<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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
[X]Definitive Proxy Statement Commission Only (as permitted by
[_]Definitive Additional Materials Rule 14a-6(e)(2))
[_]Soliciting Material Pursuant to
(S) 240.14a-11(c) or (S) 240.14a-
12
GART SPORTS COMPANY
(Name of Registrant as Specified in its Charter)
Nesa E. Hassanein
Gart Sports Company
1000 Broadway
Denver, Colorado 80203
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]$500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: ____
(2) Aggregate number of securities to which transaction applies: _______
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: ________________________________
(4) Proposed maximum aggregate value of transaction: ___________________
(5) Total fee paid: ____________________________________________________
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ____________________________________________
(2) Form, Schedule or Registration Statement No.: ______________________
(3) Filing Party: ______________________________________________________
(4) Date Filed: ________________________________________________________
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<PAGE>
GART SPORTS COMPANY
1001 Lincoln Street
Denver, Colorado 80203
May 5, 2000
Dear Fellow Stockholders:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of Gart Sports Company ("Gart Sports" or the "Company"), to be held at 10:00
a.m. on Wednesday, June 14, 2000 at the executive offices of the Company,
located at 1001 Lincoln Street, Denver, Colorado.
The 2000 Annual Meeting will be devoted to: (1) the election of Directors of
the Company who will hold office until the next Annual Meeting, and (2) such
other matters that may properly come before the meeting or any adjournment
thereof.
Your vote is important! Be sure that your shares are represented and voted
at the Annual Meeting, whether or not you plan to attend in person. If your
Gart Sports shares are registered in your name, you may vote your shares by
completing, signing and mailing your proxy card in the enclosed postage paid
envelope. If your shares are held in the name of your broker, bank or other
record holder, the record holder will instruct you how to vote those shares.
The Company's 1999 Annual Report on Form 10-K, which is being sent to you
along with the accompanying Proxy Statement, contains information about the
Company and its financial performance.
Directors and officers of the Company will be present to help host the
Annual Meeting and to respond to any questions you may have. By attending the
Annual Meeting, you will have the opportunity to hear the plans for our
Company's future and to meet our officers.
Kind Regards,
/s/ John D. Morton
<PAGE>
GART SPORTS COMPANY
1001 Lincoln Street
Denver, Colorado 80203
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
The 2000 Annual Meeting of Stockholders of Gart Sports Company, a Delaware
corporation (the "Company"), will be held at the executive offices of the
Company, located at 1001 Lincoln Street, Denver, Colorado at 10:00 a.m., local
time, on Wednesday, June 14, 2000, for the following purposes:
1. To elect six Directors of the Company to the Board of Directors to serve
until the next Annual Meeting of Stockholders; and
2. To transact such other business as may properly come before the meeting.
Stockholders of record of the Company's Common Stock, $.01 par value, at the
close of business on May 5, 2000, are entitled to notice of and to vote at the
meeting or any adjournment thereof. A list of stockholders entitled to vote at
the meeting will be available for inspection at the office of the Secretary of
the Company, 1001 Lincoln Street, Denver, Colorado for at least ten days prior
to the meeting and will also be available for inspection at the meeting.
You are cordially invited to attend the Annual Meeting in person. All
stockholders, whether or not they plan to attend the Annual Meeting, are
requested to complete, date and sign the enclosed proxy card and return it
promptly in the envelope provided for that purpose. If you are present in
person at the Annual Meeting, you may revoke your proxy and vote in person as
set forth in the Proxy Statement.
By Order of the Board of Directors,
/s/ Nesa E. Hassanein
Nesa E. Hassanein
Secretary
Denver, Colorado
May 5, 2000
<PAGE>
GART SPORTS COMPANY
1001 Lincoln Street
Denver, Colorado 80203
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
June 14, 2000
----------------
INTRODUCTION
This proxy statement is furnished to stockholders of Gart Sports Company in
connection with the solicitation of proxies by the Board of Directors for the
2000 Annual Meeting. Proxy materials, including this proxy statement and a
proxy card, are being mailed to stockholders on or about May 9, 2000. All
costs incurred in connection with this proxy solicitation will be borne by the
Company.
Information about Voting
Record Date. The record date for the 2000 Annual Meeting to be held on June
14, 2000 is May 5, 2000 (the "Record Date"). As of the Record Date, 7,480,978
shares of Common Stock, par value $.01 per share, of Gart Sports Company (the
"Common Stock") were outstanding, each of which is entitled to one vote on
each matter to be voted upon at the Annual Meeting. Only stockholders of
record at the close of business on the Record Date will be entitled to notice
of and to vote at the Annual Meeting or any adjournment thereof.
Quorum. The presence at the Annual Meeting, in person or by proxy, of
stockholders holding a majority of the shares outstanding as of the Record
Date will constitute a quorum.
Proxy Voting. If you mark your voting instructions on your proxy card and
sign and return it, the proxies, who are identified on the proxy card, will
vote your shares as you instruct. If you sign and return your proxy card, but
do not specify how your shares are to be voted, the proxies will vote your
shares FOR the election of the six Director nominees.
Other than the election of Directors, the Board of Directors does not know
of any other matter that may be presented at the meeting. By signing and
returning your proxy card, you authorize the proxies to exercise their
discretion in voting on any other matter that may be presented for a vote.
Green Equity Investors, L.P. ("GEI") owns a majority of the outstanding
Common Stock, approximately 63.0%. Therefore, GEI has sufficient voting power
to elect the nominees proposed by the Board of Directors. GEI has indicated
its intention to vote its shares FOR the election of the six Director nominees
and all other proposals contained in the Proxy Statement.
You may revoke your proxy at any time before it is voted by delivering to
the Secretary of Gart Sports Company, 1001 Lincoln Street, Denver, Colorado
80203 a written revocation notice, by submitting a subsequent valid proxy card
or by voting in person at the Annual Meeting. Any notice of revocation sent to
the Company must include the stockholder's name.
Votes Required to Elect the Directors or Approve a Proposal. The six persons
who receive the highest number of votes will be elected to the Board of
Directors of the Company. Any other matter properly presented for a vote at
the Annual Meeting will be approved if the number of shares voted in favor
exceeds the number of shares voted in opposition.
<PAGE>
Abstentions and broker non-votes are each included in the determination of
the number of shares present and voting. Abstentions and broker non-votes are
tabulated separately. Abstentions are counted in tabulations of votes cast on
proposals presented to the stockholders and will have the same effect as
negative votes, whereas broker non-votes will not be counted as votes cast for
or against a particular proposal and therefore will have no effect in
determining the outcome of the vote on a particular matter.
Annual Report
The Company's 1999 Annual Report on Form 10-K is enclosed with these proxy
materials.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Board of Directors has nominated for re-election the following
directors: John Douglas Morton, Jonathan D. Sokoloff, Jonathan A. Seiffer,
Larry J. Hochberg, Gordon D. Barker and Peter R. Formanek. The entire Board of
Directors is elected to serve until the next Annual Meeting of the
Stockholders and until their successors have been elected and qualified. One
vacancy remains on the Board which may be filled by the Board of Directors
prior to the next Annual Meeting of Stockholders.
If any candidate nominated in this Proxy Statement should for any reason
become unavailable for election, proxies may be voted with discretionary
authority for any substitute designated by the Board of Directors.
Stockholders are not allowed to cumulate their votes in the election of
Directors.
The Board of Directors recommends that you vote "FOR" the election of the
following six nominees, all of whom are currently serving as Directors of the
Company. Certain information with respect to the Director nominees is set
forth below:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
John Douglas Morton.................. 49 President, Chief Executive Officer and
Chairman of the Board
Jonathan D. Sokoloff................. 42 Director
Jonathan A. Seiffer.................. 28 Director
Gordon D. Barker..................... 54 Director
Peter R. Formanek.................... 56 Director
Larry J. Hochberg.................... 62 Director
</TABLE>
John Douglas Morton. Mr. Morton became President, Chief Executive Officer
and Chairman of the Board in May 1995. Mr. Morton joined Gart Sports in 1986
as Division Manager of Gart Sports' Utah region. In 1988 he was promoted to
Division Vice President of that region and in 1990 to Vice President of
Operations for Gart Sports. In 1994 Mr. Morton was promoted to Executive Vice
President of Gart Sports with responsibility for Stores, Distribution and
Marketing. Prior to joining Gart Sports he served in various positions with
Wolfe's Sporting Goods (a seven-store sporting goods retailer) from 1972 to
1980 including Merchandise Manager -- Ski, Camping, Golf and Tennis, Store
Manager, and Operations Manager. From 1980 until joining Gart Sports he served
as a District Manager for Malone and Hyde's sporting goods division (a 40-
store retail sporting goods retailer). Mr. Morton has worked for over 30 years
in the sporting goods retail industry.
Jonathan D. Sokoloff. Mr. Sokoloff became a Director of the Company in April
1993. Mr. Sokoloff has been a partner of Leonard Green & Associates, L.P.
("LGA"), a merchant banking firm and the general partner of Green Equity
Investors, L.P. ("GEI"), the holder of approximately 63.0% of the outstanding
Common Stock, since 1990, and was employed at Drexel Burnham Lambert
Incorporated from 1985 through 1990, most recently as a managing director. He
has been an executive officer and equity owner of Leonard Green & Partners,
L.P. ("LGP"), a merchant banking firm affiliated with LGA, since its formation
in 1994, and is also a director of Twinlab Corporation (a manufacturer and
2
<PAGE>
marketer of nutritional supplements), RiteAid Corporation (a national drug store
chain) and several private companies.
Jonathan A. Seiffer. Mr. Seiffer became a Director of the Company in
December 1998. Since December 1997, Mr. Seiffer has been a vice president of
LGP. From October 1994 until December 1997, Mr. Seiffer was an associate at
LGP. Prior to October 1994, Mr. Seiffer was a member of the corporate finance
department of Donaldson, Lufkin & Jenrette Securities Corporation. He is also
a director of several private companies.
Gordon D. Barker. Mr. Barker became a Director of the Company in April 1998.
Mr. Barker was the Chief Executive Officer and a Director of Thrifty Payless
Holdings, Inc. ("Thrifty Payless"), a subsidiary of RiteAid Corporation, from
1996 until its acquisition by RiteAid Corporation in 1997. He previously
served in various capacities at Thrifty Payless since 1968, including as Chief
Operating Officer from 1994 to 1996 and as President from 1994 to 1997. Mr.
Barker is also a director of United Natural Foods (a distributor of natural
food products) listed under the NASDAQ Exchange symbol UNFI. Mr. Barker also
currently serves as C.E.O. of Snyder Drug Stores, a mid-western chain of
approximately 150 corporate and affiliate drug stores.
Peter R. Formanek. Mr. Formanek became a Director of the Company in April
1998. Mr. Formanek was co-founder of AutoZone Inc., a retailer of aftermarket
automotive parts, and served as President and Chief Operating Officer of
AutoZone Inc. from 1986 until his retirement in 1994. He currently is a
director of The Perrigo Company, a manufacturer of store brand over-the-
counter drug products and vitamins, and Borders Group, Inc., the second
largest operator of book superstores and the largest operator of mall-based
bookstores in the United States.
Larry J. Hochberg. Mr. Hochberg became a Director of the Company in April
1998. Mr. Hochberg served as a Director of Sportmart from the time he co-
founded it in 1970 until Sportmart's acquisition by Gart Sports in January
1998. Mr. Hochberg also co-founded Children's Bargain Town (now part of Toys
"R" Us ) which he sold in 1969. Mr. Hochberg is a graduate of Northwestern
University School of Law. He served on the Executive Committee and the Board
of Directors of the International Mass Retailing Association from 1993 to
1998. Mr. Hochberg currently is National Chairman of the Unity Campaign for
the United Jewish Committees.
3
<PAGE>
INFORMATION ABOUT THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
Board of Directors Meetings
During fiscal 1999, the Board of Directors met five times and took action by
unanimous written consent on two occasions. Each Director attended at least
75% of the meetings held during fiscal 1999.
Committees of the Board of Directors
The Board of Directors has an Audit Committee and a Compensation Committee
but does not currently have a Nominating Committee.
Audit Committee. The members of the Audit Committee include Jonathan A.
Seiffer and Gordon D. Barker. The functions of the Audit Committee are to
recommend annually to the Board of Directors the appointment of independent
public accountants of the Company, discuss and review the scope and the fees
of the prospective annual audit and review the results thereof with the
independent public accountants, review and approve non-audit services of the
independent public accountants, review compliance with existing major
accounting and financial policies of the Company, review the adequacy of the
financial organization of the Company and review management's procedures and
policies relative to the adequacy of the Company's internal accounting
controls. During fiscal 1999, the Audit Committee had one meeting.
Compensation Committee. The current members of the Compensation Committee
are Jonathan D. Sokoloff, Larry J. Hochberg and Peter R. Formanek. The
Compensation Committee establishes the compensation of the Company's executive
officers and is active in reviewing salaries, bonuses and other forms of
compensation for other officers and key employees of the Company. The
Compensation Committee also administers and interprets the Company's stock
option plans and has authority to determine which persons shall be granted
options thereunder and the terms and conditions of the stock options granted.
The Compensation Committee met two times and took action by unanimous written
consent on one occasion in fiscal 1999. Only non-employee Directors may be
members of the Compensation Committee.
Compensation of Directors
Directors who are employees of the Company receive no separate compensation
for serving as Directors. Mr. Sokoloff and Mr. Seiffer do not receive any
compensation for serving as Directors. In March 1999, the Board of Directors
approved compensation to be paid to Directors who are not employees of the
Company as follows: options to purchase 10,000 shares of Common Stock upon
joining the Board of Directors and $25,000 per year payable quarterly in the
form of restricted shares or cash, at the election of the Director. The
restricted shares are valued as of the last day of the fiscal quarter in which
the Director attends at least one Board of Directors meeting. All Directors
are reimbursed for their expenses incurred in attending meetings.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
During fiscal 1999, Mr. Sokoloff, a non-employee Director, was a member of
the Compensation Committee. Mr. Sokoloff is a partner of LGA, which provides
management, consulting and financial planning services to the Company. See
"Certain Relationships and Related Transactions" for a description of this
arrangement and other relationships between the Company and entities
controlled by Mr. Sokoloff.
4
<PAGE>
EXECUTIVE OFFICERS
Set forth below is certain information with respect to the executive
officers of the Company other than Mr. Morton:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Thomas T. Hendrickson... 45 Executive Vice President, Chief Financial Officer and Treasurer
Arthur S. Hagan......... 61 Senior Vice President -- Merchandising
James M. Van Alstyne.... 39 Senior Vice President -- Merchandising
Michael McCaghren....... 40 Senior Vice President -- Chief Information Officer
Greg Waters............. 39 Senior Vice President -- Store Operations
</TABLE>
Thomas T. Hendrickson. Mr. Hendrickson became Executive Vice President,
Chief Financial Officer and Treasurer of the Company in January 1998. Mr.
Hendrickson previously served as the Executive Vice President and Chief
Financial Officer of Sportmart which position he held since September 1996. He
joined Sportmart in January 1993 as Vice President -- Financial Operations. In
March 1993 he was named Chief Financial Officer of Sportmart and in March 1995
he was named Senior Vice President and Chief Financial Officer of Sportmart.
From 1987 until joining Sportmart, Mr. Hendrickson was employed as the Vice
President and Controller of Millers Outpost Stores.
Arthur S. Hagan. Mr. Hagan became Senior Vice President -- Merchandising in
January 1998. Mr. Hagan joined the Company in 1988 as the Company's Division
Merchandise Manager for Golf, Tennis, Ski Clothing/Equipment and Garden
Furniture and was promoted to Vice President -- Store Operations in 1995 and
to Senior Vice President -- Store Operations in May 1997. He was President and
owner of Hagan Sports Ltd. (a six-store sporting goods retailer acquired by
the Company in 1987) and President and Chief Executive Officer of Aspen Leaf
of Colorado, Inc. (a 12-store ski equipment and apparel retailer). Mr. Hagan
has over 30 years retailing experience.
James M. Van Alstyne. Mr. Van Alstyne became Senior Vice President --
Merchandising in April 2000. Mr. Van Alstyne joined the Company in 1986 as a
Buyer and held that position until 1993. Mr. Van Alstyne returned to the Company
in 1998 as Vice President Merchandising -- Hardlines and held that position
until April 2000. Prior to rejoining the Company Mr. Van Alstyne served as
Western Regional Sales Manager, National Sales Manager and then Vice President
of Sales for the U.S., Latin America and Australia for Easton Sports, Inc. from
1993 to 1998.
Michael McCaghren. Mr. McCaghren became Senior Vice President -- Chief
Information Officer of the Company in February 1999. Prior to joining the
Company, he was most recently Senior Vice President -- Systems, Merchandise
Planning, Allocation and Replenishment, Logistics and Corporate Administration
at Jumbo Sports (a sporting goods retailer) where he was employed from 1997 to
1999. Before joining Jumbo Sports, for approximately one year, Mr. McCaghren
was National Director at GSI Outsourcing Inc., an information systems
outsourcing subsidiary of ADP, Inc. From 1991 to 1996, he was Senior Vice
President and Chief Information Officer of Eli Witt Company, a grocery
wholesaler.
Greg Waters. Mr. Waters joined the Company in April 1998 as Senior Vice
President -- Store Operations. Prior to joining the Company, Mr. Waters served
as the western Regional Vice President for The Sports Authority since 1994 and
as a District Manager for The Sports Authority since 1991. Mr. Waters was
employed by Herman's World of Sporting Goods from 1983 until 1991, most
recently as a District Manager.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the information regarding the annual and
long-term compensation for services rendered to the Company during each of the
last two fiscal years to the Chief Executive Officer and the four other most
highly compensated executive officers of the Company as of January 29, 2000
(collectively, the "named executives").
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------- -----------------------
Restricted Securities
Fiscal Other Stock Underlying All Other
Name and Position Year Salary($) Bonus($) ($) Awards($) Options(#) Compensation($)
----------------- ------ --------- -------- ------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
John Douglas Morton...... 1999 407,492 214,038 -- 828,125(1) 25,000 3,000(2)
Chairman, President and 1998 400,000 -- -- -- 54,000 3,000(2)
Chief Executive Officer 1997 287,500 242,358 -- -- 60,000 2,899(2)
Thomas T. Hendrickson(3). 1999 246,461 118,800 71,260(4) 409,094(1) 10,000 --
Executive Vice 1998 240,000 -- 87,362(4) -- 64,916 118,341(5)
President,
Chief Financial Officer
and Treasurer
Greg Waters(6)........... 1999 190,480 75,750 -- 165,625(1) 8,000 --
Senior Vice President -- 1998 151,675 -- 69,305(4) -- 40,000 --
Store Operations
Michael McCaghren (7).... 1999 179,038 75,000 39,569(4) -- 15,000 --
Senior Vice President --
Chief Information
Officer
Arthur S. Hagan.......... 1999 174,422 69,375 -- 139,125(1) 2,000 1,273(2)
Senior Vice President -- 1998 170,000 -- -- -- -- 2,098(2)
Merchandising 1997 140,000 79,317 -- -- 12,000 2,465(2)
</TABLE>
- --------
(1) Represents the market value of restricted shares granted during fiscal 1999
based on the closing price of $6.625 per share on March 16, 1999, the date
of grant. These shares vest 100% on March 16, 2004, subject to the
individuals continued employment by the Company.
(2) Represents contributions made by the Company on behalf of the named
executives to its 401(k) Savings Plan.
(3) Mr. Hendrickson became Executive Vice President, Chief Financial Officer
and Treasurer in January 1998.
(4) Represents reimbursement of relocation expenses.
(5) Includes $2,991 that represent contributions by the Company on behalf of
Mr. Hendrickson to its 401(k) Savings Plan, The balance of $115,350
represents a payment made to Mr. Hendrickson pursuant to a change in
control agreement he had with Sportmart. In addition, Mr. Hendrickson
received a payment of $258,757 in January 1998 pursuant to the same change
in control agreement.
(6) Mr. Waters became Senior Vice President -- Store Operations in April 1998.
(7) Mr. McCaghren became Senior Vice President -- Chief Information Officer in
February 1999.
The following table summarizes the options granted during the 1999 fiscal
year to the named executives:
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------
Potential
Realizable
Value at Assumed
Annual Rate of
Stock
Number of Percent of Price
Securities Total Options Appreciation for
Underlying Granted to Option Term(2)
Options Employees in Exercise Expiration -----------------
Name Granted (1) 1999 Price Date 5% 10%
---- ----------- ------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
John Douglas Morton..... 25,000 10.7% $6.625 3/16/09 $104,161 $263,964
Thomas T. Hendrickson... 10,000 4.3% $6.625 3/16/09 $ 41,664 $105,585
Greg Waters............. 8,000 3.4% $6.625 3/16/09 $ 33,331 $ 84,468
Michael McCaghren....... 15,000 6.4% $6.625 3/16/09 $ 62,496 $158,378
Arthur S. Hagan......... 2,000 0.9% $6.625 3/16/09 $ 8,333 $ 21,117
</TABLE>
- --------
(1) These options were granted under the Company's 1994 Management Equity Plan
described below.
(2) Based upon the estimated fair value of the Common Stock on the date of
grant and assumed appreciation over the term of the options at the
respective annual rates of stock appreciation shown. Potential gains are
net of the exercise price but before taxes associated with the exercise.
6
<PAGE>
The 5% and 10% assumed annual rates of compounded stock appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the future price of the
Common Stock. Actual gains, if any, on stock option exercises are dependent
on the future financial performance of the Company and overall market
conditions. The actual value realized may be greater or less than the
potential realizable value set forth in the table.
The following table sets forth certain information regarding the number and
value of unexercised options held by the named executives at January 29, 2000:
JANUARY 29, 2000 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of unexercised
Options at January 29, In-the-Money options at
2000 January 29, 2000 (1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John Douglas Morton........ 142,000 133,000 $173,664 $49,781
Thomas T. Hendrickson...... 23,429 51,487 $ -- $ 1,250
Greg Waters................ 8,000 40,000 $ -- $ 1,000
Michael McCaghren.......... -- 15,000 $ -- $ 1,875
Arthur S. Hagan............ 30,000 16,000 $ 40,824 $11,266
</TABLE>
- --------
(1) Represents the value of the shares of Common Stock subject to outstanding
options, based on the market value of $6.75 per share at January 29, 2000,
less the aggregate option exercise price.
7
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act of 1934, as amended, that might incorporate future filings, including this
Proxy Statement, in whole or in part, the following Report of the Compensation
Committee and the Performance Graph shall not be incorporated by reference
into any such filing.
The Compensation Committee of the Board of Directors, composed of outside
directors of the Board of Directors of the Company, reviews the performance of
the Company's executive officers, determines the compensation of the Company's
executive officers and is active in reviewing salaries, bonuses and other
forms of compensation for other officers and key employees of the Company. The
Compensation Committee is empowered by the Board to award stock options,
grants of restricted shares of Common Stock or permitted purchases of Common
Stock to key employees of the Company.
The Compensation Committee has access to independent compensation data and
is authorized, if determined appropriate in any particular case, to engage
outside compensation consultants.
The objectives of the Compensation Committee are to support the achievement
of desired Company performance, to provide compensation and benefits that will
attract and retain superior talent and reward performance and to fix a portion
of compensation to the outcome of the Company's performance.
The executive compensation program is generally composed of base salary,
bonuses based upon the Company's achievement of a target level of earnings
before income taxes plus interest expense and other financing costs and
depreciation and amortization ("EBITDA") and long-term incentives in the form
of stock options, restricted stock grants and permitted stock purchases.
Base Salaries. Base salaries for the Company's executive officers are
competitively set relative to salaries of officers of companies comparable in
business and size included in the Standard & Poor's Retail Index. In each
instance, base salary takes into account individual experience and performance
specific to the Company. The Compensation Committee generally attempts to
provide compensation approximating the median of comparable companies. Except
for increases associated with promotions or increased responsibility,
increases in base salaries for executive officers of the Company from year to
year are limited to adjustments to reflect increases in the rate of inflation.
The Compensation Committee is aware that the Internal Revenue Code of 1986,
as amended (the "Code"), treats certain elements of executive compensation in
excess of $1 million a year as an expense not deductible by the Company for
federal income tax purposes. For the fiscal year ended January 29, 2000, no
executive officer's compensation exceeded the cap on deductibility. To the
extent compensation to an executive officer exceeds the cap in the future, the
Compensation Committee will consider the facts and circumstances at that time
to reach a determination regarding the impact of the cap on such compensation.
Bonus Plan. Bonuses for executive officers and certain other officers and
members of the Company's target bonus management team are paid pursuant to the
Company's Bonus Plan (the "Bonus Plan"). The purpose of the Bonus Plan is to
provide an incentive for executives and other key employees of the Company and
to reward them in relation to the degree to which specified earnings goals are
achieved. Under the Bonus Plan, eligible employees are awarded cash bonuses
based upon the Company's achievement of a target level of EBITDA ("Target
EBITDA") established each year by the Compensation Committee. The amount of
each individual's cash bonus, as determined by the Compensation Committee, is
a percentage of salary ranging from a maximum of 70% (for the Chief Executive
Officer) to 10% depending on position, if the Company achieves 100% of Target
EBITDA. Bonuses can also be increased by up to 75% if Target EBITDA is
exceeded. The Company achieved 75% of the Target EBITDA for fiscal 1999 and
bonuses were awarded based on the percent of Target EBITDA achieved. The Board
of Directors may choose to continue, amend or terminate the Bonus Plan in
future years after 1999.
8
<PAGE>
Management Equity Plan. The Compensation Committee administers the Company's
1994 Management Equity Plan, as amended (the "Management Equity Plan"). Under
the terms of the Management Equity Plan, the Compensation Committee may award
key employees (including officers and directors who are employees) of the
Company or its subsidiaries (i) grants of Common Stock ("Grant Shares"), (ii)
permitted purchases of Common Stock ("Purchased Shares"), or (iii) options to
purchase shares of Common Stock, or any combination of the foregoing as
determined by the Compensation Committee. 1,750,000 shares of Common Stock
have been reserved for issuance pursuant to awards that may be granted under
the Management Equity Plan. Awards covering 1,371,414 shares are outstanding
as of May 5, 2000.
The Compensation Committee believes that employee equity ownership provides
significant additional motivation to maximize value for the Company's
stockholders and, therefore, periodically grants stock options to the
Company's employees, including executive officers. Stock options are granted
typically at prevailing market price and, therefore, will only have value if
the Company's stock price increases over the exercise price. The Compensation
Committee believes that the grant of stock options provides a long-term
incentive to such persons to contribute to the growth of the Company and
establishes a direct link between compensation and stockholder return,
measured by the same index used by stockholders to measure Company
performance. The terms of options granted, including number of shares,
vesting, exercisability and option term, are determined by the Compensation
Committee, based upon the position and responsibilities of each employee,
historical and expected contributions of each employee, previous option grants
to each employee and a review of competitive equity compensation for executive
officers of similar rank in companies that are comparable to the Company's
industry and size.
In the case of Stock Options, the Compensation Committee has the authority
to determine whether such stock options shall be intended as "incentive stock
options" ("ISOs") or "non-incentive" or "nonqualified" Stock Options under
Section 422 of the Code. No more than 600,000 of the 1,750,000 aggregate
shares allocated to awards under the Management Equity Plan shall be subject
to the ISOs outstanding at any time. Stock options may be transferred by an
optionee during his or her lifetime only to the extent permitted by the
Compensation Committee.
Compensation of Chief Executive Officer. The compensation package of Mr.
Morton, the Company's President and Chief Executive Officer, was determined in
accordance with the principles described above. In 1999, Mr. Morton received a
base salary of $407,492. The Compensation Committee also approved grants of
25,000 stock options and 125,000 shares of restricted stock to Mr. Morton in
1999. In addition, Mr. Morton receives certain other customary perquisites and
benefits. The Compensation Committee approved Mr. Morton's total compensation
based on the following factors, in order of importance to the Compensation
Committee: (i) improvement in the financial performance of the Company, (ii)
Mr. Morton's efforts in connection with the integration of the operations of
Sportmart, and (iii) the Company's comparative performance with other
companies in its industry.
COMPENSATION COMMITTEE MEMBERS
Jonathan D. Sokoloff
Peter R. Formanek
Larry J. Hochberg
Compensation and Severance Agreements and Plans
Change in Control Severance Agreements. The Company is party to a change in
control severance agreement with most of its officers, including Mr. Morton
and each of the other executives named in the Summary Compensation Table.
9
<PAGE>
The Company entered into change in control severance agreements dated
October 21, 1998 (the "Severance Agreements"), with most of the executive
officers of the Company. The Severance Agreements provide that the officer is
entitled to a severance payment in the event a transaction resulting in a
change in control occurs and, within one year from the date of the
transaction, either the employee's employment is terminated (other than for
cause) or the employee resigns for "good reason" (as defined in the Severance
Agreements). The severance payments consist of (i) payment, in one lump sum,
of an amount equal to the employee's base salary for a certain specified
severance period (three years for the President of the Company, two years for
the Executive Vice President, one and one-half years for Senior Vice
Presidents, and one year for Vice Presidents), (ii) payment of the "on plan"
bonus amount for the fiscal year in which termination of employment occurs,
multiplied by the applicable severance period for the officer, (iii) certain
medical, dental, life and other insurance benefits for the applicable
severance period, and (iv) any automobile provided to the employee by the
Company. After a transaction resulting in a change in control occurs, an
officer of the Company may resign for "good reason" and receive his or her
severance payment if the employee's base salary or bonus is reduced,
responsibilities and position are reduced or the employee is required to work
at a location more than 30 miles from the Company's current executive offices.
In connection with entering into the Severance Agreements, the Company
agreed to accelerate the vesting of stock options or restricted shares granted
to employees if the employee becomes entitled to receive a severance payment
under his or her Severance Agreement. The employee would then have one year in
which to exercise the stock options. After one year, the stock options would
terminate.
Employee Benefit Plan. Gart Sports maintains a defined contribution profit
sharing plan (the "Employee Plan") that includes a 401(k) plan feature for all
eligible employees. The Employee Plan permits eligible employees to make tax
deferred contributions and provides for discretionary matching contributions
by Gart Sports as determined by the Board of Directors. In fiscal 1999, Gart
Sports' matching contributions were $300,000.
Deferred Compensation Plan. During fiscal 1999, the Company began a
nonqualified Deferred Compensation Plan (the "DCP") for certain members of
management. Eligible employees may contribute a portion of base salary or
bonuses to the plan annually. The DCP provides for additional matching
contributions by the Company, with limitations similar to the Company's 401(k)
plan, as well as discretionary contributions in an amount determined by the
Company prior to the end of each plan year. The Company made no matching
contributions to the DCP during 1999.
10
<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Company, the NASDAQ Composite Index, the Standard & Poors Retail Index and a
peer group of companies during the period commencing January 9, 1998 and ending
on January 29, 2000. In reviewing this graph, stockholders should keep in mind
the possible effect that the limited trading in the Common Stock may have had
on the price of the Common Stock.
The comparison assumes $100.00 was invested on January 9, 1998 and assumes
the reinvestment of all dividends, if any. The peer group consists of the
following publicly traded sporting goods retailers: Oshman's Sporting Goods,
Inc., Sport Chalet, Inc., Hibbett Sporting Goods, Inc. and The Sports
Authority, Inc. The peer group used in the Company's Proxy Statement for fiscal
year 1998 included Just For Feet, Inc. which is no longer publicly traded as a
result of its filing under the Bankruptcy Code. The Company did not replace
Just For Feet, Inc. in its peer group.
[GRAPH APPEARS HERE]
Gart Sports NASDAQ Composite S&P Retail Peer
Company Index Index Group
----------- ---------------- ---------- --------
1/9/98 100.00 100.00 100.00 100.00
1/31/98 94.64 107.73 105.36 95.81
8/1/98 117.86 124.56 137.46 113.89
1/30/99 49.11 166.70 171.45 49.03
7/31/99 46.88 175.52 170.29 49.02
1/29/00 48.21 258.58 168.63 38.88
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The table below sets forth certain information regarding beneficial
ownership of Common Stock as of April 24, 2000, assuming the exercise of
options exercisable within 60 days of the date thereof, with respect to: (i)
each person or entity who owns of record or beneficially five percent or more
of the Common Stock, (ii) each Executive Officer and each Director and (iii)
all executive officers and Directors as a group. To the Company's knowledge,
each of such stockholders has sole voting and investment power as to the
shares shown unless otherwise noted.
<TABLE>
<CAPTION>
Name and Address Number Percent
- ---------------- --------- -------
<S> <C> <C>
Green Equity Investors, L.P.(1)............................. 4,713,200 63.0%
11111 Santa Monica Boulevard
Suite 2000
Los Angeles, CA 90025
John Douglas Morton(2)...................................... 202,600 2.7
Thomas T. Hendrickson(3).................................... 44,301 *
Arthur S. Hagan(4).......................................... 45,400 *
James M. Van Alstyne(5)..................................... 5,000 *
Greg Waters(6).............................................. 13,600 *
Michael McCaghren(7)........................................ 3,000 *
Jonathan D. Sokoloff(1)..................................... -- --
Jonathan A. Seiffer......................................... 800 *
Gordon D. Barker(8)......................................... 10,418 *
Peter R. Formanek(9)........................................ 66,883 *
Larry J. Hochberg(10)....................................... 479,987 6.4
Andrew S. Hochberg(11)...................................... 267,449 3.6
All directors and executive officers as a group (12 persons) 1,133,107 14.6%
</TABLE>
- --------
* Less than 1%.
(1) GEI is a Delaware limited partnership, the general partner of which is
LGA. The general partners of LGA are (i) Tardy-Green, Inc., a Delaware
corporation the capital stock of which is wholly-owned by a trust of
which Leonard I. Green is the co-trustee, (ii) Mr. Sokoloff, (iii)
GANMAX, a California corporation the capital stock of which is
beneficially owned by Gregory J. Annick and (iv) John G. Danhakl. Mr.
Green, Mr. Sokoloff, Mr. Annick and Mr. Danhakl may be deemed to be
beneficial owners of the shares of Common Stock held by GEI since they
(or entities controlled by them) are general partners of LGA and also
because they (whether through ownership interest or position) may be
deemed to control LGA.
(2) Includes 146,600 shares of Common Stock issuable upon the exercise of
outstanding options.
(3) Includes 31,925 shares of Common Stock issuable upon the exercise of
outstanding options.
(4) Includes 30,400 shares of Common Stock issuable upon the exercise of
outstanding options.
(5) Includes 5,000 shares of Common Stock issuable upon the exercise of
outstanding options.
(6) Includes 13,600 shares of Common Stock issuable upon the exercise of
outstanding options.
(7) Includes 3,000 shares of Common Stock issuable upon the exercise of
outstanding options.
(8) Includes 5,000 shares of Common Stock issuable upon the exercise of
outstanding options.
12
<PAGE>
(9) Includes 21,200 shares of Common Stock held by Formanek Investment Trust
with Peter R. Formanek as Beneficiary and trustee, 1,650 shares of Common
Stock held by Peter R. Formanek as a minority Trustee of the Formanek
Childrens Trust, and 5,000 shares of Common Stock issuable upon the
exercise of outstanding options. Mr. Formanek disclaims beneficial
ownership of the shares held by the Formanek Childrens Trust.
(10) Excludes 179,982 shares of Common Stock held by AH Investment Trust U/A/D
6/3/87 with Andrew S. Hochberg as Beneficiary, of which shares Larry J.
Hochberg disclaims beneficial ownership. Excludes 18,158 shares of Common
Stock held by AH Investment Trust II with Andrew S. Hochberg as
beneficiary, of which shares Larry J. Hochberg disclaims beneficial
ownership. Includes 366,811 shares of Common Stock held by Larry J.
Hochberg as Trustee and Beneficiary of the Larry J. Hochberg Trust U/A/D
6/12/81. Includes 97,009 shares of Common Stock held by Larry J. Hochberg
as Trustee and Beneficiary of the Larry J. Hochberg Revocable Trust U/A/D
6/12/81. Includes 3,216 shares of Common Stock held by Larry J. Hochberg
as Trustee of the Andrew S. Hochberg Sub-Trust U/A/D 1/3/90. Includes
3,115 shares of Common Stock held by Larry J. Hochberg as Co-Trustee of
the Hochberg Annual Gift Trust U/A/D 4/27/94. Includes 2,804 shares of
Common Stock held by Larry J. Hochberg as Trustee of the Amy H.
Lowenstein Sub-Trust U/A/D 1/3/90. Includes 5,000 shares of Common Stock
issuable upon the exercise of outstanding options.
(11) Includes 179,982 shares of Common Stock held by AH Investment Trust U/A/D
6/3/87 with Andrew S. Hochberg as Beneficiary. Includes 18,158 shares of
Common Stock held by AH Investment Trust II U/A/D 1/5/96 with Andrew S.
Hochberg as Beneficiary. Includes 22,422 shares of Common Stock held by
Andrew S. Hochberg as Trustee and Beneficiary of the Andrew S. Hochberg
Revocable Trust U/A/D 7/9/87. Includes 3,216 shares of Common Stock held
by Larry J. Hochberg as Trustee of the Andrew S. Hochberg Sub-Trust U/A/D
1/3/90. Includes 3,115 shares of Common Stock held by Andrew S.
Hochberg's spouse as Co-Trustee of the Hochberg Annual Gift Trust U/A/D
4/27/94. Includes 11,279 shares of Common Stock held by the Andrew S.
Hochberg 1995 Gift Trust, of which Andrew S. Hochberg's children are the
beneficiaries. Includes 4,110 and 17,120 shares of Common Stock,
respectively, held by the spouse and children of Andrew S. Hochberg.
Includes 5,000 shares of Common Stock issuable upon the exercise of
outstanding options.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons who own more than 10%
of the Company's Common Stock ("principal stockholders") to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of the Common Stock of the Company. Officers, directors
and principal stockholders are required to furnish the Company with copies of
all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, all section 16(a) requirements applicable to
directors, executive officers and principal stockholders have been complied
with, except that a Form 4 for Peter R. Formanek was filed late.
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Relationship with GEI
Control by GEI. GEI currently owns approximately 63% of the outstanding
Common Stock. GEI, whose general partner is LGA, led the acquisition of
Thrifty Corporation ("Thrifty") in 1992, at which time the Company was a
subsidiary of Thrifty. In 1994, Thrifty distributed all of the capital stock
of the Company to Thrifty's stockholders. LGA is a private investment firm
that initiates, structures and invests in acquisitions and recapitalizations
of established public and private middle-market companies.
Due to GEI's stock ownership in Gart Sports, GEI will continue to be able to
control the Company, to elect the majority of the Board of Directors and to
approve any action requiring stockholder approval, including adopting
amendments to the Company's Certificate of Incorporation and approving or
disapproving mergers or sales of all or substantially all of the assets of the
Company. As a result of such control, GEI will be able to effectively control
all of the Company's policy decisions. As long as GEI is a majority
stockholder of the Company, third parties will not be able to obtain control
of the Company through purchases of Common Stock not owned by GEI.
Tax Sharing and Indemnification Agreements. The Company was a subsidiary of
Thrifty, which was wholly owned by TCH Corporation ("TCH"), until 1994 and was
included in TCH's consolidated federal income tax returns during that period.
Under federal tax law, if the Company is included in a consolidated federal
income tax return, it is severally liable for all the federal income tax
liabilities with respect to such return, including tax liabilities not
attributable to income of the Company ("Non-Company Taxes"). In order to
allocate the tax liabilities among them, TCH and its subsidiaries, including
Gart Bros., the Company's predecessor, entered into a Tax Sharing Agreement as
of September 25, 1992. In general, the Tax Sharing Agreement provides that, so
long as TCH is required to file consolidated federal income tax returns which
include Gart Bros., Gart Bros. will be responsible for paying to TCH its
Separate Tax Liability (as defined in the Tax Sharing Agreement) computed as a
flat tax on its income at the highest marginal rate applicable to corporations
under the various income tax systems provided under the Internal Revenue Code.
Similarly, TCH will be required to reimburse Gart Bros. for the use of its tax
attributes (i.e., net operating losses, capital losses or credits) to reduce
federal income tax liability on a TCH consolidated federal income tax return.
Similar provisions apply with respect to the filing of combined or
consolidated state income or franchise tax returns and the payment of tax.
Under the Tax Sharing Agreement, TCH will determine the reporting of all items
on the TCH consolidated federal income tax returns and will be responsible for
all audits and controversies. Separate Tax Liabilities of each member will be
adjusted to reflect adjustments resulting from resolved audits or other
controversies and appropriate payments or reimbursements will be made. On July
24, 1997, the IRS proposed adjustments to the 1992 and 1993 consolidated
federal income tax returns of Gart Bros. and Thrifty. The proposed adjustments
relate to the manner in which LIFO inventories were characterized on such
returns. The Company recorded approximately $9.7 million as a long-term net
deferred tax liability for the tax effect of the LIFO inventory basis
difference. The IRS has asserted that this basis difference should be
reflected in taxable income in 1992 and 1993. The Company has taken the
position that the inventory acquired in connection with the acquisition of
Thrifty was appropriately allocated to its inventory pools. The IRS has
asserted the inventory was acquired at a bargain purchase price and should be
allocated to a separate inventory pool and liquidated as inventory turns.
Based on the Company's discussions with Thrifty, the Company believes the
potential accelerated tax liability, which could have a negative effect on
liquidity in the near term, ranges from approximately $2.5 million to $9.7
million. The range of loss from possible assessed interest charges resulting
from the proposed adjustments range from approximately $580,000 to $3.3
million. The Company has accrued $1,100,000 for potential interest charges in
its consolidated financial statements. No penalties are expected to be
assessed relating to this matter. At January 29, 2000, the LIFO inventory and
other associated temporary differences continue to be classified as long-term
net deferred tax liabilities since final settlement terms have not been
negotiated.
14
<PAGE>
Pacific Enterprises ("PE"), the former parent company of Thrifty, TCH and
Big 5 Corporation, entered into a Tax Indemnity Agreement dated as of
September 25, 1992 which sets forth the parties' agreements with respect to
various tax matters and provides that PE will indemnify each member of the
affiliated group of which TCH is the common parent (collectively, the "Thrifty
Group") from specified liabilities and expenses imposed on or incurred by any
member of the Thrifty Group in respect of federal income tax for all tax
periods ending on or before September 25, 1992 and in respect of certain ERISA
liabilities. Gart Bros. was a member of the Thrifty Group at the time the Tax
Indemnity Agreement was entered into and continues to be subject to such
agreement. Pursuant to the Tax Indemnity Agreement, each member of the Thrifty
Group jointly and severally indemnified PE and each member of the Parent Group
(as defined in the Tax Indemnity Agreement) against liabilities incurred as a
result of a breach of the Tax Indemnity Agreement by TCH or any member of the
Thrifty Group.
In connection with the distribution of Common Stock to the stockholders of
Thrifty (the "Distribution") and Thrifty's simultaneous acquisition of PayLess
Drugstores Northwest, Inc. ("PayLess"), the Company and several other former
subsidiaries of Thrifty (the "Former Subsidiaries") entered into an
Indemnification and Reimbursement Agreement (the "Reimbursement Agreement")
with Thrifty whereby the Former Subsidiaries have agreed to indemnify Thrifty
for any tax-related expenses arising from the Distribution (in excess of $15
million) or the operation of the Former Subsidiaries businesses. The
Reimbursement Agreement also provides that Thrifty will indemnify the Former
Subsidiaries for any expenses arising from the operation of Thrifty's business
on or before date of the Distribution. The Company has not received any
notices of claims under the Reimbursement Agreement, and is unaware of any
pending claim thereunder.
Also in connection with the Distribution, the Company entered into an
Indemnification Allocation Agreement (the "Allocation Agreement") with Thrifty
and Michigan Sporting Goods Distributors, Inc. ("MC Sports"), another
subsidiary of Thrifty, whereby the parties agree to separate and allocate
among themselves the economic benefits of certain indemnification rights under
the agreement whereby Thrifty was purchased from PE. The Company has not
received any notices of claims under the Reimbursement Agreement, and is
unaware of any pending claim thereunder.
Management Services Agreement. The Company has entered into a Management
Services Agreement with LGA, pursuant to which LGA receives an annual retainer
fee of $500,000 plus reasonable expenses for providing certain management,
consulting and financial planning services (the "LGA Management Fee"). The
Company believes that the contacts and expertise provided by LGA in these
areas enhance the Company's opportunities and management's expertise in these
matters and that the fees to be paid to LGA fairly reflect the value of the
services to be provided by LGA. In addition to the LGA Management Fee, the
Management Services Agreement provides that LGA may receive reasonable and
customary fees and reasonable expenses from time to time for providing
financial advisory and investment banking services in connection with major
financial transactions that may be undertaken in the future. The Management
Services Agreement terminates on April 20, 2004.
Property Leases
As of May 1, 2000, seven of the Company's Sportmart stores (Niles, Lombard,
Calumet City, Schaumburg, Chicago (Lakeview), Merrillville, and North
Riverside) and the No Contest stores in Ferguson, Missouri and Crestwood,
Missouri were leased from partnerships or land trusts in which a majority of
the beneficial interests are owned through various partnerships by Larry J.
Hochberg, Andrew S. Hochberg and members of their family. A partnership in
which members of the Hochberg family indirectly own the general partner and
hold up to a one-third interest as limited partners owns the property on which
the Chicago (River North), Illinois Sportmart store is located.
In fiscal 1995, Sportmart decided to discontinue the operation of its No
Contest division and to close its River North, Illinois location.
Notwithstanding the discontinuance of No Contest operations and the closing of
the River North location, the Company is still obligated on the leases for
these locations. In connection with the Sportmart Acquisition, Gart Sports'
operating subsidiary, Gart Bros. Sporting Goods Company, has guaranteed
Sportmart's obligations under these leases. These locations are currently
subleased.
15
<PAGE>
The aggregate lease payments (net of utilities, insurance, taxes and other
common area costs) for the above locations paid by the Company during its 1999
fiscal year were approximately $2.9 million. The Company received sublease
payments of approximately $0.5 million with respect to these locations during
its 1999 fiscal year.
Consulting Agreements
The Company had entered into consulting agreements with Larry J. Hochberg,
formerly Sportmart's Chairman of the Board and a nominee for the Board of
Directors for the Company, and Andrew S. Hochberg, formerly Sportmart's Chief
Executive Officer, whereby for a period of one year following January 9, 1998,
the date of the Company's acquisition of Sportmart, they were available to the
Company for advice with respect to strategic and operational issues.
Larry J. Hochberg was compensated for these services at an annual rate of
$138,000 (50% of his annual base salary at Sportmart on September 26, 1997)
and will receive lifetime medical benefits pursuant to the terms of his
existing agreement with Sportmart. Andrew S. Hochberg was compensated for
these services at an annual rate of $150,000 (50% of his annual base salary at
Sportmart on September 26, 1997) and received paid family medical insurance
coverage during the one year term of the consulting agreement and the six
months following such term. The consulting agreements also provided that each
consultant receive a severance benefit of 18 months' salary at his annual base
salary on September 26, 1997. The severance benefit was paid in equal monthly
installments over 18 months and ended in June 1999.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG LLP has served as the Company's independent public accountants for the
fiscal year ending January 29, 2000.
SUBMISSION OF PROPOSALS BY STOCKHOLDERS
Any proposal that a stockholder may desire to present at the 2001 Annual
Meeting must be received in writing by the Company at its principal offices in
Denver, Colorado by the close of business on January 9, 2001.
PROXY SOLICITATION
In addition to soliciting Proxies by mail, directors, executive officers and
employees of the Company, without receiving additional compensation, may
solicit Proxies by telephone, by telecopy or in person. Arrangements will also
be made with brokerage firms and other custodians, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of shares of the
Common Stock and the Company will reimburse such brokerage firms and other
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in connection with forwarding such materials.
OTHER BUSINESS
Management and the Board of Directors do not know of any business to be
presented for consideration at the Annual Meeting other than that stated in
the notice. It is intended, however, that the persons authorized under the
Board's proxies may, in the absence of instructions to the contrary, vote or
act in accordance with their judgment with respect to any other proposal
properly presented for action at such meeting.
16
<PAGE>
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial owners of
the Shares for which proxies are being solicited from you, and, if so, the
number of copies of this Proxy Statement and other soliciting materials you
wish to receive in order to supply copies to the beneficial owners of the
Shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS,
WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, ARE
REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE. BY RETURNING YOUR PROXY
PROMPTLY YOU CAN HELP THE COMPANY AVOID THE EXPENSE OF FOLLOW-UP MAILINGS TO
ENSURE A QUORUM SO THAT THE ANNUAL MEETING CAN BE HELD. STOCKHOLDERS WHO ATTEND
THE ANNUAL MEETING MAY REVOKE A PRIOR PROXY IN PERSON AS SET FORTH IN THIS
PROXY STATEMENT.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Nesa E. Hassanein
Nesa E. Hassanein
Secretary
17
<PAGE>
GART SPORTS COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GART SPORTS
COMPANY
The undersigned hereby appoints John Douglas Morton and Thomas T.
Hendrickson, and each of them, as proxies for the undersigned, each with full
power of appointment and substitution, and hereby authorizes them to represent
and to vote, as designated below, all shares of the $0.01 par value Common
Stock of Gart Sports Company (the "Company") which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of the Company to be held on
June 14, 2000 (the "Meeting"), or at any postponements, continuations or
adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned. If no direction is made, this proxy will be voted
(i) FOR the election of John Douglas Morton, Jonathan D. Sokoloff, Jonathan
Seiffer, Gordon D. Barker, Peter R. Formanek and Larry J. Hochberg to the
Board of Directors of the Company and (ii) on such other matters as may
properly come before the Meeting.
1. Election of Directors
[_] FOR all nominees [_] WITHHOLD AUTHORITY to
listed below vote for all nominees listed below
(except as marked to the
contrary below)
John Douglas Morton Gordon D. Barker
Jonathan D. Sokoloff Peter R. Formanek
Jonathan Seiffer Larry J. Hochberg
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
- -------------------------------------------------------------------------------
(Continued on other side)
<PAGE>
(Continued from other side)
2. In their discretion, the proxies authorized to vote upon such other
business as may properly come before the Annual Meeting or at any
postponements, continuations or adjournments thereof.
Please sign exactly as your name appears hereon. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign partnership name by authorized person. When signing
as trustee, please give full title as such.
DATED: _________________________________,2000
----------------------------------------------
Authorized Signature
----------------------------------------------
Title
PLEASE MARK BOXES [X] IN INK. SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
