<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
D.I.Y. HOME WAREHOUSE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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> 2
D.I.Y. HOME WAREHOUSE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 29, 1998
----------------------------
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of
D.I.Y. Home Warehouse, Inc. (the "Company") will be held at the Sheraton Airport
Hotel, 5300 Riverside Drive, Cleveland, Ohio 44135, (216) 267-1500, on
Wednesday, April 29, 1998, at 10:00 a.m., local time, for the following
purposes:
(1) To elect a Board of eight Directors to serve until the next
Annual Meeting of Shareholders or until their successors shall
have been duly elected and qualified; and
(2) To transact such other business as may properly come before
the meeting.
A Proxy Statement containing information relevant to the Annual Meeting
appears on the following pages.
Only holders of Common Stock of record at the close of business on
February 27, 1998, are entitled to notice of and to vote at the meeting or any
adjournments.
If you wish to vote in accordance with the Board of Director's
recommendations, it is not necessary to specify your choices; merely sign, date,
and return the enclosed Proxy Card. If you attend the meeting, you may withdraw
your Proxy and vote your own shares.
By Order of the Board of Directors
JOHN M. ERB
Secretary
Dated: March 20, 1998
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE ENCOURAGED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
<PAGE> 3
D.I.Y. HOME WAREHOUSE, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 29, 1998
----------------------------
PROXIES AND SOLICITATIONS
This Proxy Statement is furnished to shareholders in connection with
the solicitation of proxies by the Board of Directors (the "Board") of D.I.Y.
Home Warehouse, Inc. (the "Company") to be used at the Annual Meeting of
Shareholders (the "Annual Meeting") and at any adjournments. If received in time
for the Annual Meeting, the shares represented by a valid proxy will be voted in
accordance with the specifications, if any, contained in such executed proxy. If
no instructions are given, proxies will be voted for all nominees for the Board.
A proxy executed in the enclosed form may be revoked by the person signing it at
any time before it is exercised. Proxies may be revoked by filing with the
Secretary of the Company, any time prior to the time set for commencement of the
Annual Meeting, a written notice of revocation bearing a later date than the
proxy, or by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute revocation
of a proxy).
In addition to the use of mails, proxies may be solicited by personal
interview, telephone and telegram, by directors, officers and employees of the
Company. The Company has engaged Corporate Investor Communications, Inc. to
assist in various matters relating to this Proxy Statement, the solicitation of
shareholder proxies and the Annual Meeting. Arrangements may also be made with
brokerage houses or other custodians, nominees and fiduciaries to forward
solicitation material to the beneficial owners of Common Stock held of record by
such persons, and the Company may reimburse such persons for reasonable
out-of-pocket expenses incurred in forwarding material. The Company anticipates
that fees and expenses for the foregoing parties will not exceed $1,000. The
costs of all proxy solicitation will be borne by the Company.
The executive offices of the Company are located at 5811 Canal Road,
Valley View, Ohio 44125. The approximate date of mailing of this Proxy Statement
and the enclosed Proxy materials to the Company's shareholders is March 20,
1998.
TIME AND PLACE OF MEETING
The Annual Meeting will be held at the Sheraton Airport Hotel, 5300
Riverside Drive, Cleveland, Ohio 44135, (216) 267-1500, on Wednesday, April 29,
1998, at 10:00 a.m., local time.
VOTING RIGHTS AND
PRINCIPAL HOLDERS OF VOTING SECURITIES
Only shareholders of record at the close of business on February 27,
1998 are entitled to notice of and to vote at the Annual Meeting or at any
adjournments. As of that date, the Company had 7,633,859 shares of Common Stock
issued, outstanding and entitled to vote held by approximately 225 holders of
record. Based on information provided to the Company by certain holders of
record, the Company estimates that there are in excess of 1,800 beneficial
shareholders. Each outstanding share entitles the record holder to one vote.
Shares cannot be voted at the Annual Meeting unless the holder is present in
person or represented by proxy. The presence, in person or by proxy, of
shareholders entitled to vote a majority of the voting shares that are
outstanding and entitled to vote will constitute a quorum.
Information concerning principal holders of the Common Stock is
discussed under "Security Ownership of Certain Beneficial Owners and
Management."
MATTERS TO COME BEFORE THE ANNUAL MEETING
ELECTION OF DIRECTORS
The first matter expected to be considered at the Annual Meeting will
be the election of eight directors. It is proposed that these positions be
filled by persons nominated to the Board by management. Each director shall be
elected by a plurality of the votes cast at the Annual Meeting. Therefore, if a
quorum is present, abstentions and broker non-votes will have no effect on the
election of directors. Proxies will be tabulated by the Company's transfer
agent. The Inspector of Elections appointed at the Annual Meeting will then
combine the proxy votes with
2
<PAGE> 4
the votes cast at the Annual Meeting. Each director elected at the Annual
Meeting will serve for a term commencing on the date of the Annual Meeting and
continuing until the next Annual Meeting of Shareholders or until his successor
is duly elected and qualified. In the absence of directions to the contrary,
proxies will be voted in favor of the election of the eight nominees listed
below.
If any of the nominees named below are unavailable to serve for any
reason, then a valid proxy may be voted for the election of such other persons
as the person or persons voting the proxy may deem advisable in accordance with
their best judgment. Management has no present knowledge that any of the persons
named will be unavailable to serve. In any event, the enclosed proxy can be
voted for only the eight nominees named in this Proxy Statement or their
substitutes.
The following list identifies each nominee for election to the Board at
the Annual Meeting and describes each candidate's principal occupation for the
past five years. Each of the directors has served continuously from the date of
his election to the present time.
FRED A. ERB, age 75, is the Chairman of the Board of the Company. He
has been a Director of the Company since its inception. Mr. Erb is the Chief
Executive Officer and a Director of Edgemere Enterprises, Inc. He also serves as
an executive officer and director of Erb-D.I.Y. Center, Inc. and TQ10
Corporation. Edgemere Enterprises, Inc., Erb-D.I.Y. Center, Inc. and TQ10
Corporation are affiliates of the Company. Mr. Erb leases, and is a partner of
certain entities which lease, property to the Company. See "Compensation
Committee Interlocks and Insider Participation." Fred A. Erb is the father of
John M. Erb.
CLIFFORD L. REYNOLDS, age 51, has been a Director since February 1993.
He is the President and Chief Executive Officer of the Company and has served in
such capacity since October 1989. Mr. Reynolds has 27 years of experience in the
home improvement retailing business. From October 1984 until October 1989, Mr.
Reynolds served as the Senior Vice President and General Manager of the Company,
except for a brief period in 1988 when Mr. Reynolds was employed by Handy Andy
Home Improvement Centers. Prior to his involvement with the Company, Mr.
Reynolds held various senior management positions at other retail home
improvement companies.
R. SCOTT EYNON, age 48, has been a Director since February 1993. He is
the Vice President-Operations of the Company and has served in that capacity
since January 1993. Between February 1988 and December 1992, Mr. Eynon served as
the Regional Manager for the Company. From January 1985 until February 1988, Mr.
Eynon held various management positions with the Company. Since 1977, Mr. Eynon
has served in a variety of management positions in the home center industry.
DENNIS C. HOFF, age 54, has been a Director since February 1993. He is
the Vice President-General Merchandising Manager of the Company and has served
in such capacity since January 1993. From July 1988 until December 1992, Mr.
Hoff served as the General Merchandising Manager of the Company. Since 1970, Mr.
Hoff has been involved with purchasing, sales and marketing for several other
companies in the retail industry. He has been involved in the home improvement
industry since 1984.
JOHN M. ERB, age 43, has been a Director since February 1993. He is the
Secretary of the Company and has served in such capacity since February 1993.
From February 1991 to February 1993, Mr. Erb was Assistant Secretary. Mr. Erb
also serves as an executive officer of Edgemere Enterprises, Inc., Erb Lumber,
Inc. and TQ10 Corporation. TQ10 Corporation and Edgemere Enterprises, Inc. are
affiliates of the Company. John M. Erb is the son of Fred A. Erb.
GREGORY K. JONES, age 37, has been a Director since August 1993. Mr.
Jones is President and Chief Executive Officer of uBid Online Auction. From
November 1995 to November 1997, Mr. Jones served as Senior Vice President of
APAC Corporation. From April 1993 to October 1995, Mr. Jones served as President
of Office 1 Superstore. Prior to that, he was President and Chief Operating
Officer of Reliable Corporation, an office products and supplies retailer.
JOHN A. SHIELDS, age 54, has been a Director since August 1993. Mr.
Shields is self-employed. From 1994 to 1997, Mr. Shields was the Chairman and
Chief Executive Officer of Delray Farms Fresh Markets. From 1983 to 1993, he was
President and Chief Executive Officer of First National Super Markets, Inc., a
retail grocery store chain. He is also a Director of Homeland Stores, Inc., a
publicly reporting retail supermarket, Wild Oats Markets, Inc., a publicly
reporting health food supermarket and Shore Bank Corp., a publicly reporting
bank.
MARK A. TIMMERMAN, age 37, has been a Director since August 1993. He is
a principal at William Blair & Company, an investment banking firm, where he has
been employed since July 1986. He is also a Director of Prophet 21, a publicly
reporting provider of on-line business management systems.
3
<PAGE> 5
COMMITTEES OF THE BOARD AND MEETINGS
The Board met ten times and took action by unanimous written consent on
two occasions during the fiscal year ended January 3, 1998.
Several important functions of the Board may be performed by committees
that are comprised of members of the Board. The Company's Bylaws authorize the
formation of these committees and grant the Board the authority to prescribe the
functions of each committee and the standards for membership of each committee.
In addition, the Board appoints the members of each committee. The Board has
four standing committees: an Audit Committee, a Compensation Committee, a Long
Term Incentive Plan Committee, and an Executive Committee.
The Audit Committee was established to (i) annually recommend a firm of
independent public accountants to the Board to act as auditors of the Company;
(ii) review the scope of the annual audit with the auditors in advance of the
audit; (iii) generally review the results of the audit and the adequacy of the
Company's accounting, financial and operating controls; (iv) review the
Company's accounting and reporting principles, policies and practices; and (v)
perform such other duties as may be delegated to it by the Board. The current
members of the Audit Committee are Messrs. Fred A. Erb, Mark A. Timmerman and
Gregory K. Jones. The Audit Committee took action informally without meeting on
one occasion and it held one formal meeting during the fiscal year ended January
3, 1998.
The Compensation Committee was established to (i) set, review and
modify the compensation (including salaries, bonuses and stock options) of the
Company's officers; and (ii) perform such other duties as may be delegated to it
by the Board. The members of the Compensation Committee during the fiscal year
ended January 3, 1998 were Messrs. Fred A. Erb, John M. Erb and John A. Shields.
The Compensation Committee took action without a meeting on one occasion and
held two formal meetings during the fiscal year ended January 3, 1998. See
"Compensation Committee's Report to Shareholders" and "Compensation Committee's
Report on Repricing of Options/SAR's". The Long Term Incentive Plan Committee
(the "LTIP Committee") (composed of Messrs. Fred A. Erb and John M. Erb) was
established to administer the Company's 1993 Long Term Incentive Plan (the
"Plan"). The LTIP Committee took action by unanimous consent on two occasions
during the fiscal year ended January 3, 1998.
The Executive Committee was established to generally manage the
day-to-day business and affairs of the Company between regular Board meetings.
In no event may the Executive Committee, without the prior approval of the Board
acting as a whole, (i) recommend to the shareholders an amendment to the
Company's Articles of Incorporation, (ii) amend the Company's Code of
Regulations, (iii) adopt an agreement of merger or consolidation, (iv) recommend
to the shareholders the sale, lease or exchange of all or substantially all of
the Company's property and assets, (v) recommend to the shareholders a
dissolution of the Company or a revocation of a dissolution, (vi) fill vacancies
on the Board, (vii) fix compensation of the directors for serving on the Board
or on a committee of the Board, (viii) declare dividends or authorize the
issuance of the Company's stock, (ix) approve or take any action with respect to
any related party transaction involving the Company, or (x) take any other
action which is forbidden by the Company's Code of Regulations. All actions
taken by the Executive Committee must be promptly reported to the Board as a
whole and are subject to ratification, revision and alteration by the Board,
except that no rights of third persons created in reliance on authorized acts of
the Executive Committee can be affected by any such revision or alteration. The
current members of the Executive Committee are Messrs. Fred A. Erb, Clifford L.
Reynolds and John M. Erb. The Executive Committee did not hold any formal
meetings during the fiscal year ended January 3, 1998.
The Board does not have a standing committee responsible for nominating
individuals to become directors.
OUTSIDE DIRECTOR COMPENSATION
Fred A. Erb, John M. Erb and directors who are employees of the Company
do not receive compensation for serving on the Board or on the Board's
committees. Directors who are not employees of the Company are entitled to an
annual retainer fee of $5,000, a $1,000 fee for each regular or special meeting
of the Board and a $500 fee for each committee meeting attended on a day other
than a regular or special Board meeting date. For services during the fiscal
year ended January 3, 1998, Mark A. Timmerman, John A. Shields and Gregory K.
Jones received directors' fees of $14,000, $14,000 and $14,000, respectively, of
which $11,500, $11,500 and $11,500, respectively, was paid in cash and $2,500,
$2,500 and $2,500, respectively, was paid by the issuance of 588 shares of
Common Stock to each such director pursuant to the Company's 1996 Retainer Stock
Plan for Non-Employee Directors.
4
<PAGE> 6
MANAGEMENT AND COMPENSATION
EXECUTIVE OFFICERS
The persons listed below are the current executive officers of the
Company. Each is annually appointed by, and serves at the pleasure of, the
Board.
<TABLE>
<CAPTION>
APPROXIMATE
DATE
NAME AGE OFFICE SERVICE BEGAN
---- --- ------ -------------
<S> <C> <C>
Fred A Erb(1).......................... 75 Chairman of the Board October 1984
Clifford L. Reynolds................... 51 President and Chief Executive Officer October 1984
R. Scott Eynon......................... 48 Vice President-Operations January 1985
Dennis C. Hoff......................... 54 Vice President-General Merchandising May 1988
Manager
John M. Erb(1)......................... 43 Secretary February 1991
Marilyn A. Eisele...................... 40 Vice President-Administration and Finance, September 1994
and Chief Financial Officer
Eric I. Glassman....................... 39 Treasurer and Controller January 1997
<FN>
------------------------------------
(1) Fred A. Erb is the father of John M. Erb.
</TABLE>
Each of the executive officers other than Marilyn A. Eisele and Eric I. Glassman
has been continuously employed by the Company for more than five (5) years,
serving in the capacities and since the date reflected above.
MARILYN A. EISELE has been Vice President-Administration and Finance,
and Chief Financial Officer since September 1994. For the fifteen years prior to
joining the Company, Ms. Eisele was employed by Coopers & Lybrand LLP, the
Company's auditors, most recently as Business Assurance Manager.
ERIC I. GLASSMAN has been Treasurer and Controller since January 1997.
Prior to joining the Company, Mr. Glassman was employed by BE-MAC Transport
Company, Inc. as Vice President, Treasurer and Controller from 1991 to February
1993 and was employed by Photoco, Inc. as Chief Financial Officer from February
1993 until joining the Company in January 1997.
5
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid to the Chief
Executive Officer and each executive officer whose remuneration from the Company
exceeded $100,000 during the fiscal year ended January 3, 1998.
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
NAME AND PRINCIPAL POSITION COMPENSATION ALL OTHER
--------------------------- YEAR SALARY($)(1) BONUS($) OPTIONS(#) COMPENSATION($)(3)
---- ------------ --------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Clifford L. Reynolds,
President and Chief Executive
Officer........................... 1997 $250,000 $ 50,000 195,000(2) $6,371
1996 246,635 250,000 30,000 3,420
1995 234,135 121,875 30,000 3,208
R. Scott Eynon,
Vice President - Operations........ 1997 $143,654 $ 30,000 107,500(2) $6,312
1996 137,981 112,000 20,000 3,052
1995 130,481 60,938 15,000 3,123
Dennis C. Hoff,
Vice President - General
Merchandising Manager.............. 1997 $143,654 $ 30,000 107,500(2) $6,312
1996 137,981 112,000 20,000 3,052
1995 130,481 60,938 15,000 3,123
Marilyn A. Eisele,
Vice President - Administration
and Finance....................... 1997 $132,981 $ 30,000 77,500(2) $6,308
1996 125,481 89,250 20,000 2,775
1995 118,653 -0- 7,500 2,047
<FN>
------------------------------------
(1) Includes amounts which were deferred at the election of the officer to
the Company's 401(k) plan.
(2) Includes as issued in 1997 replacement options which were exchanged for
options surrendered by Messrs. Reynolds, Eynon and Hoff and Ms. Eisele
pursuant to the Company's 1997 option repricing program. Mr. Reynolds
received replacement options on options exercisable for 195,000 shares
surrendered, Messrs. Eynon, and Hoff each received replacement options
on options exercisable for 107,500 shares surrendered and Ms. Eisele
received replacement options on options exercisable for 57,500 shares
surrendered. The Company's 1997 option repricing program allowed
certain holders of certain out-of-the-money options to surrender them
to the Company and receive in exchange therefore options exercisable
for an equal number of shares at an exercise price of $3.56 per share,
which was the fair market value of the shares on the date of issuance
of the replacement options. The replacement options vest equally over
three (3) years commencing on the first anniversary of the issuance of
the replacement options, and expire on the fifth anniversary of the
issuance of the replacement options. See "Compensation Committee's
Report on Repricing of Options/SAR's."
(3) Consists of contributions paid by the Company on behalf of the officer
to the Company's 401(k) plan and Company paid premium on life
insurance.
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into amended and restated employment contracts
with Messrs. Reynolds, Eynon and Hoff dated as of January 1, 1995, which amend
and restate employment agreements originally dated as of March 24, 1993. The
Company has also entered into an employment agreement with Ms. Eisele dated as
of April 1, 1995. These agreements expire five years from their date, unless
sooner terminated as provided therein. The agreements provide for payment of a
base salary, as well as a bonus to be determined in the discretion of the
Compensation Committee, together with certain fringe benefits. The agreements
contain typical confidentiality provisions, and Messrs. Reynolds', Eynon's and
Hoff's agreements preclude them from competing with the Company during the term
of the agreement and for certain periods of time after termination under certain
circumstances. In addition, the agreements provide for severance compensation,
at the executive's base salary rate plus continued medical and insurance
benefits, for termination of employment following a "change of control" (as
defined in the agreements) for certain periods of time (18 months for Mr.
Reynolds, and 12 months for Messrs. Eynon and Hoff and Ms. Eisele) or following
various other circumstances. However, the executives are required to use their
good faith efforts to obtain reasonable replacement employment from and after
such termination and any compensation and medical and insurance benefits
received by the executive during the severance payment period will reduce the
amount of severance pay and medical and insurance benefits due to the executive
from the Company under the employment agreement.
6
<PAGE> 8
<TABLE>
<CAPTION>
OPTIONS/SARS GRANTS
IN LAST FISCAL YEAR
==========================================================================================================================
Individual Grants Grant Date Value
--------------------------------------------------------------------------------------------------------------------------
% of Total
Options/SARs
Granted to Exercise or Grant Date
Options/SARs Employees in Base Price Present
Name Granted (1) Fiscal Year (2) Per Share Expiration Date Value (3)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Clifford L. Reynolds 195,000 19% $3.56 5/21/2002 $246,076
--------------------------------------------------------------------------------------------------------------------------
R. Scott Eynon 107,500 10% $3.56 5/21/2002 $133,315
--------------------------------------------------------------------------------------------------------------------------
Dennis C. Hoff 107,500 10% $3.56 5/21/2002 $133,315
--------------------------------------------------------------------------------------------------------------------------
Marilyn A. Eisele 77,500 7% $3.56 5/21/2002 $113,663
--------------------------------------------------------------------------------------------------------------------------
<FN>
- --------------------------
(1) Includes as issued in 1997 replacement options which were exchanged for
options surrendered by Messrs. Reynolds, Eynon and Hoff and Ms. Eisele
pursuant to the Company's 1997 option repricing program. Mr. Reynolds
received replacement options on options exercisable for 195,000 shares
surrendered, Messrs. Eynon, and Hoff each received replacement options
on options exercisable for 107,500 shares surrendered and Ms. Eisele
received replacement options on options exercisable for 57,500 shares
surrendered. The Company's 1997 option repricing program allowed
certain holders of certain out-of-the-money options to surrender them
to the Company and receive in exchange therefore options exercisable
for an equal number of shares at an exercise price of $3.56 per share,
which was the fair market value of the shares on the date of issuance
of the replacement options. The replacement options vest equally over
three (3) years commencing on the first anniversary of the issuance of
the replacement options, and expire on the fifth anniversary of the
issuance of the replacement options. See "Compensation Committee's
Report on Repricing of Options/SAR's."
(2) Includes as issued in 1997 replacement options exercisable for an
aggregate of 796,000 shares which were exchanged for options
exercisable for an aggregate of 796,000 shares surrendered pursuant to
the Company's 1997 option repricing program. See "Compensation
Committee's Report on Repricing of Options/SAR's."
(3) In 1996, the Company changed its method of valuing options from the
appreciation method to the Black-Scholes option pricing model to be
consistent with the requirements of Statement of Financial Accounting
Standards No. 123 "Accounting for Stock - Based Compensation" used in
the Company's 1996 Annual Report. The present value at the date of
grant during fiscal year 1997 has been calculated using the
Black-Scholes option pricing model, based upon the following
assumptions: risk-free interest rates of 6.2% to 6.5%, no dividend
yield, expected lives of 4 to 5 years and volatility of 37% to 38%. The
values which are calculated are not intended to predict future prices
of the Company's Common Stock. The values shown are theoretical and do
not necessarily reflect the actual values the recipients may realize.
Any actual value to the recipients will depend on the extent to which
the market value of the Company's Common Stock at a future date exceeds
the exercise price.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
<TABLE>
<CAPTION>
===============================================================================================================================
No. of Unexercised Value of Unexercised
Options/SARs at In-The-Money Options/SARs
Fiscal Year-End at
Fiscal Year-End
-----------------------------------------------------------
Shares Acquired
on Exercise
in 1997 Value Not Not
Name Received Exercisable Exercisable Exercisable Exercisable
================================================================================================================================
<S> <C> <C> <C> <C> <C>
Clifford L. Reynolds 0 n/a 0 195,000 $0 $0
- ------------------------------ ---------------- ------------------ -------------- --------------- -------------- ===============
R. Scott Eynon 0 n/a 0 107,500 0 0
- ------------------------------ ---------------- ------------------ -------------- --------------- -------------- ===============
Dennis Hoff 0 n/a 0 107,500 0 0
- ------------------------------ ---------------- ------------------ -------------- --------------- -------------- ===============
Marilyn A. Eisele 0 n/a 0 77,500 0 0
- ------------------------------ ---------------- ------------------ -------------- --------------- -------------- ===============
</TABLE>
7
<PAGE> 9
COMPENSATION COMMITTEE'S REPORT ON REPRICING OF OPTIONS/SAR'S
On August 28, 1997, the Board of Directors and the Long Term Incentive
Plan Committee approved a stock option repricing program (the "1997 option
repricing program") and the Compensation Committee reviewed and approved the
1997 option repricing program with respect to the Company's Executive Officers.
The Board of Directors and the Long Term Incentive Plan Committee approved the
1997 option repricing program to restore the incentive value of stock options
held by directors, officers and key employees and other personnel of the Company
to further motivate them to contribute to the Company's future success.
Pursuant to the 1997 option repricing program, existing stock options
exercisable for an aggregate of 796,000 shares of Common Stock, with exercise
prices ranging from $16.13 to $3.63 per share (the "Old Options"), were
surrendered for replacement options exercisable for an aggregate of 796,000
shares of Common Stock at $3.56 per share (the "New Options"), the average of
the highest and lowest selling price for the Common Stock as quoted on Nasdaq NM
on May 21, 1997, the date as of which the Board of Directors and the Long Term
Incentive Plan Committee approved issuance of the New Options pursuant to the
1997 option repricing program. The Old Options had expiration dates ranging from
November 18, 1998 to September 6, 2001. The New Options expire on May 21, 2002,
the fifth anniversary of the grant of the New Options. The Old Options vested
equally over five year periods and the New Options vest equally over a three
year period, commencing on the first anniversary of the New Options.
The following table sets forth certain information concerning the
repricing of options held by any executive officer of the Company during the
last ten completed fiscal years.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
===================================================================================================================================
NUMBER OF
SECURITIES LENGTH OF ORIGINAL
UNDERLYING MARKET PRICE OF OPTION TERM
OPTIONS/SAR'S STOCK AT TIME EXERCISE PRICE AT REMAINING AT
NAME AND PRINCIPAL REPRICED OR OF REPRICING OR TIME OF REPRICING NEW EXERCISE DATE OF REPRICING
POSITION DATE AMENDED (#) AMENDMENT ($) OR AMENDMENT ($) PRICE ($) OR AMENDMENT
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Clifford L. Reynolds 5/21/97 60,000 $3.56 $10.00 $3.56 1.49 years
President and Chief 20,000 $14.75 2.26 years
Executive Officer 55,000 $12.25 2.52 years
30,000 $ 7.19 3.26 years
30,000 $ 4.69 4.30 years
- ----------------------------------------------------------------------------------------------------------------------------------
R. Scott Eynon 5/21/97 35,000 $3.56 $10.00 $3.56 1.49 years
Vice-President-Operations 10,000 $14.75 2.26 years
27,500 $12.25 2.52 years
15,000 $ 7.19 3.26 years
20,000 $ 4.69 4.30 years
- ----------------------------------------------------------------------------------------------------------------------------------
Dennis C. Hoff 5/21/97 35,000 $3.56 $10.00 $3.56 1.49 years
Vice-President-General 10,000 $14.75 2.26 years
Merchandising Manager 27,500 $12.25 2.52 years
15,000 $ 7.19 3.26 years
20,000 $ 4.69 4.30 years
- ----------------------------------------------------------------------------------------------------------------------------------
Marilyn A. Eisele 5/21/97 30,000 $3.56 $10.13 $3.56 2.80 years
Vice-President- 7,500 $ 7.19 3.26 years
Administration and 20,000 $ 4.69 4.30 years
Finance
- ----------------------------------------------------------------------------------------------------------------------------------
Eric I. Glassman 5/21/97 10,000 $3.56 $ 4.31 $3.56 5.15 years
Treasurer and Controller
- ----------------------------------------------------------------------------------------------------------------------------------
Fred A. Erb John M. Erb John A. Shields
</TABLE>
8
<PAGE> 10
COMPENSATION COMMITTEE'S REPORT TO SHAREHOLDERS
The executive compensation program is administered by the Compensation
Committee of the Board (the "Committee") which was comprised of non-employee
directors Messrs. Fred A. Erb, John M. Erb and John A. Shields during the fiscal
year ended January 3, 1998. The Committee reviews the compensation (including
salaries, bonuses and stock options) of the Company's officers and performs such
other duties as may be delegated to it by the Board. The Committee held two
formal meetings and took action without a meeting on one occasion during the
fiscal year ended January 3, 1998.
In reviewing the compensation to be paid to the Company's executive
officers during the fiscal year ended January 3, 1998, the Committee sought to
ensure that executive officers were rewarded for long-term strategic management,
for increasing the Company's value for its shareholders, and for achieving
internal goals established by the Board.
The key components of executive officer compensation are salary,
bonuses and stock awards. Salary is generally based on factors such as an
individual officer's level of responsibility, prior years' compensation,
comparison to compensation of other officers in the Company, and compensation
provided at competitive companies and companies of similar size. Bonuses and
stock awards are intended to reward exceptional performances. In March, 1997,
the Committee approved increases in the base salaries of three of the principal
executive officers (Messrs. Eynon and Hoff and Ms. Eisele) effective March 30,
1997. The aggregate base salaries for Messrs. Eynon and Hoff and Ms. Eisele was
increased by 3.6% and 5.9%, respectively. Stock awards are also intended to
increase an officer's interest in the Company's long-term success as measured by
the market and book value of its stock. Stock awards may be granted to officers
and directors of the Company and to certain employees who have managerial or
supervisory responsibilities under the Company's Plan. Stock awards may be stock
options, stock appreciation rights or restricted share rights. Including stock
options issued pursuant to the 1997 option repricing program, 107 employees and
other personnel and five non-employee directors received stock options under the
Stock Plan during the fiscal year ended January 3, 1998.
The Committee reviewed the individual performances of the principal
executive officers and recognized the progress the Company has made toward
attaining its long-term goals. Based on its subjective evaluation of the
performance by the four principal officers (Messrs. Reynolds, Eynon and Hoff and
Ms. Eisele) and their perceived levels of contribution to attainment of the
Company's long-term goals, the Committee approved the salary increases described
above and the Board of Directors and the Long Term Incentive Plan Committee
awarded stock options under the Plan, in addition to stock options issued
pursuant to the 1997 option repricing program, in May, 1997 to Ms. Eisele
(20,000 shares).
In May 1997, the Committee recommended to the Board (and the Board
adopted) an employee bonus percentage based compensation plan for the fiscal
year ended January 3, 1998. Under the bonus plan, bonuses were to be awarded
based on the extent to which earnings per share for the fiscal year exceeded
$0.50 up to a maximum of $0.59, as reported in the Company's audited financial
statements for the year. The bonus plan also provided that, in the event the
Company's earnings per share for the fiscal year ended January 3, 1998 resulted
in no incentive bonuses being earned under the bonus plan, the Compensation
Committee could consider discretionary bonuses. The bonus would be a pre-set
percentage (which varied according to the actual earnings per share reported)
multiplied by the employee's base compensation. Eligible employees were the
executive officers. The Company's earnings per share for the fiscal year ended
January 3, 1998 were $0.38 per share, which included an equivalent charge of
$0.11 relative to store development costs. The Compensation Committee awarded
discretionary bonuses of $50,000 to Mr. Reynolds and $30,000 to each of Messrs.
Eynon and Hoff and Ms. Eisele. Bonuses paid to Messrs. Reynolds, Eynon and Hoff
in 1995 were awarded for their contribution to both the growth of the Company
and the completion of the Company's initial public offering in 1993. Such
bonuses were payable through December 1995 and were contingent upon the
continuing employment of such individuals during the pay-out period.
In addition, the Committee seeks to point out that the Committee
believes that there are many relevant factors that should generally be
considered in determining a bonus plan including, but not limited to, return on
equity, earnings as a percentage of sales, margins, expenses, and other
designated targets and projects. The Committee further believes that earnings
per share in many instances should only be one component of a bonus plan or
possibly, under certain circumstances, not a component at all.
Fred A. Erb John M. Erb John A. Shields
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Fred A. Erb and John M. Erb constituted the Compensation
Committee from August 9, 1993 to February 23, 1994. On February 23, 1994, Mr.
John A. Shields joined the Compensation Committee. Prior to August 9, 1993, Mr.
Fred A. Erb was solely responsible for determining executive officer
compensation. Mr. Fred A. Erb has served as a director and executive officer of
other entities which are, or have been, related to the Company. See "Directors
and Officers." Mr. Fred A. Erb also leases, and is a partner of certain entities
which lease, property to the Company.
9
<PAGE> 11
The Company leases the Cleveland, Boardman, North Randall and Eastlake
store locations from either Fred A. Erb (the Company's Chairman and controlling
stockholder) or entities affiliated with him. Each of the leases are "net"
leases, whereby DIY and its sublessors are responsible for all costs associated
with the premises. The Company believes that the rents payable under these
leases are at rates that are no less favorable to the Company than those that
could be obtained from unaffiliated third parties.
The Company leases its Cleveland location from D.I.Y. Ohio Real Estate
Associates Limited Partnership ("DIY Ohio"), a limited partnership controlled by
Mr. Fred A. Erb and in which he and members of this immediate family are
partners. Pursuant to the terms of the lease, during 1998 the Company will pay
annual "Basic Rent" of $379,020. Each year the Company must pay an additional
amount equal to the Basic Rent multiplied by one-half of the percentage increase
in the Consumer Price Index from the previous January 31 to January 31 of that
year ("CPI Rent"). Each year, the Company must also pay "Percentage Rent" equal
to 1.5% of the amount by which the Company's gross sales for the year exceeds
the sum of the Basic Rent and the CPI Rent, if any, which sum is divided by
1.5%. The Company paid $386,796 in rent in 1997, $388,340 in rent in 1996 and
$353,340 in rent in 1995 to DIY Ohio. The term of the lease ends on December 30,
2007, and the Company does not have any renewal options.
The Company also leases its Boardman, Ohio location from DIY Ohio. The
Company pays an annual "Basic Rent" of $519,600. Each year, the Company must
also pay "Percentage Rent" equal to 1.5% of the amount by which the Company's
gross sales for the year exceeds the sum of the Basic Rent and the "CPI Rent"
(defined below), if any, which sum is divided by 1.5%. The amount of rent paid
to DIY Ohio in each of 1997, 1996 and 1995 was $519,600. The term of the lease
ends on September 30, 2008, and the Company has three five-year renewal options,
with rent equal to the Basic Rent plus an additional amount equal to one-half of
the percentage increase of the Consumer Price Index from October 1, 1993 to the
date of the beginning of the renewal term, multiplied by the Basic Rent (the
"CPI Rent").
The Company's North Randall location is leased from D.I.Y. Center
Associates, a general partnership in which Mr. Fred A. Erb is a partner. The
lease runs through October 31, 2002, and provides for annual rent of $511,000.
The Company has three ten-year renewal options, with annual rent for the first,
second and third renewal periods of $536,000, $561,000 and $586,000,
respectively. The amount of rent paid in each of 1997, 1996 and 1995 was
$511,000.
The Company leases its Eastlake store from a partnership controlled by
Mr. Fred A. Erb. The lease term ends on February 28, 2002, and DIY does not have
any renewal options. In August, 1996, Basic Rent increased from $411,000 to
$456,600 per year. Each year, the Company must also pay Percentage Rent equal to
1.5% of the amount, if any, by which the Company's gross sales for the year
exceeds the Company's Basic Rent for that year divided by 1.5%. On August 1 of
1999, the Company's Basic Rent will be increased by a percentage equal to
one-half of the percentage increase in the Consumer Price Index over the
preceding three year period. The Company paid rent of $456,600 in 1997, $430,000
in 1996 and $411,000 in 1995.
In 1985, Edgemere Enterprises, Inc. (formerly Erb Lumber Co.), a
company controlled by Mr. Fred A. Erb, advanced $3.0 million to the Company. In
April, 1997, the Company made a principal payment on the loan in the amount of
$300,000 in satisfaction of a demand for payment from Edgemere Enterprises, Inc.
The present balance outstanding is $600,000. The loan bears interest at the rate
of 3/4% over the prime rate per year, and is due on demand.
10
<PAGE> 12
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph depicts a comparison of cumulative total returns,
assuming $100 was invested on May 18, 1993 (the date of the Company's initial
public offering) and reinvestment of dividends in (a) the Company, (b) the
entire Nasdaq stock market, and (c) a group of issuers which the Company
believes are the Company's peers in its line of business. This "peer group"
consists of Building Materials Holdings, Eagle Hardware & Garden, Home Depot,
Inc., HomeBase, Inc., Lowe's Companies, Inc., National Home Centers and Wolohan
Lumber Co. The Company's "peer group" has been changed from the Company's "peer
group" used in the 1997 proxy statement. Grossman's, Inc., Hechinger, Orchard
Supply & Hardware and Payless Cashways have been deleted since their stock is no
longer quoted on a national securities exchange. HomeBase, Inc. and National
Home Centers, Inc. have been added to include in the Company's "peer group"
additional companies in the Company's line of business.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG D.I.Y. HOME WAREHOUSE, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(DOLLARS)
D.I.Y. HOME WAREHOUSE
PEER GROUP
NASDAQ MARKET INDEX
ASSUMES $100 INVESTED ON MAY 18, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1997
11
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 27, 1998, the
shareholdings of (a) each person known to the Company to be the beneficial owner
of more than five (5%) percent of the Common Stock, (b) each director of the
Company, (c) each executive officer listed in the Summary Compensation Table,
and (d) all executive officers and directors of the Company as a group, based
upon information available to the Company.
<TABLE>
<CAPTION>
==================================================================================================================
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES (1)
- ------------------------------------ -------------------- ------------------
<S> <C> <C>
Fred A. Erb 4,410,000(2) 57.8%
Chairman of the Board of Directors
44 East Long Lake Road
Bloomfield Hills, Michigan 48304
Clifford L. Reynolds 75,000 1.0%
Director and President and Chief Executive Officer
5811 Canal Road
Valley View, Ohio 44125
R. Scott Eynon 25,000 0.3%
Director and Vice President - Operations
5811 Canal Road
Valley View, Ohio 44125
Dennis C. Hoff 25,100 0.3%
Director and Vice President - General
Merchandising Manager
5811 Canal Road
Valley View, Ohio 44125
Marilyn A. Eisele 1,500 *
Vice President-Administration and Finance
and Chief Financial Officer
5811 Canal Road
Valley View, Ohio 44125
John M. Erb 70,000(2) 0.9%
Director and Secretary
44 East Long Lake Road
Bloomfield Hills, Michigan 48304
Gregory K. Jones, Director 3,084 *
One Parkway North Center
Deerfield, Illinois 60015
John A. Shields, Director 47,891 0.6%
2749 Landon Road
Shaker Heights, Ohio 44122
Mark A. Timmerman, Director 8,984 *
222 West Adams Street
Chicago, Illinois 60606
Dimensional Fund Advisors Inc. 451,000(3) 5.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
All current executive officers and directors as a group 4,666,559 61.1%
---------
(10 persons)
==================================================================================================================
</TABLE>
* Less than one-half percent.
(1) Percentage calculations based on 7,633,859 shares of Common Stock
issued and outstanding as of February 27, 1998. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission, which provide that shares of Common Stock subject to
options exercisable within 60 days are deemed outstanding for computing
the percentage of the person or group holding the particular option,
but are not outstanding for computing the percentage of any other
person.
(2) Does not include 440,000 shares held by The Erb Foundation, the
trustees of which are Fred A. Erb, John M. Erb and Ira J. Jaffe.
12
<PAGE> 14
(3) According to a Schedule 13G filed with the Securities and Exchange
Commission on February 10, 1998, Dimensional Fund Advisors Inc.
("Dimensional") is deemed to have beneficial ownership of 451,000
shares, which are held in the portfolios of DFA Investment Dimensions
Group, Inc. (the "Fund") or in series of the DFA Investment Trust
Company (the "Trust") or the DFA Group Trust and the DFA Participation
Group Trust, for all of which Dimensional serves as investment manager.
Dimensional has sole voting power of 289,400 shares and persons who are
officers of Dimensional and who serve as officers of the Fund and the
Trust have sole voting power of 71,500 shares and 90,100 shares,
respectively and Dimensional has sole dispositive power over 451,000
shares. These securities are owned by advisory clients of Dimensional
and Dimensional disclaims beneficial ownership of such securities.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is required to identify each person who was an officer,
director or beneficial owner of more than 10% of the Company's registered equity
securities during the Company's most recent fiscal year and who did not file on
a timely basis reports required by Section 16(a) of the Securities and Exchange
Act of 1934. Based solely upon its review of copies of such reports received by
it during or with respect to the fiscal year ended January 3, 1998, the Company
believes that all officers, directors and beneficial owners of more than 10% of
the Company's registered equity securities timely filed all required reports.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STORE LEASES
The Company leases the Cleveland, Boardman, North Randall and Eastlake
store locations from either Fred A. Erb (the Company's Chairman and controlling
stockholder) or entities affiliated with him. See "Management - Compensation
Committee Interlocks and Insider Participation."
TRANSACTIONS WITH EDGEMERE ENTERPRISES, INC.
In 1985, Edgemere Enterprises, Inc. (formerly Erb Lumber Co.), a
company controlled by Mr. Fred A. Erb, advanced $3.0 million to the Company. In
April 1997, the Company made a principal payment on the loan in the amount of
$300,000 in satisfaction of a demand for payment from Edgemere Enterprises, Inc.
The present balance outstanding is $600,000. The loan bears interest at the rate
of 3/4% over the prime rate per year, and is due on demand. See "Management -
Compensation Committee Interlocks and Insider Participation."
TAX INDEMNIFICATION AGREEMENT
The Company and Fred A. Erb, John M. Erb, Clifford L. Reynolds, R.
Scott Eynon and Dennis C. Hoff entered into a mutual indemnification agreement
relating to federal and certain state and local income tax liabilities of the
Company and the shareholders for tax years during which the Company had elected
to be treated as an S Corporation. This agreement generally provides that the
Company will indemnify the shareholders, and the shareholders will indemnify the
Company, against any increase in the indemnified party's income tax liabilities
(including interest and penalties and all expenses, attorneys' fees and
accountants' fees incurred in connection therewith) for those jurisdictions in
which an S Corporation election was made or deemed to have been made.
GENERAL INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The Board selected Coopers & Lybrand L.L.P. as the Company's
independent public accountants for the fiscal year ended January 3, 1998.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at the
Annual Meeting, and will have the opportunity to make a statement if they desire
to do so and to respond to appropriate questions.
SHAREHOLDERS' PROPOSALS
Any and all shareholder proposals for inclusion in the proxy materials
for the Company's next Annual Meeting of Shareholders must comply with the rules
and regulations promulgated under the Securities Exchange Act of 1934, as
amended, and must be received by the Company, at its offices at 5811 Canal Road,
Valley View, Ohio 44125, not later than December 16, 1998. Such proposals should
be addressed to the Company's Secretary.
The Company's Code of Regulations (the "Regulations") also contain
certain provisions which affect shareholder proposals. The Regulations require
that notice in writing of proposed shareholder nominations for the election of
directors be timely given to the Secretary of the Company prior to the meeting.
Such notice must contain certain information about the non-incumbent nominee,
including name, age, business and residence
13
<PAGE> 15
addresses, principal occupation, the class and number of shares of the Company
beneficially owned by the nominee and such other information as would be
required to be included in a proxy statement soliciting proxies for election of
the nominee, as well as certain information about the nominating shareholder.
The Company may require any nominee to furnish other information reasonably
required by the Company to determine the nominees eligibility to serve as a
director. If the presiding officer of any shareholders meeting determines that a
person was not nominated in accordance with the foregoing procedures, such
person shall not be eligible for election as a director.
In addition, the Regulations require that notice in writing from any
shareholder who proposes to bring business before any meeting of shareholders
must be timely given to the Secretary of the Company prior to the meeting. Such
notice must contain certain information, including a brief description of the
business proposed to be brought before the meeting, the reasons for conducting
such business at the meeting, the class and number of shares of the Company
beneficially owned by such shareholder and any supporting shareholders and any
material interest of the proposing shareholder in the business so proposed. If
the presiding officer of any shareholders' meeting determines that any such
business was not properly brought before the meeting in accordance with the
foregoing procedures, such business will not be conducted at the meeting.
Nothing in the Code of Regulations will preclude discussion by any shareholder
of any business properly brought before the meeting in accordance with the
above-mentioned procedures.
To be timely, shareholder notice of a nomination for election of a
director or to bring business before any shareholders meeting must be received
by the Company not less than thirty days nor more than sixty days prior to the
meeting (or, if fewer than forty days' notice or prior public disclosure of the
meeting date is given or made to shareholders, not later than the tenth day
following the day of mailing notice of the meeting or public disclosure
thereof).
OTHER MATTERS
The Company's Annual Report for the year ended January 3, 1998 has been
mailed with this Proxy Statement or previously delivered to shareholders.
Management knows of no matters which will be presented for
consideration at the Annual Meeting other than those stated in the Notice of
Meeting. However, if any other matters do properly come before the Annual
Meeting, the person or persons named in the accompanying proxy form will vote
the proxy in accordance with their best judgment regarding such matters,
including the election of a director or directors other than those named in this
Proxy Statement should an emergency or unexpected occurrence make the use of
such discretionary authority necessary, and also regarding matters incident to
the conduct of the meeting.
Shareholders are requested to date, sign and return the enclosed proxy
in the enclosed postage-paid envelope. So that the presence, in person or by
proxy, of the holders of a majority of the shares entitled to vote at the
meeting may be assured, prompt execution and return of the proxy is requested.
By Order of the Board of Directors
JOHN M. ERB
Secretary
Dated: March 20, 1998
14
<PAGE> 16
[DIY LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
D.I.Y. HOME WAREHOUSE, INC.
ANNUAL MEETING OF SHAREHOLDERS - WEDNESDAY, APRIL 29, 1998, AT 10:00 A.M.
The undersigned hereby appoints Fred A. Erb, John M. Erb and Clifford L.
Reynolds, or any one of them, as attorneys and proxies of the undersigned
shareholder, with full power of substitution, to vote on behalf of the
undersigned and in his or her name and stead, all shares of the common stock of
D.I.Y. Home Warehouse, Inc., which the undersigned would be entitled to vote if
personally present at the Company's Annual Meeting of Shareholders to be held
at the Sheraton Airport Hotel, 5300 Riverside Drive, Cleveland, Ohio 44135, on
Wednesday, April 29, 1998, and at any adjournments thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all the nominees listed below:
Fred A. Erb Clifford L. Reynolds Dennis C. Hoff R. Scott Eynon
John M. Erb John A. Shields Gregory K. Jones Mark A. Timmerman
[ ] FOR all the nominees listed above except those nominees with a line
drawn through their name.
[ ] AUTHORITY IS WITHHELD for all the nominees listed above.
2. OTHER BUSINESS
The above-appointed proxies are authorized to vote upon all matters
incidental to the conduct of the Annual Meeting and such other business
as may properly come before the Annual Meeting in accordance with their
best judgment.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE> 17
(continued from reverse side)
Proxy No. Shares
The undersigned shareholder acknowledges receipt of the Notice of
Annual Meeting and Proxy Statement dated March 20, 1998.
The giving of this Proxy does not affect the right of the undersigned
shareholder to vote in person should the undersigned shareholder attend
the Annual Meeting. This Proxy may be revoked at any time it is voted.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED ABOVE
AND FOR THE AMENDMENT.
Please sign exactly as your name appears
on this card. When shares are held by
joint tenants, both should sign. When
signing as attorney, executor, personal
representative, trustee or in some other
representative capacity, please sign
name and give full title. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
DATED:____________________, 1998
Signature:____________________________
______________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
