<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
OFFICEMAX, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
(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 (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: ...........................................................
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<PAGE> 2
OFFICEMAX LOGO
------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1997
------------------------------------
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of
OfficeMax, Inc., an Ohio corporation (the "Company"), will be held at the
Company's International Headquarters, 3605 Warrensville Center Road, Shaker
Heights, Ohio 44122 on Monday, May 19, 1997, at 10:00 a.m., Cleveland time, for
the following purposes:
(1) To elect three Directors of the class whose term will expire in 1999,
each to serve a term of two years and until his successor is duly
elected and qualified;
(2) To ratify the selection of Price Waterhouse, LLP as the Company's
independent auditors for fiscal 1997; and
(3) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
Only shareholders of record at the close of business on March 28, 1997 are
entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors,
/s/ Ross H. Pollock
Ross H. Pollock
Secretary
April 17, 1997
Shaker Heights, Ohio
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY RETURN
THE PROXY IN THE ENCLOSED ENVELOPE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO
THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR
PROXY PROMPTLY.
<PAGE> 3
OFFICEMAX LOGO
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
------------------------
PROXY STATEMENT
------------------------
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of OfficeMax, Inc., an Ohio
corporation (the "Company"), for use at the Annual Meeting of Shareholders to be
held on Monday, May 19, 1997, at the Company's International Headquarters, 3605
Warrensville Center Road, Shaker Heights, Ohio 44122, at 10:00 a.m., Cleveland
time, and at any adjournment or postponement thereof. This statement and the
accompanying proxy, together with the Company's Annual Report to Shareholders
for the fiscal year ended January 25, 1997, are being mailed to shareholders on
or about April 17, 1997.
The close of business on March 28, 1997, has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
meeting. At that date, the Company had outstanding 123,835,169 Common Shares,
without par value ("Common Shares"). Holders of Common Shares are entitled to
one vote per share for the election of Directors and on all matters on which
shareholders are entitled to vote.
The address of the Company's principal executive offices is 3605
Warrensville Center Road, Shaker Heights, Ohio 44122.
ELECTION OF DIRECTORS
The Company's Board of Directors (the "Board") currently consists of seven
members, divided into one class of three members and one class of four members.
At the meeting, Common Shares represented by proxies, unless otherwise
specified, will be voted for the election of the three nominees hereinafter
named, each to serve for a term of two years or until his successor is duly
elected and qualified. If any nominee should not be available for election, the
proxies will be voted for the election of such substitute nominee as the Board
may propose. Proxies may not be voted at the annual meeting for more than three
persons.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR ALL THREE
NOMINEES.
Listed below is the name of each person nominated for election as a
Director of the Company (each is currently a Director of the Company), each
Director's age, his or her principal occupation, membership on the board of
directors of other registered public companies (which is shown parenthetically),
the year in which he or she first became a Director of the Company and the year
in which each Director's term as a Director will expire:
1
<PAGE> 4
NOMINEES FOR ELECTION AT THE ANNUAL MEETING FOR THE TERM EXPIRING 1999
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION(1) SINCE EXPIRES
- ------------------- --- ---------------------------------------- -------- -------
<S> <C> <C> <C> <C>
Raymond L. Bank 43 President and Chief Operating Officer of 1994 1997
Merchant Development Corporation, a
venture capital and buy-out firm
focusing on consumer retail, direct
marketing, and service companies
Michael Feuer 52 Chairman and Chief Executive Officer of 1988 1997
the Company
Carl D. Glickman 70 President, The Glickman Organization, 1995 1997
private investing (The Bear Stearns
Companies, Inc., Alliance Tire & Rubber
Company Ltd., Andal Corporation,
Continental Health Affiliates, Inc.,
Franklin Holdings, Inc., Jerusalem
Economic Corporation Ltd., Lexington
Corporate Properties, Inc. and Insutech
Inc.)
</TABLE>
DIRECTORS WHOSE TERMS WILL CONTINUE AFTER THE ANNUAL MEETING
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION(1) SINCE EXPIRES
- ------------------- --- ---------------------------------------- -------- -------
<S> <C> <C> <C> <C>
Burnett W. Donoho 57 Vice Chairman and Chief Operating 1995 1998
Officer of Montgomery Ward & Co., Inc.,
a major retailer; former Vice Chairman,
Chief Operating Officer of Macy's East,
a chain of 60 department stores and a
then division of R.H. Macy & Co., Inc.
D. Dwayne Hoven 55 President and Chief Executive Officer of 1995 1998
Revco D.S., Inc., an operator of
discount drug stores (Revco D.S., Inc.)
James F. McCann 45 President of 1-800-FLOWERS, Inc., a 1996 1998
national retail florist
Sydell L. Miller 59 Private investor and consultant; former 1994 1998
Chairwoman of the Board and Chief
Executive Officer of Matrix Essentials,
Inc., a subsidiary of Bristol-Myers
Squibb Company
</TABLE>
- ---------------
(1) Each of the Company's Directors, except Ms. Miller and Messrs. Bank and
Donoho, either has had the positions shown or has had other executive
positions with the same employer for more than five years. Ms. Miller has
held her current position since September 1995. Prior to September 1995, Ms.
Miller served as Chairwoman of the Board and Chief Executive Officer of
Matrix Essentials, Inc., a manufacturer of professional hair care, skin care
and cosmetic products and a subsidiary of Bristol-Myers Squibb Company. Mr.
Bank has held his current position since July 1994. In addition, since 1991,
Mr. Bank has also served as President of Raymond L. Bank & Associates, a
retail and direct marketing consulting firm. From April 1992 until October
1992, Mr. Bank served as Vice President, New Business Development for QVC
Network, Inc. and from June 1984 until December 1991, Mr. Bank was
associated in a variety of capacities with New Enterprise Associates, a
venture capital firm. Mr. Bank also served as a Director of the Company from
May 1990 until the acquisition by Kmart Corporation of 92.7%
2
<PAGE> 5
of the Company in November 1991. Mr. Donoho was a retail consultant from
July 1995 to February 1997. Mr. Donoho served as Vice Chairman, Chief
Operating Officer of Macy's East, a chain of 60 department stores and a then
division of R.H. Macy & Co., Inc. from July 1992 until December 1994. From
June 1991 to June 1992, Mr. Donoho was a retail consultant with Ernst &
Young, a public accounting firm; from November 1990 to May 1991, Mr. Donoho
was a consultant to the Superintendent and acting Chief Financial Officer of
the Chicago Public Schools; and prior to that Mr. Donoho was President and
Chief Operating Officer of Marshall Field's, a department store chain.
During the fiscal year ended January 25, 1997, the Company's Board of
Directors held four meetings. Each member of the Board of Directors attended at
least 75% of the meetings.
Messrs. Glickman (Chairman), Bank and Hoven are the current members of the
Board's Audit Committee, which is empowered to exercise all powers and authority
of the Board of Directors with respect to the Company's annual audit, accounting
policies, financial reporting and internal controls. The Audit Committee met
twice and consulted informally on other occasions during the last fiscal year.
Messrs. Glickman (Chairman) and Bank and Ms. Miller are the current members
of the Board's Compensation Committee (the "Compensation Committee"), which is
empowered to exercise all powers and authority of the Board of Directors with
respect to compensation of the officers of the Company. The Compensation
Committee met once and consulted informally on other occasions during the last
fiscal year.
The Company's Board of Directors does not have a nominating committee.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of the Company receive an
annual retainer fee of $25,000 payable in restricted Common Shares of the
Company, and a fee of $1,000 for each meeting of the Board attended and a fee of
$500 for each Committee meeting of the Board attended, each of which is payable
in Common Shares of the Company.
3
<PAGE> 6
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 as of March 28, 1997 (except as
otherwise noted), by: (a) each of the Company's Directors; (b) each person known
by the Company to own beneficially more than 5% of the outstanding Common
Shares; (c) the Company's Chief Executive Officer and the other four most highly
compensated executive officers named in the Summary Compensation Table; and (d)
the Company's executive officers and Directors as a group. Except as otherwise
described in the notes below, the following beneficial owners have sole voting
power and sole investment power with respect to all Common Shares set forth
opposite their names. All amounts are adjusted to reflect the three-for-two
stock split effected on July 9, 1996.
<TABLE>
<CAPTION>
NUMBER OF
COMMON SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- --------------------------------------------------------------- ------------------ --------
<S> <C> <C>
FMR Corp....................................................... 15,167,640(1) 12.2%
82 Devonshire Street
Boston, Massachusetts 02109
Putnam Investments, Inc........................................ 13,548,603(2) 10.9%
One Post Office Square
Boston, Massachusetts 02109
Michael Feuer.................................................. 2,527,955(3) 2.0%
Sydell Miller.................................................. 29,558(4) *
James McCann................................................... 23,904(5) *
Carl D. Glickman............................................... 18,466(6) *
Raymond L. Bank................................................ 10,436(7) *
Burnett W. Donoho.............................................. 7,965(8) *
D. Dwayne Hoven................................................ 6,948(9) *
George H. Luckey............................................... 203,341(10) *
John C. Martin................................................. 163,789(11) *
John C. Belknap................................................ 1,500 *
Edward Cornell................................................. 173,332(12) *
All Executive Officers and Directors as a Group................ 3,505,860(13) 2.8%
(18 persons)
</TABLE>
- ---------------
* Less than 1%.
(1) Based on information as of January 31, 1997, obtained from a Schedule 13G
filed by FMR Corp. with the Securities and Exchange Commission on or about
February 7, 1997. Of the 15,167,640 shares shown as beneficially owned by
FMR Corp.: (i) 14,941,125 shares are beneficially owned by Fidelity
Management & Research Company; and (ii) 226,5515 shares are beneficially
owned by Fidelity Management Trust Company as a result of acting as
investment manager of institutional accounts.
(2) Based on information as of December 31, 1996, obtained from a Schedule 13G
filed by Putnam Investments, Inc. with the Securities and Exchange
Commission on or about January 27, 1997. Of the 13,548,603 shares shown as
beneficially owned by Putnam Investments, Inc.: (i) 13,137,636 shares are
beneficially owned by Putnam Investment Management, Inc.; and (ii) 410,967
shares are beneficially owned by The Putnam Advisory Company, Inc. as a
result of acting as investment manager of institutional accounts.
(3) Includes: 2,021,427 shares owned by Mr. Feuer; 310 shares held for Mr.
Feuer's benefit in the Company's 401(k) Plan; 156,467 and 15,401 restricted
shares purchased by Mr. Feuer under the Management Share Purchase Plan
which shares are subject to forfeiture until November 1997 and
4
<PAGE> 7
March 1999, respectively; 225 shares owned jointly by Mr. Feuer and his
wife; and 334,125 shares issuable upon the exercise of options currently
exercisable or exercisable within 60 days of March 28, 1997. Does not
include 2,150 shares owned by a trust for the benefit of Mr. Feuer's son
and 2,000 shares owned by a trust for the benefit of Mr. Feuer's daughter,
as to each of which trusts Mrs. Feuer is trustee, and 1,000 shares owned by
Mr. Feuer's wife, as to which shares Mr. Feuer disclaims any beneficial
interest.
(4) Includes: 22,500 shares owned by a trust of which Ms. Miller is beneficiary
and a co-trustee; 4,648 shares owned by Ms. Miller; and 2,410 restricted
shares issued to Ms. Miller under the Company's Director Share Plan which
shares are subject to forfeiture until December 31, 1997.
(5) Includes: 21,494 shares owned by Mr. McCann; and 2,410 restricted shares
issued to Mr. McCann under the Company's Director Share Plan which shares
are subject to forfeiture until December 31, 1997.
(6) Includes: 16,056 shares owned by Mr. Glickman; and 2,410 restricted shares
issued to Mr. Glickman under the Company's Director Share Plan which shares
are subject to forfeiture until December 31, 1997.
(7) Includes: 8,026 shares owned by Mr. Bank; and 2,410 restricted shares
issued to Mr. Bank under the Company's Director Share Plan which shares are
subject to forfeiture until December 31, 1997.
(8) Includes: 5,555 shares owned by Mr. Donoho; and 2,410 restricted shares
issued to Mr. Donoho under the Company's Director Share Plan which shares
are subject to forfeiture until December 31, 1997.
(9) Includes: 4,538 shares owned by Mr. Hoven; and 2,410 restricted shares
issued to Mr. Hoven under the Company's Director Share Plan which shares
are subject to forfeiture until December 31, 1997.
(10) Includes: 1,500 shares owned by Mr. Luckey; 148 shares held for Mr.
Luckey's benefit in the Company's 401(k) Plan; 53,199 and 7,471 restricted
shares purchased by Mr. Luckey under the Company's Management Share
Purchase Plan which shares are subject to forfeiture until November 1997
and March 1999, respectively; and 141,023 shares issuable upon the exercise
of options immediately exercisable or exercisable within 60 days of March
28, 1997.
(11) Includes: 25,700 shares owned by Mr. Martin; 157 shares held for Mr.
Martin's benefit in the Company's 401(k) Plan; 78,233 and 3,288 restricted
shares purchased by Mr. Martin under the Company's Management Share
Purchase Plan which shares are subject to forfeiture until November 1997
and March 1999, respectively; and 56,411 shares issuable upon the exercise
of options immediately exercisable or exercisable within 60 days of March
28, 1997.
(12) Includes: 137 shares held for Mr. Cornell's benefit in the Company's 401(k)
Plan; 53,325 restricted shares purchased by Mr. Cornell under the Company's
Management Share Purchase Plan which shares are subject to forfeiture until
November 1997; and 119,870 shares issuable upon the exercise of options
immediately exercisable or exercisable within 60 days of March 28, 1997.
(13) The shares and percent of class listed as being beneficially owned by all
executive officers and Directors as a group include all restricted shares
purchased under the Company's Management Share Purchase Plan, all
restricted shares issued under the Director Share Plan and 751,903 shares
issuable upon the exercise of options immediately exercisable or
exercisable within 60 days of March 28, 1997.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following Compensation Committee Report and the performance graph
included elsewhere in this Proxy Statement shall not be deemed soliciting
material or otherwise deemed filed and shall not be deemed to be incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any other filings under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates the report or the performance graph by reference therein.
COMPENSATION COMMITTEE REPORT
The Company's compensation program is administered by the Compensation
Committee which has responsibility for reviewing all aspects of compensation
paid by the Company to its executive officers. The Compensation Committee is
comprised of the three Directors listed at the end of this report, none of whom
is a current or former employee of the Company and each of whom qualifies as a
disinterested person for purposes of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended.
The Compensation Committee's primary objective with respect to executive
compensation is to establish programs which attract and retain key managers and
align their compensation with the Company's overall business strategies, values
and performance. To this end, the Compensation Committee has adopted an
executive compensation philosophy which includes the following considerations:
- A "pay-for-performance" orientation that differentiates compensation
based on corporate and individual performance;
- An emphasis on equity incentives as a significant component of total
compensation in order to closely align the interest of Company
executives with the long-term interests of shareholders;
- An emphasis on total compensation versus cash salary compensation,
under which base salaries are generally set at or somewhat below
competitive levels, but which motivates and rewards Company
executives with total compensation (including year-end bonuses) at
or above competitive levels if Company and individual performance
reach predetermined objectives;
- Recognition that, as an executive's level of responsibility
increases, a greater portion of his or her total compensation
opportunity should be based on equity and other performance
incentives and less on monthly salary; and
- An appropriate mix of short-term and long-term compensation which
facilitates retention of talented executives and encourages share
ownership and capital accumulation.
The primary components of the Company's executive compensation program are:
(a) base salaries; (b) annual bonuses; and (c) long-term equity incentive
opportunities. Each component of compensation is discussed below.
Base Salaries. Base salaries for Company executives are subject to annual
review and adjustment on the basis of individual and Company performance, level
of responsibility, and competitive, inflationary, and internal equity
considerations. The Compensation Committee generally attempts to set base
salaries of executive officers at a level which is at or below the "market"
rate, as determined from information gathered by the Company from independent
compensation consulting firms and published surveys. With respect to the
$650,000 base salary established for Mr. Feuer in February 1996, the
Compensation Committee took into account the factors described above for other
executive officers as well as Mr. Feuer's expanded responsibilities associated
with the Company's rapid growth and the Company reaching or exceeding each of
its financial strategies and objectives for fiscal 1995. Although the majority
of the officers of the Company received salary increases as scheduled in March
1997, those officers named in the Summary Compensation Table (the "named
executive officers") did not receive their scheduled salary increases in March.
Instead, the Compensation Committee postponed review of these named executives
until a later date.
Annual Bonuses. Under the Company's Annual Incentive Bonus Plan (the
"Bonus Plan"), Company executives are eligible to receive annual cash bonus
awards to focus attention on and provide a reward for
6
<PAGE> 9
achieving key individual and Company goals. Target incentive bonus amounts for
executives are established at the beginning of each year either as a dollar
amount or a percentage of the executive's salary, depending upon each
executive's level of responsibility and function. Performance objectives are
established for the Company at the beginning of each fiscal year, and are
designed to provide competitive bonus pay only for superior performance. In the
past, these objectives have included specific targets for both earnings growth
and overall profitability. In addition, individual performance objectives are
established for each executive which include both specific performance goals and
other more qualitative and developmental criteria. The actual amount of bonus
payable is generally expressed as a percentage of the executive's base salary
and will vary depending on the extent to which Company and individual
performance goals have been achieved.
Prior to the beginning of each fiscal year, all executives are required to
designate at least 20%, and may elect to designate up to 100%, of their annual
bonus to purchase restricted Common Shares in accordance with the terms and
conditions of the Company's Management Share Purchase Plan (the "Management
Share Purchase Plan").
Although the Company achieved or exceeded all of its operational
objectives, including launching new programs, developing new systems, and
exceeding its store expansion goals, the Company did not reach its primary
financial target as measured by earnings before interest and taxes ("EBIT"). At
the beginning of each fiscal year, the Company's EBIT target is established, and
bonuses for officers are paid based on two parameters: first, the Company must
reach its minimum established EBIT target and, second, the officer must then
reach his or her personal objectives. Even though the Company achieved record
EBIT results and net income and earnings per share in fiscal 1996 (excluding the
gain resulting from the sale of Corporate Express, Inc. in the prior year), it
did not reach its minimum target. Accordingly, bonuses were not awarded to
officers or divisional vice presidents for fiscal 1996, even though officers or
divisional vice presidents may have reached their personal objectives.
Long-Term Equity Incentives. The Company endeavors to foster an ownership
culture that encourages superior performance by its executive officers, and has
adopted the equity-based Award Plan to provide for Common Share ownership at all
levels of the Company. Pursuant to the Equity-Based Award Plan; the types of
awards that can be made range from ordinary stock options to grants of
restricted stock and stock appreciation rights.
The Company intends to make annual grants of equity awards to its
management personnel, including its executive officers. This annual grant
program is designed to provide Company managers, over a number of years, with
multiple stock options and related equity incentives. Each stock option will be
granted with an exercise price equal to the fair market of Company Common Shares
at the time of grant. Individual option grants are determined by the
Compensation Committee based on a manager's current performance, potential for
future responsibility, and salary multiples designed to increase the portion of
the total compensation opportunity represented by equity incentives as a
manager's level of responsibility increases. The Compensation Committee intends
to place substantial emphasis on equity awards as a percentage of total
compensation, consistent with its philosophy that equity awards more closely
align the interests of Company managers with the long-term interests of
shareholders.
On March 5, 1997, the Compensation Committee approved grants of executive
options to the Company's executive officers. These options vest in equal
increments over either a three year or a four year period from the date of
grant. The executive options are designed to align the interests of the
Company's senior management with those of the Company's shareholders and to
reward the Company's senior managers for superior performance which directly
increases shareholder value. In granting Mr. Feuer options to purchase 300,000
Common Shares, the Compensation Committee considered the impact of Mr. Feuer's
performance on the long-term success of the Company and the degree to which Mr.
Feuer's leadership is expected to affect the Company's future share price.
Under the Management Share Purchase Plan, Company executives and other key
employees of the Company designated by the Compensation Committee are required
to designate in advance a minimum of 20%, and may designate up to 100%, of their
annual bonus for the purchase of restricted Common Shares at a 20% discount from
fair market value on the date of purchase. Shares purchased under the Management
Share Purchase Plan are generally subject to forfeiture for three years from the
date of purchase. Because no bonuses
7
<PAGE> 10
were awarded for fiscal 1996, the officers of the Company were not entitled to
purchase shares under the Management Share Purchase Plan.
Section 162(m). Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), prohibits a deduction to any publicly held corporation for
compensation paid to a "covered employee" in excess of $1 million per year (the
"Dollar Limitation"). A covered employee is any employee who appears in the
Summary Compensation Table who is employed by the Company on the last day of the
Company's fiscal year. As a result of the amount of the Dollar Limitation,
currently proposed exclusions of certain compensation under the Company's equity
incentive plans, and salary deferral elections by Mr. Feuer, the Compensation
Committee does not expect the deductibility of compensation paid during the
fiscal year ending January 25, 1997 to be affected by the Act. However, the
Compensation Committee may consider alternatives to the Company's existing
compensation programs in the future with respect to qualifying executive
compensation for deductibility.
Conclusion. In conclusion, the Company's executive compensation program is
designed to provide a significant link between total compensation and the
Company's performance and long-term share price appreciation consistent with the
compensation philosophies set forth above.
Members of the Compensation
Committee
Carl D. Glickman (Chairman)
Raymond L. Bank
Sydell L. Miller
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Glickman, Bank and Miller comprise the Board's Compensation
Committee. None of these directors is or has been an officer or employee of the
Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- AWARDS
OTHER ------------------------- PAYOUTS
ANNUAL RESTRICTED SECURITIES -------- ALL OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND FY- SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION
PRINCIPAL POSITION ENDED(1) ($) ($) ($) ($)(2) (#) ($) ($)
- ------------------------- ----- -------- ----------- -------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael Feuer 1997 $638,462 -- -- $ 48,344 300,000 -- --
Chairman and 1996 $623,559(3) $1,000,000 -- -- 1,012,500 -- --
Chief Executive Officer 1995 $420,192 $ 411,106 -- $703,755 170,415 -- --
John C. Martin(4) 1997 $319,615 -- -- $ 10,321 225,000 -- --
President, Retail Stores 1996 $253,173 $ 129,392 -- -- -- -- --
1995 $184,038 $ 126,236 -- $351,872 59,760 -- --
John C. Belknap(5) 1997 $273,462 -- -- -- 150,000 --
Executive Vice President 1996 $ 34,327 -- -- -- 75,000 --
Chief Financial Officer 1995 -- -- -- -- -- --
George H. Luckey 1997 $273,077 -- -- $ 23,451 150,000 -- --
Executive Vice President 1996 $253,846 $ 117,189 -- -- -- -- --
Merchandising/Marketing 1995 $236,154 $ 126,236 -- $239,277 59,760 -- --
Edward L. Cornell 1997 $255,000 -- -- -- 150,000 -- --
Executive Vice President, 1996 $258,462 -- -- -- -- -- --
New Business Development 1995 $236,154 -- -- $239,844 59,760 -- --
</TABLE>
- ---------------
(1) Includes compensation earned, awarded or paid for the fiscal years ended
January 25, 1997, January 27, 1996, and January 21, 1995 respectively.
(2) Amounts shown reflect the difference between the closing market price for
the Common Shares on the date of purchase and the purchase price paid by
each of the named executive officers for the purchase of restricted Common
Shares under the Company's Management Share Purchase Plan. The aggregate
restricted share holdings and values (net of consideration paid) at January
25, 1997 for the named executive officers are as
8
<PAGE> 11
follows: (i) Mr. Feuer--171,868 shares, $933,280; (ii) Mr. Martin--81,521
shares, $467,502; (iii) Mr. Belknap--no shares; (iv) Mr. Luckey--60,670
shares, $316,879; and (v) Mr. Cornell--53,325 shares, $319,097. With respect
to the restricted shares so purchased, if employment is terminated by the
executive (other than as a result of death, disability or retirement after
age 65) or if employment is terminated by the Company for "cause" before the
third anniversary of the purchase date, the executive will receive
unrestricted Common Shares of the Company having a value equal to the lesser
of the current fair market value for the Company Common Shares or the price
paid initially for such restricted shares. If the executive's employment is
terminated by the Company without cause before the third anniversary of the
purchase date, the executive will receive unrestricted shares, having a
value equal to (i) the then current fair market value of a percentage of the
restricted shares (based on the number of months of employment completed
during the restricted period), plus (ii) as to the balance of the restricted
shares the lesser in value of the restricted shares at their current fair
market value or the price paid initially for such restricted shares.
Dividends, if any, will be paid on restricted shares at the same rate as
Common Shares.
(3) Of this amount, $126,924 was paid to Mr. Feuer by Kmart Corporation for back
salary owed to Mr. Feuer by Kmart Corporation for the Company's 1992, 1993
and 1994 fiscal years.
(4) Mr. Martin was elected to the newly created position of President, Retail
Stores, on March 7, 1996.
(5) Mr. Belknap joined the Company in December 1995.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS OF STOCK
UNDERLYING GRANTED TO PRICE APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OPTION TERM(2)
GRANTED IN FISCAL PRICE EXPIRATION -------------------------
NAME (#) YEAR(1) ($/SHARE) DATE 5%($) 10%($)
- ------------------ ---------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael Feuer 300,000 9% $ 14.50 02-26-2006 $ 217,500 $ 435,000
John C. Martin 225,000 7% $ 14.50 02-26-2006 $ 163,125 $ 326,250
John C. Belknap 150,000 7% $ 14.50 02-26-2006 $ 163,125 $ 326,250
George H. Luckey 150,000 4% $ 14.50 02-26-2006 $ 108,750 $ 217,500
Edward L. Cornell 150,000 4% $ 14.50 02-26-2006 $ 108,750 $ 217,500
</TABLE>
- ---------------
(1) Based on 3,416,719 options granted to all employees during the fiscal year
ended January 25, 1997, adjusted to give effect to a 3-for-2 share split
effected July 9, 1996.
(2) The dollar amounts under these columns are the result of the calculations at
the 5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, of the Company's stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
JANUARY 25, 1997 JANUARY 25, 1997
-------------------------------------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- -------------------------- ---------------- -------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Michael Feuer -- -- 334,125/1,482,916 $ 275,653/$1,582,587
John C. Martin -- -- 56,411/341,171 $ 471,878/$733,926
John C. Belknap -- -- 0/225,000 0/0
George H. Luckey -- -- 141,023/350,783 $1,320,681/$1,582,729
Edward L. Cornell -- -- 119,870/329,630 $1,002,713/$1,264,760
</TABLE>
9
<PAGE> 12
EMPLOYMENT AGREEMENT
The Company and Mr. Feuer are parties to an Amended and Restated Employment
Agreement (the "Feuer Agreement") dated March 9, 1995. The Feuer Agreement
provides for the employment of Mr. Feuer on a three year "evergreen" basis
beginning March 1995 and ending January 1998 at a base salary of $500,000 per
year subject to increase at the discretion of the Compensation Committee. Under
the Feuer Agreement, an additional year will be added to the end of each three
year term unless the Company provides Mr. Feuer with notice of termination at
least two years prior to the end of that three year term.
In addition, the Feuer Agreement provided for the grant to Mr. Feuer of
options to purchase 1,012,500 Common Shares having an exercise price equal to
$11.55 per share (the fair market value of Common Shares on the date of grant
adjusted to give effect to the 3-for-2 stock splits effective July 12, 1995 and
July 9, 1996, one-third of which options become exercisable in each of fiscal
1996, 1997 and 1998.
If the Company terminates Mr. Feuer's employment without "cause" or
materially changes Mr. Feuer's position, duties or reporting relationship, Mr.
Feuer is entitled to payment of his base salary for the balance of the
agreement. "Cause" is defined as fraud, commission of a felony or act that
results in material injury to the business reputation of the Company, willful
and repeated failure to perform duties under the Feuer Agreement or material
breach of the agreement.
In the event of a "change in control" of the Company, Mr. Feuer is entitled
to terminate the agreement and to treat the termination as a termination by the
Company without cause. "Change in control" is defined in the Feuer Agreement as
any person or group of commonly controlled persons controlling 30% or more of
the Company or any transaction resulting in a change in ownership of 30% or more
of the Company's Common Shares or a sale or disposition of all or substantially
all of the Company's assets.
10
<PAGE> 13
SHAREHOLDER PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return of
Common Shares with the cumulative total return of the Standard & Poor's
Composite -- 500 Stock Index and an index based on a "line of business" peer
group of companies consisting of Office Depot, Inc. and Staples, Inc. The graph
assumes in each case an initial investment of $100 on November 1, 1994 (the date
of the Company's initial public offering), with the peer group investment
weighted on the basis of market capitalization at November 1, 1994.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) OfficeMax, Inc. Peer Group S&P 500
(dollar amounts)
<S> <C> <C> <C>
Nov-94 100.00 100.00 100.00
Jan-95 135.53 104.65 99.86
Jan-96 179.60 103.12 132.71
Jan-97 146.54 122.70 167.40
- ------------------------------------------------------------------------------------
NOV. 1, 1994 JAN. 20, 1995 JAN. 27, 1996 JAN. 25, 1997
- ------------------------------------------------------------------------------------
OFFICEMAX, INC. 100.00 135.53 179.60 146.54
- ------------------------------------------------------------------------------------
PEER GROUP 100.00 104.65 103.12 122.70
- ------------------------------------------------------------------------------------
S&P 500 100.00 99.86 132.71 167.40
- ------------------------------------------------------------------------------------
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and Directors to file reports of ownership and changes in ownership with the SEC
and the New York Stock Exchange. The Company believes that during the period
from January 28, 1996 through January 25, 1997, its executive officers and
Directors complied with all applicable Section 16(a) filing requirements, except
that Mr. McCann had two untimely filings representing four transactions. This
conclusion is based solely on a review of the copies of such forms furnished to
the Company in accordance with SEC regulations and certain written
representations received by the Company.
SHAREHOLDER PROPOSALS
Any shareholder proposals for the Company's 1998 Annual Meeting of
Shareholders must be received in writing by the Secretary of the Company at 3605
Warrensville Center Road, Shaker Heights, Ohio 44122, not later than December
18, 1997. The Company will not be required to include in its proxy statement a
form of proxy or shareholder proposal which is received after that date or which
otherwise fails to meet the requirements for shareholder proposals established
by regulations of the Securities and Exchange Commission.
11
<PAGE> 14
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The Company has selected Price Waterhouse LLP ("Price Waterhouse") as the
Company's independent auditors for the fiscal year ending January 24, 1998,
subject to ratification by shareholders.
Representatives of Price Waterhouse, LLP, the Company's current independent
auditors, are expected to be present at the Annual Meeting with the opportunity
to make a statement about the Company's financial condition, if they desire to
do so, and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION
OF THE SELECTION OF PRICE WATERHOUSE AS THE COMPANY'S INDEPENDENT AUDITORS.
OTHER INFORMATION
SOLICITATION
The solicitation of proxies is made by and on behalf of the Board of
Directors. The Company has retained Corporate Investor Communication, Inc.
("CIC") at an estimated cost of $5,000, plus reimbursement of expenses, to
assist in the solicitation of proxies from brokers, nominees, institutions and
individuals. In addition to solicitation by mail, CIC and regular employees of
the Company may solicit proxies by telephone, or by facsimile. Proxies may be
solicited by Directors, officers and employees of the Company without additional
compensation.
VOTING INFORMATION
If the enclosed proxy is executed and returned, the shares represented
thereby will be voted in accordance with any specification made by the
shareholder. In the absence of any specification in a proxy, the proxy will be
voted to elect the three nominees set forth under "Election of Directors" above,
and for the proposal to ratify selection of Price Waterhouse as the Company's
independent auditors.
Under Ohio law and the Company's Second Amended and Restated Articles of
Incorporation, broker nonvotes and abstaining votes will not be counted in favor
of or against election of any nominee. Under Ohio law and the Company's Second
Amended and Restated Articles of Incorporation, any shareholder who abstains
from voting on the ratification of the selection of the Company's independent
auditors will in effect be voting against such proposal.
The presence of any shareholder at the shareholders' meeting will not
operate to revoke his proxy. A proxy may be revoked at any time insofar as it
has not been exercised by giving written notice to the Company or in open
meeting.
If any other matter shall properly come before the meeting, the persons
named in the proxy, or their substitutes, will vote thereon in accordance with
their judgment. The Board of Directors does not know of any other matter which
will be presented for action at the meeting.
By Order of the Board of Directors,
/s/ Ross H. Pollock
Ross H. Pollock
Secretary
April 17, 1997
12
<PAGE> 15
OFFICEMAX, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
P THE COMPANY FOR THE ANNUAL MEETING
R MAY 19, 1997
O
X The undersigned constitutes and appoints Michael Feuer, John C.
Y Belknap, Jeffrey L. Rutherford and Ross H. Pollock, 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 OfficeMax, Inc. to be held at the
Company's International Headquarters, 3605 Warrensville Center
Road, Shaker Heights, Ohio, on Monday, May 19, 1997 at 10:00 a.m.
(local time) and at any adjournments thereof, on all matters coming
before said meeting.
<TABLE>
<S> <C>
Election of Directors, Nominees: (change of address)
Raymond L. Bank, Michael Feuer, Carl D. Glickman _________________________________________
*To withhold authority to vote for any individual nominee, _________________________________________
write that nominee's name where indicated on the reverse side. _________________________________________
_________________________________________
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
SEE REVERSE
SIDE
- -----------------------------------------------------------------------------------------------------------------
DETACH CARD
</TABLE>
<PAGE> 16
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
X PLEASE MARK YOUR 0925
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Ratification of selection [ ] [ ] [ ]
Directors of Price Waterhouse LLP
(see reverse) as the Company's independent
auditors.
For, except vote withheld from the following nominee(s):
Please check if you have indicated PLEASE MARK, SIGN, DATE AND RETURN
a change of address on the THIS PROXY PROMPTLY USING THE ENCLOSED
reverse side. [ ] ENVELOPE.
Please check if you plan
on attending the annual meeting. [ ]
Please sign exactly as your name appears hereon. Joint owners should each 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 an authorized
officer. If a partnership, please sign in partnership name by an authorized person.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
SIGNATURE(S) DATE
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
</TABLE>
