14, 1998, April 14,
1999, April 14, 2000 and April 14, 2001.
</FN>
</TABLE>
The following table sets forth information with respect to the exercise of
options held by the Named Executive Officers during fiscal year 1997 and
unexercised stock options held by such individuals at the end of the fiscal year
ended January 31, 1998.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Number of Securities Underlying
Unexercised Options at Fiscal Value of Unexercised In-the-Money
Shares Year-End (#) Options at Fiscal Year-End ($)(1)
Acquired Value ------------------------------- ----------------------------------
Name on Exercise Realized(2) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Lemond 0 0 44,999 65,001 145,413 200,212
J. Wayne Weaver 0 0 0 0 0 0
David H. Russell 16,666 58,331 158,666 0 387,248 0
Timothy T. Baker 0 0 19,000 12,500 33,125 39,063
Clifton E. Sifford 0 0 0 30,000 0 71,250
Larry L. Linville 0 0 7,000 8,000 19,000 23,000
- ---------------
<FN>
(1) The closing price for the Company's Common Stock as reported by The Nasdaq
Stock Market on January 30, 1998 was $8.375. The value is calculated on the
basis of the difference between the Common Stock option exercise price and
$8.375, multiplied by the number of "in-the-money" shares of Common Stock
underlying the options.
(2) The value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise, multiplied by the number of shares to which the exercise relates.
</FN>
</TABLE>
Compensation Report of Compensation and Stock Option Committees
Executive Compensation Policy. In evaluating the performance of the
Company, the Compensation Committee focuses primarily on attained increases in
store growth, sales, operating income and net earnings as compared to the
Company's internal financial plan for the year approved by the Board of
Directors. In making compensation decisions, the Compensation Committee also
reviews executive compensation practices within the retail and footwear
industries with consideration given to, among other factors, differences in
sales, growth rates and total market capitalization.
The Company designs compensation programs to attract, retain and motivate
the finest talent possible for all levels of the organization. In addition, the
programs are designed to treat all employees fairly, to be cost-effective and to
assure that all compensation will continue to be tax deductible. To that end,
all programs, including those for executive officers, have the following
characteristics.
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<PAGE>
- Compensation is based on the level of job responsibility, the
individual's level of performance and Company performance. Members of management
have a greater portion of their pay based on Company performance than do
non-management employees.
- Compensation also takes into consideration the value of the job in the
marketplace. To retain its highly skilled work force, the Company strives to
remain competitive with the pay of employers of a similar stature who compete
with the Company for talent.
- The Company's 1993 Stock Option Plan is intended to provide a long-term
incentive for executives and other key employees to maximize growth and
profitability to create shareholder value.
The basic components of executive compensation, including that of the Chief
Executive Officer, consist of salary, bonus, stock options and participation in
the Company's 401(k) Savings Plan, Employee Stock Purchase Plan and Executive
Medical Plan. The Company does not currently provide for a deferred compensation
plan or any defined benefit pension plan.
Cash Compensation. The Compensation Committee reviews and approves salaries
for the Chief Executive Officer and other executive officers on an annual basis
or at other times as necessary to accommodate the hiring of new employees,
promotions or other considerations. Recommended base salaries are reviewed and
set based on a number of factors, including job responsibilities, individual
industry experience, individual performance, Company performance, industry data
for comparable positions and recommendations by senior executive officers. No
predetermined weight is given to any of the above factors.
Salary increases for the Company's executive officers have averaged
approximately 7% annually for the past three years. Certain executive officers
have received greater salary increases corresponding to expanded
responsibilities as a result of the continued growth of the Company.
A portion of the cash compensation of executive officers and most other
salaried employees consists of bonus payments. Under the Company's Executive
Incentive Compensation Plan, most salaried employees, including all executive
officers, are eligible to receive a cash bonus equal to a specified percentage
of the participant's base salary if certain financial objectives are met. The
financial objectives for executive officers relate to the attainment of sales
and operating income goals established in advance by the Company's management
and approved by its Board of Directors. The Company's financial objectives for
1997 were not met and no bonuses were paid to the Named Executive Officers under
this quantitative plan for fiscal 1997. The determination of the Compensation
Committee to award discretionary cash bonuses (i.e., bonuses not pursuant to the
Incentive Compensation Plan) is based upon the objective and subjective
assessment of individual achievements and the evaluations and recommendations of
the Company's Chairman. Additionally, consideration is given to each
individual's aggregate cash compensation relative to the individual's position
and job requirements and the individual's impact on the Company's performance
over a number of years. Based on the Company's 1997 financial performance and
individual achievements, discretionary bonuses were awarded to all executive
officers. These bonuses were paid in March 1998.
Stock Options. The Company considers equity compensation, in the form of
stock options, to be an important element in the overall compensation of its
executive officers and other key employees. The grant of stock options continues
the Company's practice of increasing management's equity ownership in order to
ensure that the interests of management remain closely aligned with those of the
Company's shareholders. Stock options also create an incentive for the Company's
key employees to remain with the Company for the long term because the options
are typically not immediately exercisable and, if not exercised, are forfeited
immediately if the employee is terminated for cause or voluntarily terminates
his employment (other than by reason of death, disability or retirement) or
within three months if employment is terminated for any other reason except
death, disability or retirement.
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<PAGE>
Options are granted pursuant to the Company's 1993 Stock Option Plan at the
discretion of the Company's Stock Option Committee. The Stock Option Committee
relies in large part on the recommendation of the Chairman in determining the
number of option shares to be granted to executive officers, based upon the
Chairman's assessment of individual performance and the Company's performance.
With the exception of new employees, options are typically granted on an annual
basis. In addition to other key employees, certain executive officers were
granted options in 1997 with an exercise price equal to the market price on the
grant date. David H. Russell received a stock option grant for his years of
dedicated service and Clifton E. Sifford received a stock option grant when he
became an employee of the Company. See "Stock Options - Option Grants in Last
Fiscal Year."
Chief Executive Officer Compensation. The Chief Executive Officer's total
compensation is based upon the same factors as the compensation of other
executive officers, including his individual performance and the Company's
short-term and long-term performance, as measured principally by increases in
store growth, sales, operating income and net earnings. In addition, the
Compensation Committee reviews the level of chief executives' compensation
within the retail and footwear industries with consideration given to, among
other factors, differences in sales, growth rates and total market
capitalization.
Mr. Lemond was elected President and Chief Executive Officer of the Company
on September 19, 1996. In establishing Mr. Lemond's cash compensation for 1997,
the Compensation Committee considered the length of time served as Chief
Executive Officer and the September 1996 increase in base salary when elected to
the office of Chief Executive Officer and chose not to increase Mr. Lemond's
base salary for 1997.
Compensation Committee Stock Option Committee
William E. Bindley William E. Bindley
Gerald W. Schoor Gerald W. Schoor
-9-
<PAGE>
Performance Graph
The performance graph set forth below compares the cumulative total
shareholder return on the Company's Common Stock with the Nasdaq Market Index
and the Nasdaq Index for Retail Trade Stocks for the period from March 15, 1993
through January 30, 1998. The Company's Common Stock commenced trading on The
Nasdaq Stock Market on March 16, 1993.
<TABLE>
<CAPTION>
Comparison of Cumulative Total Return Among The Company,
Nasdaq Market Index and Nasdaq Index for Retail Trade Stocks
- ----------------------------------------------------------------------------------------------------------------
March 15, December 31, December 30, February 2, January 31, January 30,
1993 1993 1994 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
The Nasdaq Stock Market (U.S.) 100 112 109 157 204 241
- ----------------------------------------------------------------------------------------------------------------
Nasdaq Retail Trade Stocks 100 109 99 109 133 156
- ----------------------------------------------------------------------------------------------------------------
Shoe Carnival, Inc. 100 138 55 39 58 97
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
[PERFORMANCE GRAPH APPEARS HERE]
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that may incorporate future filings (including
this proxy statement, in whole or in part), the Compensation Report of the
Compensation and Stock Option Committees and the Performance Graph, shall not be
incorporated by reference in any such filings.
Compensation Committee Interlocks and Insider Participation
During fiscal 1997, the Compensation Committee consisted of Messrs. Bindley
and Schoor. Neither of the Compensation Committee members are involved in a
relationship requiring disclosure as an interlocking executive officer/director
or under Item 404 of Regulation S-K or as a former officer or employee of the
Company.
-10-
<PAGE>
Certain Transactions
Mr. Weaver, along with Bradley W. Weaver, his son and the owner of 4.8% of
the outstanding shares of the Company's Common Stock, are the principal
shareholders of LC Footwear, Inc. and PL Footwear, Inc. Mr. J. Wayne Weaver is
also Chairman of the Board and Chief Executive Officer of LC Footwear, Inc.and
PL Footwear, Inc. Bradley W. Weaver also owns and operates Weaver International
Footwear, Inc. ("Weaver International").
The Company purchases women's footwear from LC Footwear, Inc. in the
ordinary course of business. During 1997, the Company purchased approximately
$34,000 of merchandise from LC Footwear, Inc. Management of the Company believes
that purchases from LC Footwear, Inc. are on terms that are not less favorable
to the Company than could be obtained from unrelated third parties for
comparable merchandise.
Weaver International and PL Footwear, Inc., along with others, serve as
import agents for the Company. Import agents represent the Company on a
commission basis in dealings with shoe factories primarily in mainland China
where most of the Company's private label shoes are manufactured. As agents for
the Company, Weaver International and PL Footwear, Inc. visit shoe
manufacturers, collect shoe samples, submit these samples to the Company and
advise the Company of market conditions and availability of merchandise. They
also help select leather, assist in detailing and quality control and coordinate
the production and delivery schedule of a portion of the Company's private label
merchandise. The Company pays Weaver International and PL Footwear, Inc. 10% of
the gross purchase price of shoes bought through each company. In 1997, the
Company paid Weaver International and PL Footwear, Inc. approximately $730,000
and $26,000, respectively, in commissions. Management of the Company believes
that the arrangements with Weaver International and PL Footwear, Inc. are on
terms that are not less favorable to the Company than could be obtained from
unrelated parties.
On November 1, 1992, the Company made loans bearing interest at the rate of
6% per annum to certain officers, Directors and key employees in connection with
their exercise of stock options. See "Stock Options." During fiscal year 1997
the largest amount outstanding in connection with such loan to Mr. Lemond was
$67,087. At fiscal year end the amount outstanding pursuant to Mr. Lemond's loan
was $63,617. All of the foregoing amounts include accrued but unpaid interest at
such time. In March 1998 Mr. Lemond's note was paid in full.
APPOINTMENT OF AUDITORS
The appointment of Deloitte & Touche LLP as auditors for the Company for
fiscal year 1998 is recommended by the Board of Directors and will be submitted
to the meeting in order to permit the shareholders to express their approval or
disapproval. In the event of a negative vote, a selection of other auditors will
be made by the Board. A representative of Deloitte & Touche LLP is expected to
be present at the meeting, will be given an opportunity to make a statement if
he desires and will respond to appropriate questions. Notwithstanding approval
by the shareholders, the Board of Directors reserves the right to replace the
auditors at any time upon the recommendation of the Audit Committee of the Board
of Directors.
The Board of Directors recommends a vote FOR the appointment of Deloitte &
Touche LLP as auditors for 1998.
-11-
<PAGE>
APPROVAL OF AMENDMENT OF THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION
On April 7, 1998, the Company's Board of Directors approved an amendment to
the Company's Restated Articles of Incorporation in order to increase the par
value of the shares of the Company's Common Stock and the shares of the
Company's Preferred Stock from no par value per share to $.01 per share. To
effect this change, Article IV, Section 1 of the Company's Restated Articles of
Incorporation would be amended in its entirety as follows:
ARTICLE IV
Section 1. Capital Stock. The total number of shares of all classes of
capital stock which the Corporation shall have authority to issue is
55,000,000 shares, consisting of 50,000,000 shares of Common Stock, par
value $.01 per share ("Common Stock"), and 5,000,000 shares of Preferred
Stock, par value $.01 per share ("Preferred Stock").
The only change effected in Article IV, Section 1 by the proposed amendment will
be to increase the par value of the shares of Common Stock and the shares of
Preferred Stock. The remaining text of Article IV, Section 1 as set forth above
is unchanged from the text as presently in effect. The two versions of Article
IV, Section 1, as presently in effect and as proposed to be amended, are set
forth on Appendix A to this Proxy Statement.
The purpose of the proposed increase in the par value of the shares of
Common Stock and Preferred Stock is to decrease the amount of franchise taxes
paid by the Company. Although the concept of par value has no relevance in the
Company's state of incorporation under the Indiana Business Corporation Law,
certain other states in which the Company does business and is qualified as a
foreign corporation compute franchise taxes based on an assumed par value of the
stock of corporations that have no par value stock. The Board of Directors
believes that a change in the par value of the Company's Common Stock to $.01
will allow the Company to avoid the burdens imposed by certain other states'
systems of franchise taxation without altering any substantive rights of
shareholders.
The Board of Directors believes that the proposed amendment is in the best
interests of the Company and its shareholders, and has directed that it be
submitted to the Company's shareholders for consideration at this meeting. In
the event of shareholder approval, the amendment will be effected as soon as
practicable thereafter by causing Articles of Amendment to the Company's
Restated Articles of Incorporation to be filed with the Secretary of State of
the State of Indiana. Upon such filing, the amendment will be effective and each
share certificate which immediately prior to such time represented outstanding
shares of the Company's Common Stock, no par value, shall be deemed for all
purposes to evidence ownership of, and to represent, the same number of shares
of Common Stock, par value $.01 per share.
The Board of Directors recommends a vote FOR the amendment of the Company's
Restated Articles of Incorporation.
-12-
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 31, 1998, certain information
with respect to beneficial ownership of the Company's Common Stock by each
person (or group of affiliated persons) who is known by management to own
beneficially more than 5% of the Common Stock, by each Named Executive Officer
who is not a Director, and by all Directors and current executive officers as a
group. Except as otherwise noted, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
Number of Shares Percent of
Name Beneficially Owned Class
---- ------------------- ----------
J. Wayne Weaver (1)................ 4,833,230 (2) 36.9%
Delores B. Weaver (1).............. 4,833,230 (3) 36.9%
David H. Russell (4)............... 616,931 (5) 4.6%
Timothy T. Baker................... 37,880 (6) *
Clifton E. Sifford................. 7,500 (7) *
Larry L. Linville.................. 12,000 (8) *
Dimensional Fund Advisors, Inc.
1299 Ocean Ave, 11th Floor
Santa Monica, CA 90401**.......... 668,600 (9) 5.1%
All current executive officers
and Directors as a group
(9 persons)....................... 5,277,826 (10) 39.8%
- ----------
* Less than 1%
** Information is based solely on reports filed by such shareholder under
Section 13(d) or Section 13(g) of the Securities Exchange Act of 1934.
(1) J. Wayne Weaver and Delores B. Weaver are husband and wife. Their address
is 8233 Baumgart Road, Evansville, Indiana 47711.
(2) Includes 2,000,000 shares directly owned by Mr. Weaver's spouse, Delores B.
Weaver, and 833,230 shares owned jointly with his spouse.
(3) Includes 2,000,000 shares directly owned by Mrs. Weaver's spouse, J. Wayne
Weaver, and 833,230 shares owned jointly with her spouse.
(4) The address of this shareholder is 5011 Washington Ave, Suite 6,
Evansville, IN 47715.
(5) Includes 900 shares held by Mr. Russell as custodian for his minor
children, and 158,666 shares issuable upon the exercise of options.
(6) Includes 26,500 shares issuable upon the exercise of options.
(7) Represents shares issuable upon the exercise of options.
(8) Includes 1,000 shares owned jointly with Mr. Linville's spouse and 11,000
shares issuable upon the exercise of options.
(9) The shareholder is a registered investment advisor and has sole voting
power with respect to 449,700 of such shares and sole dispositive power
with respect to 668,600 of such shares. All of the indicated shares are
owned by advisory clients of the shareholder, and the shareholder disclaims
beneficial ownership of such shares.
(10) Includes 152,716 shares issuable upon the exercise of options.
-13-
<PAGE>
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The date by which shareholder proposals must be received by the Company
for inclusion in proxy materials relating to the 1999 Annual Meeting of Common
Shareholders is January 15, 1999.
-14-
<PAGE>
Appendix A
PROPOSAL TO AMEND RESTATED ARTICLES OF INCORPORATION
On April 7, 1998, the Board of Directors of Shoe Carnival, Inc. (the
"Company") approved an amendment to Article IV, Section 1 of the Restated
Articles of Incorporation of the Company to establish a par value of $.01 per
share for the Common Stock and Preferred Stock of the Company. This proposed
amendment would amend Article IV, Section 1 to read in its entirety as follows:
Section 1. Capital Stock. The total number of shares of all classes
of capital stock which the Corporation shall have authority to issue is
55,000,000 shares, consisting of 50,000,000 shares of Common Stock, par value
$.01 per share ("Common Stock"), and 5,000,000 shares of Preferred Stock, par
value $.01 per share ("Preferred Stock").
All other portions of the Restated Articles of Incorporation of the Company
will remain unchanged. The text of Article IV, Section 1 as presently in effect
reads in its entirety as follows:
Section 1. Capital Stock. The total number of shares of all classes
of capital stock which the Corporation shall have authority to issue is
55,000,000 shares, consisting of 50,000,000 shares of Common Stock, without par
value ("Common Stock"), and 5,000,000 shares of Preferred Stock, without par
value ("Preferred Stock").
-15-
<PAGE>
PROXY SHOE CARNIVAL, INC. PROXY
Proxy Solicited on Behalf of The Board of Directors
For The Annual Meeting of Shareholders -- June 11, 1998
The undersigned appoints Mark L. Lemond and J. Wayne Weaver, and each of
them, as proxies, with full power of substitution and revocation, to vote, as
designated on the reverse side hereof, all the Common Stock of Shoe Carnival,
Inc. which the undersigned has power to vote, with all powers which the
undersigned would possess if personally present, at the annual meeting of
shareholders thereof to be held at the Evansville Airport Marriott, 7101 North
U.S. Route 41, Evansville, Indiana on June 11, 1998, or at any adjournment
thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. Unless otherwise marked, this proxy will
be voted FOR the election as Directors of the nominees listed under Proposal 1
and FOR Proposals 2 and 3.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
SHOE CARNIVAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
For Withhold For All (except
Nominee(s) written
below)
1. Election of Directors -- [] [] []
Nominees: Mark L. Lemond
William E. Bindley
-----------------------------
For Against Abstain
2. Proposal to approve the appointment [] [] []
of Deloitte & Touche LLP, as
auditors for the Company for 1998.
For Against Abstain
3. Proposal to approve the [] [] []
amendment to the Company's
Restated Articles of
Incorporation
4. In their discretion, any other
matters that may properly
come before the meeting.
Dated: , 1998
Signature(s)
NOTE: When signing as attorney, executor, administrator,
trustee or guardian, please give full title. If more than one
trustee, all should sign. All joint owners must sign.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
