<PAGE> 1
SCHEDULE 14A INFORMATION
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 Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
ROBERDS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[ROBERDS LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 1, 2000
March 24, 2000
To the Shareholders of Roberds, Inc.:
The annual meeting of the shareholders of Roberds, Inc. will be held at
the Company's offices, 1000 East Central Avenue, Dayton, Ohio 45449 on May 1,
2000 at 11:00 a.m., Eastern Daylight Savings Time, for the following purposes:
1. To elect four Directors, each to hold office for a two-year term
and until their respective successors are elected and qualified.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Holders of Common Shares of record at the close of business on March 10, 2000
will be entitled to vote at the meeting.
By Order of the Board of Directors,
/s/ Robert M. Wilson
ROBERT M. WILSON, Secretary
<PAGE> 3
TABLE OF CONTENTS
GENERAL INFORMATION...........................................................1
ELECTION OF DIRECTORS.........................................................2
BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES.................................3
EXECUTIVE COMPENSATION........................................................5
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION................8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............................10
PERFORMANCE COMPARISON.......................................................12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...............13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE......................14
INDEPENDENT AUDITORS.........................................................14
SHAREHOLDER PROPOSALS........................................................14
OTHER MATTERS................................................................15
<PAGE> 4
ROBERDS, INC.
P.O. Box 8729
Dayton, Ohio 45401-8729
PROXY STATEMENT
March 24, 2000
GENERAL INFORMATION
The Board of Directors of Roberds, Inc. ("Company" and "Roberds") is
soliciting the Proxy enclosed with this Proxy Statement. If you properly execute
and return the Proxy, the shares of the Company represented by the Proxy will be
voted at the 2000 annual meeting of shareholders as directed on the Proxy, or if
no direction is given on the Proxy, the shares will be voted for the election of
the nominees listed in this Proxy Statement. A shareholder may revoke a Proxy by
giving notice to the Company at the meeting or, in writing, at any time before
its exercise. A revocation will not affect any vote taken prior to the
revocation. The presence of a shareholder at the annual meeting does not by
itself revoke a Proxy. The approximate date on which the Proxy Statement and
Proxy will first be sent to shareholders is March 24, 2000.
The Company will bear the cost of solicitation of proxies in the
enclosed form. The Company has also made arrangements with brokerage houses and
other custodians, nominees and fiduciaries to send proxy materials to their
principals, and the Company may reimburse them for their expenses in so doing.
Officers, employees and agents of the Company also may request the return of
proxies in person or by telephone, facsimile transmission, telegram or other
electronic communication.
The holders of record of the Company's Common Shares at the close of
business on March 10, 2000 ("Record Date") will be entitled to vote at the
meeting. At the Record Date, there were 6,240,958 Common Shares outstanding and
entitled to vote at the meeting. Each share is entitled to one vote. The
Company's Amended and Restated Articles of Incorporation prohibit cumulative
voting for Directors. The presence, in person or by proxy, of persons entitled
to vote a majority of the Common Shares outstanding at the Record Date
constitutes a quorum for the conduct of all business to be considered at the
annual meeting. The inspectors of election intend to treat properly executed
proxies marked "vote withheld" as "present" for these purposes. The inspectors
also will treat as "present" shares held in "street name" by brokers that are
voted on at least one proposal to come before the annual meeting. Nominees for
election as Directors receiving the greatest number of votes will be elected as
Directors. Votes that are withheld or broker non-votes in respect of the
election of Directors will not be counted in determining the outcome of the
election. All other questions and matters brought before the annual meeting will
be, unless otherwise provided by law or by the Articles of Incorporation of the
Company, decided by the vote of the holders of a majority of the shares entitled
to vote thereon present in person or by proxy at the annual meeting. In voting
for any proposals, other than the election of directors, votes may be cast in
favor, against, or abstained. Abstentions will count as present for purposes of
the items on which the abstention is noted and will have the effect of a vote
against. The inspectors of election will not count broker non-votes as present
for purposes of determining whether a proposal has been approved, and broker
non-votes will have no effect on the outcome of any such proposal.
1
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Amended and Restated Code of Regulations ("Regulations")
classifies the members of the Board of Directors into two groups, with terms
expiring in alternate years. All of the Directors, including the current
nominees, are identified in the table below. The terms of the current nominees,
Messrs. Kirby, Smith, Williamson and Wright, expire at the annual meeting to be
held on May 1, 2000. All nominees are currently members of the Board of
Directors. The Regulations fix the number of Directors at seven but authorize
the Board of Directors to increase or decrease the number of Directors by not
more than two. The number of Directors is currently set at seven. The
Regulations authorize the Board of Directors to fill any vacancies by the
affirmative vote of a majority of the Directors then in office.
The Board of Directors of the Company has nominated the persons listed
below for election as Directors to hold office for two years and until the
election and qualification of their successors. If any nominee declines or is
unable to serve, which the Board of Directors has no reason to expect, the
persons named in the accompanying Proxy intend to vote for the balance of those
nominees named, and, if they deem it advisable, for a substitute nominee.
The following table sets forth information with respect to each of the
nominees and, in addition, the Directors whose terms expire at the 2001 Annual
Meeting of Shareholders:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
NOMINEES FOR TERMS TO EXPIRE IN 2002
<S> <C> <C>
Jerry L. Kirby 65 Director
Howard W. Smith 57 Director
Gilbert P. Williamson 63 Director
Donald C. Wright 63 Chairman of the Board and Director
DIRECTORS WHOSE TERMS EXPIRE IN 2001
Melvin H. Baskin 56 Chief Executive Officer and Director
Robert M. Wilson 47 President, Chief Administrative Officer, General
Counsel, Secretary and Director
Dr. James F. Robeson 63 Vice Chairman of the Board and Director
</TABLE>
During the past fiscal year, the Board of Directors of the Company met
on seven occasions. The Company's audit committee, which currently consists of
James F. Robeson, Chair, Jerry L. Kirby, and Gilbert P. Williamson, met two
times during the last fiscal year. The audit committee reviews, acts and reports
to the Board of Directors with respect to various auditing and accounting
matters, including the selection of the Company's independent accountants, the
scope of audit procedures, the Company's internal audit program and results, the
nature of services to be performed by the independent accountants and the
Company's accounting practices. The Company's compensation committee, which
currently consists of Jerry L. Kirby, Chair, and Gilbert P. Williamson, met, or
took unanimous written action in lieu of a meeting, eleven times during the last
fiscal year. The compensation committee establishes and monitors executive
compensation. The Company's executive committee, which currently consists of
Gilbert P. Williamson, Chair, James F. Robeson and Robert M. Wilson, acts on
behalf of the Board of Directors between meetings of the Board, and took
unanimous written action in lieu of a meeting once during 1999. All Directors
attended more than 75%
2
<PAGE> 6
of the aggregate of the total number of meetings of the Board of Directors
during the last fiscal year and the total number of meetings held by each
committee on which each Director served during the last fiscal year. The Board
of Directors does not have a separate nominating committee, though the
Compensation Committee informally monitors Board organization and staffing
issues, and makes recommendations on such matters to the Board.
BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES
Melvin H. Baskin was elected Chief Executive Officer of the Company in
July 1998 and has been a Director since February 1999. He also served as
President from July through October 1998. From July 1997 through July 1998, he
was Chief Operating Officer, Farm Stores, Inc., Miami, Florida. From May 1997
through July 1997, he was President, Breuner's Home Furnishings Corp.,
Lancaster, Pennsylvania, and from June 1996 through July 1997 was
President-Eastern Division of Breuner's. From 1993 through May 1996, he was
President, Alex & Ivy Country Division, The Bombay Company, Inc., Fort Worth,
Texas.
Jerry L. Kirby was elected a Director of the Company in 1993. Since
July 1998, he has been Chairman, Fifth Third Bank, Western Ohio, a subsidiary of
Fifth Third Bancorp, a $40 billion bank holding company, and is a director of
Fifth Third Bancorp. Prior thereto, he was CEO and a director of CitFed Bancorp,
Inc., the parent of Citizens Federal Bank, FSB, of which Mr. Kirby also served
as a Director, President and CEO. CitFed Bancorp was a bank holding company with
$3 billion in assets, prior to its acquisition by Fifth Third Bancorp in 1998.
Mr. Kirby is also a director of Supply One, a distributor and retailer of bath
and kitchen fixtures, Dayton, Ohio. He was for six years a director of the
Cincinnati Branch of the Federal Reserve Bank of Cleveland.
Dr. James F. Robeson was elected Vice Chairman of the Board in February
1999. He served as Chief Executive Officer and President of the Company from
December 1997 through July 1998. He has served as a Director of the Company
since 1993, and chaired the Audit Committee of the Board of Directors from 1993
through December 1997 and since February 1999. Dr. Robeson was Interim Director,
Miami University Art Museum, Oxford, Ohio, from July 1996 through December 1997.
He was Herbert E. Markley Visiting Scholar in Business, Miami University, from
1995 through May 1997. Since 1993, Dr. Robeson has served as an independent
consultant on marketing, logistics, and general business matters, including
services rendered through the firm of PricewaterhouseCoopers LLP. From 1988
through 1993, Dr. Robeson was Dean, Richard T. Farmer School of Business
Administration, Miami University. He is a director of Gummer Wholesale, a
regional distributor of grocery, candy, and tobacco products, Newark, Ohio;
Huffy Corporation, a diversified manufacturer and supplier of services to
retailers, Dayton, Ohio, and chairs its audit committee; DesignForum, a national
retail store planning and design firm, Dayton, Ohio; and MotoPhoto, Inc., a
national photo finishing firm of corporate and franchise retail outlets, Dayton,
Ohio, and chairs its compensation committee.
Howard W. Smith was elected a Director of the Company in 1993. He was
President, Dayton Market from 1988 through March 1996, when he retired from the
Company.
Gilbert P. Williamson was elected a Director of the Company in 1993.
He retired as Chairman and Chief Executive Officer of NCR Corporation in 1993.
From 1991 through 1993, he was a member of the Management Executive Committee
and board of directors of AT&T, New York, New York. He is a director of Santa
Cruz Operation, Inc., a provider of computer software, Santa Cruz, California;
Fifth Third Bank, Western Ohio, a subsidiary of Fifth Third Bancorp, a $40
billion bank holding company; Dean Investment Associates, an asset management
firm, Dayton, Ohio; and French Oil Machinery Co., a manufacturer of presses,
Piqua, Ohio.
Robert M. Wilson was elected President and Chief Administrative Officer
of the Company in October 1998. He has been General Counsel, Secretary, and a
director since 1993. He served as Chief Financial Officer of Roberds from 1988
through July 1999, and was Executive Vice President from 1988 through October
1998. He was Treasurer from 1993 through May 1995, and Assistant Treasurer from
May 1995 through May 1997.
3
<PAGE> 7
Donald C. Wright is co-founder of the Company. He has served as a
Director of the Company since 1971, and its Chairman since February 1999. He was
Vice Chairman of the Board from 1993 to February 1999. Mr. Wright was Assistant
Secretary from 1993 through May 1997. He owns and operates Don Wright Realty,
Dayton, Ohio, a firm providing real estate brokerage services to the public.
4
<PAGE> 8
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
--------------------------
The following table summarizes the compensation paid to the Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers determined as of the end of the last fiscal year (together
with the Chief Executive Officer, the "Named Executive Officers") during or with
respect to the fiscal years ended December 31, 1999, 1998, and 1997 for services
in all capacities to the Company.
<TABLE>
<CAPTION>
- ------------------------------ ----------- -------------------------------------------- ---------------- ------------------
Long Term
Annual Compensation Compensation
Awards
-------------------------------------------- ---------------- ------------------
Other
Annual All Other
Salary Bonus Compensation(2) Options Compensation
Name and Principal Position Period ($) ($) ($) (# of shares) ($)
- --------------------------- ------ ---- ---- ---- ------------- ---
<S> <C> <C> <C> <C> <C> <C>
Melvin H. Baskin(1) FY 1999 400,000 -0- N/A 50,000 -0-
Chief Executive Officer FY 1998 192,308 25,000 24,125 50,000 -0-
Robert M. Wilson FY 1999 270,000 -0- N/A -0- -0-
President, Chief FY 1998 270,000 -0- N/A 27,000 -0-
Administrative FY 1997 270,000 -0- N/A -0- -0-
Officer, General Counsel and
Secretary
Billy D. Benton(3) FY 1999 250,000 -0- 4,070 25,000 -0-
Executive Vice President- FY 1998 250,000 -0- 3,968 -0- -0-
General Merchandise Manager FY 1997 158,654 -0- 46,664 106,000 -0-
Charles H. Palko(4) FY 1999 173,558 -0- N/A -0- -0-
Vice President-Appliances and FY 1998 150,000 -0- N/A 20,000 -0-
Electronics FY 1997 124,616 -0- 31,552 -0- -0-
R. Brian Good(5) FY 1999 175,000 -0- 31,710 -0- -0-
Senior Vice President-Stores FY 1998 20,192 -0- N/A 25,000 -0-
<FN>
1 Mr. Baskin joined the Company as Chief Executive Officer and President in July
1998. Mr. Wilson succeeded him as President in October 1998.
2 Other annual compensation for the individuals listed above did not exceed $50,000
or 10% of each of their combined annual salaries and bonuses for any period
reported, except for Mr. Baskin, who had $23,625 in relocation costs paid for by
the Company and $500 in legal fees for the negotiation of his employment
agreement in 1998; Mr. Benton, $4,070 for the personal use of an automobile in
1999, $3,968 for an automobile in 1998, and $2,835 for an automobile and $43,829
in relocation expenses paid for by the Company in 1997; and Messrs. Palko and
Good for relocation expenses paid for by the Company in the years indicated.
3 Mr. Benton joined the Company in May 1997.
4 Mr. Palko's position with the Company was terminated effective December 31, 1999.
5 Mr. Good joined the Company in November 1998 and his position was eliminated in February 2000.
</TABLE>
5
<PAGE> 9
Option Grants in Last Fiscal Year
---------------------------------
The following table sets forth the stock options granted during the
year ended December 31, 1999 to the Named Executive Officers. The Options were
granted pursuant to the 1993 Stock Incentive Plan, as amended. The Options
become exercisable as to 25% of the shares underlying such options on each
anniversary of the grant. None of the options include automatic "reload" or tax
reimbursement features.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Appreciation for Option
Grants Term
- ------------------------------------------------------------------------------------- -------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options
Granted to Exercise
Options Employees in Price Expiration
Name Granted (#)(1) Fiscal Year ($/sh) Date 5%($)(1) 10%($)(1)
---- ----------- ----------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Melvin H. Baskin 50,000 24.9 1.88 7/6/09 59,000 150,000
Robert M. Wilson None --- --- --- --- ---
Billy D. Benton 25,000 12.5 2.16 4/30/09 34,000 86,000
Charles H. Palko None --- --- --- --- ---
R. Brian Good None --- --- --- --- ---
<FN>
1 Amounts have been calculated using the exercise price per share and assumed
compound annual rates of stock appreciation from the date of grant to the
date of expiration of 5% and 10% respectively.
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
-------------------------------------------------------------------
Option Value
- ------------
The following table sets forth information for each Named Executive
Officer with regard to the aggregate stock options exercised during the year
ended December 31, 1999, and the stock options held at December 31, 1999.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of Unexercised
Number of Unexercised in-the-Money Options
Options at December 31, 1999 at December 31, 1999(2)
---------------------------- ------------------------
Shares
Acquired Value
Name on Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Melvin H. Baskin None None 12,500 87,500 $ None $ None
Robert M. Wilson None None 41,750 20,250 None None
Billy D. Benton None None 53,000 78,000 None None
Charles H. Palko None None 12,500 17,500 None None
R. Brian Good None None 6,250 18,750 None None
<FN>
1 Market value of underlying securities at exercise, minus the exercise price.
2 Market Value of underlying securities at year end (based upon market value of $1.44 at December
31, 1999) minus the exercise price.
</TABLE>
6
<PAGE> 10
COMPENSATION OF DIRECTORS
Cash Compensation
-----------------
Directors who are members of management receive no additional
compensation for their service as Directors. Directors who are not members of
management receive a monthly fee of $500, plus a fee of $1,000 for each meeting
attended. Mr. Wright is paid $75,000 annually for his service as a Director and
as Chairman of the Board. He does not receive a separate meeting fee. Directors
are reimbursed for their out-of-pocket travel expenses incurred in connection
with Company business.
Deferred Compensation Plan
--------------------------
Prior to January 2000, the Company had a Deferred Compensation Plan for
Outside Directors. Under this plan, on or before December 31 of any year, a
non-employee director could elect to defer the receipt of payment of all fees
payable to the director for services during the calendar year following such
election, and for succeeding calendar years, until he elects not to defer
compensation in a future calendar year or ceases to be a director. At the time
of his election, the non-employee director was required to specify how the
deferred fees should be deemed invested. Such fees could be deemed invested in
either (i) cash or (ii) Deemed Common Shares. Fees deferred at the election of a
non-employee director were credited to a separate deferred account on the date
on which they otherwise would have been paid to the director. The amounts
credited by the Company to a director's account are subject to the claims of the
company's general creditors. Two Directors participated in the plan during its
operation.
If, for a given calendar year, a non-employee director elected a
deferred investment in cash, the Company credited interest on the amount
credited to the director's deferred account at the prime rate of interest
charged by the Company's principal bank lender. Neither participant in the plan
utilized the cash sub-account.
If, for a given calendar year, a non-employee director elected to have
his deferred fees invested in Deemed Common Shares, then the total of such
deferred fees was deemed invested in Common Shares of the Company on the last
day of each calendar quarter. On the date of each such deemed investment, the
total cash-denominated amount in a non-employee director's deferred account was
divided by the then "fair market value" of a Common Share, which was determined
by averaging the high and low trading prices of the Common Shares on such date.
The non-employee director's deferred account was then credited with whole and
fractional shares resulting from such computation, which shares are Deemed
Common Shares. Non-employee directors investing in Deemed Common Shares were
entitled to receive credits equivalent to cash dividends, if any, paid on the
outstanding Common Shares. Under the plan, at the earliest of a director's
death, disability, resignation, removal, failure to be re-elected upon
expiration of his term or retirement, the Company was to issue or acquire Common
Shares equal to the whole number of Deemed Common Shares in a non-employee
director's deferred account and distribute the actual number of whole shares in
the director's account in a lump sum to the director as soon as practicable
after such date.
Under the terms of the plan, when the Company filed for protection
under Chapter 11 of the United States bankruptcy laws on January 19, 2000, the
Deemed Shares in the Directors' accounts were automatically converted into cash
at the average of the high and low trading prices of the Common Shares on that
date. In light of this event, on January 24, 2000 the Board of Directors
terminated the plan and ordered the Company to wind up its affairs. The affairs
of the plan have been wound up.
Outside Director Stock Option Plan
----------------------------------
The Company also has an Outside Director Stock Option Plan for
non-employee directors. Under this plan, each non-employee director, upon
election and taking of office, received an option for 2,000 shares. The price
per share at which each option granted under the plan may be exercised is the
fair market value of a Common Share at the time the option is granted. Options
granted under the Outside Director Stock Option Plan terminate, and the right of
the non-employee director (or his estate, personal representative, or
beneficiary) to purchase shares upon exercise of the option, expire 10 years
after the date of grant. Subject to certain limitations, options become
exercisable on the first anniversary of the date the option was granted.
Non-employee directors whose membership on the Board of Directors has terminated
for reasons other than permanent and total disability or death must exercise all
options previously awarded
7
<PAGE> 11
within three months after such termination and, in the case of permanent and
total disability, an option must be exercised within one year after such
termination. The plan expired on December 31, 1998, though certain options
granted prior to its expiration remain exercisable through 2003.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
GENERAL
The Company's Board of Directors has a Compensation Committee
("Committee") which has the power and authority to: (i) review the
recommendations of management and adopt compensation philosophy and guidelines
for the Company; (ii) review the role of the CEO, his performance and
compensation, and determine the base compensation, annual incentive bonus, and
stock-based awards made to the CEO; and (iii) determine the base compensation,
annual incentive bonus, and stock-based awards for all executive officers of the
Company. Mr. Kirby has served as chair of the Committee since its formation in
1993. The Committee consists of directors who are not employees of the Company.
The Committee has regularly engaged a compensation consulting firm to
study the Company's compensation system for executive officers; to compare the
Company's base pay, cash incentives, and stock-based compensation for executive
officers to those paid by comparable companies; and to develop recommendations
for an overall compensation system for executive officers and other senior
managers. Based on the consultant's report, the Committee adopted the Roberds,
Inc. Executive Compensation Plan ("Executive Plan") which became effective for
calendar 1995, and has been amended several times since its adoption.
In July 1998, Mr. Baskin was elected Chief Executive Officer and
President of the Company, with base pay of $400,000 annually. In order to align
Mr. Baskin's interests with those of other Shareholders, the Committee granted
Mr. Baskin an Incentive Stock Option on 50,000 Common Shares at the fair market
value of the Common Shares on the date of grant, and agreed to grant Incentive
Stock Options on an additional 50,000 Common Shares on each of the first, second
and third anniversaries of the commencement of his employment. All such grants
were, and are, to be made under the 1993 Stock Incentive Plan, as amended.
During 1999, the first of those three annual grants was made. In setting Mr.
Baskin's base pay and stock option arrangements, the Committee relied in part on
a special study by the Company's compensation consultants on the compensation
arrangements for new CEO's recruited to companies similar to Roberds, as well as
the compensation arrangements for incumbent CEOs of similar companies.
Based on the current levels of pay of the CEO and other executive
officers of the Company, the Committee does not believe that the limitations on
deductibility of annual compensation in excess of $1 million as provided by
section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
are likely to have an effect on the compensation plans of the Company in the
foreseeable future. As a result, the Committee has not adopted a policy with
respect to compensation exceeding the deductible limits. The Committee will
consider the deductibility of compensation, along with other factors, in future
determinations of compensation.
BASE PAY
Based upon the salary ranges recommended by the compensation
consultants in their reports, the base pay of comparable executives employed by
comparable companies, and periodic changes in duties and responsibilities, the
Committee has made periodic adjustments in the base pay of the Company's
executive officers. Based on the compensation consulting firm's reports, the
Committee believes that the base pay for Roberds' CEO and other executive
officers is competitive within the industry and similar to that offered by
comparable companies.
8
<PAGE> 12
ANNUAL INCENTIVES
The Committee annually establishes Threshold, Target, and Ceiling
amounts of pre-tax income for the Company. Below the Threshold, no cash bonuses
are awarded to the executive officers. As pre-tax income grows above the
Threshold, the pool of money available for cash bonuses increases at an
increasing percentage rate. At the Ceiling amount, the pool reaches a maximum
percentage, but continues to grow in dollars as pre-tax income grows beyond the
Ceiling amount.
The CEO's cash bonus is expressed as a percentage of his base pay,
depending on the performance of the Company against the Threshold, Target, and
Ceiling amounts. Below the Threshold, no bonus is awarded to the CEO.
The other officers share in a pool of money that increases as the
Company's performance increases against the Threshold, Target, and Ceiling
amounts. Once the size of the pool is determined, each participant is awarded a
bonus based on his "share" of the pool. The shares are determined by reference
to each manager's base pay as a percentage of the base pay of the entire group.
The group (and the individuals) receives no bonus if the Company's performance
is below the Threshold. Beginning at the Threshold, managers receive a small
percentage of their base pay as a bonus, and the bonuses grow to a maximum
percentage of managers' base pay at the Ceiling amount. In addition, a
percentage of the cash bonus pool is available for awards upon the
recommendation of the CEO, to managers other than the CEO, to recognize
outstanding achievement.
The Executive Plan permits the CEO to recommend to the Committee that
the amounts awarded to executives under the formula system may be adjusted
upward and downward by up to 50 percent, in order to reflect the individual
performance of each executive. However, the total amount awarded to all
executives cannot exceed the total computed under the formula plan. The
Committee believes that the Executive Plan provides significant incentives for
the Company's CEO, the executive officers, and other senior managers to meet or
exceed the Company's annual profit plan. The Executive Plan makes a significant
portion of senior management's compensation contingent on the Company's
financial performance for the year. The combination of the base pay described
above and the bonuses established by the Executive Plan is intended to yield
total cash compensation that is comparable to the total cash compensation paid
by comparable companies to their CEOs and other executive officers.
The Company failed to meet the Threshold amount for 1999, and no cash
bonuses were paid to the CEO, other executive officers, or senior managers
participating in the Executive Plan.
LONG-TERM INCENTIVES
The Executive Plan establishes a mechanism for awarding Incentive Stock
Options ("ISOs") to senior management under the 1933 Stock Incentive Plan, as
amended. ISOs are awarded as a percentage of each executive's base pay. No
awards are made if the Company's earnings fall below the Threshold amount.
Beginning at the Threshold amount, awards are made to each executive as a
percentage of his base pay. Such percentage grows as earnings reach the Target,
and reaches a maximum percentage at the Ceiling amount. The minimum percentage
for the CEO is zero percent of his base pay, growing to a maximum percentage of
his base pay. The minimum percentage for all other participants (including the
other executive officers) is zero percent of their base pay, growing to a
maximum percentage of their base pay. The Committee reviews these percentages
annually. All executive officers are eligible for ISO awards, as are a number of
other managers. Once the dollar amount of the awards is determined under the
formula, the dollar amount is converted to a number of shares, based on the
then-current value of the Company's shares at the time of the award. Options on
that number of shares are granted at 100 percent of the then market value. If an
individual award made under the Executive Plan exceeds the dollar limits imposed
on ISOs by the Code, the maximum permissible amount is granted in the form of an
ISO, and the amount in excess of the ISO limit is granted in "non-qualified
stock options," as defined under the Code. In addition, options may be awarded
based upon the recommendation of the CEO to the Committee in order to reward
efforts or results beyond those recognized by the formula system.
9
<PAGE> 13
The Committee believes that the stock-based awards to be made under the
Executive Plan will further align the interests of the Company's CEO, executive
officers, and senior and middle managers with those of the shareholders, and
will motivate management to increase the value of the Company's shares over the
long term.
Because the Company failed reach the Threshold amount in 1999, no stock
options were awarded under the Plan. During 1999, the Committee awarded options
on 25,000 shares to Mr. Benton in recognition of additional duties he assumed
during the year and to be consistent with options granted to other senior
executives in 1998, and made the award to Mr. Baskin that was required under his
employment agreement.
Jerry L. Kirby, Chair
Gilbert P. Williamson
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PROPERTIES
The Company was co-founded by Mr. Kenneth W. Fletcher, who died in
January 1999. His various interests in certain of the Company's real properties
and his Common Shares were transferred to his Estate, a trust for the benefit of
his widow, Ms. Deborah A. Fletcher, and to Ms. Fletcher directly.
The Company leases two of its Atlanta-area properties from Howard
Investments, an Ohio general partnership consisting of the Estate of Mr.
Fletcher and Messrs. Smith and Wright. Each lease provides for two extensions of
10 years each at the election of the Company, and the annual rental during the
extensions will be the "prevailing market rate" determined at the time of such
extensions. The current terms under these leases are as shown in the following
table:
<TABLE>
<CAPTION>
COMMENCEMENT EXPIRATION
LOCATION DATE DATE ANNUAL RENT
- -------- ------------ ---------- -----------
<S> <C> <C> <C>
Marietta, Georgia 5/10/84 5/31/2004 $600,000
Forest Park, Georgia 11/01/87 9/30/2007 $600,000
</TABLE>
The Company leases its facilities at 1000 and 1100 East Central Avenue,
Dayton, Ohio from DAF West Carrollton Plaza Ltd., an Ohio limited liability
company controlled by Deborah A. Fletcher.
In December 1998, the Company took over approximately 3,500 square
feet of improved office space adjacent to its West Carrollton store in order to
accommodate its addition of senior staff members under its new centralized
corporate structure. The space was obtained by the Company's assumption of an
existing lease on the space between Don Wright Realty, a sole proprietorship
controlled by Mr. Wright, as lessee, and DAF West Carrollton Plaza, Ltd., as
lessor. Mr. Wright assigned his existing lease on the space to Roberds, Inc.,
without compensation to Mr. Wright. Roberds took over the space and assumed the
lease in December 1998. The transaction was reviewed and approved by a special
committee of the Board of Directors, consisting of members who were
disinterested in the transaction. The rent was reviewed by an independent broker
and property manager, which concluded that it was within the range of rents
charged for comparable properties. In December 1999, the original lease term
expired. By informal agreement, the Company extended the lease through February
2000, at the same rent, and then abandoned the space and returned it to the
landlord, as part of the Company's restructuring.
10
<PAGE> 14
The Company's facilities in Piqua, Ohio and Richmond, Indiana are
leased from Mr. Wright. The term and annual rent under the leases associated
with these five Dayton-area properties, exclusive of operating expenses, are
shown in the following table:
<TABLE>
<CAPTION>
COMMENCEMENT EXPIRATION
LOCATION DATE DATE ANNUAL RENT
- -------- ------------ ---------- -----------
<S> <C> <C> <C>
1000 East Central Avenue 4/1/90 3/31/2015 $120,000
Dayton, Ohio
(Administrative building)
1100 East Central Avenue 4/1/90 3/31/2015 600,000
Dayton, Ohio
(Store)
1100 East Central Avenue
Dayton, Ohio
(Office space) 12/98 12/31/1999 28,000
Richmond, Indiana 4/1/88 3/31/2013 240,000
Piqua, Ohio 6/1/88 5/31/2013 240,000
</TABLE>
The Company leases its Springfield, Ohio facility from Springfield
Properties, Inc., an Ohio corporation owned by the Estate of Mr. Fletcher and
Mr. Wright. The term and annual rent under the lease associated with this
property, exclusive of operating expenses, are shown in the following table:
<TABLE>
<CAPTION>
COMMENCEMENT EXPIRATION
LOCATION DATE DATE ANNUAL RENT
- -------- ------------ ---------- -----------
<S> <C> <C> <C>
Springfield, Ohio 3/1/92 2/28/2017 $240,000
</TABLE>
In January, February, and March 2000, the Company defaulted on its
lease payments to all of its landlords, including those shown in the tables
above. The Company has not yet determined which of its real property leases it
expects to affirm or reject under the bankruptcy laws, although all of the
properties listed in the tables above are located in markets in which the
Company plans to continue to operate. During 2000, the Company expects to enter
into agreements to cure the defaults under the leases for the stores it expects
to retain, and expects to enter into such agreements to cure with the parties
shown above.
OTHER TRANSACTIONS AND RELATIONSHIPS
Messrs. Fletcher and Wright personally guaranteed the mortgage loans
made in connection with the acquisition of two of the Company's stores prior to
the Company's initial public offering in 1993 (the "IPO"). At December 31, 1999,
the principal amount of the guaranties remaining on these mortgage loans was
approximately $3.2 million. The loan is in default as the result of the
Company's bankruptcy and its inability to make timely payments under the loan.
In connection with the IPO, the Company and the initial shareholders of
the Company entered into a Tax Indemnification Agreement ("Indemnification
Agreement") that requires the Company to reimburse the initial shareholders for
certain additional taxes that they may have to pay for any adjustments in
taxable income through the date of the IPO. In addition, the Indemnification
Agreement requires the initial shareholders to reimburse the Company for certain
decreases in taxes that are refunded to them for adjustments in prior years'
taxable income. The Company also agreed to conduct, at its expense, the defense
of, or the negotiations in settlement with respect to, any challenge to the
Company's S Corporation status in prior years. All matters through 1994 have
been settled with the Internal Revenue Service. However, the Company owes the
shareholders approximately $30,000 under the Indemnification Agreement, the
payment of which is subject to resolution in the bankruptcy proceedings.
11
<PAGE> 15
PERFORMANCE COMPARISON
The following graph illustrates the return that would have been
realized (assuming reinvestment of dividends) by an investor who invested $100
on December 31, 1994 in each of (i) the Company's Common Shares, (ii) the Nasdaq
Stock Market (U.S.) Index and (iii) the Nasdaq Retail Trade Stocks Index. On
January 19, 2000, the Company filed for protection under Chapter 11 of the
United States bankruptcy laws. Nasdaq suspended trading in the Company's stock
on January 18, 2000.
PERFORMANCE GRAPH
-----------------
ROBERDS, INC.
-------------
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Roberds $100 $124 $114 $ 41 $ 28 $ 20
Nasdaq Stock Market 100 141 174 213 300 542
Nasdaq Retail 100 110 131 154 188 181
</TABLE>
12
<PAGE> 16
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Shares by all nominees for election
as Directors, by all Directors, by all Named Executive Officers, by all
Directors and Officers as a group, and by each person known to the Company to be
a beneficial owner of five percent or more of the outstanding Common Shares at
January 31, 2000. Unless indicated otherwise in the table, the business address
for each person is c/o Roberds, Inc., P.O. Box 8729, Dayton, Ohio 45401-8729.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED(1)
---------------------------------------------------
BENEFICIAL OWNER NUMBER PERCENT
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Donald C. Wright(2) 1,495,670 23.3
433 Windsor Park Drive
Dayton, Ohio 45459
Howard W. Smith 176,627 2.8
P.O. Box 390
Gray Hawk, Kentucky 40434
Billy D. Benton(3) 76,355 1.2
Robert M. Wilson(4) 47,480 *
R. Brian Good(5) 23,450 *
James F. Robeson(6) 20,500 *
5120 Bonham Road
Oxford, Ohio 45056
Melvin H. Baskin(7) 18,910 *
Jerry L. Kirby(8) 3,500 *
Fifth Third Center
Dayton, Ohio 45402
Gilbert P. Williamson(9) 2,000 *
2320 Kettering Tower
Dayton, Ohio 45423
All Directors and executive officers 1,932,805 30.1
as a group (20 persons)(10)
Deborah A. Fletcher(11) 1,359,463 21.2
1110 East Central Avenue
Dayton, Ohio 45449
</TABLE>
[FN]
______________________________
* Less than one percent.
1 The persons named in the above table have sole voting and investment power
with respect to all shares shown as beneficially owned by them, except as
noted in the footnotes below.
2 Includes 650 shares held by Mr. Wright's spouse, for which Mr. Wright
disclaims any beneficial ownership.
3 Includes 53,000 shares underlying options that are currently exercisable.
4 Includes 41,750 shares underlying options that are currently exercisable,
and 2,500 shares held by Mr. Wilson as custodian for his minor son, over
which Mr. Wilson has voting power and dispositive power, but as to which he
disclaims beneficial ownership in all other respects.
5 Includes 6,250 shares underlying options that are currently exercisable.
13
<PAGE> 17
6 Includes 3,500 shares held by Dr. Robeson's spouse for which Dr. Robeson
disclaims any beneficial ownership and 17,000 shares underlying options that
are currently exercisable.
7 Includes 12,500 shares underlying options that are currently exercisable.
8 Includes 500 shares held by Mr. Kirby's spouse, for which Mr. Kirby
disclaims any beneficial ownership, and 2,000 shares underlying options that
are currently exercisable.
9 All 2,000 shares underlie options that are currently exercisable.
10 Includes 1,757,180 shares held directly and by attribution and 175,625
shares underlying options that are currently exercisable.
11 Based on Schedule 13D filed by Ms. Fletcher in January 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of Forms 3, 4 and 5 and certain written
representations from Directors and executive officers that have been submitted
to the Company with respect to the 1999 fiscal year, pursuant to Section 16(a)
of the Exchange Act, it appears that no such person failed to file, on a timely
basis, any reports required by that section, except Mr. Melvin H. Baskin, who
filed Form 4 six months late with respect to the acquisition of 6,410 common
shares through the Employee Stock Purchase Plan, and Mr. M. Scott Taylor, who
filed Form 4 nine months late with respect to the acquisition of 100 common
shares in the open market.
INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP has served as the independent
auditors for the Company since 1987 including for the fiscal year ended December
31, 1999. The Company expects Deloitte & Touche LLP to so serve for the year
ending December 31, 2000. A representative of Deloitte & Touche LLP is expected
to be present at the annual meeting of shareholders. This representative will be
afforded an opportunity to make a statement at the meeting, if he so desires,
and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for the 2001 annual meeting of shareholders is
November 24, 2000. The Regulations of the Company impose additional requirements
affecting the submission of proposals by shareholders.
14
<PAGE> 18
OTHER MATTERS
The management of the Company does not know of any matters that may
properly be presented at the meeting other than as specifically set forth in the
Notice of Annual Meeting. If any other matters come before the meeting or any
adjournment thereof, the persons named in the accompanying form of Proxy and
acting thereunder will vote in accordance with their best judgment with respect
to such matters.
ROBERDS, INC., by
/s/ Robert M. Wilson
ROBERT M. WILSON, Secretary
15
<PAGE> 19
- --------------------------------------------------------------------------------
ROBERDS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
MAY 1, 2000
The undersigned hereby constitutes and appoints Melvin H. Baskin and
Robert M. Wilson, and each of them, his true and lawful agents and
proxies with full power of substitution in each, to represent the
undersigned at the annual meeting of shareholders of ROBERDS, INC. to
be held at the Company's offices, 1000 East Central Avenue, West
Carrollton, Ohio 45449-1888 on May 1, 2000 at 11:00 a.m., Eastern
Daylight Savings Time, and at any adjournments thereof, on all matters
coming before said meeting.
1. The election as directors of all nominees listed below, except as
indicated to the contrary.
Jerry L. Kirby, Howard W. Smith, Gilbert P. Williamson
and Donald C. Wright
[ ] FOR ALL NOMINEES LISTED ABOVE [ ] VOTE WITHHELD
For all of the nominees above, except vote withheld
from the following nominee(s):
--------------------------------------------------------------------
--------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED ON REVERSE SIDE)
(CONTINUED FROM REVERSE SIDE)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED ABOVE.
Please sign exactly as name appears below.
When shares are held as joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation,
please sign in full corporate name by
President or other authorized officer.
If a partnership, please sign in
partnership name by authorized person.
Dated , 2000
---------------------------
--------------------------------------
Print Name of Shareholder
--------------------------------------
Signature
--------------------------------------
Print Shareholder Name if held jointly
--------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
