SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section
14(a) of the Securities
Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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>
SHOE CARNIVAL, INC.
NOTICE OF ANNUAL MEETING OF COMMON SHAREHOLDERS
TO BE HELD ON JUNE 8, 2000
The annual meeting of common shareholders of Shoe Carnival, Inc.
will be held at the Company's headquarters, 8233 Baumgart Road, Evansville,
Indiana, on Thursday, June 8, 2000, at 10:00 a.m., C.D.T., for the following
purposes:
(1) To elect one Director to serve until the 2003 annual
meeting of shareholders and until his successor is elected and has
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 2000;
(3) To approve or disapprove the Company's 2000 Stock Option
and Incentive Plan; 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
14, 2000 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
2
<PAGE>
SHOE CARNIVAL, INC.
8233 Baumgart Road
Evansville, Indiana 47725
PROXY STATEMENT
Annual Meeting of Common Shareholders
June 8, 2000
This statement is being furnished to common shareholders on or about May
9, 2000, 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 8, 2000, at
the Company's headquarters, 8233 Baumgart Road, Evansville, Indiana, for the
purposes set forth in the accompanying Notice.
At the close of business on April 14, 2000, the record date for the
meeting, there were 12,948,206 shares of Common Stock of the Company outstanding
and entitled to vote at the meeting. On all matters, including the election of a
Director, 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 a Director of the nominee
listed under Proposal 1 and for the proposals shown as Proposals 2 and 3.
Election of the Director 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.
3
<PAGE>
ELECTION OF DIRECTORS
Nominees
The Company's bylaws currently provide for five Directors divided into
three classes as nearly equal in number as possible. 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. Currently the Company has four Directors. The class of Directors
whose term expires at the 2000 annual meeting is currently vacant. The remaining
two classes of Directors currently each have two Directors. The Director's
position, whose term would expire at the 2000 annual meeting of shareholders,
has been vacant since December 8, 1997. The Company intends to add a fifth
person to the Board of Directors when a suitable candidate is located. In order
to equalize the number of Directors in each class as near as possible, William
E. Bindley is standing for re-election this year even though his current term
was not to expire until 2001. The accompanying form of proxy cannot be voted for
a greater number of persons than the number of nominees listed below.
The shareholders will be asked to elect one Director. Mr. Bindley has been
nominated by the Board of Directors for reelection as a Director for a term to
expire at the 2003 annual meeting of shareholders and until his successor is
elected and has 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 Mr. 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 29, Percent
Name Age Occupation Since 2000(1) of Class
- ------------------- --- ------------------------- -------- ------------ --------
NOMINEE FOR DIRECTOR
(Nominee for three-year term to expire at the annual meeting of
shareholders in 2003)
<S> <C> <C> <C> <C> <C>
William E. Bindley 59 Chairman of the Board 1993 2,000 (2) *
and Chief Executive
Officer of Bindley Western
Industries, Inc.
(pharmaceutical wholesale
distribution company) (3)
DIRECTORS CONTINUING IN OFFICE
(Term expiring at the annual meeting of shareholders in 2001)
Mark L. Lemond 45 President and 1988 412,101 (4) 3.2%
Chief Executive Officer
of the Company (5)
(Term expiring at the annual meeting of shareholders in 2002)
J. Wayne Weaver 65 Chairman of the Board 1988 4,833,230 (6) 37.4%
of the Company, Chairman
and Chief Executive Officer
of Jacksonville Jaguars, LTD
(professional football
franchise), and Chairman and
Chief Executive Officer
of LC Footwear, LLC
(footwear distributor) (7)
Gerald W. Schoor 65 Merchant Banker 1993 4,000 (8) *
(self-employed) (9)
4
<PAGE>
* Less than 1%
<FN>
(1) Does not include shares subject to options that are not presently
exercisable (i.e., within 60 days after March 29, 2000).
(2) Includes 1,000 shares issuable upon the exercise of presently exercisable
options granted under the Company's Outside Directors Stock Option Plan.
(3) Mr. Bindley also serves on the Board of Directors of Priority
Healthcare Corporation, a distributor and provider to the alternate
healthcare market.
(4) Includes 1,500 shares directly owned by Mr. Lemond's spouse and 143,540
shares issuable upon the exercise of presently exercisable options granted
under the Company's 1993 Stock Option and Incentive Plan ("1993 Stock
Option Plan").
(5) 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.
(6) Includes 2,000,000 shares directly owned by Mr. Weaver's spouse,
333,230 shares owned jointly with Mr. Weaver's spouse and
500,000 shares held in a trust of which Mr. Weaver is a trustee.
(7) 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.
(8) Represents 3,000 shares held as co-trustee for the benefit of his spouse
and 1,000 shares issuable upon the exercise of presently exercisable
options granted under the Company's Outside Directors Stock Option Plan.
(9) 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 nominee listed above.
Meetings and Committees
During the 1999 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
1999, consists of Messrs. Bindley and Schoor. The Stock Option Committee, which
met once in fiscal year 1999, consists of Messrs. Bindley and Schoor. The Audit
Committee, which met two times during fiscal year 1999, 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 LC Footwear, LLC 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 1999 fiscal year.
5
<PAGE>
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 initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission. Such persons are required by
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that during fiscal 1999 all filing requirements applicable to its
executive officers, Directors and greater than 10% shareholders were timely
satisfied.
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 four other most highly compensated executive
officers, based on salary and bonuses earned during fiscal 1999 (the "Named
Executive Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
------------
Annual Compensation (1) Awards
----------------------- ------------
Securities
Name and Principal Fiscal Underlying All Other
Position Year Salary Bonus (2) Options (3) Compensation (4)
- --------------------- ----- ------ -------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Mark L. Lemond, 1999 $ 422,116 $ 20,000 75,000 $ 3,927 (5)
President and Chief 1998 390,385 75,000 25,000 3,785 (6)
Executive Officer 1997 350,000 225,000 0 4,181 (7)
J. Wayne Weaver, 1999 $ 300,000 $ 0 0 $ 0
Chairman of the Board 1998 300,000 0 0 0
1997 300,000 0 0 0
Timothy T. Baker, 1999 $ 197,692 $ 18,000 20,000 $ 3,923 (5)
Senior Vice President 1998 175,192 50,000 15,000 3,911 (6)
- --Store Operations 1997 155,000 30,857 0 2,616 (7)
Clifton E. Sifford, 1999 $ 195,962 $ 18,000 15,000 $ 3,914 (5)
Senior Vice President 1998 162,116 50,000 10,000 2,935 (6)
- --General Merchandise 1997 112,510 22,275 30,000 23,896 (8)
Manager (9)
W. Kerry Jackson, 1999 $ 132,115 $ 9,000 7,500 $ 3,682 (5)
Vice President -Chief 1998 107,115 26,000 7,500 3,091 (6)
Financial Officer and 1997 95,000 19,000 0 2,477 (7)
Treasurer
- ---------------
<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 total of annual salary and bonus
for each Named Executive Officer for any of the years listed.
(2) Represents bonuses earned during the fiscal year indicated, which bonuses
at times have been paid in the subsequent fiscal year.
(3) All of the amounts reflect option shares. The Company has never granted
SARs.
(4) Except as otherwise indicated, all amounts are compensation related to life
and disability insurance premiums.
(5) Of the amounts shown, $3,064 for Mr. Lemond, $3,071 for Mr. Baker,
$2,916 for Mr. Sifford and $3,096 for Mr. Jackson represent the Company's
matching contributions under the Company's 401(k) plan.
(6) Of the amounts shown, $2,779 for Mr. Lemond, $2,993 for Mr. Baker,
$1,972 for Mr. Sifford and $2,522 for Mr. Jackson represent the Company's
matching contribution under the Company's 401(k) plan.
6
<PAGE>
(7) Of the amounts shown, $3,048 for Mr. Lemond, $1,669 for Mr. Baker and
$1,902 for Mr. Jackson represent the Company's matching
contribution under the Company's 401(k) plan.
(8) Of the amount shown, $23,370 represents reimbursement for relocation
expenses.
(9) Mr. Sifford joined the Company in April 1997.
</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. The employment agreement expired April 14, 1999.
On January 15, 1993, the Company entered into a noncompetition agreement
with J. Wayne Weaver. As 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, LLC 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.
Compensation of Directors
During 1999, 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.
On March 4, 1999, the Board of Directors approved the Outside Directors
Stock Option Plan. The plan calls for each non-employee director to be granted
on April 1 of each year an option to purchase 1,000 shares of the Company's
common stock at the market value on the date of the grant. The options will vest
six months from the date of grant and expire ten years from the date of grant.
Stock Options
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").
7
<PAGE>
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 29, 2000.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants (1)
----------------------------------------------------------------
Potential Realizable
% of Total Value at Assumed
Options Annual Rates of Stock
Number of Granted to Price Appreciation
Securities Employees Exercise for Option
Underlying in or Term (2)
Options Fiscal Base Price Expiration --------------------
Name Granted (#) Year ($/Sh) Date (3) 5%($) 10%($)
- ---------------- --------- --------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Lemond 75,000 23.4% 11.125 03/03/09 524,552 1,329,214
J. Wayne Weaver --- --- --- --- --- ---
Timothy T. Baker 20,000 6.2% 11.125 03/03/09 139,881 354,457
Clifton E. Sifford 15,000 4.7% 11.125 03/03/09 104,910 265,843
W. Kerry Jackson 7,500 2.3% 11.125 03/03/09 52,455 132,921
- ---------------
<FN>
(1) During fiscal 1999, options to purchase an aggregate of 322,750 shares were
granted to 140 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 become exercisable in thirds on March 4, 2000, March 4, 2001
and March 4, 2002.
</FN>
</TABLE>
The following table sets forth information with respect to the exercise of
options held by the Named Executive Officers during fiscal year 1999 and
unexercised stock options held by such individuals at the end of the fiscal year
ended January 29, 2000.
<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
Year-End # Options at Fiscal Year-End ($)(1)
----------------------------- ---------------------------------
Shares Acquired Value
Name on Exercise(#) Realized($)(2) Exercisable Unexercisable Exercisable Unexercisable
- ------------------ --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Lemond 8,126 7,110 110,207 91,667 297,555 0
J. Wayne Weaver 0 0 0 0 0 0
Timothy T. Baker 12,500 116,719 14,000 30,000 0 0
Clifton E. Sifford 7,500 53,438 10,833 36,667 14,535 29,070
W. Kerry Jackson 0 0 17,350 12,500 24,005 0
- ---------------
<FN>
(1) The closing price for the Company's Common Stock as reported by The Nasdaq
Stock Market on January 28, 2000 was $7.938. The value is calculated on the
basis of the difference between the Common Stock option exercise price and
$7.938, 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>
8
<PAGE>
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.
- 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 any
defined benefit pension plan. On March 7, 2000, the Board of Directors approved
a deferred compensation plan for certain officers, including all named executive
officers, who are limited by Internal Revenue Services rules in the amount that
they may contribute to the Company's existing 401(k) retirement plan.
Participants may defer for retirement or other purposes up to $50,000 of current
compensation on a pre-tax basis. The plan provides for matching and profit
sharing contributions by the Company.
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 5.6% 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
9
<PAGE>
1999 were not met and no bonuses were paid to the Named Executive Officers under
this quantitative plan for fiscal 1999. 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 1999 financial performance and
individual achievements, discretionary bonuses were awarded to all executive
officers. These bonuses were paid in March 2000.
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.
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. Based on the Company's record performance in 1998, most
field and administrative managers and all executive officers were granted
options in 1999 with an exercise price equal to the market price on the grant
date. 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.
In establishing Mr. Lemond's cash compensation for 1999, the Compensation
Committee noted that in the two years since Mr. Lemond was elected to the
offices of President and Chief Executive Officer, the Company has achieved
record results and has initiated an aggressive store expansion program. In 1998,
sales increased 13.6 percent to $280.2 million and net income increased 38.4
percent to $10.2 million. As a percent to sales, an increase in gross margin
accompanied with a decrease in selling, general and administrative expenses
resulted in operating margin increasing 1.0 percent to 6.3 percent of sales.
Additionally, the Company opened 20 new stores in 1998. The goal of the Company
in 1999 and into the foreseeable future is to grow the store base by 20% to 25%
per year. Based on the aforementioned achievements and the expectation of
continued store growth, Mr. Lemond's salary was increased 6% to $425,000
effective March 7, 1999. He was also granted an option to purchase 75,000 shares
of the Company's Common Stock on March 4, 1999. Based on the 1999 financial
results, Mr. Lemond was awarded a bonus of $20,000 payable in March 2000.
Compensation Committee Stock Option Committee
William E. Bindley William E. Bindley
Gerald W. Schoor Gerald W. Schoor
10
<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 December 30,
1994 through January 28, 2000.
<TABLE>
<CAPTION>
Comparison of Cumulative Total Return Among The Company,
Nasdaq Market Index and Nasdaq Index for Retail Trade Stocks
- ----------------------------------------------------------------------------------------------------------------------------------
December 30, February 2, January 31, January 30, January 29, January 28,
1994 1996 1997 1998 1999 2000
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Nasdaq Stock Market (U.S.) 100 144 186 220 344 519
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Nasdaq Retail Trade Stocks 100 109 134 156 191 157
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Shoe Carnival, Inc. 100 71 105 176 199 167
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</TABLE>
[PERFORMANCE GRAPH APPEARS HERE]
Compensation Committee Interlocks and Insider Participation
During fiscal 1999, the Compensation Committee consisted of Messrs.
Bindley and Schoor. Neither of the Compensation Committee members were 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.
11
<PAGE>
Certain Transactions
Mr. Weaver, along with Bradley W. Weaver, his son and the owner of 4.7%
of the outstanding shares of the Company's Common Stock, are the principal
shareholders of LC Footwear, LLC and PL Footwear, Inc. Mr. J. Wayne Weaver is
also Chairman of the Board and Chief Executive Officer of LC Footwear, LLC and
PL Footwear, Inc.
The Company purchases women's footwear from LC Footwear, LLC in the
ordinary course of business. During 1999, the Company purchased approximately
$798,000 of merchandise from LC Footwear, LLC. Management of the Company
believes that purchases from LC Footwear, LLC are on terms that are not less
favorable to the Company than could be obtained from unrelated third parties for
comparable merchandise.
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, PL Footwear,
Inc. and others, 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 PL
Footwear, Inc. 10% of the gross purchase price of shoes bought through that
company. Commissions paid to PL Footwear, Inc. were approximately $1,061,000 in
1999. Management of the Company believes that the arrangements with PL Footwear,
Inc. are on terms that are not less favorable to the Company than could be
obtained from unrelated parties.
APPOINTMENT OF AUDITORS
The appointment of Deloitte & Touche LLP as auditors for the Company for
fiscal year 2000 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 2000.
APPROVAL OF 2000 STOCK OPTION AND INCENTIVE PLAN
On May 1, 2000, the Board of Directors of the Company adopted the 2000
Stock Option and Incentive Plan (the "2000 Plan") and directed that the 2000
Plan be submitted to shareholders for consideration at the 2000 annual meeting
of shareholders. The following is a summary of the principal features of the
2000 Plan and is qualified in its entirety by reference to the complete text of
the 2000 Plan as set forth as Appendix A to this Proxy Statement. Shareholders
are urged to read the actual text of the 2000 Plan. Capitalized terms used but
not defined herein have the meanings assigned to them in the 2000 Plan.
The Board of Directors recommends a vote FOR adoption of the 2000 Plan.
12
<PAGE>
Purpose
The purpose of the 2000 Plan is to promote the long-term interests of
the Company and its shareholders by providing a means for attracting and
retaining officers and key employees of the Company and its subsidiaries. The
Company believes that employees who own shares of the Company's Common Stock
will have a closer identification with the Company and greater motivation to
work for the Company's success by reason of their ability as shareholders to
participate in the Company's growth and earnings.
Eligible Persons
Recipients of awards under the 2000 Plan must be, or have been at the
time of grant, officers or key employees (as determined by the Committee). The
Company presently has approximately 200 officers and employees who fall within
the category of key employees who may be considered for awards under the 2000
Plan. No awards may be granted to Directors who are not also employees of the
Company or one of its subsidiaries.
Shares Subject to the 2000 Plan
The 2000 Plan permits the granting of awards of stock options and
restricted stock. The total number of shares with respect to which awards may be
made under the 2000 Plan is 1,000,000, subject to antidilution adjustments. The
source of shares may be authorized and unissued shares or shares acquired by the
Company and held as treasury shares.
The number of shares covered by an award under the 2000 Plan reduces
the number of shares available for future awards under the 2000 Plan; however,
any shares of restricted stock that ultimately are forfeited to the Company by
the grantee will become available for further awards under the 2000 Plan.
Similarly, if any stock option granted under the 2000 Plan expires, terminates,
or is surrendered or cancelled without having been exercised in full, the number
of shares then subject thereto is added back to the number of remaining
available shares under the 2000 Plan.
The total number of shares that may be granted to any individual during
any calendar year under all forms of awards may not exceed 300,000 shares.
The closing sale price of the Company's Common Stock on May 1, 2000, as
quoted on the Nasdaq National Market System and reported in The Wall Street
Journal, was $ 9.4063 per share.
Administration of the Plan
The 2000 Plan will be administered by the Committee. The members of the
Committee must qualify as "non-employee directors" as provided under Rule 16b-3
under the Securities Exchange Act of 1934, as amended, and as "outside
directors" as provided under Section 162(m) of the Code. Subject to the terms of
the 2000 Plan, the Committee has the sole authority and discretion to determine
those officers and key employees who are to be granted awards under the 2000
Plan and the nature and terms of the awards to be granted, including the number
of shares covered by such awards.
13
<PAGE>
Grant of Stock Options
With respect to the grant of stock options under the 2000 Plan that are
intended to qualify as "incentive stock options" under Section 422 of the Code,
the option price will be at least 100% (or 110% in the case of any holder of
more than 10% of the voting power of the Company) of the fair market value of
the Company's Common Stock on the date of the grant of the stock option. The
aggregate fair market value (determined on the date of grant) of the shares of
stock subject to incentive stock options that become exercisable for the first
time by a grantee in any calendar year may not exceed $100,000. The Committee
will establish the exercise price of options that do not qualify as incentive
stock options ("nonqualified stock options") at the time the options are
granted.
The exercise price of, and the number of shares subject to, an option
will be adjusted by the Committee in the event of stock splits, stock dividends,
recapitalizations and certain other events involving a change in the Company's
capital.
Exercise of Stock Options
No incentive stock option granted under the 2000 Plan may be exercised
more than ten years (or, in the case of any holder of more than 10% of the
voting power of the Company, five years) or such shorter period as the Committee
may determine from the date it is granted. Nonqualified stock options may be
exercised during such period as the Committee determines at the time of grant.
If a grantee's employment with the Company or a subsidiary is
terminated for cause or voluntarily by the grantee for any reason other than
death, disability or retirement, such grantee's options expire at the date of
termination, and the grantee must (unless waived by the Committee) repay to the
Company the amount of any gain realized by the grantee upon any exercise within
the 90-day period prior to the date of termination of any options granted to the
grantee under the 2000 Plan.
Stock options granted under the 2000 Plan will become exercisable in
one or more installments in the manner and at the time or times specified by the
Committee at the time of grant.
Restricted Stock
Awards under the 2000 Plan may be made in the form of restricted stock,
in which case the participant would be granted shares of the Company's Common
Stock, which shares would be subject to such forfeiture provisions and transfer
restrictions as the Committee determined at the time of grant. Pending the lapse
of such forfeiture provisions and transfer restrictions, certificates
representing restricted stock would be held by the Company, but the grantee
generally would have all of the rights of a shareholder, including the right to
vote the shares and the right to receive all dividends thereon.
While restricted stock would be subject to forfeiture provisions and
transfer restrictions for a period or periods of time, the 2000 Plan does not
set forth any minimum or maximum duration for such provisions and restrictions.
It is expected that the terms of restricted stock awards ordinarily will provide
that the restricted stock will be forfeited to the Company if the grantee ceases
to be employed by the Company prior to the lapse of the forfeiture provisions
and transfer restrictions, subject to exceptions for death, disability or
retirement while employed by the Company. The Committee has the discretion to
determine whether an award of restricted stock will vest upon the lapse of
certain time period(s) or upon the achievement of specified performance targets
during a performance period. Performance targets may be based on one or more of
the following business criteria: annual return to shareholders; total net sales;
net earnings; net earnings before nonrecurring expenses; return on equity;
return on assets; diluted earnings per share; earnings before interest, taxes,
depreciation and amortization ("EBITDA"); and EBITDA before nonrecurring
expenses. In the case of grants of restricted stock that are intended to qualify
as "performance-based compensation" under Section 162(m) of the Code, no shares
of restricted stock will become vested unless the performance targets shall have
been satisfied and the Committee has certified, by resolution or other
14
<PAGE>
appropriate action in writing, that the performance targets previously
established by the Committee have been satisfied.
Payment for Shares; Loans by the Company
The Committee may permit payment of the exercise price of stock options
to be made in cash, by the surrender of Common Stock valued at its then fair
market value, through a cashless exercise, or by such other means (including a
combination of stock and cash) as it deems appropriate.
The 2000 Plan empowers the Company to make loans to grantees in
connection with the exercise of stock options or the ownership of restricted
stock, up to the following amounts:
(1) With respect to the exercise of stock options, the sum of the
exercise price and the amount of income taxes reasonably estimated to be payable
by the grantee in connection with such exercise; or
(2) With respect to restricted stock, the amount of income taxes
reasonably estimated to be payable by the grantee in connection with the
ownership of the restricted stock.
Loans made under the terms of the 2000 Plan will bear interest at such
rates as may be established by the Committee. No loan may have an initial term
exceeding three years, but the loan may be renewed at the discretion of the
Committee. With the consent of the Committee, loans may be repaid in shares of
Common Stock at their then fair market value. Loans may, but are not required to
be, secured by shares of Common Stock.
Miscellaneous Provisions
The Committee may accelerate the period of exercise or vesting of any
award made under the 2000 Plan, either absolutely or contingently, for such
reasons as the Committee may deem appropriate, except to the extent inconsistent
with qualification under Section 162(m) of the Code, when such qualification is
intended.
In general, if the employment of a recipient of restricted stock is
involuntarily terminated within 18 months following a change in control of the
Company, the forfeiture provisions and transfer restrictions applicable to such
stock lapse. In addition, in the event of a tender offer or exchange offer for
the Common Stock or upon the occurrence of certain other events, all options
granted under the 2000 Plan shall become exercisable in full, unless otherwise
provided by the Committee.
Amendment and Termination of the Plan
The Board may at any time terminate or amend the 2000 Plan. No
amendments to the 2000 Plan will require shareholder approval unless such
approval is required to comply with Section 422 of the Code, the requirements of
the Nasdaq National Market System or any other applicable law or regulation.
Unless previously terminated by the Board, no further awards may be made under
the 2000 Plan after ten years from the date of its adoption.
15
<PAGE>
Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences of awards under the 2000 Plan. The summary is based on current
federal income tax laws and interpretations thereof, all of which are subject to
change at any time, possibly with retroactive effect. The summary is not
intended to be exhaustive.
Limitation on Amount of Deduction. The Company generally will be
entitled to a tax deduction for awards under the 2000 Plan only to the extent
that the participants recognize ordinary income from the award. Section 162(m)
of the Code contains special rules regarding the federal income tax
deductibility of compensation paid to the Company's Chief Executive Officer and
to each of the other four most highly compensated executive officers of the
Company. The general rule is that annual compensation paid to any of these
specified executives will be deductible only to the extent that it does not
exceed $1,000,000 or it qualifies as "performance-based compensation" under
section 162(m). The 2000 Plan has been designed to permit the Committee to grant
awards which qualify for deductibility under section 162(m).
Taxation of Ordinary Income and Capital Gains. Subject to certain
exceptions, the maximum rate of tax on "net capital gains" from the sale or
exchange of capital assets is 20%. "Net capital gain" is the excess of net
long-term capital gain over net short-term capital loss. Short-term capital
gains are taxed at the same rates applicable to ordinary income. Gains or losses
from the sale or exchange of capital assets will be "long term" if the capital
asset was held for more than one year and "short-term" if the capital asset was
held for one year or less. For taxpayers with certain income levels, the
marginal tax rate applicable to ordinary income can range up to 39.6%. The
classification of income as ordinary income or capital gain is also relevant for
income tax purposes for taxpayers who have capital losses and investment
interest.
Nonqualified Stock Options. An employee who is granted a nonqualified
option does not recognize taxable income upon the grant of the option, and the
Company is not entitled to a tax deduction. The employee will recognize ordinary
income upon the exercise of the option in an amount equal to the excess of the
fair market value of the option shares on the exercise date over the option
price. Such income will be treated as compensation to the employee subject to
applicable withholding requirements. The Company is generally entitled to a tax
deduction in an amount equal to the amount taxable to the employee as ordinary
income in the year the income is taxable to the employee.
The employee may also be required to recognize gain or loss upon the
sale of the option shares. If the selling price of the option shares exceeds the
employee's basis in the shares, the employee will recognize long-term capital
gain if the option shares were held for more than one year, and short-term
capital gain if the shares were held for one year or less. If the selling price
of the option shares is less than the employee's basis in the shares, the
employee will recognize long-term or short-term capital loss depending on how
long the shares were held. The employee's basis in the option shares will equal
the amount of ordinary income recognized by the employee upon exercise of the
option, plus any cash paid to exercise the option.
Incentive Stock Options. An employee who receives an incentive stock
option does not recognize taxable income upon the grant or exercise of the
option, and the Company is not entitled to a tax deduction. The difference
between the option price and the fair market value of the option shares on the
date of exercise, however, will be treated as a tax preference item for purposes
of determining the alternative minimum tax liability, if any, of the employee in
the year of exercise. The Company will not be entitled to a deduction with
respect to any item of tax preference.
An employee will recognize gain or loss upon the disposition of shares
acquired from the exercise of incentive stock options. The nature of the gain or
loss depends on how long the option shares were held. If the option shares are
not disposed of pursuant to a "disqualifying disposition" (i.e., no disposition
occurs within two years from the date the option was granted nor one year from
the date of exercise), the employee will recognize long-term capital gain or
16
<PAGE>
capital loss depending on the selling price of the shares. If option shares are
sold or disposed of as part of a disqualifying disposition, the employee must
recognize ordinary income in an amount equal to the lesser of the amount of gain
recognized on the sale, or the difference between the fair market value of the
option shares on the date of exercise and the option price. Any additional gain
will be taxable to the employee as a long-term or short-term capital gain,
depending on how long the option shares were held. The Company is generally
entitled to a deduction in computing its federal income taxes for the year of
disposition in an amount equal to any amount taxable to the employee as ordinary
income.
Restricted Stock. An employee who receives an award of restricted stock
generally will not recognize taxable income at the time of the award, nor will
the Company be entitled to a tax deduction at that time, unless the employee
makes an election under Section 83(b) of the Code to recognize the income upon
the receipt of the restricted stock. If the election is not made, the employee
will recognize ordinary income when the restricted stock becomes vested (i.e.,
when the restrictions lapse through attainment of specified performance goals or
otherwise) in an amount equal to the fair market value of the shares at that
time less any amount paid by the employee. The Company may claim a deduction
when the employee recognizes income, in an amount equal to the income recognized
by the employee. Dividends paid to the employee with respect to restricted stock
prior to vesting constitute compensation taxable to the employee and a tax
deduction to the Company.
Pursuant to the provisions of Section 83(b) of the Code, an employee
who receives restricted stock may elect to be taxed at the time of the award. If
the employee so elects, the full value of the shares (without regard to
restrictions) at the time of the grant, less any amount paid by the employee,
will be taxed to the employee as ordinary income and will be deductible by the
Company. Dividends paid with respect to the shares during the period of
restriction will be taxable as dividends to the employee and not deductible by
the Company. If, after making an election pursuant to Section 83(b), any shares
are subsequently forfeited, the employee will be entitled to a capital loss
deduction.
17
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 29, 2000, 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) 37.4%
Delores B. Weaver (1).................. 4,833,230 (3) 37.4%
Timothy T. Baker....................... 32,145 (4) *
Clifton E. Sifford..................... 27,121 (5) *
W. Kerry Jackson....................... 22,350 (6) *
Lord Abbett & Company
90 Hudson Street
Jersey City, NJ 07302**................ 1,670,066 12.9%
Dimensional Fund Advisors, Inc.
1299 Ocean Ave, 11th Floor
Santa Monica, CA 90401**.............. 763,300 (7) 5.9%
Awad Asset Management, Inc.
250 Park Avenue, 2nd Floor
New York, NY 10177**................... 741,500 5.7%
All current executive officers and Directors
as a group
(7 persons)............................ 5,332,947 (8) 40.6%
- ----------
* 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 47725.
(2) Includes 2,000,000 shares directly owned by Mr. Weaver's spouse, Delores
B. Weaver, 333,230 shares owned jointly with his spouse and 500,000
shares held in a trust of which Mr. Weaver is a trustee.
(3) Includes 2,000,000 shares directly owned by Mrs. Weaver's spouse, J. Wayne
Weaver, 333,230 shares owned jointly with her spouse and 500,000 shares
held in a trust of which Mrs. Weaver is a trustee.
(4) Includes 25,666 shares issuable upon the exercise of options.
(5) Includes 26,666 shares issuable upon the exercise of options.
(6) Represents shares issuable upon the exercise of options.
(7) The shareholder is a registered investment advisor and has sole voting and
dispositive power with respect to the shares. All of the indicated shares
are owned by advisory clients of the shareholder, and the shareholder
disclaims beneficial ownership of such shares.
(8) Includes 220,222 shares issuable upon the exercise of options.
18
<PAGE>
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
The date by which shareholder proposals must be received by the Company
for inclusion in proxy materials relating to the 2001 Annual Meeting of Common
Shareholders is January 10, 2001.
In order to be considered at the 2001 Annual Meeting, shareholder
proposals must comply with the advance notice and eligibility requirements
contained in the Company's By-Laws. The Company's By-Laws provide that
shareholders are required to give advance notice to the Company of any
nomination by a shareholder of candidates for election as directors and of any
business to be brought by a shareholder before an annual shareholders' meeting.
Specifically, the By-Laws provide that for a shareholder to nominate a person
for election to the Company's Board of Directors, the shareholder must be
entitled to vote the election of directors at the meeting and must give timely
written notice of the nomination to the Secretary of the Company. The By-Laws
also provide that for business to be properly brought before an annual meeting
by a shareholder, the shareholder must have the legal right and authority to
make the proposal for consideration at the meeting and the shareholder must give
timely written notice thereof to the Secretary of the Company. In order to be
timely, a shareholder's notice must be delivered to or mailed and received at
the principal executive offices of the Company not less than 30 days nor more
than 60 days prior to the meeting. In the event that less than 40 days' notice
or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder must be received not later than the
close of business on the tenth day following the day on which notice of the date
of the meeting was mailed or public disclosure was made. The notice must contain
specified information about each nominee or the proposed business and the
shareholder making the nomination or proposal.
The specific requirements of these advance notice and eligibility
provisions are set forth in Article II and Article III of the Company By-Laws, a
copy of which is available upon request. Such request and any shareholder
proposals should be sent to the Secretary of the Company at the principal
executive offices of the Company.
INCORPORATION BY REFERENCE
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.
ANNUAL REPORTS
The Annual Report to Shareholders for the 1999 fiscal year accompanies
this Proxy Statement. The Annual Report is not used as part of this solicitation
material and no action will be taken with respect to it at the Annual meeting.
In addition, a copy of the Company's Annual Report on Form 10-K for the 1999
fiscal year as filed with the Securities and Exchange Commission, including
financial statements but excluding exhibits, may be obtained without charge upon
written request to David A. Kapp, Secretary, Shoe Carnival, Inc., 8233 Baumgart
Road, Evansville, Indiana 47725.
19
<PAGE>
SHOE CARNIVAL, INC.
2000 STOCK OPTION AND INCENTIVE PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Company and its shareholders by providing a means for
attracting and retaining officers and key employees of the Company and its
Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" -- means any "parent corporation" or "subsidiary corporation"
of the Company as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Annual Return To Shareholders" -- means the Company's return to
shareholders as represented by share price appreciation plus dividends paid on
one share of stock during any Year during a Restricted Period.
"Award" -- means the grant by the Committee of an Incentive Stock Option,
a Non-Qualified Stock Option, or Restricted Stock, or any combination thereof,
as provided in the Plan.
"Board" -- means the Board of Directors of the Company.
"Business Criteria" -- means any one or any combination of Annual Return
to Shareholders, Total Net Sales, Net Earnings, Net Earnings before Nonrecurring
Items, Return on Equity, Return on Assets, EPS, EBITDA or EBITDA before
Nonrecurring Items, in each case during any Year during a Restricted Period.
"Change in Control" -- means each of the events specified in the following
clauses (i) through (iii): (i) any third person, including a "group" as defined
in Section 13(d)(3) of the Exchange Act shall, after the date of the adoption of
the Plan by the Board, first become the beneficial owner of shares of the
Company with respect to which 25% or more of the total number of votes for the
election of the Board of Directors of the Company may be cast, (ii) as a result
of, or in connection with, any cash tender offer, exchange offer, merger or
other business combination, sale of assets or contested election, or combination
of the foregoing, the persons who were directors of the Company shall cease to
constitute a majority of the Board of Directors of the Company or (iii) the
stockholders of the Company shall approve an agreement providing either for a
transaction in which the Company will cease to be an independent publicly owned
entity or for a sale or other disposition of all or substantially all the assets
of the Company; provided, however, that the occurrence of any of such events
shall not be deemed a Change in Control if, prior to such occurrence, a
resolution specifically providing that such occurrence shall not constitute a
Change in Control under the Plan shall have been adopted by at least a majority
of the Board of Directors of the Company.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee referred to in Section 3 hereof
Appendix A
<PAGE>
"Company" -- means Shoe Carnival, Inc., an Indiana corporation.
"Continuous Service" -- means the absence of any interruption or
termination of service as an employee of the Company or an Affiliate. Service
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Company or in the case of any
transfer between the Company and an Affiliate or any successor to the Company.
"EBITDA" for any Year means -- the consolidated earnings before interest,
taxes, depreciation and amortization of the Company as reflected in the
Company's audited consolidated financial statements for the Year.
"EBITDA before Nonrecurring Items" means -- for any Year EBITDA of the
Company before any extraordinary or unusual one-time nonrecurring expenses or
other charges as reflected in the Company's audited consolidated financial
statements for the Year.
"Employee" -- means any person, including an officer or director, who is
employed by the Company or any Affiliate.
"EPS" for any Year means -- diluted earnings per share of the Company, as
reported in the Company's audited consolidated financial statements for the
Year.
"Exchange Act" -- means the Securities Exchange Act of 1934, as amended.
"Exercise Price" -- means the price per Share at which the Shares subject
to an Option may be purchased upon exercise of such Option.
"Incentive Stock Option" -- means an option to purchase Shares granted by
the Committee pursuant to the terms of the Plan which is intended to qualify
under Section 422 of the Code.
"Market Value" -- means the last reported sale price on the date in
question (or, if there is no reported sale on such date, on the last preceding
date on which any reported sale occurred) of one Share on the principal exchange
on which the Shares are listed for trading, or if the Shares are not listed for
trading on any exchange, on the NASDAQ National Market System or any similar
system then in use, or, if the Shares are not listed on the NASDAQ National
Market System, the mean between the closing high bid and low asked quotations of
one Share on the date in question as reported by NASDAQ or any similar system
then in use, or, if no such quotations are available, the fair market value on
such date of one Share as the Committee shall determine.
"Net Earnings" for any Year means -- the consolidated net earnings of the
Company, as reported in the Company's audited consolidated financial statements
for the Year.
"Net Earnings before Nonrecurring Items" means -- for any Year the Net
Earnings of the Company before any extraordinary or unusual one-time
nonrecurring expenses or other charges as reflected in the Company's audited
consolidated financial statements for the Year.
A-2
<PAGE>
"Non-Qualified Stock Option" -- means an option to purchase Shares granted
by the Committee pursuant to the terms of the Plan, which option is not intended
to qualify under Section 422 of the Code.
"Option" -- means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" -- means any officer or key employee of the Company or any
Affiliate who is selected by the Committee to receive an Award.
"Performance Target(s)" -- means the specific objective goal or goals
(which may be cumulative and/or alternative) that are timely set forth in
writing by the Committee for each Employee for the Restricted Period in respect
of any one or more of the Business Criteria.
"Plan" -- means this 2000 Stock Option and Incentive Plan of the Company.
"Reorganization" -- means the liquidation or dissolution of the Company or
any merger, consolidation or combination of the Company (other than a merger,
consolidation or combination in which the Company is the continuing entity and
which does not result in the outstanding Shares being converted into or
exchanged for different securities, cash or other property or any combination
thereof).
"Restricted Period" -- means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 9
hereof with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" -- means Shares which have been contingently awarded to
a Participant by the Committee subject to the restrictions referred to in
Section 9 hereof, so long as such restrictions are in effect.
"Return on Assets" for any Year means -- Net Earnings (as reported in the
Company's audited consolidated financial statements for the Year) divided by the
average of the total assets of the Company at the end of the fiscal quarters of
the Year.
"Return on Equity" for any Year means -- the Net Earnings (as reported in
the Company's audited consolidated financial statements for the Year) divided by
the shareholders equity of the Company at the beginning of each Year.
"Securities Act" -- means the Securities Act of 1933, as amended.
"Shares" -- means the Common Stock, $.01 par value, of the Company.
"Total Net Sales" for any Year -- means the Company's total net sales as
reported in the Company's consolidated audited financial statements for the
Year.
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"Year" -- means any one or more fiscal years of the Company commencing on
or after January 30, 2000 that represent(s) the applicable Restricted Period.
3. Administration. The Plan shall be administered by the Committee, which
shall consist of two or more members of the Board, each of whom shall be a
"non-employee director" as provided under Rule 16b-3 of the Exchange Act, and an
"outside director" as provided under Code Section 162(m). The members of the
Committee shall be appointed by the Board. Except as limited by the express
provisions of the Plan, the Committee shall have sole and complete authority and
discretion to (a) select Participants and grant Awards; (b) determine the number
of Shares to be subject to types of Awards generally, as well as to individual
Awards granted under the Plan; (c) determine the terms and conditions upon which
Awards shall be granted under the Plan; (d) prescribe the form and terms of
instruments evidencing such grants; (e) establish procedures and regulations for
the administration of the Plan; (f) interpret the Plan; and (g) make all
determinations deemed necessary or advisable for the administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by all members of the Committee without a meeting,
shall be acts of the Committee. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan shall be final, conclusive and
binding on all persons, and shall be given the maximum deference permitted by
law.
4. Participants. The Committee may select from time to time Participants
in the Plan from those officers and key employees of the Company or its
Affiliates who, in the opinion of the Committee, have the capacity for
contributing in a substantial measure to the successful performance of the
Company or its Affiliates.
5. Shares Subject to Plan. Subject to adjustment by the operation of
Section 10 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 1,000,000 Shares. The number of Shares which may be
granted under the Plan to any Participant during any calendar year of the Plan
under all forms of Awards shall not exceed 300,000 Shares. The Shares with
respect to which Awards may be made under the Plan may either be authorized and
unissued shares or unissued shares heretofore or hereafter reacquired and held
as treasury shares. With respect to any Option which terminates or is
surrendered for cancellation or with respect to Restricted Stock which is
forfeited, new Awards may be granted under the Plan with respect to the number
of Shares as to which such termination or forfeiture has occurred.
6. General Terms and Conditions of Options. The Committee shall have full
and complete authority and discretion, except as expressly limited by the Plan,
to grant Options and to provide the terms and conditions (which need not be
identical among Participants) thereof. In particular, the Committee shall
prescribe the following terms and conditions: (i) the Exercise Price, (ii) the
number of Shares subject to, and the expiration date of, any Option, (iii) the
manner, time and rate (cumulative or otherwise) of exercise of such Option, and
(iv) the restrictions, if any, to be placed upon such Option or upon Shares
which may be issued upon exercise of such Option.
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<PAGE>
7. Exercise of Options.
(a) Except as provided in Section 13, an Option granted under the
Plan shall be exercisable during the lifetime of the Participant to whom
such Option was granted only by such Participant, and except as provided
in paragraphs (c), (d) and (e) of this Section 7, no such Option may be
exercised unless at the time such Participant exercises such Option, such
Participant has maintained Continuous Service since the date of the grant
of such Option.
(b) To exercise an Option under the Plan, the Participant must give
written notice to the Company specifying the number of Shares with respect
to which such Participant elects to exercise such Option together with
full payment of the Exercise Price. The date of exercise shall be the date
on which such notice is received by the Company. Payment may be made
either (i) in cash (including check, bank draft or money order), (ii) by
tendering Shares already owned by the Participant and having a Market
Value on the date of exercise equal to the Exercise Price, or (iii) by any
other means determined by the Committee in its sole discretion, including
permitting a Participant to elect to pay the Exercise Price upon the
exercise of an Option by authorizing a third party to sell the Shares (or
a sufficient portion of the Shares) acquired upon exercise of the Option
and remit to the Company a sufficient portion of the sale proceeds to pay
the Exercise Price and any tax withholding resulting from such exercise.
(c) If the Continuous Service of a Participant is terminated for
cause, or voluntarily by the Participant for any reason other than death,
disability or retirement, all rights under any Options granted to such
Participant shall terminate immediately upon such Participant's cessation
of Continuous Service, and the Participant shall (unless the Committee in
its sole discretion waives this requirement) repay to the Company within
10 days the amount of any gain realized by the Participant upon any
exercise within the 90-day period prior to the cessation of Continuous
Service of any Options granted to such Participant under the Plan. If the
Continuous Service of a Participant is terminated by reason of death,
disability or retirement, such Participant may exercise such Option, but
only to the extent such Participant was entitled to exercise such Option
at the date of such cessation, at any time during the remaining term of
such Option, or, in the case of Incentive Stock Options, during such
shorter period as the Committee may determine and so provide in the
applicable instrument or instruments evidencing the grant of such Option.
If a Participant shall cease to maintain Continuous Service for any reason
other than those set forth above in this paragraph (c) of this Section 7,
such Participant may exercise such Option to the extent that such
Participant was entitled to exercise such Option at the date of such
cessation but only within 90 days immediately succeeding such cessation of
Continuous Service, and in no event after the expiration date of the
subject Option; provided, however, that such right of exercise after
cessation of Continuous Service shall not be available to a Participant if
the Company otherwise determines and so provides in the applicable
instrument or instruments evidencing the grant of such Option.
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<PAGE>
(d) In the event of the death of a Participant while in the
Continuous Service of the Company or an Affiliate, the person to whom any
Option held by the Participant at the time of his death is transferred by
will or by the laws of descent and distribution may exercise such Option
on the same terms and conditions that such Participant was entitled to
exercise such Option. At the time of the death of the Participant, all
Options theretofore granted to the Participant and not fully exercisable
shall terminate. Following the death of any Participant to whom an Option
was granted under the Plan, the Committee, as an alternative means of
settlement of such Option, may elect to pay to the person to whom such
Option is transferred the amount by which the Market Value per Share on
the date of exercise of such Option shall exceed the Exercise Price of
such Option, multiplied by the number of Shares with respect to which such
Option is properly exercised. Any such settlement of an Option shall be
considered an exercise of such Option for all purposes of the Plan.
(e) Notwithstanding the provisions of the foregoing paragraphs of
this Section 7, the Committee may, in its sole discretion, establish
different terms and conditions pertaining to the effect of the cessation
of Continuous Service, to the extent permitted by applicable federal and
state law.
8. Incentive Stock Options. Incentive Stock Options may be granted only to
Participants who are Employees. Any provisions of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the Company
and no Incentive Stock Option shall be exercisable more than ten years from the
date such Incentive Stock Option is granted, (ii) the Exercise Price of any
Incentive Stock Option shall not be less than the Market Value per Share on the
date such Incentive Stock Option is granted, (iii) any Incentive Stock Option
shall not be transferable by the Participant to whom such Incentive Stock Option
is granted other than by will or the laws of descent and distribution and shall
be exercisable during such Participant's lifetime only by such Participant, and
(iv) no Incentive Stock Option shall be granted which would permit a Participant
to acquire, through the exercise of Incentive Stock Options in any calendar
year, Shares or shares of any capital stock of the Company or any Affiliate
thereof having an aggregate Market Value (determined as of the time any
Incentive Stock Option is granted) in excess of $100,000. The foregoing
limitation shall be determined by assuming that the Participant will exercise
each Incentive Stock Option on the date that such Option first becomes
exercisable. Notwithstanding the foregoing, in the case of any Participant who,
at the date of grant, owns stock possessing more than 10% of the total combined
voting power of all classes of capital stock of the Company or any Affiliate,
the Exercise Price of any Incentive Stock Option shall not be less than 110% of
the Market Value per Share on the date such Incentive Stock Option is granted
and such Incentive Stock Option shall not be exercisable more than five years
from the date such Incentive Stock Option is granted. Notwithstanding any other
provisions of this Plan, if for any reason any Option granted under this Plan
that is intended to be an Incentive Stock Option shall fail to qualify as an
Incentive Stock Option, such Option shall be deemed to be a Non-Qualified Stock
Option, and such Option shall be deemed to be fully authorized and validly
issued under this Plan.
9. Terms and Conditions of Restricted Stock. The Committee shall have full
and complete authority, subject to the limitations of the Plan, to grant awards
of Restricted Stock and, in addition to the terms and conditions contained in
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paragraphs (a) through (g) of this Section 9, to provide such other terms and
conditions (which need not be identical among Participants) in respect of such
Awards, and the vesting thereof, as the Committee shall determine and provide in
the agreement referred to in paragraph (d) of this Section 9. Notwithstanding
any other provisions of this Plan, the Committee shall have full and complete
discretion, at the time of the grant of an award of Restricted Stock, to
determine whether or not the grant of Restricted Stock is intended to qualify as
"performance-based compensation" under Section 162(m) of the Code.
(a) At the time of an award of Restricted Stock, the Committee shall
establish for each Participant a Restricted Period during which or at the
expiration of which, the Shares of Restricted Stock shall vest. The
Committee may also restrict or prohibit the sale, assignment, transfer,
pledge or other encumbrance of the Shares of Restricted Stock by the
Participant during the Restricted Period. Except for such restrictions,
and subject to paragraphs (c), (d) and (e) of this Section 9 and Section
10 hereof, the Participant as owner of such Shares shall have all the
rights of a stockholder, including but not limited to, the right to
receive all dividends paid on such Shares and the right to vote such
Shares. Except in the case of grants of Restricted Stock which are
intended to qualify as "performance-based compensation" under Section
162(m) of the Code, the Committee shall have the authority, in its
discretion, to accelerate the time at which any or all of the restrictions
shall lapse with respect to any Shares of Restricted Stock prior to the
expiration of the Restricted Period with respect thereto, or to remove any
or all of such restrictions, whenever it may determine that such action is
appropriate by reason of changes in applicable tax or other laws or other
changes in circumstances occurring after the commencement of such
Restricted Period.
(b) Except as provided in Section 12 hereof, if a Participant ceases
to maintain Continuous Service for any reason (other than death, total or
partial disability or retirement) unless the Committee shall otherwise
determine, all Shares of Restricted Stock theretofore awarded to such
Participant and which at the time of such termination of Continuous
Service are subject to the restrictions imposed by paragraph (a) of this
Section 9 shall upon such termination of Continuous Service be forfeited
and returned to the Company. If a Participant ceases to maintain
Continuous Service by reason of death or total or partial disability, then
the restrictions with respect to the Ratable Portion of the Shares of
Restricted Stock shall lapse and such Shares shall be free of restrictions
and shall not be forfeited. The Ratable Portion shall be determined with
respect to each separate Award of Restricted Stock issued and shall be
equal to (i) the number of Shares of Restricted Stock awarded to the
Participant multiplied by the portion of the Restricted Period that
expired at the date of the Participant's death or total or partial
disability reduced by (ii) the number of Shares of Restricted Stock
awarded with respect to which the restrictions had lapsed as of the date
of the death or total or partial disability of the Participant.
(c) Each certificate issued in respect of Shares of Restricted Stock
awarded under the Plan shall be registered in the name of the Participant
and deposited by the Participant, together with a stock power endorsed in
blank, with the Company and shall bear the following (or a similar)
legend:
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"The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) contained
in the 2000 Stock Option and Incentive Plan of Shoe Carnival, Inc., and an
Agreement entered into between the registered owner and Shoe Carnival, Inc.
Copies of such Plan and Agreement are on file in the office of the Secretary of
Shoe Carnival, Inc.
(d) At the time of an award of Shares of Restricted Stock, the
Participant shall enter into an Agreement with the Company in a form
specified by the Committee, agreeing to the terms and conditions of the
award and to such other matters as the Committee shall in its sole
discretion determine.
(e) At the time of an award of Shares of Restricted Stock, the
Committee may, in its discretion, determine that the payment to the
Participant of dividends declared or paid on such Shares by the Company or
a specified portion thereof, shall be deferred until the earlier to occur
of (i) the lapsing of the restrictions imposed under paragraph (a) of this
Section 9 or (ii) the forfeiture of such Shares under paragraph (b) of
this Section 9, and shall be held by the Company for the account of the
Participant until such time. In the event of such deferral, there shall be
credited at the end of each year (or portion thereof) interest on the
amount of the account at the beginning of the year at a rate per annum as
the Committee, in its discretion, may determine. Payment of deferred
dividends, together with interest accrued thereon as aforesaid, shall be
made upon the earlier to occur of the events specified in (i) and (ii) of
the first sentence of this paragraph (e).
(f) At the expiration of the restrictions imposed by paragraph (a) of
this Section 9, the Company shall redeliver to the Participant (or where
the relevant provision of paragraph (b) of this Section 9 applies in the
case of a deceased Participant, to his legal representative, beneficiary
or heir) the certificate(s) and stock power deposited with it pursuant to
paragraph (c) of this Section 9 and the Shares represented by such
certificate(s) shall be free of the restrictions referred to in paragraph
(a) of this Section 9. Notwithstanding any other provision of this Section
9 and Section 11 to the contrary, in the case of grants of Restricted
Stock that are intended to qualify as "performance-based compensation"
under Section 162(m) of the Code, no Shares of Restricted Stock shall
become vested unless the Performance Targets with respect to such
Restricted Stock shall have been satisfied and unless the Committee has
certified, by resolution or other appropriate action in writing, that the
Performance Targets previously established by the Committee have been
satisfied. If the vesting of Shares of Restricted Stock is accelerated
after the applicable Performance Targets have been met, the amount of
Restricted Stock distributed shall be discounted by the Committee to
reasonably reflect the time value of money in connection with such early
vesting.
(g) Notwithstanding any other provision of this Section 9 to the
contrary, for purposes of qualifying grants of Restricted Stock as
"performance-based compensation" under Section 162(m) of the Code, the
Committee shall establish restrictions based upon the achievement of
Performance Targets. The specific goal or goals under the Performance
Targets that must be satisfied for the Restricted Period to lapse or
terminate shall be set by the Committee on or before the latest date
permissible to enable the Restricted Stock to qualify as
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<PAGE>
"performance-based compensation" under Section 162(m) of the Code. The
Business Criteria for Performance Targets under this Section 9 shall be
any one or any combination of Annual Return to Shareholders, Total Net
Sales, Net Earnings, Net Earnings before Nonrecurring Items, Return on
Equity, Return on Assets, EPS, EBITDA or EBITDA before Nonrecurring Items.
In granting Restricted Stock that is intended to qualify under Section
162(m), the Committee shall follow any procedures determined by it in its
sole discretion from time to time to be necessary, advisable or
appropriate to ensure qualification of the Restricted Stock under Section
162(m) of the Code.
10. Adjustments Upon Changes in Capitalization. In the event of any
change in the outstanding Shares subsequent to the effective date of the
Plan by reason of any reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or any change
in the corporate structure or Shares of the Company, the maximum aggregate
number and class of shares as to which Awards may be granted under the Plan
and the number and class of shares with respect to which Awards theretofore
have been granted under the Plan shall be appropriately adjusted by the
Committee, whose determination shall be conclusive. Any shares of stock or
other securities received, as a result of any of the foregoing, by a
Participant with respect to Restricted Stock shall be subject to the same
restrictions and the certificate(s) or other instruments representing or
evidencing such shares or securities shall be legended and deposited with the
Company in the manner provided in Section 9 hereof.
11. Effect of Reorganization.
Awards will be affected by a Reorganization as follows:
(a) If the Reorganization is a dissolution or liquidation of the
Company then (i) the restrictions of Section 9(a) on Shares of Restricted
Stock shall lapse and (ii) each outstanding Option shall terminate, but
each Participant to whom the Option was granted shall have the right,
immediately prior to such dissolution or liquidation to exercise his
Option in full, notwithstanding the provisions of Section 8, and the
Company shall notify each Participant of such right within a reasonable
period of time prior to any such dissolution or liquidation.
(b) If the Reorganization is a merger or consolidation, upon the
effective date of such Reorganization (i) each Optionee shall be entitled,
upon exercise of his Option in accordance with all of the terms and
conditions of the Plan, to receive in lieu of Shares, shares of such stock
or other securities or consideration as the holders of Shares shall be
entitled to receive pursuant to the terms of the Reorganization; and (ii)
each holder of Restricted Stock shall receive shares of such stock or
other securities as the holders of Shares received and the certificate(s)
or other instruments representing or evidencing such shares or securities
shall be legended and deposited with the Company in the manner provided in
Section 9 hereof.
The adjustments contained in this Section and the manner of application of such
provisions shall be determined solely by the Committee.
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<PAGE>
12. Effect of Change of Control. If the Continuous Service of any
Participant of the Company or any Affiliate is involuntarily terminated, for
whatever reason, at any time within eighteen months after a Change in Control,
unless the Committee shall have otherwise provided in the agreement referred to
in paragraph (d) of Section 9 hereof, any Restricted Period with respect to
Restricted Stock theretofore awarded to such Participant shall lapse upon such
termination and all Shares awarded as Restricted Stock shall become fully vested
in the Participant to whom such Shares were awarded. If a tender offer or
exchange offer for Shares (other than such an offer by the Company) is
commenced, or if an event specified in clause (ii) or clause (iii) of the
definition of a Change in Control contained in Section 2 shall occur, unless the
Committee shall have otherwise provided in the instrument evidencing the grant
of an Option, all Options theretofore granted and not fully exercisable shall
become exercisable in full upon the happening of such event and shall remain so
exercisable in accordance with their terms; provided, however, that no Option
which has previously been exercised or otherwise terminated shall become
exercisable.
13. Assignments and Transfers. Except as otherwise determined by the
Committee, no Award nor any right or interest of a Participant under the Plan in
any instrument evidencing any Award under the Plan may be assigned, encumbered
or transferred except, in the event of the death of a Participant, by will or
the laws of descent and distribution.
14. Employee Rights Under the Plan. No officer, employee or other person
shall have a right to be selected as a Participant nor, having been so selected,
to be selected again as a Participant and no officer, employee or other person
shall have any claim or right to be granted an Award under the Plan or under any
other incentive or similar plan of the Company or any Affiliate. Neither the
Plan nor any action taken thereunder shall be construed as giving any employee
any right to be retained in the employ of the Company or any Affiliate.
15. Delivery and Registration of Stock. The Company's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Company shall determine to be necessary or advisable to comply with the
provisions of the Securities Act or any other applicable federal or state
securities legislation. It may be provided that any representation requirement
shall become inoperative upon a registration of the Shares or other action
eliminating the necessity of such representation under the Securities Act or
other securities legislation. The Company shall not be required to deliver any
Shares under the Plan prior to (i) the admission of such shares to listing on
any stock exchange or system on which Shares may then be listed, and (ii) the
completion of such registration or other qualification of such Shares under any
state or federal law, rule or regulation, as the Company shall determine to be
necessary or advisable.
16. Withholding Tax. Upon the termination of the Restricted Period with
respect to any Shares of Restricted Stock (or at any such earlier time, if any,
that an election is made by the Participant under Section 83(b) of the Code, or
any successor provision thereto, to include the value of such Shares in taxable
income), the Company may, in lieu of requiring the Participant or other person
receiving such Shares to pay the Company the amount of any taxes which the
Company is required to withhold with respect to such Shares, retain a sufficient
number of Shares held by it to cover the amount required to be withheld. The
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<PAGE>
Company shall have the right to deduct from all dividends paid with respect to
Shares of Restricted Stock the amount of any taxes which the Company is required
to withhold with respect to such dividend payments.
Where a Participant or other person is entitled to receive Shares pursuant
to the exercise of an Option pursuant to the Plan, the Company may, in lieu of
requiring the Participant or such other person to pay the Company the amount of
any taxes which the Company is required to withhold with respect to such Shares,
retain a number of such Shares sufficient to cover the amount required to be
withheld.
17. Loans.
(a) The Company may make loans to a Participant in connection with
Restricted Stock or the exercise of Options subject to the following terms
and conditions and such other terms and conditions not inconsistent with
the Plan, including the rate of interest, if any, as the Company shall
impose from time to time.
(b) No loan made under the Plan shall exceed (i) with respect to
Options, the sum of (A) the aggregate option price payable upon exercise
of the Option in relation to which the loan is made, plus (B) the amount
of the reasonably estimated income taxes payable by the grantee and (ii)
with respect to Restricted Stock, the amount of reasonably estimated
income taxes payable by the grantee. In no event may any such loan exceed
the Market Value of the related Shares at the time of the loan.
(c) No loan shall have an initial term exceeding three years;
provided, that loans under the Plan shall be renewable at the discretion
of the Committee; and provided, further, that the indebtedness under each
loan shall become due and payable on a date no later than (i) one year
after termination of the Participant's employment due to death, retirement
or disability, or (ii) the day of termination of the Participant's
employment for any reason other than death, retirement or disability.
(d) Loans under the Plan may be satisfied by the Participant, as
determined by the Committee, in cash or, with the consent of the
Committee, in whole or in part in Shares at Market Value on the date of
such payment.
(e) When a loan shall have been made, Shares having an aggregate
Market Value equal to the amount of the loan may, in the discretion of the
Committee, be required to be pledged by the Participant to the Company as
security for payment of the unpaid balance of the loan. Portions of such
Shares may, in the discretion of the Committee, be released from time to
time as it deems not to be needed as security.
(f) Every loan shall meet all applicable laws, regulations and rules
of the Federal Reserve Board and any other governmental agency having
jurisdiction.
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18. Termination, Amendment and Modification of Plan. The Board may at any
time terminate, and may at any time and from time to time and in any respect
amend or modify, the Plan; provided however, that to the extent necessary and
desirable to comply with Section 422 of the Code (or any other applicable law or
regulation, including requirements of any stock exchange or Nasdaq system on
which the Shares are listed or quoted) shareholder approval of any Plan
amendment shall be obtained in such a manner and to such a degree as is required
by the applicable law or regulation; and provided further, that no termination,
amendment or modification of the Plan shall in any manner affect any Award
theretofore granted pursuant to the Plan without the consent of the Participant
to whom the Award was granted or transferee of the Award.
19. Section 162(m) Conditions; Bifurcation of Plan. It is the intent of
the Company that the Plan and certain of the Awards granted hereunder satisfy
and be interpreted in a manner that, in the case of Participants who are or may
be persons whose compensation is subject to Section 162(m), satisfies any
applicable requirements as performance-based compensation. Any provision,
application or interpretation of the Plan inconsistent with this intent to
satisfy the standards in Section 162(m) of the Code shall be disregarded.
Notwithstanding anything to the contrary in the Plan, the provisions of the Plan
may at any time be bifurcated by the Board of Directors of the Company or the
Committee in any manner so that certain provision of the Plan or any Award
intended (or required in order) to satisfy the applicable requirements of
Section 162(m) are only applicable to persons whose compensation is subject to
Section 162(m).
20. Effective Date and Term of Plan. The Plan shall become effective upon
its adoption by the Board of Directors and shareholders of the Company. Unless
sooner terminated under Section 18 hereof, no further Awards may be made under
the Plan after ten years from the date of adoption.
Adopted by the Board of Directors
of Shoe Carnival, Inc. as of May 1, 2000
Adopted by the Shareholders of
Shoe Carnival, Inc. as of ______________, 2000
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PROXY SHOE CARNIVAL, INC. PROXY
Proxy Solicited on Behalf of The Board of Directors
For The Annual Meeting of Shareholders -- June 8, 2000
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 Company's headquearters, 8233 Baumgart
Road, Evansville, Indiana on June 8, 2000, 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 Director of the nominee listed under Proposal 1
and FOR Proposal 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
1. Election of Director-- [] []
Nominee: William E. Bindley
For Against Abstain
2. Proposal to approve the [] [] []
appointment of Deloitte &
Touche LLP, as auditors for
the Company for 2000.
For Against Abstain
3. Proposal to approve the [] [] []
Company's 2000 Stock Option
and Incentive Plan.
4. In their discretion, any other
matters that may properly
come before the meeting.
Dated: , 2000
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.
<PAGE>
