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 Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
GARDEN RIDGE CORPORATION
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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:
<PAGE>
GARDEN RIDGE CORPORATION
19411 Atrium Place, Suite 170
Houston, Texas 77084
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 10, 1999
To the Stockholders of
Garden Ridge Corporation:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Garden Ridge Corporation (the "Company") will be held at
Chase Tower, 600 Travis, 25th Floor Conference Room, Houston, Texas 77002, at
10:00 a.m., Houston time, on Thursday, June 10, 1999, for the following
purposes:
1. To elect seven persons to serve as directors on the Board of Directors
until the 2000 annual meeting of stockholders and until their successors
have been elected and have qualified.
2. To increase the number of shares of Common Stock available for grant
under the Company's Amended and Restated 1994 Stock Option Plan by
1,200,000 shares, as more fully set forth under "Proposal No. 2."
3. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending January 30,
2000.
4. To transact such other business as may properly come before the Annual
Meeting, or any adjournment or adjournments thereof.
Stockholders of record at the close of business on April 26, 1999 will be
entitled to notice of and to vote at the Annual Meeting, or any adjournment or
adjournments thereof. Stockholders are cordially invited to attend the Annual
Meeting in person. Those who will not attend and who wish their shares voted are
requested to sign, date and mail promptly the enclosed proxy for which a return
envelope is provided.
By Order of the Board of Directors
Jane L. Arbuthnot, SECRETARY
Houston, Texas
April 27, 1999
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED
TO SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY. IF YOU ATTEND THE ANNUAL
MEETING, YOU CAN VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE>
GARDEN RIDGE CORPORATION
19411 ATRIUM PLACE, SUITE 170
HOUSTON, TEXAS 77084
PROXY STATEMENT
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Garden Ridge Corporation, a
Delaware corporation ("Garden Ridge" or the "Company"), for use at the annual
meeting of stockholders to be held on Thursday, June 10, 1999, at Chase Tower,
600 Travis, 25th Floor Conference Room, Houston, Texas 77002, at 10:00 a.m.,
Houston time, or at any adjournment or adjournments thereof (such meeting or
adjournment(s) thereof referred to as the "Annual Meeting"). Copies of the Proxy
and Notice and Proxy Statement are being mailed to stockholders on or about
April 27, 1999.
In addition to solicitation by mail, solicitation of proxies may be made
by personal interview, special letter, telephone or telecopy by the officers,
directors and employees of the Company. Brokerage firms will be requested to
forward proxy materials to beneficial owners of shares registered in their names
and will be reimbursed for their expenses. In addition, the Company has retained
the services of Corporate Investor Communications to assist in the solicitation
of proxies either in person or by mail, telephone or telecopy, at an estimated
cost of $2,000 plus expenses. The cost of solicitation of proxies will be paid
by the Company.
A proxy received by the Board of Directors of the Company may be revoked
by the stockholder giving the proxy at any time before it is exercised. A
stockholder may revoke a proxy by notification in writing to the Company at
19411 Atrium Place, Suite 170, Houston, Texas 77084, Attention: Corporate
Secretary. A proxy may also be revoked by execution of a proxy bearing a later
date or by attendance at the annual Meeting and voting by ballot. A proxy in the
form accompanying this Proxy Statement, when properly executed and returned,
will be voted in accordance with the instructions contained therein. A proxy
received by management which does not withhold authority to vote or on which no
specification has been indicated will be voted in favor of the proposals set
forth in this Proxy Statement and for the nominees for the Board of Directors of
the Company named in Proposal No. 1 of this Proxy Statement. A majority of the
outstanding shares will constitute a quorum at the Annual Meeting. Abstentions
and broker non-votes are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. Abstentions are counted in
tabulations of the vote's cast on proposals presented to stockholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
At the date of this Proxy Statement, management of the Company does not
know of any business to be presented at the Annual Meeting other than those
matters, which are set forth in the Notice accompanying this Proxy Statement. If
any other business should properly come before the Annual Meeting, it is
intended that the shares represented by proxies will be voted with respect to
such business in accordance with the judgment of the persons named in the proxy.
-1-
<PAGE>
COMMON STOCK OUTSTANDING AND PRINCIPAL HOLDERS THEREOF
The Board of Directors has fixed the close of business on April 26, 1999,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting. At that date there were outstanding
17,168,595 shares of common stock, par value $0.01 per share ("Common Stock"),
of the Company and the holders thereof will be entitled to one vote for each
share of Common Stock held of record by them on that date for each proposal to
be presented at the Annual Meeting.
The following table sets forth information with respect to the shares of
Common Stock (the only outstanding class of voting securities of the Company)
owned of record and beneficially as of March 31, 1999, unless otherwise
specified, by (i) all persons who own of record or are known by the Company to
own beneficially more than 5% of the outstanding shares of such class of stock,
(ii) each director, nominee for director, and named executive officer, and (iii)
all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
NAME NUMBER(1) PERCENT
---- --------- -------
<S> <C> <C>
Armand Shapiro ............................................. 902,020(2) 5.2%
Jane L. Arbuthnot .......................................... 109,247(3) *
David S. Hensley ........................................... 56,500(4) *
Phyllis C. Hink ............................................ 91,600(5) *
Gary W. Ramsey ............................................. 52,671(6) *
Norman M. Brody ............................................ 13,599(7) *
Stephen C. Fox ............................................. 8,333(8) *
Richard E. Nawrot .......................................... 0 *
Terry S. Boyce ............................................. 15,000(9) *
Alyson Henning ............................................. 12,500(10) *
Ira Neimark ................................................ 16,000(9) *
Sam J. Susser .............................................. 23,000(9) *
Barbara S. Tapp ............................................ 5,000(11) *
H. Whitney Wagner .......................................... 372,348(12) 2.0%
Quilvest American Equity, Ltd. ............................. 3,080,000(13) 17.9%
c/o Craigmuir Chambers
P.O. Box 71, Road Town
Tortola British Virgin Islands
J.P. Morgan & Co. Incorporated ............................. 1,351,000(14) 7.9%
60 Wall Street
New York, New York 10260
Morgan Grenfell Incorporated ............................... 1,032,790(14) 6.0%
885 Third Avenue
New York, NY 10022-4802
The Capital Group Companies, Inc. .......................... 995,000(14) 5.8%
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
All directors and executive officers as a group (14 persons) 1,677,818 9.5%
</TABLE>
- --------------
* Less than 1%
(1) The persons listed have the sole power to vote and dispose of the shares
except as otherwise indicated.
-2-
<PAGE>
(2) Includes 208,950 shares that may be acquired within the next 60 days upon
the exercise of outstanding employee stock options.
(3) Includes 97,000 shares that may be acquired within the next 60 days upon
the exercise of outstanding employee stock options.
(4) Includes 20,000 shares that may be acquired within the next 60 days upon
the exercise of outstanding employee stock options.
(5) Includes 70,004 shares that may be acquired within the next 60 days upon
the exercise of outstanding employee stock options and 1,600 shares owned
by her spouse.
(6) Includes 50,000 shares that may be acquired within the next 60 days upon
the exercise of outstanding employee stock options.
(7) Includes 13,333 shares that may be acquired within the next 60 days upon
the exercise of outstanding director options.
(8) Includes 8,333 shares that may be acquired within the next 60 days upon
the exercise of outstanding director options.
(9) Includes 15,000 shares that may be acquired within the next 60 days upon
the exercise of outstanding director options.
(10) Includes 12,500 shares that may be acquired within the next 60 days upon
the exercise of outstanding director options.
(11) Includes 5,000 shares that may be acquired within the next 60 days upon
the exercise of outstanding director options.
(12) Includes 337,342 shares held directly by Three Cities Holdings Limited,
12,734 shares held directly by Three Cities Research, Inc., and 1,616
shares held directly by Three Cities Partners 1990, as to which Mr. Wagner
has disclaimed beneficial ownership.
(13) Based on information in Form 4 filed by Quilvest American Equity Ltd. for
December 1998.
(14) Based on information in Schedule 13G filed for the year ended December 31,
1998.
-3-
<PAGE>
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
GENERAL
Seven directors are to be elected at the Annual Meeting. The Company
recommends voting for the election of each of the nominees for director listed
below. The persons named as proxy holders in the accompanying proxy intend to
vote each properly signed and submitted proxy for the election as a director of
each of the persons named as a nominee below under "Nominees for Director"
unless authority to vote in the election of directors is withheld on such proxy.
If, for any reason, at the time of the election one or more of the nominees
should be unable to serve, the proxy will be voted for a substitute nominee or
nominees selected by the Board of Directors. Directors are elected by a
plurality of votes cast at the Annual Meeting.
Unless otherwise specified, all properly executed proxies received by the
Company will be voted for the election of the directors listed below to hold
office until the 2000 annual meeting of stockholders and until each of their
respective successors is elected and qualified.
THE COMPANY RECOMMENDS VOTING "FOR" THE NOMINEES.
NOMINEES FOR DIRECTOR
The following table sets forth the name, age and principal position of
each nominee for director to hold office until the 2000 annual meeting of
stockholders.
NAME AGE POSITION
---- --- --------
Armand Shapiro..... 57 Chief Executive Officer and Chairman of the Board
Terry S. Boyce..... 59 Director
Alyson Henning..... 44 Director
Ira Neimark........ 77 Director
Sam J. Susser...... 59 Director
Barbara S. Tapp.... 48 Director
H. Whitney Wagner.. 43 Director
ARMAND SHAPIRO joined the Company in June 1990 as Chairman of the Board
and Chief Executive Officer. For seven years prior to joining Garden Ridge, Mr.
Shapiro was in executive management at ComputerCraft, Inc. ("ComputerCraft"),
then a publicly traded retailer of computer products, most recently serving as
President from 1986 to 1990. Mr. Shapiro was associated with a family-owned
corporation, Modern Furniture Rentals, Inc. as Chief Operating Officer prior to
joining ComputerCraft. Mr. Shapiro serves on the board of directors of SSP
Partners, Inc., which owns and operates convenience stores.
TERRY S. BOYCE has been a director of the Company since 1992. Mr. Boyce
has been the managing partner in the executive search firm of Boyce, Davis
Partners, Inc. (formerly Boyce Partners, Inc.) since November 1995. Mr. Boyce
previously was a partner in the executive search firm of Ingram & Aydelotte,
Inc., from January 1994 to November 1995. Mr. Boyce was the vice president of
administration for the Rockefeller Group, Inc., from 1982 to 1990, and was
president of Boyce & Associates, Inc., a management-consulting firm, from 1991
to 1993.
-4-
<PAGE>
ALYSON HENNING has been a director of the Company since 1997. Ms. Henning
has been the Chief Business Development Officer, Worldwide for Ammirati Puris
Lintas, an international marketing firm, since January 1996. From 1985 to 1995,
Ms. Henning held various management positions within Ammirati Puris Lintas.
IRA NEIMARK has been a director of the Company since 1996. Mr. Neimark has
served as a retail consultant since 1992. From 1975 to 1992, Mr. Neimark held
various management positions with Bergdorf Goodman, most recently as Chairman of
the Board and Chief Executive Officer. Mr. Neimark serves on the board of
directors of Factory-2-U Stores, Inc. and Hermes Paris.
SAM J. SUSSER has been a director of the Company since 1992. Mr. Susser
currently serves as Chairman of the Boards of SSP Partners, Inc. and has served
as Chief Executive Officer of Southguard Corp., the predecessor of SSP Partners
from 1988 to 1990. Mr. Susser also has served as Chairman and Chief Executive
Officer of Susser Petroleum Company from 1979 to 1989. From 1987 to 1992, Mr.
Susser served as Chairman and Chief Executive Officer of Shaper Partners, an
investment partnership.
BARBARA S. TAPP has served as the Editor-in-Chief of Arts and Antiques, a
TransWorld publication, since 1998. From 1990 to 1998, Ms. Tapp served as editor
of ATLANTA HOMES & LIFESTYLES, a Wiesner publication. Prior thereto, Ms. Tapp
served as executive editor of Southern Homes from 1989 to 1991.
H. WHITNEY WAGNER has been a director of the Company since 1992. Mr.
Wagner has served as a Managing Director of TCR, a private investment advisory
firm, since 1989. He joined TCR in 1983 and was elected a Vice President in
1986. Mr. Wagner serves on the boards of directors of Factory-2-U Stores, Inc.
and Pameco Corp., all publicly traded companies.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met four times in fiscal 1999. The Board of
Directors has established Compensation, Audit and Nominating Committees. The
Compensation Committee, which met twice in fiscal 1999, is composed of Messrs.
Boyce, Susser and Wagner and is responsible for establishing salaries, bonuses,
stock options and other compensation for the Company's executive officers. The
Audit Committee, which met once in fiscal 1999, is composed of Messrs. Susser
and Wagner and is responsible for recommending independent auditors, reviewing
with the independent auditors the scope and results of the audit engagement,
establishing and monitoring the Company's financial policies and control
procedures and overseeing the Company's investment funds policy. The Board of
Directors has also established a Nominating Committee, which is comprised of
Messrs. Neimark, Boyce, Shapiro and Wagner and is responsible for reviewing the
size and composition of the Board of Directors, recommending to the Board of
Directors candidates for election to the Board of Directors and reviewing
matters relating to potential conflicts of interest and directors' fees and
retainers. The Nominating Committee will consider suggestions from stockholders
for nominees to serve as directors, if such proposals are submitted to Corporate
Secretary, 19411 Atrium Place, Suite 170, Houston, Texas 77084. During fiscal
1999, the Nominating Committee met one time. All directors attended at least 75%
of the meetings of the Board of Directors and the meetings of the committees on
which they served in fiscal 1999.
DIRECTOR COMPENSATION
Independent directors of the Company receive $10,000 per year and $500 per
meeting of the Board attended. All directors receive reimbursement of reasonable
out-of-pocket expenses incurred in connection with meetings of the Board and
committees thereof. Pursuant to the 1996 Non-Employee Director Stock Option
Plan, all non-employee directors receive annually an automatic grant of a stock
option to purchase 5,000 shares at an exercise price equal to the fair market
value of the Common Stock on the date of grant. All directors receive such
compensation except for
-5-
<PAGE>
Messrs. Wagner and Shapiro. The Compensation Committee annually approves the
number of shares granted to directors.
EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions of the
persons who are not directors and who are executive officers of the Company:
NAME AGE POSITION
------ --- ----------------------------------------
Gary W. Ramsey....... 56 Executive Vice President - Stores
Jane L. Arbuthnot.... 39 Chief Financial Officer and Secretary
David S. Hensley..... 46 Vice President - General Merchandise Manager
Phyllis C. Hink...... 56 Vice President-Human Resources and Operations
Norman M. Brody...... 52 Vice President - Property Development
Stephen C. Fox....... 47 Vice President - Planning and Allocation
Richard E. Nawrot.... 52 Chief Information Officer
GARY RAMSEY joined the Company in 1996 as Executive Vice President -
Stores. From 1995 to 1996, Mr. Ramsey was a consultant, and from 1993 to 1995,
he was the Senior Vice President - General Merchandise Manager of Montgomery
Wards. From 1964 to 1993, Mr. Ramsey held various management positions with
Sears Roebuck and Company, including Chief Executive Officer of Sears Business
Centers.
JANE L. ARBUTHNOT joined Garden Ridge in July 1990 as Vice President -
Controller and Assistant Secretary, was promoted to Chief Financial Officer in
1991 and elected as Secretary in 1992. From 1983 to 1990, Ms. Arbuthnot held
various management positions at ComputerCraft, most recently as Vice President -
Controller. Prior to joining ComputerCraft, she was employed by Arthur Andersen
& Co. SC. Ms. Arbuthnot is a certified public accountant.
DAVID S. HENSLEY joined the Company in June 1990 as Vice President -
General Merchandise Manager. From 1982 to 1990, Mr. Hensley served as a Product
Marketing Director for ComputerCraft, and prior to 1982 he served as a senior
buyer for Foley's Department Stores.
PHYLLIS C. HINK joined Garden Ridge in October 1990 as Vice President -
Operations and assumed responsi bility as well for Human Resources in 1993. From
1978 to 1990, Ms. Hink served as Vice President of both Operations and Human
Resources for ComputerCraft.
NORMAN M. BRODY joined the Company in 1997 as Vice President - Property
Development. From 1995 to 1997, Mr. Brody was the Regional Real Estate Manager
of Target Stores. From 1993 to 1995, Mr. Brody was Senior Real Estate Manager of
Best Buy Co. From 1985 to 1993, Mr. Brody was President of The Shopping Center
Group, Inc. Mr. Brody is a licensed attorney.
STEPHEN C. FOX joined Garden Ridge in June 1997 as Vice President -
Planning and Allocation. Mr. Fox has held various management positions in retail
planning organizations including, Vice President of Planning and Replenishment
at Oshman's from 1996 to 1997, Vice President of Planning and Replenishment at
Northern Automotive in 1995, and Senior Vice President of Replenishment with
Caldor Corp from 1990 to 1994.
-6-
<PAGE>
RICHARD E. NAWROT joined Garden Ridge in August 1998 as Chief Information
Officer. From 1997 to 1998, Mr. Nawrot was Vice President of Information
Services for SuperValu. Prior to SuperValu, Mr. Nawrot was the Chief Information
Officer for Payless Cashways until September 1997. Since 1970, Mr. Nawrot has
served as the Chief Information Officer of retail companies in the specialty,
discount, department and building supplies sector.
COMPENSATION COMMITTEE REPORT(1)
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of outside directors. The Committee is responsible for
establishing and administering the compensation policies applicable to the
Company's executive officers. All decisions by the Committee are subject to
review and approval of the full Board of Directors.
The Company's executive compensation philosophy and specific compensation
plans tie a significant portion of executive compensation to the Company's
success in meeting specific profit, growth and performance goals.
The Company's compensation objectives include attracting and retaining the
best possible executive talent, motivating executive officers to achieve the
Company's performance objectives, rewarding individual performance and
contributions, and linking executives' and stockholders' interests through
equity based plans.
The Company's executive compensation consists of three key components:
base salary, annual incentive compensation and stock options, each of which is
intended to complement the others and, taken together, to satisfy the Company's
compensation objectives. The Compensation Committee's policies with respect to
each of the three components are discussed below.
BASE SALARY. In the early part of each fiscal year, the Compensation
Committee reviews the base salary of the Chief Executive Officer ("CEO") and the
recommendations of the CEO with regard to the base salary of all other executive
officers of the Company and approves, with any modifications it deems
appropriate, annual base salaries for each of the executive officers.
Recommended base salaries of the executive officers, other than the CEO, are
based on an evaluation of the individual performance of the executive officer,
including satisfaction of annual objectives. The recommended base salary of the
CEO is based on achievement of the Company's annual goals relating to financial
objectives, including earnings growth and return on capital employed, and an
evaluation of individual performance. Recommended base salaries of the executive
officers are also in part based upon an evaluation of the salaries of those
persons holding comparable positions at comparable companies.
ANNUAL INCENTIVE COMPENSATION. The Company's executive officers are
entitled to participate in a discretionary incentive bonus plan which provides
for the payment of annual bonuses to be paid in cash, stock, or a combination
thereof, based on the relative success of the Company in attaining certain
financial objectives and certain subjective factors as established from time to
time by the Committee and/or the Board of Directors. The Committee will consider
aggregate incentive cash and stock bonus payments to the executive officers, as
a group, of up to 100% of aggregate annual executive base salaries, and will
consider bonus payments to be paid in stock in excess of 50% of aggregate
- --------
(1) Notwithstanding filings by the Company with the Securities and
Exchange Commission ("SEC") that have incorporated or may incorporate by
reference other SEC filings (including this proxy statement) in their entirety,
this Compensation Committee Report shall not be incorporated by reference into
such filings and shall not be deemed to be "filed" with the SEC except as
specifically provided otherwise.
-7-
<PAGE>
annual executive base salaries. The Committee awarded no cash or stock bonuses
to the named executive officers for fiscal 1999.
STOCK OPTIONS. The primary objective of the stock option program is to
link the interests of the Company's stockholders to the executive officers and
other selected employees of the Company through the grant of significant annual
grants of stock options. The aggregate number of options recommended by the
Committee is based on practices of the same comparable companies utilized for
determining base salary, while actual grants of stock options reflect each
individual's expected long-term contribution to the success of the Company. The
Committee made no grants of stock options to the named executive officers in
fiscal 1999.
Compensation Committee: Terry S. Boyce, Sam J. Susser and H. Whitney
Wagner.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors of the
Company was, during fiscal 1999, an officer or employee of the Company or any of
its subsidiaries, or was formerly an officer of the Company or any of its
subsidiaries.
H. Whitney Wagner, a member of the Compensation Committee of the Company's
Board of Directors, is a Managing Director of TCR. The Company has entered into
an Advisory Agreement with TCR pursuant to which the Company has agreed to pay
TCR a fee of $50,000 per annum for advisory services and to reimburse TCR for
out-of-pocket expenses approved in advance by the Company, for a five-year
period ending on July 16, 2001.
Sam J. Susser, a member of the Compensation Committee of the Company's
Board of Directors, is chairman of the board of directors of SSP Partners, Inc.
Armand Shapiro, Chairman and Chief Executive Officer of the Company, serves on
the Board of SSP Partners, Inc.
Except as set forth above, during fiscal 1999, no executive officer of the
Company served as (i) a member of the compensation committee (or other board
committee performing equivalent functions) of another entity, one of whose
executive officers served on the Compensation Committee of the Board of
Directors, (ii) a director of another entity, one of whose executive officers
served on the Compensation Committee of the Board of Directors, or (iii) a
member of the compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive officers served
as a director of the Company.
-8-
<PAGE>
COMPENSATION TABLES
The following table sets forth compensation information for the chief
executive officer and the four most highly compensated executive officers of the
Company during the Company's fiscal years 1999, 1998 and 1997, for services
rendered during such years to the Company or any of its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------ ------------------
FISCAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS COMPENSATION
- --------------------------- ------ ------- ------- ------------------ ------------
($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
Armand Shapiro ............................................ 1999 350,000 -- -- --
Chairman of the Board and ............................... 1998 350,000 98,000 16,500 --
Chief Executive Officer ................................. 1997 350,000 -- 4,950 --
Jack E. Lewis ............................................. 1999 175,465 -- -- 804,882(1)
President and ........................................... 1998 245,000 90,000 13,500 --
Chief Operating Officer ................................. 1997 223,700 -- 4,050 --
Gary W. Ramsey ............................................ 1999 233,750 -- -- --
Executive Vice President - .............................. 1998 215,000 64,000 -- --
Stores .................................................. 1997 29,356 -- 75,000 --
Norman M. Brody ........................................... 1999 168,750 -- -- 35,295(2)
Vice President - Property ............................... 1998 55,635 12,000 -- --
Development
Jane L. Arbuthnot ......................................... 1999 155,000 -- -- --
Chief Financial Officer ................................. 1998 136,667 36,000 5,000 --
and Secretary ........................................... 1997 116,500 -- 1,500 --
</TABLE>
(1) Mr. Lewis left the Company October 1, 1998, with severance
compensation totaling $804,882.
(2) Mr. Brody received compensation of $35,295 for certain relocation
expenses.
In fiscal 1999 there were no grants of options to purchase shares of the
Company's Common Stock to any of the named executive officers.
-9-
<PAGE>
The following table presents information regarding options exercised in
fiscal 1999 and the value of options outstanding at January 31, 1999 for each of
the named executive officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
--------------------------- ---------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Armand Shapiro .............................. 25,500 $ 91,290 280,950 -- $ 1,612,395 --
Jack E. Lewis ............................... 49,500 -- 17,550 -- 0 --
Gary W. Ramsey .............................. 0 -- 50,000 25,000 0 --
Norman M. Brody ............................. 0 -- 13,333 26,667 0 --
Jane L. Arbuthnot ........................... 4,000 19,055 97,000 -- 608,130 --
</TABLE>
(1) Value is based upon a fair market value of $7.31 per share at fiscal 1999
year end.
PERFORMANCE GRAPH
The following performance graph provided by Zacks Investment Research,
Inc. compares the performance of the Company's Common Stock to the S&P 500 Index
and the S&P Retail Stores-Specialty Index since May 9, 1995, the first day of
public trading of the Company's Common Stock.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
DESCRIPTION 5/95 1996 1997 1998 1999
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
GARDEN RIDGE CO ($) $100.00 $220.00 $114.99 $211.66 $ 97.49
S & P 500 ($) $100.00 $125.93 $159.10 $201.91 $267.52
S & P Retail Stores - Specialty($) $100.00 $100.30 $109.98 $117.41 $109.88
</TABLE>
-10-
<PAGE>
PROPOSAL NO. 2 - INCREASE IN SHARES AVAILABLE FOR
GRANT UNDER THE AMENDED AND RESTATED 1994 STOCK OPTION PLAN
The Board of Directors of the Company has approved an amendment (the
"Amendment") to the Amended and Restated 1994 Stock Option Plan (the "1994
Plan") to make an additional 1,200,000 shares of Common Stock available for
issuance pursuant thereto, and has directed that the Amendment to the 1994 Plan
be submitted to the stockholders for approval.
The 1994 Plan was initially adopted in 1994, and an aggregate of 219,176
shares of Common Stock were reserved for issuance pursuant thereto. The 1994
Plan was then amended and restated in 1996, 1997 and 1998, and an additional
200,000 shares, 100,000 shares and 250,000 shares of Common Stock, respectively,
were reserved for issuance pursuant thereto for a current total of 769,176
shares. As of March 31, 1999, there were 250,710 remaining shares of Common
Stock available for issuance under the 1994 Plan. If Proposal No. 2 is approved
by the stockholders, there will be 1,450,710 shares of Common Stock available
for issuance under the 1994 Plan. In the opinion of the Board of Directors, it
is appropriate to consider amending the 1994 Plan to increase such number of
shares available for issuance because of the current intentions of the Company
to attract additional senior management personnel.
PURPOSE. The purpose of the 1994 Plan is to secure for the Company and its
stockholders the benefits arising from stock ownership by selected executive
employees and other key employees of the Company or its subsidiaries as the
Board of Directors of the Company, or a committee constituted for such purpose,
may from time to time determine. The Company believes that the possibility of
participation in the 1994 Plan through receipt of incentive options ("Incentive
Options") or nonqualified options ("Nonqualified Options") (Incentive Options
and Nonqualified Options shall be collectively referred to herein as "Stock
Options"), will provide participants an incentive to perform more effectively
and will assist the Company in obtaining and retaining people of outstanding
training and ability.
TERM. The 1994 Plan was initially adopted in 1994 and will terminate in
April 2004, unless earlier terminated by the Board.
ADMINISTRATION. The 1994 Plan is administered by the Stock Option
Committee (the "Committee") of the Board of Directors which is comprised of at
least two members of the Board of Directors, and all members of the Committee
are "disinterested persons" (as defined in Rule 16b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended). No member of
the Committee is eligible to participate in the 1994 Plan while serving as a
member of the Committee. All questions of interpretation and application of the
1994 Plan are determined by the Committee, and each Stock Option granted under
the 1994 Plan has a term selected by the Committee.
PARTICIPATION. All named executive officers and other key employees of the
Company or any subsidiary of the Company are eligible for selection to
participate in the 1994 Plan. As stated, directors of the Company who are not
regular employees of the Company and members of the Committee are not eligible
to participate in the 1994 Plan. The Board of Directors or the Committee shall
determine from time to time the individuals who are to receive Stock Options
under the 1994 Plan. The number of employees eligible to participate in the 1994
Plan is approximately 100. During the lifetime of participants, Stock Options
shall be exercisable only by the optionee, and no Stock Options will be
transferable otherwise than by will or the laws of descent and distribution.
SHARES OF STOCK AVAILABLE FOR GRANT. A total not exceeding an aggregate
amount of 250,710 shares of the Company's Common Stock are currently available
for issuance under the 1994 Plan. If the amendment is approved by the
stockholders, a total of 1,450,710 shares of the Company's Common Stock will be
available for issuance under the 1994 Plan. The shares may be treasury shares or
authorized but unissued shares. In the event a Stock Option expires unexercised,
is terminated, or is canceled or forfeited, the shares of Common Stock allocable
to the unexercised portion of that Stock Option may again be subject to a Stock
Option under the 1994 Plan.
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<PAGE>
The 1994 Plan provides that the number of shares subject thereto and
shares covered by Stock Options outstanding will be proportionately adjusted for
any increase or decrease in the number of issued shares of the Company's Common
Stock resulting from a subdivision or consolidation of shares or the payment of
a stock dividend (but only on the Common Stock), a stock split, a reverse stock
split, or any other increase or decrease in the number of such shares effected
without receipt of consideration by the Company, as well as in the event of a
spin-off, spin-out or other distribution of assets to stockholders of the
Company, to the extent necessary to prevent dilution of the interests of
grantees pursuant to the 1994 Plan or of the other stockholders of the Company,
as applicable.
COMPENSATION DEDUCTION LIMITATION. Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), generally limits to $1 million per year
per employee the tax deduction available to publicly traded companies for
certain compensation paid to named executive officers. There is an exception
(Section 162(m)(4)(C)) from this deduction limitation, for certain
"performance-based compensation," if specified requirements are satisfied,
including: (i) the establishment by a compensation committee comprised solely of
two or more outside directors of performance goals which must be met for the
additional compensation to be earned, (ii) the approval of the material terms
for the performance goals by the stockholders after adequate disclosure, and
(iii) the certification by the compensation committee that the performance goals
have been met. The 1994 Plan is designed to satisfy these statutory requirements
for Incentive Options and Nonqualified Options. Therefore, for all grants
intended to satisfy Section 162(m) of the Code, the Company is entitled to
deduct an amount equal to the ordinary income reportable by each optionee on
exercise of a Nonqualified Option and the Early Disposition (as defined below)
of shares of Common Stock acquired by exercise of an Incentive Option.
STOCK OPTIONS. The Committee may designate a Stock Option as an Incentive
Option or as a Nonqualified Option. The terms of each Stock Option shall be set
out in a written option agreement which incorporates the terms of the 1994 Plan.
The purchase price per share of Common Stock (the "Purchase Price") of a
Nonqualified Option may not be less than the par value of a share of Common
Stock of the Company, and the Nonqualified Option may not be exercisable after
10 years from the date of grant. The Purchase Price of an Incentive Option may
not be less than 100% of the Fair Market Value (as defined in the 1994 Plan) of
the Common Stock on the date of grant, and the Incentive Option may not be
exercisable after 10 years from the date of grant. Additionally, the grant of
Incentive Options to an employee owning over 10% of the voting Stock of the
Company must be at an exercise price of not less than 100% of the Fair Market
Value of the stock on the date of grant, and the Incentive Option may not be
exercisable after 5 years from the date of grant. The aggregate fair market
value of all shares of Common Stock with respect to which Incentive Options are
exercisable for the first time by any optionee during any one calendar year
shall not exceed $100,000. On April 23, 1999 the last reported sales price of
the Common Stock was $7.39 per share.
Stock Options may be exercised by written notice of exercise and payment
of the Stock Option price in cash, by check or in previously owned shares of
Common Stock valued at fair market value on the date of exercise. Special rules
apply which limit the time of exercise of a Stock Option following an employee's
termination of employment or upon the occurrence of a "Significant Event" (as
defined in the 1994 Plan). The Committee may impose additional restrictions on
the exercise of any Stock Option.
AMENDMENT OF THE 1994 PLAN. The Board of Directors or the Committee may
amend, rescind, suspend or terminate the 1994 Plan at any time, provided that
the 1994 Plan may not be amended more than once every six months, other than to
comport with changes in the Code, ERISA, or the rules thereunder. In the event
that the Board of Directors or the Committee determines that stockholder
approval of any amendment to the 1994 Plan is necessary or desirable, then the
effectiveness of any such amendment may be conditioned upon its approval by the
affirmative votes of the holders of a majority of the outstanding voting stock
of the Company. No change may be made in, and no amendment, rescission,
suspension or termination of the 1994 Plan shall have an effect on, Stock
Options previously granted under
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<PAGE>
the 1994 Plan which may impair or alter the rights or obligations of the holders
thereof except with the consent of the optionee.
CHANGE IN CONTROL. Upon the consummation of a Significant Event, the
Company, upon obtaining approval by the Board, may elect to waive any and all
restrictions on the vesting of rights under Stock Options granted pursuant to
the 1994 Plan by providing written notice thereof to the optionees, in which
event the Company shall have the option (the "Termination Option") to require
all optionees to exercise their vested but unexercised stock options upon the
occurrence of the Significant Event by providing them written notice thereof at
least 10 days before the occurrence of such Significant Event. If the Company
exercises its Termination Option, each Stock Option that is vested but
unexercised as of the date of the Significant Event shall terminate.
FEDERAL TAX CONSEQUENCES. The grant of Incentive Options to an employee
does not result in any income tax consequences. The exercise of an Incentive
Option generally does not result in any income tax consequences to an employee
if (i) the Incentive Option is exercised by the employee during his employment
with the Company or a subsidiary of the Company, or within a specified period
after termination of employment, and (ii) the employee does not dispose of
shares acquired pursuant to the exercise of an Incentive Option before the
expiration of two years from the date of grant of the Incentive Option or one
year after exercise and the transfer of the shares to him, whichever is later
(the "Waiting Period"). However, the excess of the fair market value of the
shares of Common Stock as of the date of exercise over the 1994 Plan price is a
tax preference item for purposes of determining an employee's alternative
minimum tax in the year of exercise, if applicable.
An employee who disposes of his Incentive Option shares prior to the
expiration of the Waiting Period (an "Early Disposition") generally will
recognize ordinary income in the year of sale in an amount equal to the excess,
if any, of (a) the lesser of (i) the fair market value of the shares as of the
date of exercise or (ii) the amount realized on the sale, over (b) the Incentive
Option price. Any additional amount realized on an Early Disposition should be
treated as capital gain to the employee, short or long term, depending on the
employee's holding period for the shares. If the shares are sold for less than
the option price, the employee will not recognize any ordinary income but will
recognize a capital loss, short or long term, depending on the holding period.
As a result of changes made by the IRS Restructuring and Reform Act of
1998 reducing the required holding period for assets afforded long-term capital
gains tax treatment, if an employee sells shares acquired pursuant to the
exercise of an Incentive Option after December 31, 1997, the employee will
generally recognize a long-term capital gain or loss on the sale if the shares
were held for more than twelve (12) months. Under those circumstances, if the
employee recognizes a long-term capital gain on the sale, his or her long-term
capital gain will be taxed at a maximum rate of 20%. After December 31, 2000,
the sale by an employee of shares acquired pursuant to the exercise of an
Incentive Option which are held for more than five years will be taxed at a
maximum rate of 18%.
The Company will not be entitled to a deduction as a result of the grant
of an Incentive Option, the exercise of an Incentive Option, or the sale of
Incentive Option shares after the Waiting Period. If an employee disposes of
Incentive Option shares in an Early Disposition, the Company would be entitled
to deduct the amount of ordinary income recognized by the Employee.
The grant of Nonqualified Options under the 1994 Plan will not result in
the recognition of any taxable income by the optionee. An optionee will
recognize ordinary income on the date of exercise of the Nonqualified Option
equal to the excess, if any, of (i) the fair market value of the shares acquired
as of the exercise date, over (ii) the exercise price. The tax basis of these
shares for purposes of a subsequent sale includes the Nonqualified Option price
paid and the ordinary income reported on exercise of the Nonqualified Option.
The income reportable on exercise of a Nonqualified Option is subject to federal
income and employment tax withholding. Generally, the Company will be entitled
to a deduction for its taxable year within which the optionee recognizes
compensation income in the amount reportable as income by the optionee on the
exercise of a Nonqualified Option.
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<PAGE>
GRANTS UNDER THE 1994 PLAN. There have been no grants under the 1994 Plan
since the Board approved the Amendment set forth in this proposal; accordingly,
the benefits or amounts that will be received as a result of the Amendment are
not currently determinable.
In fiscal 1999 there were no grants of options to purchase shares of the
Company's Common Stock to any of the named executive officers or non-executive
directors as a group.
In fiscal 1999, there were grants of options to purchase shares of the
Company's Common Stock to executive officers as a group and non-executive
officer employees as a group as set forth in the table below.
NEW PLAN BENEFITS
THE AMENDED AND RESTATED 1994 STOCK OPTION PLAN
NAME NUMBER OF UNITS
---- ---------------
Executive Group............................... 40,000
Non-Executive Officer Employee Group.......... 71,000
STOCKHOLDER APPROVAL REQUIREMENT. The approval of the amendment requires
the affirmative vote of a majority of the shares of Common Stock voting on the
matter. Accordingly, abstentions and broker non-votes applicable to shares at
the Annual Meeting will not be included in the tabulation of votes cast on this
proposal.
THE COMPANY RECOMMENDS VOTING "FOR" PROPOSAL NO. 2.
PROPOSAL NO. 3 - RATIFICATION AND APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected Arthur Andersen LLP as
its independent public accountants to audit the accounts of the Company for the
fiscal year ending January 30, 2000. Arthur Andersen LLP has advised the Company
that it will have a representative in attendance at the Annual Meeting who will
respond to appropriate questions presented.
Management recommends that the appointment of Arthur Andersen LLP as
independent public accountants of the Company for the fiscal year ending January
30, 2000, be ratified by the stockholders. Unless otherwise specified, all
properly executed proxies received by the Company will be voted for such
ratification at the meeting or any adjournment thereof.
THE COMPANY RECOMMENDS VOTING "FOR" PROPOSAL NO. 3.
CERTAIN TRANSACTIONS
The Company has used and will continue to use, as it deems appropriate,
Neon Electric Corporation for the design, construction and installation of its
signs. In fiscal 1999, the Company paid Neon Electric Corporation $1,313,288 for
its services. Sherman Hink, the spouse of Phyllis C. Hink, Vice President -
Human Resources of the Company, is the owner of Neon Electric Corporation. The
Company believes these services were on terms at least as favorable to the
Company as those, which could have been obtained elsewhere.
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<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year, and written representations from reporting persons that no Form 5
was required. The Company does not believe that any reporting person failed to
file on a timely basis reports as required by Section 16(a) of the Exchange Act.
PROPOSALS, NOMINATIONS AND OTHER BUSINESS FOR NEXT ANNUAL MEETING
The Board of Directors knows of no other matters than those described
above which are likely to come before the Annual Meeting. If any other matters
properly come before the meeting, persons named in the accompanying form of
proxy intend to vote such proxy in accordance with their best judgment on such
matters.
To be included in the proxy statement, any proposals of holders of Common
Stock of the Company intended to be presented at the Annual Meeting of
Stockholders of the Company to be held in 2000 must be received by the Company,
addressed to the Secretary of the Company, 19411 Atrium Place, Suite 170,
Houston, Texas 77084, no later than December 28, 1999, and must otherwise comply
with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934.
Any holder of Common Stock of the Company desiring to bring business
before the 2000 annual meeting of stockholders in a form other than a
stockholder proposal in accordance with the preceding paragraph must give
written notice that is received by the Company, addressed to the Secretary of
the Company, 19411 Atrium Place, Suite 170, Houston, Texas, 77084, no earlier
than February 11, 2000 and no later than March 8, 2000.
By Order of the Board of Directors
Jane L. Arbuthnot, SECRETARY
April 27, 1999
THE COMPANY WILL FURNISH WITHOUT CHARGE ADDITIONAL COPIES OF ITS ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 1999 TO INTERESTED
SECURITY HOLDERS ON REQUEST. THE COMPANY WILL FURNISH TO ANY SUCH PERSON ANY
EXHIBITS DESCRIBED IN THE LIST ACCOMPANYING SUCH REPORT UPON PAYMENT OF
REASONABLE FEES RELATING TO THE COMPANY'S FURNISHING SUCH EXHIBITS. REQUESTS FOR
COPIES SHOULD BE DIRECTED TO THE SECRETARY AT THE COMPANY'S ADDRESS PREVIOUSLY
SET FORTH.
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<PAGE>
PROXY PROXY
GARDEN RIDGE CORPORATION
19411 Atrium Place, Suite 170
Houston, Texas 77084
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 10, 1999
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Garden Ridge Corporation (the "Company") will be held at Chase
Tower, 600 Travis, 25th Floor Conference Room, Houston, Texas 77002, at 10:00
a.m., Houston time, on Thursday, June 10, 1999, for the following purposes.
STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON APRIL 26, 1999 WILL BE
ENTITLED TO NOTICE OF AND TO VOTE AT THE ANNUAL MEETING, OR ANY ADJOURNMENT OR
ADJOURNMENTS THEREOF. STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL
MEETING IN PERSON. THOSE WHO WILL NOT ATTEND AND WHO WISH THEIR SHARES VOTED ARE
REQUESTED TO SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY FOR WHICH A RETURN
ENVELOPE IS PROVIDED.
<PAGE>
Please mark
your votes as
indicated in [X]
this example
1. To elect seven persons to serve as directors on FOR WITHHELD
the Board of Directors until the 2000 annual [ ] [ ]
meeting of stockholders and until their successors
have been elected and have qualified.
Nominees: Armand Shapiro, Terry S. Boyce, Alyson Henning, Ira Neimark, Sam J.
Susser, Barbara S. Tapp, H. Whitney Wagner
(INSTRUCTION: To withhold authority to vote for any individual nominees, write
that nominee's name in the space provided below.)
_______________________________________________________________
2. To increase the number of shares of Common FOR AGAINST ABSTAIN
Stock available for grant under the Company's [ ] [ ] [ ]
Amended and Restated 1994 Stock Option Plan
by 1,200, 000 shares, as more fully set forth
under "Proposal No. 2."
3. To ratify the appointment of Arthur Andersen LLP as FOR AGAINST ABSTAIN
the Company's independent public accountants for the [ ] [ ] [ ]
fiscal year ending January 30, 2000.
4. To transact such other business as may properly come FOR AGAINST ABSTAIN
before the Annual Meeting, or any adjournment or [ ] [ ] [ ]
adjournments thereof.
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO
SIGN, DATE AND MAI L PROMPTLY THE ENCLOSED PROXY. I F YOU ATTEND THE ANNUAL
MEETING. YOU CAN VOTE EITHER IN PERSON OR BY YOUR PROXY.
Signature________________________ Signature________________________ Date________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
