<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-12
CARSON PIRIE SCOTT & CO.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
CARSON PIRIE SCOTT & CO.
331 WEST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53203
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, JUNE 4, 1997
The Annual Meeting of Shareholders of Carson Pirie Scott & Co. will be held
on Wednesday, June 4, 1997, at 10:00 a.m., Milwaukee time, in the Towne Hall
at the Company's Principal Executive Offices, 331 West Wisconsin Avenue,
Fourth Floor, Milwaukee, Wisconsin, 53203, for the following purposes:
1. To elect seven directors;
2. To approve the 1997 Senior Executive Bonus Plan;
3. To approve the 1993 Stock Incentive Plan, as amended and restated as
of March 19, 1997;
4. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent accountants for the fiscal year ending January 31, 1998;
and
5. To act upon any other business that may properly come before the
Annual Meeting or adjournments or postponements of the Annual Meeting.
A Proxy Statement containing additional information is enclosed with this
Notice.
Only shareholders of record at the close of business on April 10, 1997 will
be entitled to notice of and to vote at the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. YOU MAY
REVOKE A PROXY AT ANY TIME BEFORE IT IS EXERCISED. IF YOU ARE PRESENT AT THE
ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AT THAT TIME IN THE MANNER DESCRIBED
UNDER "GENERAL" ON PAGE 1 OF THE PROXY STATEMENT AND VOTE IN PERSON.
Charles J. Hansen,
Secretary
April 30, 1997
<PAGE>
CARSON PIRIE SCOTT & CO.
331 WEST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53203
PROXY STATEMENT
GENERAL
The Board of Directors (the "Board") of Carson Pirie Scott & Co. (the
"Company") is soliciting the enclosed proxy for use at the Annual Meeting of
Shareholders to be held on Wednesday, June 4, 1997 (the "Annual Meeting"). The
Annual Meeting will be held at the time and place and for the purposes listed
on the accompanying Notice of Annual Meeting of Shareholders. This Proxy
Statement and the enclosed proxy were mailed to shareholders on or about April
30, 1997. The Company will pay the cost of preparing, printing, and mailing
this Proxy Statement, the accompanying notice and the enclosed proxy, and all
other costs in connection with the solicitation of proxies. In addition to
solicitation by mail, the Company may request banks, brokers, and other
custodial nominees and fiduciaries to furnish proxy material to the beneficial
owners of the Company's common shares, par value $.01 per share (the "Common
Shares"), of whom they have knowledge. The Company will reimburse the
custodial nominees and fiduciaries for their solicitation expenses. Additional
solicitation may be made by letter, telephone or telecopier by officers and
employees of the Company.
Shareholders of record on the books of the Company at the close of business
on April 10, 1997 will be entitled to vote at the Annual Meeting. On April 10,
1997, 15,910,948 Common Shares were issued and outstanding (exclusive of
21,555,068 Common Shares held by the Company's subsidiaries (the "Subsidiary
Shares")). Subject to the next sentence, each share entitles the holder to one
vote on each matter submitted to a vote at the Annual Meeting, with the right
to cumulate votes in the election of directors. The Subsidiary Shares will be
voted with respect to each matter in the same proportion as the Common Shares
voted by other shareholders with respect to that matter. A majority of the
outstanding shares entitled to vote on a particular matter that are not
Subsidiary Shares must be represented in person or by proxy at the Annual
Meeting in order for a quorum to be present for consideration of the matter at
the Annual Meeting.
The shares represented by properly executed and unrevoked proxies received
in the accompanying form in time will be voted by Stanton J. Bluestone,
Charles J. Hansen and Michael R. MacDonald, the proxy holders designated in
the proxies (the "Proxy Holders"), at the Annual Meeting as directed in the
proxies. A proxy may be revoked at any time prior to the time it is voted by
(a) written notice to the Company stating that the proxy is revoked, (b)
execution and delivery to the Company of a subsequently dated proxy, or (c)
attendance at the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not automatically revoke the proxy.
PROXY VOTING
At the Annual Meeting, the shareholders will (1) elect seven directors by
cumulative voting, (2) vote on approval of the Carson Pirie Scott & Co. 1997
Senior Executive Bonus Plan (the "1997 Bonus Plan"), (3) vote on approval of
the 1993 Stock Incentive Plan, as amended and restated as of March 19, 1997
(the "Restated 1993 Stock Incentive Plan"), and (4) vote on ratification of
the appointment of KPMG Peat Marwick LLP as the Company's independent
accountants for the fiscal year ending January 31, 1998 ("Fiscal 1997"). As of
the date of this Proxy Statement, the Board does not know of any other
business that may come before the Annual Meeting. However, if any matters
properly come before the Annual Meeting, the Proxy Holders intend to vote the
proxies received by them in accordance with their sole and absolute
discretion.
<PAGE>
With respect to the election of directors, a shareholder may (a) vote "FOR"
the election of all seven of the nominees for director named in this Proxy
Statement, (b) "WITHHOLD AUTHORITY" to vote for all the nominees, or (c)
"WITHHOLD AUTHORITY" to vote for one or more of the nominees and vote for all
of the remaining nominees. If a quorum is present at the meeting, the seven
candidates for director receiving the greatest number of votes will be
elected. Withholding authority to vote for a particular nominee will not
prevent that nominee from being elected.
In addition, with respect to the election of directors and for no other
purpose, each shareholder has the right to cast votes equal to the number of
shares owned by the shareholder multiplied by the number of directors to be
elected. The shareholder may distribute the shareholder's votes among as many
candidates as desired in whatever proportion desired. Except as otherwise
instructed by a shareholder, each signed and returned proxy that grants
authority to vote for one or more of the nominees will authorize the Proxy
Holders to cumulate all votes which the shareholder is entitled to cast and to
allocate these votes among the nominees as the Proxy Holders determine, in
their sole and absolute discretion. If individuals other than the nominees
named below are nominated for director of the Company, the Proxy Holders
intend to distribute the number of votes as to which they have discretionary
authority with respect to cumulative voting in a manner as will assure the
election of all nominees named below or, if they have insufficient votes for
this purpose, the election of as many of the nominees named below as is
possible.
With respect to each other matter specified in the notice of the meeting, a
shareholder may (a) vote "FOR" the matter, (b) vote "AGAINST" the matter, or
(c) "ABSTAIN" from voting on the matter. Assuming a quorum is present at the
Annual Meeting, the affirmative vote of a majority of the Common Shares
represented at the Annual Meeting and entitled to vote on each of these
matters will be required for approval of the matter. A vote to abstain from
voting on a matter has the effect of a vote against the matter.
Proxies submitted by brokers for shares beneficially owned by other persons
may indicate that all or a portion of the shares represented by the proxies
are not being voted with respect to a particular matter. Applicable broker
rules may not permit a broker to vote shares held in street name with respect
to a particular matter in the absence of instructions from the beneficial
owner of the shares. The shares represented by broker proxies which are not
voted with respect to a particular matter will not be considered entitled to
vote with respect to such matter. Accordingly, at the meeting, shares
represented by broker proxies which are not voted with respect to a particular
matter will not count in determining the presence of a quorum with respect to
that matter. If a quorum is otherwise present, the shares represented by
broker proxies which are not voted will not affect the determination of
whether a matter is approved.
Common Shares will be voted by the Proxy Holders as instructed in the
accompanying proxy, if signed and returned to the Company, on each matter
submitted to the shareholders. THE BOARD RECOMMENDS A VOTE (1) FOR ALL SEVEN
NOMINEES FOR DIRECTOR NAMED BELOW, (2) FOR APPROVAL OF THE 1997 BONUS PLAN,
(3) FOR APPROVAL OF THE RESTATED 1993 STOCK INCENTIVE PLAN, AND (4) FOR
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR FISCAL 1997.
If a proxy is signed and returned to the Company but no instructions are
given on the proxy, the shares covered by the proxy will be voted "FOR" the
election of all seven nominees for director named below, "FOR" approval of the
1997 Bonus Plan, "FOR" approval of the Restated 1993 Stock Incentive Plan and
"FOR" ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent accountants for Fiscal 1997.
2
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table provides information regarding each person or group of
persons who is the beneficial owner of more than 5% of the outstanding Common
Shares (exclusive of the Subsidiary Shares) as of the respective dates
indicated in the footnotes to the table.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS OF 5% NUMBER OF OUTSTANDING
BENEFICIAL OWNER COMMON SHARES COMMON SHARES
---------------------- ------------- -------------
<S> <C> <C>
NewSouth Capital 2,188,331 13.8%
Management, Inc.(1)
1000 Ridgeway Loop Road
Suite 233
Memphis, TN 38120
FMR Corp.(2) 2,131,674 13.4%
82 Devonshire Street
Boston, MA 02109
Harris Associates L.P.(3) Two North 1,644,900 10.3%
LaSalle Street Suite 500
Chicago, IL 60602-3790
Lazard Freres & Co. LLC (4) 30 Rockefel- 939,395 5.9%
ler Plaza
New York, NY 10020
</TABLE>
- --------
(1) As reported in Amendment No. Three to a Schedule 13G dated February 12,
1997 filed with the Securities and Exchange Commission (the "SEC"),
NewSouth Capital Management, Inc. is an investment adviser registered
under the Investment Advisers Act of 1940 (the "Advisers Act") and has
sole investment power with respect to 2,188,331 Common Shares, sole voting
power with respect to 2,079,831 Common Shares and shared voting power with
respect to 108,500 Common Shares.
(2) As reported in Amendment No. 3 to a Schedule 13G dated February 14, 1997
filed with the SEC, Edward C. Johnson 3d, Chairman of FMR Corp., various
members of the Edward C. Johnson 3d family, and trusts for their benefit
may be deemed to form a controlling group with respect to FMR Corp. FMR
Corp. (through its control of Fidelity Management & Research Company
("Fidelity"), an investment adviser registered under the Advisers Act),
Mr. Johnson and the Fidelity Funds each has sole investment power with
respect to 1,841,074 Common Shares. Neither FMR Corp. nor Mr. Johnson has
sole voting power with respect to the Common Shares owned by the Fidelity
Funds, which power resides with the Fidelity Funds' Board of Trustees. FMR
Corp. (through its control of Fidelity Management Trust Company, the
investment manager of certain institutional accounts) and Mr. Johnson each
has sole voting and investment power with respect to 290,600 Common
Shares.
(3) As reported in Amendment No. 2 to Schedule 13G dated April 3, 1997 filed
with the SEC, Harris Associates L.P. ("Harris L.P.") is an investment
adviser registered under the Advisers Act. Harris Associates, Inc.
("Harris") is the sole general partner of Harris L.P. Harris and Harris
L.P. have shared voting power with respect to 1,644,900 Common Shares,
shared investment power with respect to 1,634,400 Common Shares and sole
investment power with respect to 10,500 Common Shares. Of the Common
Shares with respect to which Harris and Harris L.P. have shared investment
and voting power, 1,000,000 are owned by a series of the Harris Associates
Investment Trust designated The Oakmark Fund.
(4) As reported in Amendment No. 1 to Schedule 13G dated April 7, 1997 filed
with the SEC, Lazard Freres & Co. LLC is an investment adviser registered
under the Advisers Act and has sole investment power with respect to
939,395 Common Shares and sole voting power with respect to 851,445 Common
Shares.
3
<PAGE>
The following table provides information concerning the number of Common
Shares that are beneficially owned, directly or indirectly, as of April 10,
1997 (except that the information for Mr. Freudenthal is as of January 17,
1997, the date he resigned from the Company) by each director, by each
executive officer named in the Summary Compensation Table on page 9 of this
Proxy Statement and by all directors and all executive officers (including the
named executive officers) as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON SHARES
------------------------ -------------------- -------------
<S> <C> <C>
Stanton J. Bluestone (1).............. 227,117 1.4%
Michael R. MacDonald (2).............. 147,439 *
John R. Freudenthal (3)............... 76,374 *
Catherine A. Shaw (4)................. 62,919 *
Edward P. Carroll, Jr. (5)............ 53,463 *
Darren Jackson (6).................... 18,045 *
Mark Dickstein (7).................... 134,400 *
Mark L. Kaufman (8)................... 12,000 *
Robert Tammero (9).................... 10,000 *
John W. Burden III (10)............... 0 *
Chaim Edelstein (10).................. 0 *
William I. Jenkins.................... 0 *
All directors and executive officers
as a group
(11 persons)(11)..................... 741,757 4.7%
</TABLE>
- --------
*Less than 1%.
(1) Consists of 3,117 Common Shares owned by Mr. Bluestone and exercisable
options to purchase 224,000 Common Shares under the Company's 1993 Stock
Incentive Plan (the "1993 Stock Incentive Plan").
(2) Consists of 2,539 Common Shares owned by Mr. MacDonald, 3,000 Common
Shares held in The Michael R. MacDonald Trust, 2,300 Common Shares owned
by each of Mr. MacDonald's three minor daughters and exercisable options
to purchase 135,000 Common Shares under the 1993 Stock Incentive Plan.
(3) Consists of 374 Common Shares owned by Mr. Freudenthal and exercisable
options to purchase 76,000 Common Shares under the 1993 Stock Incentive
Plan. The information provided in the table for Mr. Freudenthal is as of
January 17, 1997, the date Mr. Freudenthal resigned from the Company.
(4) Consists of 719 Common Shares owned by Ms. Shaw and exercisable options to
purchase 62,200 Common Shares under the 1993 Stock Incentive Plan.
(5) Consists of 341 Common Shares owned by Mr. Carroll and exercisable options
to purchase 53,122 Common Shares under the 1993 Stock Incentive Plan.
(6) Consists of 1,785 Common Shares owned by Mr. Jackson and exercisable
options to purchase 16,260 Common Shares under the 1993 Stock Incentive
Plan.
(7) Includes 103,000 Common Shares owned by Dickstein & Co., L.P., 21,400
Common Shares owned by Dickstein International Limited, and 10,000
exercisable options to purchase Common Shares pursuant to the Company's
1993 Directors' Stock Option Plan (the "Director Option Plan") held by Mr.
Dickstein, who is the sole shareholder, sole director, and president of
Dickstein Partners Inc. ("DPI"). DPI serves as the general partner of the
general partner of Dickstein & Co., L.P. and serves as advisor to, and
makes all investment and voting decisions for, Dickstein International
Limited. The information in the table excludes 2,000 Common Shares the
receipt of which Mr. Dickstein elected to defer in accordance with the
terms of the Carson Pirie Scott & Co. 1996 Directors' Stock Compensation
Plan ("Director Stock Plan").
(8) Consists of 2,000 Common Shares owned by Mr. Kaufman and 10,000
exercisable options under the Director Option Plan.
4
<PAGE>
(9) Consists of 10,000 exercisable options under the Director Option Plan but
excludes 2,000 Common Shares the receipt of which Mr. Tammero elected to
defer in accordance with the terms of the Director Stock Plan.
(10) Excludes 2,000 Common Shares the receipt of which Mr. Burden and Mr.
Edelstein each elected to defer in accordance with the terms of the
Director Stock Plan.
(11) Consists of the Common Shares owned by the directors and executive
officers, exercisable options to purchase Common Shares under the 1993
Stock Incentive Plan and the Director Option Plan held by them as
described in the footnotes above and Common Shares issued under the
Director Stock Plan. The table excludes Common Shares the receipt of
which directors elected to defer in accordance with the terms of the
Director Stock Plan. The number in the table reflects the Common Shares
and exercisable options held by Mr. Freudenthal as of the date he
resigned from the Company.
ITEM I
ELECTION OF DIRECTORS
Seven directors are to be elected at the Annual Meeting to hold office until
the next annual meeting of shareholders and until their respective successors
shall have been elected and qualified. The nominees for election as directors
at the Annual Meeting are Stanton J. Bluestone (Chairman of the Board), John
W. Burden III, Mark Dickstein, Chaim Y. Edelstein, Mark L. Kaufman and Michael
R. MacDonald, each of whom currently is a director of the Company, and William
I. Jenkins. Robert Tammero, currently a director of the Company, has decided
not to stand for reelection as a director. Under the employment agreements
between the Company and each of Messrs. Bluestone and MacDonald, the Company
is required to take all necessary steps to allow each of Messrs. Bluestone and
MacDonald to serve as a director of the Company. See "Executive Compensation--
Employment Agreements" below.
NOMINEES FOR DIRECTOR
Information with respect to each nominee for director is provided below.
Except as otherwise indicated, each nominee has been engaged in his present
principal occupation for at least the past five years. Messrs. Bluestone and
MacDonald have served on the Board since January 1985 and August 1991,
respectively. Messrs. Dickstein and Kaufman have served on the Board since
October 1993. Mr. Burden served on the Board from October 1993 to June 1995,
when he resigned to serve on the Board of Directors of Younkers, Inc. (the
"Younkers Board"). In February 1996, Mr. Burden resigned from the Younkers
Board and was reappointed to the Board. Mr. Edelstein has served on the Board
since February 1996. Mr. Jenkins has not previously served on the Board.
STANTON J. BLUESTONE
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Age 62. Chairman of the Board and Chief Executive Officer since March 1996.
President and Chief Executive Officer from August 1993 to March 1996.
President and Acting Chief Executive Officer from May 1991 to August 1993.
President from January 1985 to May 1991. Member of the Executive Committee of
the Board. Other directorship: Hills Stores Company ("Hills Stores").
5
<PAGE>
JOHN W. BURDEN III
DIRECTOR
Age 60. Partner of Retail Options, Inc., a retail consultant, since November
1993. Vice President of Pelican Palm Realty Corporation, a real estate sales
company, from December 1990 to March 1993. Chairman and Chief Executive
Officer of Federated Department Stores, Inc. ("Federated") and Allied Stores
Corporation, each a department store chain, from August 1988 to February 1990.
Chairman of the Nominating Committee and member of the Compensation Committee.
Other directorships: Danskin, Inc. and Hills Stores.
MARK DICKSTEIN
DIRECTOR
Age 38. President of Dickstein Partners Inc. As President of Dickstein
Partners Inc., Mr. Dickstein is primarily responsible for the operations of
Dickstein & Co., L.P., Dickstein Focus Fund L.P. and Dickstein International
Limited, each of which invests primarily in risk arbitrage transactions,
securities and debt obligations of financially distressed companies, and other
special situations. Chairman of the Compensation Committee and member of the
Executive Committee and the Nominating Committee. Chairman of the Board from
October 1993 until March 1996. Other directorships: Hills Stores and News
Communications, Inc.
CHAIM Y. EDELSTEIN
DIRECTOR
Age 54. Chairman of the Board of Hills Stores since February 1996. Retail
consultant to various department store chains from February 1994 to February
1996. Consultant to Hills Stores since July 1995. Chairman and Chief Executive
Officer of Abraham and Straus, a division of Federated, from January 1985 to
February 1994. Member of the Audit Committee, the Compensation Committee and
the Nominating Committee. Other directorships: Hills Stores and Jan-Bell
Marketing, Inc. Trustee: Independence Saving Bank.
WILLIAM I. JENKINS
DIRECTOR NOMINEE
Age 56. President and Chief Executive Officer of Sinai Samaritan Medical
Center Aurora Health Care, Inc. since April 1990. Administrator, Chief
Executive Officer of Milwaukee County Medical Complex (Doyne Hospital) from
March 1983 to December 1989.
MARK L. KAUFMAN
DIRECTOR
Age 40. Vice President of Dickstein Partners Inc. since July 1992. Senior
Vice President of Oppenheimer & Co., an investment banking firm, from March
1992 to July 1992 and a Vice President of Oppenheimer & Co. from May 1990 to
February 1992. Vice President of GAF Corp., a chemical and roofing
manufacturer, from July 1988 to April 1990. Member of the Audit Committee.
MICHAEL R. MACDONALD
DIRECTOR, PRESIDENT AND CHIEF OPERATING OFFICER
Age 45. President and Chief Operating Officer since March 1996. Executive
Vice President and Chief Administrative Officer from August 1993 to March 1996
and Executive Vice President and Chief Financial Officer from September 1990
to August 1993. Senior Vice President-Chief Financial Officer of Marshall
Field & Co., a department store chain, from April 1985 to September 1990.
6
<PAGE>
ADDITIONAL INFORMATION CONCERNING THE BOARD
Attendance at Meetings--During the Company's fiscal year ended February 1,
1997 ("Fiscal 1996"), the Board held five meetings and all incumbent directors
attended more than 75% of the aggregate of these meetings of the Board and the
committees on which they served that were held while they so served.
Committees of the Board--The Board has the following standing committees:
Executive, Audit, Compensation and Nominating. The Audit, Compensation and
Nominating Committees are composed solely of nonemployee directors.
Executive Committee--The Executive Committee is composed of Messrs.
Dickstein and Bluestone. Pursuant to the Company's By-laws, this Committee
consists of the Chairman of the Board and Chief Executive Officer and one
other person. The Executive Committee has and may exercise all authority of
the Board, subject to the limitations in the Company's Amended and Restated
By-laws (the "By-laws") and The Illinois Business Corporation Act of 1983. The
Executive Committee held one meeting in Fiscal 1996.
Audit Committee--The Audit Committee is composed of Messrs. Tammero
(Chairman), Edelstein and Kaufman. This Committee (a) ensures the adequacy of
the Company's internal control structure, (b) establishes the policies of the
Company's Internal Audit Department to ensure they meet the objectives of the
Audit Committee, (c) approves the annual and long range audit plans, (d)
reviews the audit results and directs any necessary management action to
improve internal audit controls, and (e) reviews the activities of the
independent auditors. The Audit Committee held two meetings in Fiscal 1996.
Compensation Committee--The Compensation Committee is composed of Messrs.
Dickstein (Chairman), Burden and Edelstein. This Committee (a) approves the
Company's executive compensation policy and practices, (b) approves the
specific compensation levels of the Chairman of the Board and Chief Executive
Officer and the members of the Company's Senior Executive Committee (the
"SEComm"), (c) approves all cash-based or deferred executive compensation
plans, (d) approves, and recommends for approval by the Board for submission
to shareholders, all stock-based compensation programs, and (e) approves
overall compensation budgets and significant compensation or benefit programs
impacting all of the Company's employees. The Compensation Committee held
three meetings in Fiscal 1996.
Nominating Committee--On March 25, 1996, the Board established the
Nominating Committee, which is composed of Messrs. Burden (Chairman),
Dickstein and Edelstein. This Committee (a) recommends to the Board, with the
advice of other Board members, the optimal size of the Board and committees of
the Board, (b) assists in director selection by determining the desired member
characteristics and developing a candidate list and (c) considers issues of
corporate governance. The Nominating Committee held one meeting in Fiscal
1996.
Director Nominations by Shareholders--The Company's By-laws provide that
nominations of persons for election to the Board may be made at an annual
meeting or special meeting of shareholders (i) pursuant to the Company's
notice of meeting and (ii) by any shareholder who was a shareholder of record
at the time of giving of notice as provided in the By-laws, who is entitled to
vote at the meeting and who complied with the notice procedures provided in
the By-laws. Subject to the next sentence, for an annual meeting of
shareholders, the shareholder's notice must be delivered to the Secretary of
the Company at the Company's principal executive offices not later than 90
days prior to the first anniversary date of the release of the Company's proxy
statement to shareholders for the preceding year's annual meeting of
shareholders. If no annual meeting of shareholders was held in the preceding
year, or if the date of the annual meeting has been advanced by more than 30
days or delayed by more than 60 days from the first anniversary date of the
preceding year's annual meeting of
7
<PAGE>
shareholders, notice by the shareholder must be so delivered not later than
the close of business on the later of the 90th day prior to the meeting or the
10th day following the day on which public announcement of the date of the
meeting is first made. For a special meeting, the shareholder's notice must be
delivered to the Secretary at the Company's principal executive offices not
later than the close of business on the later of the 90th day prior to the
special meeting or the 10th day following the day on which public announcement
is first made of the date of the special meeting. In the case of an annual
meeting or a special meeting of shareholders, the shareholder's notice must
set forth with respect to the shareholder's nominee, all information relating
to such person that is required to be disclosed in solicitations of proxies
for election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934 (the "Exchange Act")
and information regarding the shareholder and the beneficial owner, if any, on
whose behalf the nomination is made, including the shareholder's name and
address as they appear on the Company's books, and of the beneficial owner,
and the class and number of Common Shares which are owned beneficially and of
record by the shareholder and the beneficial owner. If the size of the Board
is increased by action of the Board after the date that the shareholder's
notice is required to be delivered as described above, the shareholder's
notice shall also be considered timely, but only with respect to the number of
directors added to the Board by the increase, if the shareholder's notice
complying with the By-laws is delivered to the Secretary of the Company at the
Company's principal executive offices not later than the close of business on
the 10th day following the day on which the Company announces the increase in
the size of the Board. The chairman of the meeting has the power to disregard
any defective nomination. The By-laws contain similar procedures applicable to
other business to be brought before a meeting by a shareholder.
Compensation of Directors--In Fiscal 1996 pursuant to the Director Stock
Plan, each nonemployee director was granted (a) 1,500 Common Shares on May 30,
1996 for service from May 31, 1996 through the Annual Meeting to be held on
June 4, 1997 and (b) 500 Common Shares effective as of March 25, 1996
following approval by the Company's shareholders on May 30, 1996, for service
on the Board from February 5, 1996 to May 30, 1996. All nonemployee directors
other than Mr. Kaufman elected to defer receipt of Common Shares granted under
the Director Stock Plan for a period of 4 years. For service on the Board from
June 4, 1997 until the Company's next annual meeting of shareholders, each
nonemployee director nominee, if elected, would be entitled to receive 1,500
Common Shares pursuant to the Director Stock Plan. However, pursuant to
waivers signed by each nonemployee director nominee, each nonemployee director
nominee, if elected, will receive 1,250 Common Shares in full satisfaction of
the right to receive the 1,500 Common Shares he would be entitled to receive
under the Director Stock Plan. The nonemployee directors may elect to defer
receipt of these Common Shares. Common Shares that were deferred will be
delivered to a nonemployee director at the earliest of (i) the expiration of
the deferral period, (ii) cessation of service on the Board, or (iii) a change
of control (as provided in the Director Stock Plan). Nonemployee directors
serving as committee chairmen also received an additional annual fee of $2,500
in cash. For each Board meeting, nonemployee directors received $2,500 in cash
for attendance in person and $1,000 in cash for attendance by conference
telephone. For each committee meeting, nonemployee directors received $1,000
in cash for attendance in person and $500 in cash for attendance by conference
telephone. Directors who are full-time employees of the Company do not receive
fees for service on the Board or on a committee of the Board and are not
eligible to receive Common Shares under the Director Stock Plan. The Director
Option Plan, which provided for option grants to persons who were nonemployee
directors on November 2, 1993 or who thereafter became nonemployee directors,
was suspended effective as of the end of the fiscal year ending February 3,
1996 ("Fiscal 1995").
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation of the Chairman of the Board
and Chief Executive Officer of the Company, and the other four most highly
compensated persons who were serving as executive officers of the Company at
the end of Fiscal 1996. As used in this Proxy Statement the term "executive
officer" has the meaning set forth in Rule 3b-7 under the Exchange Act. As a
consequence, the table is not a list of the most highly compensated employees
of the Company. In addition, the table sets forth the compensation of John R.
Freudenthal, who resigned from the Company prior to the end of Fiscal 1996.
The table shows compensation for services rendered in all capacities to the
Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL
COMPENSATION AWARDS
----------------- ------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION (1)
--------------------------- ---- -------- -------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Stanton J. Bluestone, 1996 $750,000 $337,500 40,000 $ 16,433(2)
Chairman of the Board and 1995 723,654 242,820 20,000 13,110
Chief Executive Officer 1994 682,500 255,938 30,000 9,945
Michael R. MacDonald, 1996 $437,000 $180,263 25,000 $ 20,297
President and Chief 1995 394,442 121,325 24,000 6,180
Operating Officer 1994 365,000 123,187 16,000 3,732
John R. Freudenthal, 1996 $315,384 $ 74,489 0 $664,996(3)
Executive Vice President-- 1995 334,308 37,392 10,000 7,122
Merchandising (3) 1994 317,000 83,213 11,000 3,658
Catherine A. Shaw, 1996 $300,000 $ 71,250 7,500 $ 7,979
Executive Vice President-- 1995 294,558 32,946 10,000 6,697
Stores, Visual Merchandising 1994 279,000 73,238 11,000 3,622
and Store Planning
Edward P. Carroll, Jr., 1996 $255,000 $ 76,500 7,500 $ 20,086
Executive Vice President-- 1995 247,681 55,406 10,000 8,965
Sales Promotion and 1994 229,000 60,115 11,000 3,743
Marketing
Darren R. Jackson 1996 $166,000 $ 34,652 5,000 $ 7,626
Senior Vice President-- 1995 151,577 28,779 5,600 4,638
Chief Financial Officer 1994 126,600 22,155 2,400 3,165
</TABLE>
- --------
(1) The Company made matching 401(k) contributions for Fiscal 1996 of $3,000
for each of Mr. Bluestone, Mr. MacDonald, Mr. Freudenthal, Ms. Shaw, Mr.
Carroll and Mr. Jackson. The Company also credited an account with
matching deferred compensation contributions for Fiscal 1996 of $3,250 for
each of Mr. Bluestone, Mr. MacDonald, Ms. Shaw and Mr. Carroll, $3,200 for
Mr. Freudenthal and $1,168 for Mr. Jackson, and with interest on the
amounts in the accounts of Mr. Bluestone, Mr. MacDonald, Mr. Freudenthal,
Ms. Shaw, Mr. Carroll and Mr. Jackson at a rate that exceeded 120% of the
applicable federal long-term rate by $4,858, $14,047, $2,796, $1,729,
$13,836 and $3,458 respectively.
9
<PAGE>
(2) Includes payment for Fiscal 1996 of $5,325 for life insurance premiums for
Mr. Bluestone.
(3) Mr. Freudenthal resigned from the Company effective January 17, 1997.
Includes a $656,000 benefit paid to Mr. Freudenthal in January 1997
pursuant to a separation agreement.
OPTION GRANTS
The following table sets forth information regarding grants of stock options
in Fiscal 1996 under the 1993 Stock Incentive Plan to the executive officers
named in the Summary Compensation Table.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT
OPTIONS EMPLOYEES OR BASE DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT
NAME (#)(1) YEAR ($/SH) DATE VALUE(2)
---- ---------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Stanton J. Bluestone......... 40,000 23.6% $24.25 3/25/2006 $464,800
Michael R. MacDonald......... 25,000 14.7% 24.25 3/25/2006 290,500
John R. Freudenthal.......... 0 -- -- -- --
Catherine A. Shaw............ 7,500 4.4% 24.25 3/25/2006 87,150
Edward P. Carroll, Jr........ 7,500 4.4% 24.25 3/25/2006 87,150
Darren R. Jackson............ 5,000 2.9% 23.75 5/02/2006 58,100
</TABLE>
- --------
(1) The options shown above vest 20% on the date of grant and an additional
20% on each of the first four anniversaries of the date of grant for all
executives except Mr. Bluestone. The options granted to Mr. Bluestone vest
20% on the date of grant, an additional 20% on each of the next two
anniversary dates of the grant and the final 40% on January 31, 1999.
Stock options fully vest upon a change of control and, in the case of each
of Mr. Bluestone and Mr. MacDonald, upon his termination of employment by
the Company without cause prior to a change of control.
(2) The Black-Scholes option pricing method has been used to calculate present
value as of the date of grant. To calculate the present value as of the
date of grant the following assumptions were used: exercise price, $24.25
for options granted to Messrs. Bluestone, MacDonald, Carroll and Ms. Shaw
and $23.75 for options granted to Mr. Jackson; time of exercise, 7 years
following the date of grant; risk-free rate of return, 6.44%; volatility,
31.84%; and dividend yield, 0.0%. There is no assurance that these
assumptions will prove to be true in the future. The actual value, if any,
that may be realized by each individual will depend on the market price of
Common Shares on the date of exercise.
10
<PAGE>
OPTION EXERCISES
The following table provides information regarding unexercised stock options
granted under the 1993 Stock Incentive Plan to the executive officers named in
the Summary Compensation Table. None of these executive officers exercised any
stock options during Fiscal 1996. Except as indicated in the footnotes to the
table, all the options were held by the named executive officers at the end of
Fiscal 1996.
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
AT FY-END (#) FY-END(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stanton J. Bluestone....... 208,000 32,000 $2,997,500 $ 80,000
Michael R. MacDonald....... 125,000 20,000 1,720,500 50,000
John R. Freudenthal(2)..... 76,000 0 1,132,000 0
Catherine A. Shaw.......... 56,100 27,400 843,200 307,550
Edward P. Carroll, Jr...... 56,100 27,400 843,200 307,550
Darren Jackson............. 14,280 10,720 200,680 97,620
</TABLE>
- --------
(1) This amount represents the aggregate amount of the difference between the
option exercise price and the closing market price of the Common Shares on
January 31, 1997, the last day of trading during Fiscal 1996, as reported
in The Wall Street Journal as New York Stock Exchange Composite
Transactions.
(2) Mr. Freudenthal resigned from the Company on January 17, 1997. In
accordance with his separation agreement, all unvested options then
outstanding became fully exercisable.
LONG-TERM INCENTIVE PLAN
During Fiscal 1996 the Company adopted the Carson Pirie Scott & Co. 1996
Long-Term Incentive Plan (the "Long-Term Incentive Plan"). The Long-Term
Incentive Plan provides that its participants will receive a cash payment if
the Company achieves a specified level of earnings before interest, income
taxes, depreciation and amortization, as such earnings are adjusted based upon
the Company's capital expenditures for the preceding fiscal year ("Adjusted
Earnings") for each determination period (as provided in the Long-Term
Incentive Plan). Under the plan, a determination period is defined as a period
of three consecutive fiscal years with the first determination period
beginning February 4, 1996. A new three-fiscal-year determination period will
commence with the commencement of each new fiscal year so long as the plan is
in effect. If the Company's Adjusted Earnings are less than the threshold
level for the determination period, no payment will be made. If the Company
achieves Adjusted Earnings between the threshold level and the maximum level
for the determination period, each participant will receive a prorated portion
of the maximum award. If the Company's Adjusted Earnings equal or exceed the
maximum level for the determination period, the maximum award will be paid.
Both the threshold and maximum Adjusted Earnings levels for fiscal 1996 are
set forth in the plan. For subsequent years, threshold and maximum Adjusted
Earnings levels are determined according to a formula set forth in the plan. A
participant will receive a prorated portion of any earned award if the
participant becomes a participant after the commencement of the determination
period or if the participant's employment with the Company ceases during the
determination period as a result of death, disability or retirement. A
participant also will receive a prorated award if there is a change of control
(as provided in the Long-Term Incentive Plan) during the determination period.
Participants will be required to defer receipt of any award under the Long-
Term Incentive Plan if
11
<PAGE>
necessary to avoid the loss of tax deductions under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "IRC"). The following table
provides information regarding the threshold and maximum awards that may be
payable to the named executive officers at the end of the three-year
determination period that commenced in Fiscal 1996 under the Long-Term
Incentive Plan:
LONG-TERM INCENTIVE PLAN
AWARDS IN FISCAL 1996
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK
PRICE-BASED PLANS
PERFORMANCE OR OTHER -------------------------
PERIOD UNTIL MATURATION THRESHOLD
NAME OR PAYOUT ($) MAXIMUM ($)
---- ------------------------ -------------------------
<S> <C> <C> <C>
Stanton J. Bluestone........ February 4, 1996 through $ 50,000 $ 150,000
January 30, 1999
Michael R. MacDonald........ February 4, 1996 through $ 35,000 $ 105,000
January 30, 1999
John R. Freudenthal (1)..... -- -- --
Catherine A. Shaw........... February 4, 1996 through $30,000 $ 90,000
January 30, 1999
Edward P. Carroll, Jr....... February 4, 1996 through $30,000 $ 90,000
January 30, 1999
Darren Jackson.............. February 4, 1996 through $ 15,000 $ 45,000
January 30, 1999
</TABLE>
- --------
(1) Mr. Freudenthal will not be entitled to any benefits under the Long-Term
Incentive Plan because his employment terminated prior to the end of the
determination period for reasons other than death, disability or
retirement.
EMPLOYMENT AGREEMENTS
On March 25, 1996, the Company entered into employment agreements with
Messrs. Bluestone and MacDonald which replaced their existing employment
agreements with the Company. The agreement with Mr. Bluestone provides that he
will serve as Chairman of the Board and Chief Executive Officer of the Company
until January 31, 1999 and that the Company will take all necessary steps to
allow Mr. Bluestone to serve as a director of the Company until such date. The
agreement with Mr. MacDonald provides that he will serve as President and Chief
Operating Officer of the Company and that the Company will take all necessary
steps to allow Mr. MacDonald to serve as a director of the Company until the
end of his employment term. Mr. MacDonald's employment agreement provides for
an employment term initially ending on October 31, 1998, and, commencing April
1, 1996, an extension of his term each day by an additional day unless either
Mr. MacDonald or the Company notifies the other that the term will not be
extended. As of the date of this Proxy Statement and subject to the preceding
sentence, Mr. MacDonald's employment term ends on November 30, 1999. The
agreements also provide that Messrs. Bluestone and MacDonald receive
compensation in the form of (a) an annual base salary (which may be increased,
but not decreased, during the employment term), (b) the opportunity to earn an
annual bonus pursuant to a mutually agreed-upon formula, and (c) the right to
participate in the 1993 Stock Incentive Plan, life insurance, medical
insurance, other employee benefit plans, and all incentive, savings and
retirement plans, policies and programs of the Company in effect from time to
time. The Company's obligations to provide Messrs. Bluestone and MacDonald with
an opportunity to earn an annual bonus in any year will be satisfied if they
are selected to participate in the 1997 Bonus Plan for that year. Upon Mr.
Bluestone's total disability (as defined in the employment agreement), the
Company will pay a disability
12
<PAGE>
benefit to Mr. Bluestone equal to 65% of his annual base salary (as defined in
the employment agreement) until the earlier of his death or January 31, 1999,
but reduced by any insurance benefits provided by the Company or the Company's
insurance carrier and all other compensation paid by the Company. Upon Mr.
MacDonald's total disability (as defined in the employment agreement), the
Company will pay a disability benefit to Mr. MacDonald equal to 50% of his
annual base salary (as defined in the employment agreement) until the earlier
of his death or his attaining age 62, but reduced by any disability insurance
benefits provided by the Company or the Company's insurance carrier and all
other compensation paid by the Company. Messrs. Bluestone and MacDonald may
defer a portion of their annual salary and bonus with payments of deferred
amounts, plus interest, beginning not later than April 30, 1999 for Mr.
Bluestone and December 31, 1999 for Mr. MacDonald. During Mr. Bluestone's
employment, the Company is required to maintain for Mr. Bluestone a term life
insurance policy equal to $1,000,000 less the amount of insurance coverage
provided by the Company under any other plan, policy or arrangement. Mr.
Bluestone is the owner of the policy. The Company is also required to
reimburse Mr. Bluestone for one-half of the premium paid to insure the payment
of Mr. Bluestone's accrued benefits under the Carson Pirie Scott & Co.
Supplemental Executive Retirement Plan (the "SERP"), if Mr. Bluestone chooses
to purchase a policy, up to a cumulative maximum reimbursement of $25,000 per
year. As of the date of this Proxy Statement, Mr. Bluestone has not purchased
such a policy. The Company must pay Mr. Bluestone, upon termination of his
employment, $523,215 under a plan entitled Restated P.A. Bergner & Co.
Incentive Compensation Plan (the "PAB Incentive Plan"). As of April 2, 1990,
the PAB Incentive Plan was suspended and the amounts payable to the then-
existing participants upon termination of employment were fixed. During the
employment of Messrs. Bluestone and MacDonald, all stock options or other
securities granted under the 1993 Stock Incentive Plan to Messrs. Bluestone
and MacDonald prior to March 25, 1996 fully vested on January 31, 1997 and all
stock options or other securities granted under the 1993 Stock Incentive Plan
to Messrs. Bluestone and MacDonald on and after March 25, 1996 fully vest, in
the case of Mr. Bluestone, on January 31, 1999 and, in the case of Mr.
MacDonald, on September 30, 1999. Notwithstanding the preceding sentence,
options granted to Mr. MacDonald on March 25, 1996 and March 26, 1997 vest 20%
on the date of grant and an additional 20% vest on each of the four following
anniversaries of the date of grant in accordance with waivers executed by Mr.
MacDonald.
The Company may terminate the employment of Messrs. Bluestone and MacDonald
at any time for cause or in the event of total disability (as provided in the
employment agreements). Messrs. Bluestone and MacDonald each may terminate his
employment for good reason upon or within two years following a change of
control (as provided in the employment agreements).
If the Company terminates the employment of either executive for cause or if
Mr. Bluestone or Mr. MacDonald terminates his employment voluntarily (other
than for good reason upon or within two years following a change of control),
the Company is required to pay the executive his annual salary and other
benefits to the date of termination of employment together with any
compensation previously deferred and accrued interest on the deferred amount.
If the employment of Mr. Bluestone or Mr. MacDonald is terminated for total
disability or by reason of death, he or his estate would receive (a)
disability benefits (if applicable), (b) any compensation previously deferred
(plus accrued interest on the deferred amount) and (c) the amount of the
executive's annual base salary and average bonus (as defined in the employment
agreements) prorated to the date of termination. If the Company terminates Mr.
Bluestone's employment without cause prior to a change of control, (i) Mr.
Bluestone would receive his annual base salary and employee benefits until the
later of the second anniversary of the date of termination or January 31, 1999
(the "Severance Period"), (ii) the Company will pay Mr. Bluestone, within 30
days following the date of termination, a lump sum payment of the midpoint
bonus (as provided in the employment agreement) prorated as of the date of
termination, an additional amount equal to his midpoint bonus for the
severance period and all previously deferred compensation (plus accrued
interest on the deferred amount) and (iii) all of Mr. Bluestone's SERP
benefits, any stock options or other securities awarded under the 1993 Stock
Incentive Plan and, to the extent permitted by law, any defined benefit and
401(k) plan
13
<PAGE>
benefits fully vest with credit for service during the Severance Period. If
the Company terminates Mr. MacDonald's employment without cause prior to a
change of control, (i) Mr. MacDonald would receive his annual base salary and
employee benefits until the end of the employment term under his employment
agreement with service credit for purposes of accruals and vesting under the
SERP, (ii) All of Mr. MacDonald's stock options or other securities awarded
under the 1993 Stock Incentive Plan would fully vest and (iii) within 30 days
following his termination, the Company would pay Mr. MacDonald any previously
deferred compensation (plus accrued interest on the deferred amount) and
accrued vacation pay to the extent not previously paid.
If, upon or within two years after a change of control, Mr. Bluestone or Mr.
MacDonald terminates his employment for good reason or the Company terminates
his employment without cause, then the Company is required to pay in a lump
sum within 15 days of the date of termination, in the case of Mr. Bluestone,
three times his annual base salary plus three times his midpoint bonus and a
prorated midpoint bonus for the year of termination, and in the case of Mr.
MacDonald, two and one-half times his annual base salary plus two times his
maximum bonus (as provided in his employment agreement) and a prorated maximum
bonus for the year of termination. At the same time, the Company would be
required to pay Mr. Bluestone and Mr. MacDonald cash equal to the sum of
unvested amounts in the Company's defined benefit and 401(k) plans and credit
the executive with additional hours under the Company's pension plan, in the
case of Mr. Bluestone, equal to the least of (a) the greater of (1) 501 hours
and (2) the maximum number of hours of benefit service attributable to
severance pay on the date of termination, (b) the maximum number of hours
permitted by law, and (c) 3,000 hours, and in the case of Mr. MacDonald, equal
to the least of (a) the greater of (1) 501 hours and (2) the maximum number of
hours of benefit service attributable to severance pay on the date of
termination, (b) the maximum number of hours permitted by law, and (c) 2,500
hours. The Company also would be required to continue the executive's employee
benefits for 36 months in the case of Mr. Bluestone and 30 months in the case
of Mr. MacDonald.
The Company is required to pay Messrs. Bluestone and MacDonald a gross-up
payment (as that term is defined in the employment agreements) to reimburse
them for the full amount of any excise tax that may be applicable to any
payment or distribution under their respective employment agreements.
SEVERANCE AGREEMENTS
As of March 25, 1996, the Company entered into severance agreements (the
"Severance Agreements") with the named executive officers (except Messrs.
Bluestone and MacDonald) that replaced existing severance agreements. The
Severance Agreements provide a lump-sum severance payment to the executive if
(a) the Company terminates the executive's employment prior to a change of
control without justification (as those terms are defined in the Severance
Agreements) or (b) the Company terminates the executive's employment without
cause or the executive voluntarily terminates the executive's employment for
good reason, in either case, within two years after a change of control (as
described in the Severance Agreements). Under their Severance Agreements, Ms.
Shaw and Mr. Carroll each are eligible to receive 78 weeks' annual base
compensation, and Mr. Jackson is eligible to receive 65 weeks base
compensation, if their employment is terminated without justification prior to
a change of control. Mr. Carroll, Ms. Shaw and Mr. Jackson each are eligible
to receive 104 weeks annual base compensation and a bonus amount (as provided
in the Severance Agreements) if, upon or within two years after a change of
control, their employment is terminated without cause, they terminate their
employment for good reason or their employment is terminated in anticipation
of a change of control. Messrs. Bluestone's and MacDonald's severance benefits
are set forth in their employment agreements described above. The Company and
Mr. Freudenthal entered into a separation agreement in connection with Mr.
Freudenthal's resignation from the Company. Pursuant to the separation
agreement, Mr. Freudenthal received cash payments totaling $730,489,
accelerated vesting of his options, an increased vesting percentage with
respect to the SERP, and limited continuation of his associate discount and
medical benefits.
14
<PAGE>
RETIREMENT BENEFITS
The following table sets forth the aggregate annual retirement benefits (with
an offset for social security benefits) under the Company's pension plan (the
"Pension Plan") and the SERP at selected years of service and remuneration
levels.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE(1)
BENEFIT ------------------------------------------
REMUNERATION PERCENTAGE 3 6 12 18
------------ ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000 40% $ 7,800 $ 27,800 $ 67,800 $ 67,800
35% 5,300 22,800 57,800 57,800
300,000 40% 17,800 47,800 107,800 107,800
35% 14,050 40,300 92,800 92,800
400,000 40% 27,800 67,800 147,800 147,800
35% 22,800 57,800 127,800 127,800
600,000 40% 47,800 107,800 227,800 227,800
35% 40,300 92,800 197,800 197,800
800,000 40% 67,800 147,800 307,800 307,800
35% 57,800 127,800 267,800 267,800
1,000,000 40% 87,800 187,800 387,800 387,800
35% 75,300 162,800 337,800 337,800
1,200,000 40% 107,800 227,800 467,800 467,800
35% 92,800 197,800 407,800 407,800
1,400,000 40% 127,800 267,800 547,800 547,800
35% 110,300 232,800 477,800 477,800
</TABLE>
- --------
(1) Under the SERP, the benefit accrues ratably over 12 years. After 12 years,
the maximum benefit is reached. The benefit becomes payable at age 62.
The Pension Plan bases retirement benefits on a participant's annual
compensation for each year of participation. Under the Pension Plan, annual
compensation is subject to a maximum limit ($150,000 for 1996) imposed under
the IRC. For 1996, the IRC limits the maximum amount of annual pension benefits
payable by the Pension Plan to $120,000.
The SERP bases retirement benefits upon the average of a participant's five
highest annual salary and regular bonuses that were paid during the
participant's last eligible 10 years of service. Under the SERP, participants
accrue a varying percentage of their average covered compensation depending
upon their membership on the SEComm or the Company's Executive Committee (the
"EC"), reduced by their social security benefits, Pension Plan benefits and
other retirement benefits (except for any 401(k) plan benefits) provided by the
Company or its affiliates and certain predecessors. The SEComm is a management
committee which, as of the end of Fiscal 1996, was composed of Messrs.
Bluestone, MacDonald and Carroll and Ms. Shaw. The EC is a management committee
which, as of the end if Fiscal 1996, was composed of select other officers of
the Company. The percentage for SEComm members is 40% and for EC members is
35%. For each executive officer named in the Summary Compensation Table, the
compensation amount used to calculate the benefits under the Pension Plan
(subject to the maximum limit described above) and the SERP is equal to the sum
of the amounts shown for the executive officer in the Salary and Bonus columns
of the table. The SERP is unfunded.
The Pension Plan and SERP each provide a retirement benefit in the form of a
life annuity for the participant. The normal retirement age under the Pension
Plan is age 65 and under the SERP is age 62. The years of service credited as
of February 1, 1997 to the named executive officers under the SERP are as
follows: Mr. Bluestone (12.1 SEComm years), Mr. Freudenthal (6.5 SEComm years),
Mr. MacDonald (6.4 SEComm years), Ms. Shaw (7.7 SEComm years, 5 EC years), Mr.
Carroll (3.8 SEComm years, 7.7 EC years) and Mr. Jackson (1.5 EC years).
15
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
Compensation matters for the Company's executive officers for Fiscal 1996
were reviewed and approved by the Compensation Committee of the Board of
Directors.
Executive Compensation Policy
The Company's executive compensation policy in effect in Fiscal 1996
required that executive compensation function in a manner intended to achieve
the following objectives:
.retain the executive officer team necessary to maximize operational
performance
.attract new executive officers as required
.motivate the executive officer team to enhance Company value in the best
interests of shareholders
.link executive officer compensation to Company performance and the long-
term interests of shareholders
In order to assess the general competitiveness of the Company's overall pay
structure for its executive officers, the Company annually obtains from a
nationally recognized executive compensation consultant (the "Consultant"), a
published survey of compensation practices in the retail industry. The Company
uses the Consultant's executive compensation survey of national department
store companies (the "Survey") to determine competitive median total cash
compensation (annual base salary plus annual cash bonus) levels for executive
officers and other executives. The Survey is conducted and the results are
reported by an independent survey organization, which selects the department
store company subjects of the Survey. The Survey includes executive
compensation data from three of the seven department store companies that are
included in the Standard & Poor's Retail Department Store Index in the graph
included under the heading "Comparison of Shareholder Return" on page 19 of
this Proxy Statement. While the Survey subjects are not exactly the same as
the subjects of the Standard & Poor's Retail Department Store Index, the
Company believes that the Survey is the most effective and economical means
available to the Company for determining competitive total cash compensation
levels for executive officers and other executives. The Company's total cash
compensation levels are targeted at approximately the median compensation paid
by comparable companies in the Survey group.
For Mr. Bluestone, the Company's Chairman of the Board and Chief Executive
Officer, and the other executive officers, the principal features of the
Company's Fiscal 1996 executive compensation program consisted of four basic
components, each designed to support one or more of the stated objectives. The
basic components are base salary, an annual cash bonus plan, the 1993 Stock
Incentive Plan and the Long-Term Incentive Plan.
Base Salary
Early in Fiscal 1996, the Committee reviewed and determined a base salary
level for each of its executive officers who were on the SEComm. The base
salary levels are designed to be competitive with median base salaries paid to
comparable level executive officers in the retail industry. Each base salary
level takes into consideration the overall complexity of the executive
officer's position and performance requirements compared with peers within the
Company.
The Company awards to executive officers base salary merit increases that
are designed primarily to reflect (a) subjective and objective determinations
of achievement of corporate goals established for each individual (such as
level of sales, expenses, gross margin, or inventory turnover) and (b)
subjective determinations of individual performance characteristics (such as
know-how, problem solving, and accountability), position accountabilities, and
contributions to the Company's overall performance. Merit increases also
reflect increases in competitive median base salaries demonstrated by the
Survey.
16
<PAGE>
In early Fiscal 1996, the Committee awarded base salary merit increases to
some, but not all, of the Company's executive officers. Those base salary merit
increases ranged from 3.8% to 12.9% of the recipient's base salaries for Fiscal
1995. These merit increases reflected the attainment of the Company's Fiscal
1995 results of operations, which exceeded the Company's Fiscal 1995 plans, a
comparison to competitive salaries in the retail industry and the Committee's
subjective assessment of the executive officer's achievement of corporate
goals.
Annual Cash Bonus Plan
The Company's annual cash bonus plan is designed to link a significant
portion of executive-officer compensation directly to the Company's achievement
of annual objectives for operating earnings before interest, taxes,
depreciation, amortization and other non-cash and nonrecurring items
("EBITDA").
The Fiscal 1996 annual cash bonus plan for executive officers of the Company
was based, in whole or in part, on the Company's achievement of three levels of
EBITDA described below. The specific dollar amount of EBITDA for each level was
established by the Committee at the beginning of Fiscal 1996.
. Minimum--if Fiscal 1996 EBITDA were equal to or below the established
Minimum EBITDA level, no cash bonus would be earned.
. Target--if Fiscal 1996 EBITDA were equal to the Target EBITDA level, one-
half of the maximum cash bonus would be earned. If Fiscal 1996 EBITDA
were between the Minimum and Target EBITDA levels, the annual cash bonus
would be prorated.
. Maximum--if Fiscal 1996 EBITDA were equal to or greater than the Maximum
EBITDA level, the maximum annual cash bonus would be earned. If Fiscal
1996 EBITDA were between the Target and Maximum EBITDA levels, the annual
cash bonus would be prorated.
The Fiscal 1996 annual cash bonuses for three executive officers of the
Company (including Mr. Bluestone) were based solely on the Company's
achievement of EBITDA levels. The Fiscal 1996 annual cash bonuses for three
other executive officers of the Company were based on the Company's achievement
of EBITDA levels and, for one executive officer, also on the achievement of
store EBITDA contribution goals, for the second executive officer, also on the
achievement of gross margin goals, and for the third executive officer, also on
the achievement of a combination of financial goals. For Fiscal 1996, the
executive officers were eligible to earn maximum annual cash bonuses ranging
from 25% to 60% of their base salary.
The Company's Fiscal 1996 EBITDA of $95.6 million exceeded the Target EBITDA
level but was below the Maximum EBITDA level. Accordingly, that portion of
annual cash bonuses determined by EBITDA levels was paid to executive officers
between the Target and Maximum EBITDA levels. That portion of annual cash
bonuses determined by store contribution goals and gross margin goals was paid
between the Minimum and Target levels for both store contribution and gross
margin goals. That portion of annual cash bonuses determined by a combination
of financial goals was paid between the Target and Maximum levels for those
financial goals. The Committee believes that the Fiscal 1996 EBITDA levels for
the annual cash bonuses provided an effective and measurable link between the
Company's Fiscal 1996 EBITDA objective and the annual cash bonuses paid.
1993 Stock Incentive Plan
The 1993 Stock Incentive Plan is designed to align the interests of the
participants with the Company's shareholders and to motivate the participants
to improve corporate performance on a long-term basis.
During Fiscal 1996, the Committee approved stock option grants, totaling
169,850 Common Shares, to 82 key employees of the Company, including five of
the six executive officers named in the Summary Compensation
17
<PAGE>
Table on page 9 of this Proxy Statement. The grants of options were made to
motivate the key employees to achieve the Company's long-term objectives. The
exercise price for these options ranged from $23.75 to $27.875 depending upon
the date of grant, but in all cases was equal to the fair market value, as
defined in the 1993 Stock Incentive Plan, on the date of grant.
1996 Long-Term Incentive Plan
During Fiscal 1995, the Consultant, which had been retained by the Company to
assist the Committee in its review of the Company's executive compensation
policy and practices, recommended that the Company adopt a long-term incentive
plan. The Committee approved and implemented the 1996 Long-Term Incentive Plan
in Fiscal 1996. The plan is designed to (a) provide an incentive to key
executives to focus their efforts on consistently achieving the long-term
strategic goals of the Company by providing cash awards for superior business
performance and (b) enhance the Company's ability to retain key executives who
are vulnerable to recruitment by other retailers by providing competitive total
compensation. The plan has a determination period of three fiscal years. The
first fiscal year of the first determination period began February 4, 1996. A
new three-fiscal-year determination period will commence with the commencement
of each fiscal year thereafter so long as the plan is in effect. The threshold
and maximum EBITDA targets are specified in the plan for the first fiscal year
of the first determination period and will be calculated according to the
formula set forth in the plan for subsequent fiscal years.
Compensation of the Chief Executive Officer
Mr. Bluestone's annual base salary and his 5.6% base salary merit increase
for Fiscal 1996 were established by the Committee. The Company awarded Mr.
Bluestone's Fiscal 1996 merit increase based primarily on the Committee's
assessment of competitive salaries in the retail industry, the Committee's
subjective assessment of Mr. Bluestone's achievement of corporate goals, and
the Company's overall operating performance.
Mr. Bluestone's Fiscal 1996 cash bonus of $337,500 was based solely on the
Company's achievement of a level of Fiscal 1996 EBITDA established in
accordance with the Fiscal 1996 annual cash bonus plan.
The grant of options to purchase 40,000 Common Shares to Mr. Bluestone on
March 26, 1997 was awarded to motivate Mr. Bluestone to successfully lead the
Company's efforts to achieve its long-term objectives.
Subject to shareholder approval of the 1997 Bonus Plan, Mr. Bluestone will be
entitled to receive a cash bonus for Fiscal 1997 pursuant to the 1997 Bonus
Plan based solely on the Company's achievement of levels of Fiscal 1997 EBITDA
established by the Compensation Committee in accordance with the 1997 Bonus
Plan.
Tax Deductibility of Executive Compensation
Section 162(m) of the IRC, added by the Omnibus Budget Reconciliation Act of
1993, generally disallows a tax deduction to a public company for compensation
in excess of $1,000,000 paid to the company's chief executive officer and the
four other highest compensated executive officers at the end of the company's
fiscal year. Due to the application of various "grandfather" and transition
rules, the Company believes that all compensation for the Company's affected
executive officers for Fiscal 1996 will be fully deductible for federal income
tax purposes. The 1997 Bonus Plan is intended to provide compensation which
will be fully deductible for federal income tax purposes.
Mark Dickstein, Chairman
John W. Burden III
Chaim Y. Edelstein
18
<PAGE>
COMPARISON OF SHAREHOLDER RETURN
The following graph compares the percentage changes in the cumulative total
shareholder return on the Common Shares to the cumulative total return of the
Standard & Poor's 500 Composite Index and the Standard & Poor's Retail
Department Store Index for the period from November 1, 1993 (the date on which
the Common Shares opened for trading) through January 31, 1997 (the last day of
trading prior to the end of Fiscal 1996), assuming an initial investment of
$100 and the reinvestment of all dividends.
TOTAL SHAREHOLDER RETURNS
LOGO
<TABLE>
<CAPTION>
11/1/93 1/28/94 1/27/95 2/2/96 1/3/97
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Carson Pirie Scott & Co. $100 $121 $137 $133 $207
- -----------------------------------------------------------------------------------
S&P 500 Index $100 $103 $104 $142 $179
- -----------------------------------------------------------------------------------
S&P Retail Dept. Store
Index $100 $ 98 $ 89 $108 $117
</TABLE>
19
<PAGE>
ITEM II
APPROVAL OF THE CARSON PIRIE SCOTT & CO.
1997 SENIOR EXECUTIVE BONUS PLAN
Introduction--On March 19, 1997, the Board unanimously adopted the 1997 Bonus
Plan and unanimously recommended that it be submitted to the shareholders for
approval. The purpose of the 1997 Bonus Plan is to provide a select group of
executive officers with an annual incentive opportunity, based on achievement
of preestablished, objective performance goals, to earn additional compensation
so as to attract and retain such executive officers and to motivate them to
enhance the value of the Company's business. The 1997 Bonus Plan is intended to
provide an annual incentive compensation opportunity which is not subject to
the limitation on deductions for federal income tax purposes contained in
Section 162(m) of the IRC. Executive officers selected to participate in the
1997 Bonus Plan will not participate in the Company's existing annual cash
bonus plan.
The provisions of the 1997 Bonus Plan are generally described below. This
description is qualified in its entirety by reference to the provisions of the
plan, a copy of which is attached to this Proxy Statement as Exhibit A.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF
THE 1997 BONUS PLAN.
Eligibility for Participation--The participants in the 1997 Bonus Plan will
be those executive officers of the Company who are selected for participation
by the committee administering the plan. See "Administration" below. Selection
of participants in the plan will be made by the committee within the first 90
days of each fiscal year of the Company. There currently are five executive
officers of the Company from among whom participants may be selected. An
executive officer will automatically cease to be a participant in the 1997
Bonus Plan upon the earliest of the executive officer's: (i) death, (ii)
permanent and total disability, or (iii) termination of employment.
Bonus Amounts and Performance Goals--Prior to the 90th day of each fiscal
year of the Company, the committee administering the plan will establish for
each participant (a) a bonus amount expressed as a percentage of the
participant's annual base salary and (b) one or more performance goals. Each
performance goal will be measured against one of the following: the Company's
net sales, gross margin, EBITDA, store four-wall EBITDA or customer
satisfaction. Each performance goal selected by the committee will include a
minimum, a target and a maximum level of achievement.
Bonus Awards--Participants in the 1997 Bonus Plan will be eligible to receive
the bonus amount determined by the committee administering the plan if and to
the extent the performance goals are achieved as follows.
. Minimum--if the performance level achieved is equal to or below the
established minimum level, no bonus amount would be earned.
. Target--if the performance level is equal to the established target
level, one-half of the bonus amount would be earned. If the performance
level is between the minimum and target levels, the bonus amount would be
prorated.
. Maximum--if the performance level is equal to or greater than the
established maximum level, the maximum bonus amount would be earned. If
the performance level is between the target and maximum levels, the bonus
amount would be prorated.
20
<PAGE>
No participant in the 1997 Bonus Plan will be entitled to receive a bonus
amount in excess of the lesser of (i) 75% of the participant's annual base
salary in effect on the first day of the fiscal year or (ii) $900,000. The
committee administering the plan may eliminate or reduce the bonus amount in
its sole discretion.
Payment of Bonus--Payment of any bonus under the 1997 Bonus Plan may only be
made if the participant is employed by the Company on the last day of the
fiscal year and the committee administering the plan certifies in writing that
the participant met the applicable performance goal(s) for the fiscal year and
that all other material terms of the bonus were satisfied. If requested by the
participant prior to the end of the ninth month of the fiscal year, the
participant may defer receipt of all or part of the bonus for such period in
accordance with plans and policies of the Company or any employment agreement
between the participant and the Company.
Administration--The 1997 Bonus Plan will be administered by the Compensation
Committee, or a subcommittee thereof consisting solely of two or more members
of the Board, each of whom will be an "outside director" within the meaning of
Section 162(m) of the IRC. The committee is authorized to take all actions
necessary or desirable to effect the purposes of the plan.
Amendment or Termination--The 1997 Bonus Plan may be amended or terminated by
the committee administering the plan with the approval of the Board, subject to
any shareholder approval required by law; provided, that the committee may not
amend the plan to change a performance goal without the approval of
shareholders.
Effective Date--Subject to shareholder approval, the 1997 Bonus Plan will be
effective as of February 2, 1997.
New Plan Benefits--If the 1997 Bonus Plan is approved by the Company's
shareholders, Mr. Bluestone will be the only participant in the 1997 Bonus Plan
for Fiscal 1997 and the Company's achievement of levels of EBITDA established
by the committee administering the plan will be his sole performance goal.
Because the Company's EBITDA for Fiscal 1997 will not be determinable until
after the end of Fiscal 1997, the Company at this time cannot determine the
amount, if any, that will be paid to Mr. Bluestone under the 1997 Bonus Plan
for Fiscal 1997. If (a) the 1997 Bonus Plan had been in effect for Fiscal 1996,
(b) Mr. Bluestone had participated in the plan, and (c) Mr. Bluestone's
performance goal had been the same as the annual bonus criteria established for
Mr. Bluestone by the Compensation Committee for Fiscal 1996, Mr. Bluestone
would have been entitled to receive a cash bonus under the 1997 Bonus Plan of
$337,500, which is equal to the amount of the cash bonus paid to Mr. Bluestone
for Fiscal 1996.
ITEM III
APPROVAL OF THE CARSON PIRIE SCOTT & CO 1993 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED AS OF MARCH 19, 1997)
INTRODUCTION
The purposes of the 1993 Stock Incentive Plan are to more closely align the
interests of the Company's key employees with the interests of the Company's
shareholders and to motivate key employees to improve corporate performance on
a long-term basis. The 1993 Stock Incentive Plan provides for the grant of
nonqualified stock options and the award of shares of restricted stock to
officers and other key employees of the Company and its subsidiaries. A maximum
of 1,739,130 Common Shares may be issued under the 1993 Stock Incentive Plan.
Including options granted on March 26, 1997, options to purchase 1,478,990
Common Shares are outstanding or have been exercised, and 260,140 Common Shares
are available for future option grants or future restricted stock awards under
the plan. No restricted stock awards have been made under the plan.
21
<PAGE>
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF
THE RESTATED 1993 STOCK INCENTIVE PLAN.
AMENDMENTS TO 1993 STOCK INCENTIVE PLAN
On March 19, 1997, in order to further the purposes of the 1993 Stock
Incentive Plan, the Board voted unanimously to amend and restate the plan and
to submit the plan, as amended and restated, to the Company's shareholders for
approval. The amendment and restatement reflects two material changes to the
1993 Stock Incentive Plan.
The amendment and restatement increases the maximum number of Common Shares
that may be issued under the plan by 600,000 shares from 1,739,130 to
2,339,130. Consequently, after giving effect to the options granted on March
26, 1997, the number of Common Shares available for future option grants or
the future awards of shares of restricted stock under the plan would be
increased from 260,140 to 860,140, plus Common Shares subject to and not
issued under options which expire, terminate or are canceled or forfeited.
The amendment and restatement also changes the definition of "Change of
Control". Both before and after the amendment and restatement, all stock
options granted under the plan become fully vested upon a Change of Control
and the committee administering the plan may provide, with respect to an award
of restricted stock under the plan, that the restrictions on the restricted
stock lapse upon a Change of Control. Prior to the amendment and restatement,
the definition of Change of Control contained in the plan was different from
the definition of such term contained in other benefit plans and agreements of
the Company. Following the amendment and restatement, the definition of Change
of Control contained in the plan is consistent with the less limited
definition contained in such other benefit plans and agreements.
Prior to the amendment and restatement, Change of Control was defined as,
subject to certain exceptions: (a) approval by the Company's shareholders of
(i) a reorganization, merger, consolidation or similar business combination or
a sale of all or substantially all of the assets of the Company (each a
"Business Combination"), other than an Excluded Transaction, or (ii) the
liquidation or dissolution of the Company or (b) the occurrence of both (i)
the acquisition by a third party or group of 30% or more of the Company's
outstanding Common Shares, other than in an Excluded Transaction, and (ii)
individuals who were incumbent directors as of October 30, 1993 or approved
thereafter as directors by a majority of incumbent directors cease to
constitute a majority of the Board. An Excluded Transaction was defined as a
Business Combination with respect to which persons who were the shareholders
of the Company immediately prior to the Business Combination own immediately
after the Business Combination more than 50% of the voting power of the voting
securities of the company resulting from the Business Combination or the
entity that acquired all or substantially all of the Company's assets.
The Restated 1993 Stock Incentive Plan defines Change of Control as, subject
to certain exceptions, any one of the following events: (a) the acquisition by
a third party or group of 30% or more of the Company's outstanding Common
Shares (subject to certain exceptions); or (b) individuals who were incumbent
directors as of February 6, 1996 or approved thereafter as directors by a
majority of incumbent directors cease to constitute a majority of the Board;
or (c) the consummation of a Business Combination or the acquisition of the
assets of another entity, excluding any Business Combination or acquisition of
assets of another entity pursuant to which (i) all or substantially all of the
individuals and entities who were the Company's shareholders immediately prior
to the transaction own, in the same proportions as their ownership of the
Company's outstanding Common Shares prior to the transaction, more than 60% of
the outstanding shares of common stock and of the voting power of the
outstanding voting securities of the corporation resulting from the Business
Combination or of the entity acquiring assets, and (ii) no person or group
owns 30% or more of the outstanding shares of common stock or
22
<PAGE>
of the voting power of the voting securities of the corporation resulting from
the Business Combination or of the entity acquiring assets unless such
ownership existed prior to the transaction, and (iii) at least a majority of
the members of the board of directors of the corporation resulting from the
Business Combination were members of the Board prior to the transaction; or (d)
approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company. If approved by the shareholders, the amendment to
the definition of "Change of Control" will be effective for all grants made
under the plan both prior to and after the effective date of the amendment and
restatement.
SUMMARY OF RESTATED 1993 STOCK INCENTIVE PLAN
The provisions of the Restated 1993 Stock Incentive Plan are generally
described below. This description is qualified in its entirety by reference to
the provisions of the restated plan, a copy of which is attached to this Proxy
Statement as Exhibit B.
Shares Available--If the amendment is approved, the maximum number of Common
Shares that may be issued under the plan would be increased from 1,739,130 to
2,339,130. Taking into account all grants of options described above and
forfeitures prior to the date of this Proxy Statement, the maximum number of
Common Shares that would be available for option grants or for future
restricted stock awards would be increased from 260,140 to 860,140. Shares
subject to grants or awards which expire, terminate or are canceled or
forfeited would again be available under the plan.
Administration--The Restated 1993 Stock Incentive Plan is administered by a
committee consisting solely of members of the Board who are "non-employee
directors" within the meaning of Rule 16b-3 under the Exchange Act and who are
"outside directors" within the meaning of Section 162(m) of the IRC. Currently,
the Compensation Committee administers the plan. The committee administering
the plan is authorized to designate eligible employees to receive grants and
awards, to make grants and awards subject to any limitations, restrictions and
conditions as the committee deems appropriate, to waive any restrictions or
conditions and to prescribe the form of agreements to represent grants and
awards. The committee may adopt rules, regulations and procedures to administer
the Restated 1993 Stock Incentive Plan and to interpret the plan.
Eligibility for Participation--Participation in the Restated 1993 Stock
Incentive Plan is determined by the committee administering the plan and is
limited to officers and other key employees of the Company and any of its
subsidiaries. As of the date of this Proxy Statement, the Company has granted
options under the plan to 241 employees. Nonemployee directors are not eligible
to participate in the plan.
Awards
Options--Under the Restated 1993 Stock Incentive Plan, the committee
administering the plan may grant nonqualified stock options or award shares of
restricted stock. Each option is evidenced by a stock option agreement between
the Company and the participant. No participant may be granted options in any
year that in the aggregate would be exercisable for more than 20% of the total
number of Common Shares available for issuance under the plan.
Options are granted for a term of 10 years. The committee administering the
Restated 1993 Stock Incentive Plan may provide that if a participant's
employment is terminated by reason of death, disability or retirement, any
option held by the participant shall become fully vested and may be exercised
during the period specified by the committee. The committee may also at any
time accelerate the exercisability of any option and otherwise waive or amend
any condition of the option. All unvested options become fully exercisable upon
a Change of Control.
Except for certain options with an exercise price of $10.25 granted in 1993
shortly after the inception of the 1993 Stock Incentive Plan, all options are
to be granted with an exercise price equal to not less than 100% of the fair
market value of the Common Shares on the date of grant. Except for certain
options granted to Messrs.
23
<PAGE>
Bluestone or MacDonald as described under the heading "Employment Agreements"
on page 12 of this Proxy Statement, options vest 20% on the date of grant and
an additional 20% on each of the first four anniversaries of the date of
grant. Options may be exercised in whole or in part by the payment of the
exercise price in cash or, with the approval of the committee administering
the plan, by the delivery of Common Shares held for at least six months, or a
combination of cash and Common Shares held for at least six months.
Nontransferability--Options granted under the Restated 1993 Stock Incentive
Plan are not transferable or assignable except by last will and testament or
the laws of decent and distribution. During a grantee's lifetime, options are
only exercisable by the grantee or by the grantee's guardian or legal
representative.
Restricted Stock--Awards in the form of shares of restricted stock may be
granted either alone or in addition to the grant of stock options. Each award
of restricted stock is subject to a restricted stock agreement between the
Company and the participant. The committee administering the plan determines
all terms and conditions of the awards, including the selection of
participants to receive awards, the number of shares subject to each award and
the times at which awards shall be made. The committee may provide, with
respect to any award of restricted stock, that the restrictions shall lapse
three years following the date of grant or upon an earlier Change of Control.
The committee may at any time accelerate the date on which restrictions lapse
and otherwise waive or amend any condition. Holders of shares of restricted
stock have all of the rights of a shareholder of the Company, including the
right to vote the shares and to receive dividends on the shares. Except as
otherwise provided in the restricted stock award agreement, all shares of
restricted stock shall be forfeited by the holder upon termination of
employment for any reason.
Withholding Taxes--The Company may require, as a condition to the exercise
of an option or the issuance of a stock certificate upon the lapse of
restrictions on shares of restricted stock, that a participant in the plan
concurrently pay to the Company an amount equal to any taxes which the Company
is required to withhold by reason of the exercise or lapse of restrictions.
The participant may elect, subject to the rules and regulations of the
committee administering the Restated 1993 Stock Incentive Plan, that in lieu
of the payment in cash of the amount of taxes required to be withheld by the
Company, the Company withhold from the shares to be issued to the participant
a number of shares having an aggregate fair market value equal to the amount
of taxes the Company is required to withhold.
Amendment and Termination--The Restated 1993 Stock Incentive Plan expires on
October 29, 2003 unless terminated earlier pursuant to its terms. The Board
has the power to amend, modify, suspend or terminate the plan so long as the
action does not impair an outstanding grant or award.
FEDERAL INCOME TAX TREATMENT
Options--A participant will not recognize income for federal income tax
purposes upon the grant of an option under the plan, and the Company will not
be entitled to any tax deduction at that time. Upon exercise, a participant
will recognize compensation taxable as ordinary income (and subject to income
tax withholding) in an amount equal to the excess of the fair market value on
the date of exercise of the Common Shares purchased over their aggregate
exercise price. The Company will be entitled to a tax deduction in an amount
equal to the compensation recognized by the participant. Based on regulations
published by the Internal Revenue Service, compensation under the Restated
1993 Stock Incentive Plan attributable to options granted thereunder is not
expected to be subject to the $1 million annual limitation imposed by Section
162(m) of the IRC. Upon the disposition of Common Shares acquired upon
exercise of an option, the difference between the amount realized upon the
disposition and the fair market value of these shares on the date of exercise
will be treated either as short-term or long-term capital gain, depending upon
the length of time the shares have been held after the date of exercise.
24
<PAGE>
Restricted Stock--A participant will not recognize income for federal income
tax purposes upon the award of shares of restricted stock, and the Company will
not be entitled to any tax deduction at that time, unless the participant
elects otherwise. Within 30 days after the award of shares of restricted stock,
a participant can elect to recognize compensation taxable as ordinary income
(and subject to income tax withholding) equal to the excess of the fair market
value of the shares of restricted stock, determined without regard to the
restrictions, on the date of award, over the amount, if any, paid for the
shares. In the absence of this election, a participant will recognize
compensation taxable as ordinary income (and subject to income tax withholding)
on the date the restrictions lapse in an amount equal to the excess of the fair
market value of the shares on this date over the amount, if any, paid for the
shares. The Company will be entitled to a tax deduction in an amount equal to
the compensation recognized by a participant at the time of the recognition,
except to the extent the deduction for compensation paid to certain
participants is subject to the $1 million annual limitation under Section
162(m) of the IRC. Upon the disposition of Common Shares acquired as restricted
stock, the difference between the amount realized and the amount of
compensation previously recognized by the participant will be short-term or
long-term capital gain, depending upon the length of time the shares were held
after the date on which the income was recognized.
NEW PLAN BENEFITS
The following table provides information regarding options granted in Fiscal
1997 under the 1993 Stock Incentive Plan through April 30, 1997. No shares of
restricted stock have been awarded under the plan. No determination has been
made regarding any specific awards that may be made under the plan in the
future.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION DOLLAR VALUE (1) NUMBER OF UNITS (2)
--------------------------- ---------------- -------------------
<S> <C> <C>
Stanton J. Bluestone................ -- 40,000
Chairman of the Board and Chief
Executive Officer
Michael R. MacDonald................ -- 25,000
President and Chief Operating
Officer
John R. Freudenthal................. -- 0
Executive Vice President--
Merchandising
Catherine A. Shaw................... -- 12,000
Executive Vice President--
Stores, Visual Merchandising
and Store Planning
Edward P. Carroll................... -- 12,000
Executive Vice President--
Sales Promotion and Advertising
Darren R. Jackson................... -- 7,500
Senior Vice President--
Chief Financial Officer
Executive Group..................... -- 96,500
Non-Executive Director Group........ -- 0
Non-Executive Officer Employee -- 108,900
Group..............................
</TABLE>
- --------
(1) The exercise price of these options is $31.50 per share, which is equal to
100% of the closing price of the Common Shares on March 26, 1997, the date
of grant, reported in The Wall Street Journal as New York Stock Exchange
Composite Transactions. On April 10, 1997, the closing price per share of
the Common Shares as so reported was $30.75.
(2) This column shows the number of Common Shares underlying option grants on
March 26, 1997.
25
<PAGE>
ITEM IV
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board appointed KPMG Peat
Marwick LLP, independent public accountants, to serve as auditors for the
Company and its subsidiaries for Fiscal 1997. KPMG Peat Marwick LLP and its
predecessors have served as independent accountants for the Company for at
least the last 40 years. At the Annual Meeting, the shareholders will be asked
to ratify this appointment. Representatives of KPMG Peat Marwick LLP are
expected to be present at the Annual Meeting and, if the representatives
desire, to make a statement. The Company expects that the KPMG Peat Marwick
representatives will be available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS
FOR FISCAL 1997.
1997 SHAREHOLDER PROPOSALS
The Company must receive any shareholder proposal intended to be presented at
the Annual Meeting of Shareholders to be held in 1998 no later than December
31, 1997 in order for the proposal to be included in the Company's proxy
materials relating to that meeting. Any proposal should be sent to the
Secretary of the Company at 331 West Wisconsin Avenue, Milwaukee, Wisconsin
53203.
By Order of the Board of Directors
Charles J. Hansen,
Secretary
Milwaukee, Wisconsin
April 30, 1997
26
<PAGE>
EXHIBIT A
CARSON PIRIE SCOTT & CO.
1997 SENIOR EXECUTIVE BONUS PLAN
1. PURPOSE.
The purpose of the 1997 Senior Executive Bonus Plan (the "PLAN") is to
provide a select group of executive officers with an annual incentive
opportunity, based on the achievement of preestablished, objective performance
goals described in Section 4 ("PERFORMANCE GOALS"), to earn additional
compensation so as to attract and retain such executive officers, and motivate
them to enhance the value of the business of Carson Pirie Scott & Co. (the
"COMPANY"). The Plan is intended to provide an annual incentive compensation
opportunity which is not subject to the limitation on deductions for federal
income tax purposes contained in Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "CODE"), and is to be construed to the extent
possible as providing for remuneration which is "qualified performance-based
compensation" within the meaning of Section 162(m) of the Code and regulations
thereunder. The Plan is not intended to be subject to the Employee Retirement
Income Security Act of 1974, as amended.
2. ELIGIBILITY TO PARTICIPATE.
(a) The participants in the Plan ("PARTICIPANTS") for any annual performance
period (an "ANNUAL PERFORMANCE PERIOD") shall be those executive officers of
the Company who are selected by the Committee (as defined in Section 7) to
participate in the Plan for such Annual Performance Period. Such selection
shall be made by the Committee within 90 days following the commencement of
each Annual Performance Period. No executive officer shall have any right to
participate in the Plan for any Annual Performance Period unless selected to
participate in the Plan by the Committee.
(b) An executive officer shall automatically cease to be a Participant,
without notice to or consent of such executive officer, upon the earliest to
occur of the following events: (i) the Participant's death, (ii) the
Participant's permanent and total disability (within the meaning of the
Company's Pension Plan), or (iii) the Participant's termination of employment
with the Company.
3. ANNUAL PERFORMANCE PERIOD.
Each Annual Performance Period shall be a fiscal year of the Company,
commencing with the fiscal year ending January 31, 1998.
4. BONUS AMOUNTS AND PERFORMANCE GOALS.
Prior to the 90th day following the start of each Annual Performance Period
and while the outcome of the Performance Goals is substantially uncertain, the
Committee will establish, in writing, for each Participant (i) a bonus amount
(expressed as a percentage of annual rate of base salary) payable in
accordance with the Plan and (ii) one or more Performance Goals with respect
to such bonus amount. Each Performance Goal will consist of, and achievement
of each Performance Goal will be measured against, one of the following
criteria:
(a) Net sales;
(b) Gross margin dollars (sales minus cost of sales);
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(c) Earnings before interest, taxes, depreciation and amortization, after
taking into account bonuses payable under the Company's bonus plans,
including the Plan ("EBITDA");
(d) Store four-wall EBITDA; and
(e) Customer satisfaction (measured by customer responses).
Each Performance Goal established by the Committee will include the following
levels of achievement: a minimum level ("MINIMUM"); a target level ("TARGET");
and a maximum level ("MAXIMUM"). The Committee, in its sole discretion, may
establish all other terms and conditions applicable to the Performance Goals
and the measurement of their achievement, including without limitation the
relative weighting of multiple Performance Goals, that may be necessary or
appropriate to implement the Plan. Each Performance Goal must be based upon
measurable criteria which would permit a third party having knowledge of the
relevant facts to determine whether the Performance Goal was satisfied and to
calculate the amount payable to the Participant. The Performance Goals must
preclude the discretion to increase the bonus amount payable to the
Participant over that which would otherwise be payable upon attainment of the
Performance Goal.
5. BONUS AWARDS.
(a) Each Participant shall be eligible to receive the bonus amount
determined by the Committee in accordance with Section 4, payable in cash
pursuant to Section 6, if and to the extent, with respect to such bonus
amount, the Performance Goal or the Performance Goals established for the
Participant for the Annual Performance Period are achieved in accordance with
the following sentence (a "BONUS AWARD"). Subject to subsection (b), if the
performance level achieved is:
(i) equal to or below the established Minimum, no Bonus Award will be
paid;
(ii) between the Minimum and the Target, the Bonus Award will be prorated
between such levels;
(iii) equal to the Target, one-half of the maximum Bonus Award will be
paid;
(iv) between the Target and Maximum, the Bonus Award will be prorated
between such levels; and
(v) equal to or greater than Maximum, the maximum Bonus Award will be
paid.
(b) The maximum Bonus Award payable to any Participant for any Annual
Performance Period pursuant to the Plan may not exceed the lesser of (x) 75%
of such Participant's annual rate of base salary as in effect on the first day
of the Annual Performance Period (including salary deferrals under Section 125
or 401(k) of the Code) and (y) $900,000.
(c) The Committee, in its sole discretion, may reduce the amount of, or
eliminate, a Bonus Award of any Participant. In determining whether a Bonus
Award will be reduced or eliminated, the Committee may consider any
extraordinary changes that may also have occurred during the Annual
Performance Period, including without limitation changes in accounting
practices or the law, and may consider such business performance criteria that
it deems appropriate, including without limitation the Company's net income,
cash flow, earnings per share and other relevant operating and strategic
business results.
6. PAYMENT OF BONUS AWARDS.
Subject to any shareholder approval required by law, payment of any Bonus
Award for an Annual Performance Period in accordance with the Plan shall be
made in cash to a Participant who is employed by the Company on the last day
of the Annual Performance Period after the Committee shall have certified in
writing
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that the Performance Goal or Performance Goals for the Annual Performance
Period were achieved and any other material terms of the Bonus Award were
satisfied. Subject to the next sentence, at the request of a Participant made
prior to the end of the ninth month of an Annual Performance Period, the
Company may defer, for such period of time as the Participant may request at
the time of such deferral, in accordance with the plans and policies of the
Company, the payment of all or any portion of any Bonus Award which may become
payable to the Participant with respect to the Annual Performance Period. If a
Participant has the right to defer payment of all or any portion of the
Participant's compensation from the Company in accordance with an employment
or similar agreement, then the right to defer any Bonus Award and the terms of
such deferral will be governed by that agreement.
7. ADMINISTRATION.
(a) The Compensation Committee of the Board of Directors of the Company (the
"BOARD"), or a subcommittee thereof, consisting solely of two or more members
of the Board, each of whom shall be an "outside director" within the meaning
of Section 162(m) of the Code (the "COMMITTEE"), shall administer the Plan and
be authorized to take all actions necessary or desirable to effect the
purposes of the Plan, in its sole discretion, including, but not limited to:
(i) providing rules for the management, operation and administration of
the Plan;
(ii) interpreting the Plan in its sole discretion to the fullest extent
permitted by law; and
(iii) correcting any defect or omission, or reconciling any inconsistency
in the Plan in such manner and to such extent as it shall deem appropriate
in its sole discretion.
(b) The decisions of the Committee shall be final and conclusive for all
purposes of the Plan and upon all persons and will not be subject to any
appeal or review.
8. AMENDMENT OR TERMINATION.
The Committee may, with the approval of the Board, amend or terminate the
Plan by resolution at any time as it shall deem advisable, subject to any
shareholder approval required by law, provided that the Committee may not
amend the Plan to change any Performance Goal without the approval of a
majority of the votes cast by shareholders in a separate vote.
9. MISCELLANEOUS.
(a) Neither the establishment of the Plan nor participation herein shall be
construed as conferring any legal rights upon any Participant or other person
for continuation of employment, and the Company reserves its right to
discharge any executive officer without regard to the effect such discharge
might have upon such executive officer as a Participant in the Plan.
(b) The Company shall withhold from any amounts payable under the Plan all
federal, state, local and other taxes as may be required to be withheld by
applicable law.
(c) Subject to any applicable law, no benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to do so shall be void, nor
shall any such benefit be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of the Participant. In the event
that the Committee shall find that any Participant has attempted to violate
such provision or has become bankrupt, such benefit may, in the sole
discretion of the Committee, be forfeited.
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(d) The Plan shall be interpreted and construed in accordance with the laws
of the State of Wisconsin, without regard to principles of conflicts of laws.
(e) If a provision of the Plan shall be held illegal or invalid, the
illegality or invalidity shall not affect the remaining provisions of the Plan
and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included in the Plan.
10. EFFECTIVE DATE
The Plan shall be submitted to the shareholders of the Company for approval
and, if approved by the affirmative vote of a majority of the Common Shares
present in person or represented by proxy, shall be effective as of February
2, 1997.
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EXHIBIT B
CARSON PIRIE SCOTT & CO.
1993 STOCK INCENTIVE PLAN
AS AMENDED AND RESTATED AS OF MARCH 19, 1997
I. INTRODUCTION
A. Purpose. This plan shall be known as the Carson Pirie Scott & Co. 1993
Stock Incentive Plan (the "Plan"). The Plan is designed to more closely align
the interests of the executives of Carson Pirie Scott & Co. (the "Company")
with the Company's shareholders and to motivate executives to improve
corporate performance on a long-term basis.
B. Effective Date. The effective date of the Plan shall be October 29, 1993.
The Company intends that the Plan and its operation comply with the provisions
of Rule 16b-3 under the Securities Exchange Act of 1934 or any successor rule
(the "Exchange Act").
II. PLAN DEFINITIONS
The following terms shall have the meanings set forth below:
1. "Acquisition" is defined in Section III.B.
2. "Acquisition Consideration" is defined in Section III.B.
3. "Award" means the grant of a stock option or restricted stock.
4. "Board" means the Board of Directors of the Company.
5. "Change of Control" means:
a. the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of voting securities of the Company
where such acquisition causes such Person to own 30% or more of the
combined voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding CPS Voting Securities"); provided, however, for purposes
of this paragraph (a), the following acquisitions shall not be deemed
to result in a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company or (iv) any
acquisition by any corporation pursuant to a transaction that complies
with clauses (i), (ii) and (iii) of paragraph (c) of this definition of
Change of Control; and provided, further, if any Person's beneficial
ownership of the Outstanding CPS Voting Securities equals or exceeds
30% as a result of a transaction described in clause (i) or (ii) above,
and such Person subsequently acquires beneficial ownership of
additional voting securities of the Company, such subsequent
acquisition shall be treated as an acquisition that causes such Person
to own 30% or more of the Outstanding CPS Voting Securities; or
b. individuals who, as of February 6, 1996, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors of the
Company; provided, however, that any individual becoming a director
subsequent to February 6, 1996 whose election, or nomination for
election by the Company's shareholders, was approved by a
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vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors of the Company; or
c. the consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company or the acquisition of assets of another corporation
("Business Combination") excluding, however, any Business Combination
pursuant to which (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding CPS Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the then-
outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation that as a result of such transaction owns the Company or
all or substantially all of the Companys assets either directly or
through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of
the Outstanding CPS Voting Securities, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 30% or more of, respectively, the then-
outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then-
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (iii)
at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board of Directors of the Company,
providing for such Business Combination; or
d. approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
6. "Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
7. "Committee" means the Committee described in Section IV.A.
8. "Company" is defined in Section I.A.
9. "Common Stock" means the Company's Common Stock, $.01 par value, and
such other stock as may be substituted for the Company's Common Stock
pursuant to Section III.B.
10. "Eligible Employee" means the officers and other key employees of the
Company or a Subsidiary. Directors who are not full-time employees of the
Company or a Subsidiary shall not be eligible to be granted Awards under
this Plan. Eligibility under this Plan shall be determined by the
Committee.
11. "Exchange Act" is defined in Section I.B.
12. "Fair Market Value" means with respect to the Common Stock, on any
date (a) if the Common Stock is then listed and traded on a registered
national securities exchange or is quoted in the NASDAQ National Market
System, the closing price recorded in composite transactions as reported in
The Wall Street Journal (Midwest Edition) for such date or the preceding
business day if such date is not a business day, or (b) in the absence of
reported sales or if the Common Stock is not so listed or quoted, the value
of the Common Stock as determined in good faith by the Committee.
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13. "Grantee" means any Eligible Employee who has been granted an Award
under the Plan.
14. "Option Price" is defined in Section V.B.
15. "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act.
16. "Subsidiary" means any corporation now or hereafter in existence in
which the Company owns, directly or indirectly, a voting stock interest of
more than fifty percent.
III. SHARES SUBJECT TO AWARD
A. Available Shares. The total number of shares of Common Stock that may be
issued under the Plan shall not exceed 2,339,130. Subject to the next
sentence, shares of Common Stock subject to and not issued under Awards which
expire, terminate, or are canceled or forfeited for any reason under the Plan
shall again become available for the granting of Awards. The Committee may
modify share usage and issuance so as to conform this Plan and any Awards to
the requirements of Rule 16b-3.
B. Adjustment Provisions.
1. The Committee may provide, with respect to any Award, that if the Company
shall at any time change the number of issued shares of Common Stock without
new consideration to the Company (such as by stock dividend, stock split,
recapitalization, reorganization, exchange of shares, liquidation, combination
or other change in corporate structure affecting the Common Stock) or make a
distribution of cash or property which has a substantial impact on the value
of issued Common Stock, the total number of shares available for Awards under
this Plan shall be appropriately adjusted and the number of shares covered by
each outstanding Award and the reference price or Fair Market Value for each
outstanding Award shall be adjusted so that the net value of such Award shall
not be changed.
2. The Committee may provide with respect to any Award that, in the case of
any Acquisition (subject to the provisions of this Plan and any limitation
applicable to the Award):
a. any Eligible Employee to whom an option has been granted shall have
the right thereafter and during the term of the option to receive upon
exercise thereof only the Acquisition Consideration receivable upon the
Acquisition by a holder of the number of shares of Common Stock which might
have been obtained upon exercise of the option or portion thereof, as the
case may be, immediately prior to the Acquisition; and
b. any Eligible Employee to whom restricted stock has been awarded shall
have the right thereafter and during the term of the Award to substitute
the Acquisition Consideration for the Common Stock upon which the Award is
valued or in which the Award is payable.
"Acquisition" means a sale of assets, merger, consolidation, combination or
other corporate reorganization or restructuring of the Company with or into
another corporation which results in the outstanding Common Stock being
converted into or exchanged for different securities, cash or other property,
or any combination.
"Acquisition Consideration" means the kind and amount of securities, cash or
other property or any combination thereof receivable for one share of Common
Stock upon consummation of an Acquisition.
IV. ADMINISTRATION
A. Administration by the Committee. The Plan shall be administered by a
committee designated by the Board to administer the Plan. The Committee at all
times shall be constituted to permit the Plan to comply with the provisions of
Rule 16b-3 and shall be comprised solely of "outside directors" within the
meaning of Section 162(m)(4)(C)(i) of the Code. A majority of the members of
the Committee shall constitute a quorum. The
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approval of a quorum, expressed by a vote at a meeting, or the unanimous
consent of all members in writing without a meeting, shall constitute the
action of the Committee and shall be valid and effective for all purposes of
the Plan.
B. Committee Powers Generally. The Committee may adopt all rules,
regulations and procedures and take all other action as it shall deem
necessary or proper for the administration of the Plan and, in its discretion,
may modify, extend, or renew any Award. The Committee may also interpret the
Plan and the Committee's interpretation shall be final and conclusive. The
Committee may consult with counsel, who may be counsel for the Company, and
shall not incur any liability for any action taken in good faith in reliance
upon the advice of counsel.
C. Specific Committee Powers. Subject to the provisions of the Plan, the
Committee shall have full and final authority to:
1. designate the Eligible Employees to whom Awards shall be granted;
2. grant Awards in such form and amount as the Committee shall determine;
3. impose such limitations, restrictions and conditions upon any such
Award as the Committee shall deem appropriate;
4. waive in whole or in part any or all restrictions or conditions
imposed on Awards as the Committee shall deem appropriate; and
5. prescribe from time to time the form of agreement with Eligible
Employees that shall effect the Awards.
The specific enumeration in other sections of this Plan of the Committee's
powers shall not limit the Committee's power specified in this Section IV.
V. NONQUALIFIED STOCK OPTIONS
A. General. The Committee shall determine from time to time those Eligible
Employees to whom stock options shall be granted. All stock options granted
under the Plan shall be nonqualified stock options. No Eligible Employee shall
have any right whatsoever to receive an Award unless so determined by the
Committee. Each stock option shall be evidenced by a stock option agreement
between the Company and the Grantee which shall contain the terms and
conditions required by this Section V. and such other consistent terms and
conditions as the Committee may deem appropriate. A Grantee of a stock option
shall not have any rights as a stockholder with respect to the shares of
Common Stock covered by the stock option until the shares of Common Stock have
been delivered to the Grantee in accordance with this Plan. The provisions of
stock option Awards need not be the same with respect to each recipient.
Notwithstanding anything in this Plan to the contrary, no Eligible Employee
shall be granted stock options in any year that in the aggregate would be
exercisable for more than 20% of the total number of shares of Common Stock
that may be issued in accordance with Section III.A. of this Plan.
B. Option Price. The price at which each share of Common Stock covered by a
stock option may be purchased (the "Option Price") shall be:
1. $10.25 per share if the stock option is granted on or before the 30th
day following the consummation of the Plan of Reorganization in the cases
entitled In the Matter of P. A. Bergner & Co. Holding Company, et al.,
Debtors (Jointly Administered Case Nos. 91-05501 to 91-05516 and 93-20736
(RAE)) (the "Plan of Reorganization"); or
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2. no less than one hundred percent of the Fair Market Value of the
Common Stock at the time the stock option is granted if the stock option is
granted after the 30th day following the consummation of the Plan of
Reorganization.
C. Date Option Granted. A stock option shall be considered as having been
granted on the date on which the Committee authorized the grant of the stock
option, except where the Committee has designated a later date, in which event
the later date shall constitute the date of grant of the stock option. The
Committee shall cause notice of the stock option grant date to be given to the
employee within a reasonable time after the Committee has authorized the
Award.
D. Period for Exercise of Options. Each stock option agreement shall state
that the stock option may be exercised by the Grantee, in whole or in part,
for ten years. The Committee may provide that if a Grantee's employment by the
Company or a Subsidiary terminates by reason of death, disability or
retirement, any stock option held by the Grantee shall be fully vested and
thereafter may be exercised, during a period specified by the Committee, by
the Grantee or by any beneficiary or legal representative of the estate of a
disabled or deceased Grantee. The terms of any stock option agreement
notwithstanding, the Committee may at any time accelerate any date on which
the Grantee may exercise all or any portion of a stock option Award and
otherwise waive or amend any condition of a stock option Award. All stock
option Awards shall become fully vested and thereafter may be exercised in
full upon a Change of Control and each stock option agreement shall reflect
full vesting upon such event.
E. Method of Exercise. Each stock option may be exercised in whole or in
part from time to time as specified in the stock option agreement. Each
Grantee may exercise a stock option by giving written notice of the exercise
to the Company, specifying the number of shares to be purchased, accompanied
by payment in full of the Option Price for the shares of Common Stock to be
purchased. The Option Price may be paid in cash, by check, or, with the
approval of the Committee, by delivering shares of Common Stock which have
been beneficially owned by the Grantee, the Grantee's spouse, or both of them
for a period of at least six months prior to the time of exercise ("Delivered
Stock") or a combination of cash and Delivered Stock. Delivered Stock shall be
valued at its Fair Market Value determined as of the date of exercise of the
stock option. No Grantee shall be under any obligation to exercise any stock
option granted under this Plan.
F. Nontransferability. No stock option granted under the Plan shall be
transferable or assignable except by last will and testament or the laws of
descent and distribution. During the Grantee's lifetime, options shall be
exercisable only by the Grantee or by the Grantee's guardian or legal
representative.
VI. RESTRICTED STOCK
A. Administration. Shares of Common Stock may be issued to Eligible
Employees as restricted stock either alone or in addition to other Awards
granted under the Plan. The Committee shall determine the Eligible Employees
to whom, and the time or times at which, grants of restricted stock will be
made, the number of shares to be awarded, the purchase price, if any, the time
or times within which such Awards may be subject to forfeiture and any other
terms and conditions of the Awards. The Committee may condition the grant of
restricted stock upon the attainment of specified performance goals or such
other factors or criteria as the Committee shall determine. The provisions of
restricted stock Awards need not be the same with respect to each recipient.
B. Lapse of Restrictions. The Committee may provide, with respect to any
Award of restricted stock, that the restrictions with respect to restricted
stock granted under the Plan shall lapse upon the earliest of the following:
(a) three years from the date of grant or (b) a Change of Control. The terms
of any restricted stock
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agreement notwithstanding, the Committee may at any time accelerate any date
on which restrictions with respect to restricted stock Awards shall lapse and
otherwise waive or amend any conditions of the restricted stock Award.
C. Awards and Certificates. Each Grantee receiving a restricted stock Award
shall be issued a certificate in respect of the shares of restricted stock.
Such certificate shall be registered in the name of the Grantee and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to the Award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions of the Carson
Pirie Scott & Co. 1993 Stock Incentive Plan and a Restricted Stock
Agreement. Copies of such Plan and Agreement are on file at the offices of
Carson Pirie Scott & Co."
The Committee may require that the certificates evidencing restricted shares
be held in custody by the Company until the restrictions thereon shall have
lapsed and that, as a condition of any restricted stock Award, the Grantee
shall have delivered a stock power, endorsed in blank, relating to the Common
Stock covered by the Award.
D. Terms and Conditions. Shares of restricted stock shall be subject to the
following terms and conditions:
1. Until the applicable restrictions lapse, the Grantee shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber shares of
restricted stock.
2. The Grantee shall have, with respect to the shares of restricted
stock, all of the rights of a stockholder of the Company, including the
right to vote the shares and the right to receive any cash dividends.
Unless otherwise determined by the Committee, cash dividends shall be
automatically paid in cash and dividends payable in Common Stock shall be
paid in the form of additional restricted stock.
3. Except to the extent otherwise provided in the applicable restricted
stock agreement, all shares subject to restriction shall be forfeited by
the Grantee upon termination of a Grantee's employment for any reason.
4. If and when the applicable restrictions lapse, unlegended certificates
for the restricted shares shall be delivered to the Grantee.
5. Each Award shall be confirmed by, and be subject to the terms of, a
restricted stock agreement.
VII. WITHHOLDING TAXES
A. General Rule. Pursuant to applicable federal and state laws, the Company
is or may be required to collect withholding taxes upon the exercise of an
option or the lapse of restrictions on restricted stock. The Company may
require, as a condition to the exercise of an option or the issuance of a
stock certificate, that the Grantee concurrently pay to the Company the entire
amount or a portion of any taxes which the Company is required to withhold by
reason of such exercise or lapse of restrictions, in such amount as the
Committee or the Company in its discretion may determine.
B. Withholding from Shares to be Issued. In lieu of part or all of any such
tax payment, the Grantee may elect, subject to such rules and regulations as
the Committee may adopt from time to time, or the Company may require, that
the Company withhold from the shares to be issued that number of shares having
a Fair Market Value equal to the amount which the Company is required to
withhold. Any such request or election by a Grantee who is subject to the
provisions of Section 16 of the Exchange Act shall be made in accordance with
the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
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VIII. GENERAL
A. General Restriction. Each Award shall be subject to the requirement that
if at any time the Board or the Committee shall determine, in its discretion,
that the listing, registration, or qualification of securities upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such option or the issue
or purchase of securities thereunder, such option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board or the Committee.
B. No Employment Rights. The Plan shall not be construed as conferring any
rights upon any person for a continuation of employment, nor shall it
interfere with the rights of the Company or any Subsidiary to terminate the
employment of any person or to take any other action affecting such person.
C. Expiration and Termination of the Plan. Awards may be granted under the
Plan at any time and from time to time, prior to the tenth anniversary of the
effective date of this Plan, the date on which the Plan will expire, except as
to Awards then outstanding under the Plan, which shall remain in effect until
they have been exercised, the restrictions have lapsed or the Awards have
expired or been forfeited. The Plan may be abandoned or terminated at any time
by the Board of Directors of the Company, except with respect to any Awards
then outstanding under the Plan.
D. Amendments. Subject to the next sentence, the Board may from time to time
amend, modify, suspend or terminate the Plan and any amendment or modification
(other than an amendment to Section III.A of the Plan which changes the number
of shares of Common Stock that may be issued under the Plan) will be effective
with respect to all options granted under the Plan both prior to and after the
time the amendment or modification becomes effective. No such action shall (a)
impair without the Grantee's consent any Award theretofore granted under the
Plan or deprive any Grantee of any shares of Common Stock which he or she may
have acquired through or as a result of the Plan or (b) be made without
shareholder approval where such approval would be required as a condition of
compliance with Rule 16b-3.
E. Construction. Except as otherwise required by applicable federal laws,
the Plan shall be governed by, and construed in accordance with, the laws of
the State of Illinois.
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PROXY/VOTING PROXY/VOTING
INSTRUCTION CARD INSTRUCTION CARD
CARSON PIRIE SCOTT & CO.
This Proxy is solicited on behalf of the Board of Directors
for the Annual Meeting of Shareholders to be held on June 4, 1997
The undersigned appoints Stanton J. Bluestone, Charles J. Hansen and
Michael R. MacDonald, or any of them, proxies for the undersigned, each with
full power of substitution, to attend the Annual Meeting of Shareholders of
Carson Pirie Scott & Co., to be held on June 4, 1997 at 10:00 a.m., Milwaukee
time, and at any adjournments or postponements of the Annual Meeting, and to
vote as specified in this Proxy all the Common Shares of the Company which the
undersigned would be entitled to vote if personally present.
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, AND DATE
THIS PROXY ON THE REVERSE
SIDE AND RETURN IT PROMPTLY
IN THE ACCOMPANYING
ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /O/
[ ]
This Proxy when properly executed will be voted in accordance with your
indicated directions. If no direction is made, this Proxy will be voted FOR the
election of Directors and FOR proposals 2, 3 and 4.
1. ELECTION OF DIRECTORS:
NOMINEES: S. Bluestone, J. Burden III, M. Dickstein, C. Edelstein,
W. Jenkins, M. Kaufman and M. MacDonald.
For Withhold For All
All All Except
/O/ /O/ /O/
________________________________________________
(Except nominee(s) written above)
NOTE: If you vote for one or more nominees, unless you otherwise specify below,
you will authorize the Proxy Holders to vote your Common Shares cumulatively to
maximize the number of the nominees elected. To specify a different manner of
cumulative voting, write "Cumulate For", the number of votes, and the name(s) of
the nominee(s) below.
See "Proxy Voting" in the accompanying Proxy Statement for additional
information.
____________________________________________________________________
The Board of Directors recommends a vote FOR the election of Directors and FOR
proposals 2, 3 and 4.
In their discretion, the Proxy Holders are authorized to vote upon any other
business that may properly come before the meeting.
For Against Abstain
2. Approval of the 1997 Senior Executive Bonus Plan. /O/ /O/ /O/
3. Approval of the 1993 Stock Incentive Plan, as /O/ /O/ /O/
amended and restated as of March 19, 1997.
4. Ratification of the appointment of KPMG Peat /O/ /O/ /O/
Marwick LLP as independent accountants for
fiscal year 1997.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and of the Proxy Statement.
Dated: _____________________________________, 1997
Signature(s) _____________________________________
__________________________________________________
Please sign exactly as your name appears on the
other side of this card. Joint owners should
each sign personally. Where applicable, indicate
your official position or representative capacity.
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YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ACCOMPANYING ENVELOPE.
