SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 as amended
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[ ] Preliminary Proxy Statement
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(as permitted by Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Sect. 240.14a-11(c) or Sect. 240.14a-12
DOLLAR TREE STORES, INC.
(Name of Registrant as specified in its Charter)
------
(Name of Person(s) Filing Proxy Statement)
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
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applies:
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pursuant to Exchange Act Rule 0-11.
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[ ] Fee paid previously with preliminary materials
[ ] Check 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 of schedule and the date of its filing.
(1) Amount previously paid:
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<PAGE>
[LOGO]
DOLLAR TREE STORES, INC.
500 Volvo Parkway
Chesapeake, Virginia 23320
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on
Thursday, May 25, 2000
To Our Shareholders:
We will hold the annual meeting of the shareholders of Dollar Tree Stores,
Inc. at the Norfolk Waterside Marriott, Norfolk, Virginia, on Thursday, May 25,
2000 at 10:00 a.m. local time. Shareholders will consider and vote on the
following proposals:
o to elect three directors;
o to approve an amendment to our Stock Incentive Plan; and
o to act upon any other business that may properly come before the
meeting.
Shareholders of record at the close of business on April 1, 2000 will
receive notice of and be allowed to vote at the meeting.
Your vote is important to us. We encourage you to read this Proxy Statement
then sign, date and return your proxy card in the enclosed envelope at your
earliest convenience. Sending in your proxy card will not prevent you from
voting your stock at the meeting if you desire to do so.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Frederick C. Coble
----------------------
Frederick C. Coble
Senior Vice President,
Chief Financial Officer and Secretary
Chesapeake, Virginia
April 19, 2000
<PAGE>
DOLLAR TREE STORES, INC.
500 Volvo Parkway
Chesapeake, Virginia 23320
PROXY STATEMENT
We sent you this proxy statement and the enclosed proxy card because Dollar
Tree's Board of Directors is soliciting your proxy to vote your shares at the
Annual Meeting. We will bear all costs for this solicitation. On or about April
24, 2000, we began mailing these proxy materials to all stockholders of record
at the close of business on April 1, 2000.
VOTING PROCEDURES
Shareholders of record have one vote per share of stock held. On April 1,
2000, there were 62,364,335 shares of common stock outstanding.
If you vote by proxy, that is, by signing, dating and returning the
enclosed proxy card, the individuals named on the card (your "proxies") will
vote your shares in the manner you indicate. If you do not indicate instructions
on the card, then your shares will be voted FOR the election of three nominees
for director in Class II and FOR the amendment to our Stock Incentive Plan. If
any other matter is presented, then your proxy will vote in accordance with your
proxies' best judgment. At this time, the Board of Directors is unaware of any
other business to be brought before the meeting. If you send more than one proxy
card, then your shares will be voted in accordance with the proxy card bearing
the latest date.
As shown in the Notice of Annual Meeting, the 2000 Annual Meeting of
Shareholders of Dollar Tree Stores, Inc. will be held on Thursday, May 25, 2000,
at the Norfolk Waterside Marriott in Norfolk, Virginia, at 10:00 a.m. local
time. A quorum of shareholders is necessary to hold a valid meeting. If holders
of a majority of the outstanding shares of common stock are present in person or
by proxy, a quorum will exist. Abstentions and broker non-votes are counted as
present for establishing a quorum. A broker non-vote occurs when a broker votes
on some matters on the proxy card but not on others because he does not have the
authority to do so.
If you send in your proxy card, you may revoke your proxy by providing a
written notice of revocation to the Secretary of Dollar Tree Stores, Inc. prior
to the Annual Meeting or by attending the annual meeting to cast your vote in
person.
I. ELECTION OF DIRECTORS
Directors and Nominees
Our Board of Directors is divided into three staggered classes for purposes
of election. One class is elected at each annual meeting of shareholders to
serve for a three-year term.
At the 2000 Annual Meeting of Shareholders, the terms of three Class II
directors are expiring. Class II directors elected at this annual meeting will
hold office for a three-year term expiring in 2003. The other directors will
continue in office following this annual meeting, and their terms will expire in
2001 (Class III) and 2002 (Class I). Officers are appointed by the Board of
Directors.
The nominees have indicated their willingness to serve as directors. If a
nominee becomes unable to stand for reelection, the persons named in the proxy
will vote for any substitute nominee proposed by the Board of Directors.
Vote Required
A director is elected at the meeting, so long as a quorum is present, if
the votes cast favoring the election of that director exceed those cast in
opposition. Abstentions and broker non-votes are not "cast" for this purpose.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE NOMINEES FOR
DIRECTOR.
1
<PAGE>
INFORMATION CONCERNING NOMINEES, DIRECTORS, AND EXECUTIVE OFFICERS
Nominees
J. Douglas Perry
Class of Director: II
Director Since: 1986
Principal Occupation: Chairman of the Board, Dollar Tree Stores, Inc.
Recent Business Experience: Mr. Perry, age 52, has been Chairman of the
Board since 1986 when he founded Dollar Tree
with Mr. Brock and Mr. Compton. He retired as
an employee and officer of the company as of
March 1, 1999. However, he still continues his
duties as Chairman of the Board. He is also
Chairman of the Board of Old Dominion Trust
Company. Until 1991, he was an executive
officer of K&K Toys, which he, along with Mr.
Brock, Mr. Compton and Mr. Perry's father,
built from the company's original single store
to 136 stores. Mr. Perry has 31 years of retail
experience.
Other Directorships: None
- --------------------------------------------------------------------------------
Thomas A. Saunders, III
Class of Director: II
Director Since: 1993
Principal Occupation: Member, Saunders Karp & Megrue Partners, L.L.C.
Recent Business Experience: Mr. Saunders, age 63, has been a member of
Saunders Karp & Megrue Partners, L.L.C., which
serves as the general partner of the general
partner of The SK Equity Fund, L.P.,since 1990.
Before founding Saunders Karp & Megrue, he
served as a Managing Director of Morgan Stanley
& Co. from 1974 to 1989. Mr. Saunders is the
Vice President of the Board of Visitors of the
Virginia Military Institute. He is a former
Chairman of the University of Virginia's Darden
Graduate School of Business Administration. Mr.
Saunders is a Vice Chairman of The Thomas
Jefferson Memorial Foundation (Monticello).
Other Directorships: Hibbett Sporting Goods, Inc.
- --------------------------------------------------------------------------------
Frank Doczi
Class of Director: II
Director Since: 1995
Principal Occupation: President, Dive Quarters, Inc.; private
investor; corporate director
Recent Business Experience: Mr. Doczi, age 62, has been President of Dive
Quarters, Inc. since 1997. He served as the
President and Chief Executive Officer of Home
Quarters Warehouse, Inc. (HQ), a subsidiary of
Hechinger Company, from 1988 until 1995. Mr.
Doczi had been with HQ since it began in 1984.
He also served as a member of the Management
Committee for the Hechinger Company. Prior to
1984, Mr. Doczi spent seven years with Moore's,
a chain of home centers operated by Evans
Products Company, where he was the Senior Vice
President, General Merchandise Manager.
Other Directorships: None
- --------------------------------------------------------------------------------
2
<PAGE>
Continuing Directors
Macon F. Brock, Jr.
Class of Director: I
Director Since: 1986
Principal Occupation: President and Chief Executive Officer, Dollar
Tree Stores, Inc.
Recent Business Experience: Mr. Brock, age 58, has been Chief Executive
Officer since 1993 and a Director and President
since 1986 when he founded Dollar Tree with Mr.
Perry and Mr. Compton. He directs the overall
operations of Dollar Tree. Until 1991, he was
employed in a similar role with K&K Toys. Mr.
Brock has 31 years of retail experience.
Other Directorships: First Union National Bank of Virginia/Maryland/
Washington, D.C.
- --------------------------------------------------------------------------------
H. Ray Compton
Class of Director: III
Director Since: 1986
Principal Occupation: Executive Vice President, Dollar Tree Stores,
Inc.
Recent Business Experience: Mr. Compton, age 57, has been Executive Vice
President since 1986 when he founded Dollar
Tree with Mr. Perry and Mr. Brock. From 1986
until 1998, he also served as Dollar Tree's
Chief Financial Officer. From 1979 until 1991,
he was employed in a similar role with K&K
Toys. Prior to 1979, he was associated for 15
years with a manufacturing company in various
accounting and management positions.
Other Directorships: Hibbett Sporting Goods, Inc.
- --------------------------------------------------------------------------------
John F. Megrue
Class of Director: III
Director Since: 1993
Principal Occupation: Member, Saunders Karp & Megrue Partners, L.L.C.
Recent Business Experience: Mr. Megrue, age 41, has been Vice Chairman of
the Board of Dollar Tree since 1993. He also
serves as Chairman of the Board for Hibbett
Sporting Goods, Inc. Mr. Megrue has been a
member of Saunders Karp & Megrue Partners,
L.L.C., which serves as the general partner of
the general partner of The SK Equity Fund, L.P.
since 1992. From 1989 to 1992, he served as a
Vice President and Principal at Patricof & Co.
Prior to 1989, he served as a Vice President at
C.M. Diker Associates.
Other Directorships: Hibbett Sporting Goods, Inc.; Children's Place
Retail Stores, Inc.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
Richard G. Lesser
Class of Director: I
Principal Occupation: President, The Marmaxx Group and Executive Vice
President, The TJX Companies, Inc.
Recent Business Experience: Mr. Lesser, age 65, has been President of The
Marmaxx Group (T.J. Maxx and Marshalls) since
1995 and Executive Vice President of The TJX
Companies, Inc. since 1991. From 1981 to 1991,
he held various executive positions within The
TJX Companies, Inc. Mr. Lesser has over 35
years of retail experience.
Other Directorships: The TJX Companies, Inc.; Reebok International
Ltd.; A.C. Moore Arts & Crafts,
Inc.
- --------------------------------------------------------------------------------
Alan L. Wurtzel
Class of Director: III
Director Since: 1995
Principal Occupation: Private investor; corporate director
Recent Business Experience: Mr.Wurtzel, age 66, serves as the Vice Chairman
of the Board of Circuit City Stores, Inc., a
large consumer electronics retailing chain.
From 1986 to 1994, he served as Chairman of the
Board of Circuit City. Prior to 1986, he served
in several other capacities with Circuit City,
including Chief Executive Officer from 1973 to
1986. From 1986 to 1988, he served as President
of Operation Independence, a non profit
organization. Mr. Wurtzel was a director of
Office Depot, Inc.from 1989 to 1996. Mr.Wurtzel
has 31 years of retail experience.
Other Directorships: Circuit City Stores, Inc.
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS
(Other than those listed above)
Frederick C. Coble
Principal Occupation: Senior Vice President, Chief Financial Officer
and Secretary, Dollar Tree Stores, Inc.
Recent Business Experience: Mr.Coble, age 39, became Senior Vice President,
Chief Financial Officer in 1998. Prior to that,
he served as Senior Vice President, Finance
from 1997 and as Vice President, Controller
from 1991. Before joining Dollar Tree in 1989,
Mr. Coble served as Internal Audit Manager with
Royster Company, a manufacturing company, and
as Audit Manager for KPMG LLP.
- --------------------------------------------------------------------------------
Bob Sasser
Principal Occupation: Chief Operating Officer, Dollar Tree Stores,
Inc.
Recent Business Experience: Mr. Sasser, age 48, became Chief Operating
Officer in 1999. Before joining Dollar Tree, he
served as Senior Vice President, Merchandise
and Marketing of Roses Stores, Inc. from 1997.
From 1994 to 1996, he was Vice President,
General Merchandise Manager for Michaels Stores
Inc. Prior to 1994, he held several positions
at Roses Stores, Inc., ranging from Store
Manager to Vice President, General Merchandise
Manager.
- --------------------------------------------------------------------------------
Mr. Brock is married to Mr. Perry's sister. There are no additional family
relationships among the Directors and Executive Officers.
4
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, officers and persons who own more than 10% of our stock to file
reports of ownership and changes in ownership of our stock with the Securities
and Exchange Commission and Nasdaq, and to provide us with copies of these
reports. Based on our review of the reports and written representations
furnished to us, we believe that all of these reporting persons complied with
their filing requirements for 1999.
INFORMATION ABOUT THE BOARD OF DIRECTORS
Meetings of the Board of Directors
The Board of Directors has scheduled four regular meetings in 2000 and will
hold special meetings when company business requires. During 1999, the Board
held four regular meetings. Each member of the Board attended at least 75% of
all Board meetings and meetings of Committees of which each was a member.
Committees of the Board of Directors
The Board of Directors currently appoints an Audit Committee and a
Compensation Committee. The memberships and functions of these committees is set
forth below. The Board has no standing Executive or Nominating Committees.
o Audit Committee
Directors Megrue (Chairman), Wurtzel, Doczi and Lesser constitute the
Audit Committee, whose functions include reviewing the accounting
principles and procedures employed by the company, reviewing annual
and interim reports of the company, reviewing annual reports of the
independent public accountants of the company, reviewing significant
financial information, reviewing the company's system of internal
controls, reviewing all related party transactions and recommending
the selection of the independent public accountants. The Audit
Committee met three times in 1999.
o Compensation Committee
Directors Megrue (Chairman), Wurtzel, Doczi and Lesser also constitute
our Compensation Committee, which meets as necessary to oversee the
company's compensation and benefit practices, recommend to the full
Board the compensation arrangements for the company's senior officers,
administer the company's executive compensation plans and Employee
Stock Purchase Plan, and administer and consider awards under the
company's Stock Incentive Plan. The Compensation Committee met three
times in 1999.
OWNERSHIP OF COMMON STOCK
The table on the following page shows the number of shares of our common
stock beneficially owned on April 1, 2000 by
o each of the Directors and nominees for director,
o each of the Executive Officers,
o all Directors and Executive Officers as a group, and
o each other person who has reported beneficial ownership of more than
five percent of the outstanding common stock.
The address of each Director and Executive Officer of Dollar Tree is c/o Dollar
Tree Stores, Inc., 500 Volvo Parkway, Chesapeake, Virginia 23320.
5
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership(1)
-----------------------
Directors and Executive Officers Shares Percent
- -------------------------------- ------ -------
<S> <C> <C>
J. Douglas Perry............................... 4,312,460(2) 6.8%
Macon F. Brock, Jr............................. 3,943,643(3) 6.1%
H. Ray Compton................................. 379,453(4) *
John F. Megrue................................. 6,977,246(5) 10.7%
Allan W. Karp.................................. 6,977,250(6) 10.7%
Thomas A. Saunders, III........................ 7,074,750(7) 10.9%
Alan L. Wurtzel................................ 70,313(8) *
Frank Doczi.................................... 79,313(9) *
Richard G. Lesser.............................. 25,313(10) *
Frederick C. Coble............................. 152,051(11) *
Bob Sasser..................................... 80,000(12) *
All current Directors and Named
Officers (10 persons)..................... 16,100,464 23.6%
Other 5% Shareholders
- ---------------------
Putnam Investments, Inc........................ 8,474,465(13) 13.6%
One Post Office Square
Boston, MA 02109
The SK Equity Fund, L.P........................ 6,965,664(14) 10.7%
Two Greenwich Plaza, Suite 100
Greenwich, CT 06830
Baron Capital Group, Inc....................... 4,258,174(15) 6.8%
767 Fifth Avenue, 24th Floor
New York, NY 10153
Gilder Gagnon Howe & Co. LLC................... 3,276,644(16) 5.3%
1775 Broadway, 26th Floor
New York, NY 10019
- ------------
<FN>
* less than 1%
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote or direct the voting or to dispose or direct the disposition
of any security. A person is deemed as of any date to have "beneficial
ownership" of any security that such person has a right to acquire within
60 days after such date. Any security that any person named above has the
right to acquire within 60 days is deemed to be outstanding for purposes
of calculating the ownership percentage of such person, but is not deemed
to be outstanding for purposes of calculating the ownership percentage of
any other person. The company has issued warrants to acquire 5,584,899
shares of common stock (the "Warrant Shares") all of which are currently
exercisable.
(2) Includes 1,350,000 shares and 1,256,600 Warrant Shares owned by trusts for
the benefit of certain Perry family members, of which Mr. Perry is a
trustee, 120,600 shares owned by a private foundation over which Mr. Perry
and his wife, Patricia W. Perry, exercise shared control, and 13,000
shares issuable upon exercise of certain stock options granted pursuant to
The Dollar Tree Stores, Inc. Stock Incentive Plan, but excludes 28,247
shares owned by Patricia W. Perry.
(3) Includes 703,996 shares and 1,256,600 Warrant Shares owned by trusts for
the benefit of certain Brock family members, of which Mr. Brock is a
trustee, 72,710 shares owned by a private foundation over which Mr. Brock
and his wife, Joan P. Brock, exercise shared control, and 40,000 shares
issuable upon exercise of certain stock options granted pursuant to The
Dollar Tree Stores, Inc. Stock Incentive Plan, but excludes 1,562,931
shares owned by Mr. Brock's wife, Joan P. Brock.
(4) Includes 40,000 shares and 279,248 Warrant Shares owned by trusts for the
benefit of certain Compton family members, over which Mr. Compton may
indirectly exercise investment or voting power, but excludes 56,250 shares
owned by Mr. Compton's wife, Jean T. Compton.
(5) Represents 7,028 shares and 4,554 Warrant Shares owned by Mr. Megrue's
sister as Custodian for his children. Also includes 4,187,790 shares and
2,777,874 Warrant Shares owned by The SK Equity Fund, L.P. Mr. Megrue is a
member of the general partner of the general partner of The SK Equity
Fund, L.P.
(6) Includes 4,187,790 shares and 2,777,874 Warrant Shares owned by The SK
Equity Fund, L.P., and 4,556 Warrant Shares owned by Mr. Karp. Mr. Karp is
a member of the general partner of the general partner of The SK Equity
Fund, L.P.
(7) Includes 7,030 shares and 4,556 Warrant Shares owned by an irrevocable
trust for the benefit of certain Saunders family members, of which Mr.
Saunders is a trustee. Also includes 4,187,790 shares and 2,777,874
Warrant Shares owned by The SK Equity Fund, L.P. Mr. Saunders is a member
of the general partner of the general partner of The SK Equity Fund, L.P.
(8) Includes 16,313 shares held in a revocable trust of which Mr. Wurtzel is a
trustee and 54,000 shares issuable upon exercise of certain stock options
granted pursuant to The Dollar Tree Stores, Inc. Stock Incentive Plan.
(9) Includes 79,313 shares issuable upon exercise of certain stock options
granted pursuant to The Dollar Tree Stores, Inc. Stock Incentive Plan.
(10) Includes 25,313 shares issuable upon exercise of certain stock options
granted pursuant to The Dollar Tree Stores, Inc. Stock Incentive Plan.
(11) Includes 111,188 shares issuable upon exercise of certain stock options
granted pursuant to The Dollar Tree Stores, Inc. Stock Incentive Plan.
(12) Represents 80,000 shares issuable upon exercise of certain stock options
granted pursuant to The Dollar Tree Stores, Inc. Stock Incentive Plan.
(13) Includes shares held or controlled by Putnam Investments, Inc. and its
affiliates including Marsh & McLennan Companies, Inc., Putnam Investments
parent holding company, and Putnam Investment Management, Inc. and The
Putnam Advisory Company, Inc., investment advisors and subsidiaries of
Putnam Investments, Inc. Based on Schedule 13G filed by Putnam Investments
for the period ended December 1999.
6
<PAGE>
(14) Includes 2,777,874 Warrant Shares. Messrs. Megrue, Saunders and Karp, as
members of the general partner of the general partner of The SK Equity
Fund, L.P., may be deemed to have beneficial ownership of shares held by
that fund, and the shares and warrant shares held by that fund have been
attributed to them in the table above. See Notes (5), (6) and (7) above.
(15) Includes shares held or controlled by Baron Capital Group, Inc., a parent
holding company, and its affiliates including BAMCO, Inc. and Baron
Capital Management, Inc., registered investment advisors, and Baron Asset
Fund, a registered investment company. Ronald Baron owns a controlling
interest in Baron Capital Management, Inc. Based on Schedule 13G/A filed
by Baron Capital Management for the period ended December 1999.
(16) Includes shares held or controlled by Gilder Gagnon Howe & Co., LLC., a
registered brokerage. Based on Schedule 13G filed by Gilder Gagnon Howe &
Co. for the period ended December 1999.
</FN>
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Leases
As described below, we lease our former corporate headquarters and
distribution center facility and three stores from various lessors who are
affiliated with officers or directors of our company, including leases with a
partnership consisting of both parents of Mr. Perry and Mrs. Brock and a
partnership controlled by Mr. Perry and Mr. Brock.
Lease on Former Headquarters and Distribution Center: Located in Norfolk,
Virginia, this facility is leased from DMK Associates, a partnership controlled
by Mr. Perry and Mr. Brock; the lease expires in December 2009. Rental payments
under the lease are adjusted every other lease year to reflect certain changes
in a consumer price index. The lease currently provides for an aggregate minimum
annual rental of $656,250. We replaced our Norfolk location with an expanded
facility in Chesapeake, Virginia, in early 1998. In March 1998, we subleased the
Norfolk facility through March 2008 for an amount that exceeds our annual
obligation under the prime lease.
Store and Other Leases: We currently lease three stores from lessors who
are affiliated with officers or directors of our company. We lease a store from
Suburban Management Company, a partnership owned by the parents of Mr. Perry and
Mrs. Brock. In addition, we rent two stores from DMK Associates. Rental payments
on the three stores totaled approximately $138,000 in 1999. The lease with
Suburban Management expires in March 2001, with an option to renew for five
years. The store leases with DMK Associates expire in November 2003, with two
options to renew for four years, and January 2003, respectively.
While we believe that the terms of these leases are fair to us, their
respective terms were not negotiated on an arms-length basis and accordingly the
terms of the leases may not be as favorable to us as those which we could have
obtained from an independent third party.
Advisory Agreements
On September 30, 1993, we entered into a financial and management advisory
agreement with Saunders Karp & Megrue, L.P., (the Advisor), a limited
partnership under the control of SKM Partners, L.P., of which Messrs. Saunders,
Karp and Megrue are general partners. In consideration for certain financial
advisory services, the Advisor was entitled to receive an initial annual fee of
$250,000, reduced to $200,000 in 1995, payable quarterly, and is reimbursed for
certain of its out-of-pocket expenses. In addition, we have agreed to indemnify
the Advisor for certain losses arising out of the provision of advisory
services. The agreement is terminable by a majority of the Board of Directors of
our company upon 30 days notice to the Advisor.
7
<PAGE>
II. COMPENSATION OF EXECUTIVE OFFICERS
Compensation of Executive Officers
The following table sets forth the compensation earned by our executive
officers for the years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
------------------------------------ ------------
Securities
Name and Other Underlying All Other
Principal Position Year Salary Bonus Annual(1) Options(2) Compensation(3)
- ------------------ ---- ------ ----- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Douglas Perry(4) 1999 $103,125 --- --- 13,000 $33,375
Chairman of the Board 1998 266,667 --- --- --- 31,690
1997 340,696 $125,000 --- --- 34,141
Macon F. Brock, Jr. 1999 $518,750 $302,439 --- --- $35,177
President and 1998 450,000 285,000 --- --- 32,307
Chief Executive Officer 1997 340,696 125,000 --- --- 30,996
H. Ray Compton 1999 $135,416 $ 50,000 --- --- $23,025
Executive Vice President 1998 250,000 84,875 --- --- 19,833
1997 227,132 100,000 --- --- 22,301
Frederick C. Coble(5) 1999 $175,000 $ 71,358 --- 17,500 $17,952
Senior Vice President and 1998 146,250 77,012 --- 22,500 14,530
Chief Financial Officer 1997 --- --- --- --- ---
Bob Sasser(6) 1999 $180,929 $125,815 --- 50,000 ---
Chief Operating Officer 1998 --- --- --- --- ---
1997 --- --- --- --- ---
- ---------------
<FN>
(1) The value of perquisites or other personal benefits have been excluded
because they do not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus for any Named Executive Officer.
(2) Stock options were granted pursuant to the company's Stock Incentive Plan.
(3) For 1999, this column includes $3,375, $17,952, $17,952 and $17,952 for
Messrs. Perry, Brock, Compton and Coble, respectively, for the company's
discretionary and matching contributions allocated to the owners' 401(k)
and Profit Sharing Plan accounts. Also included is $17,225 and $5,073 for
Messrs. Brock and Compton, respectively, for life insurance premiums on
policies of which the officer is the owner. For Mr. Perry, it also includes
$30,000 for a consulting agreement.
(4) Mr. Perry retired from the company in March 1999. He continues in his
capacity as Chairman of the Board. The salary amount in 1999 includes
$65,625 received by Mr. Perry in his capacity as Chairman of the Board.
(5) Mr. Coble was named Senior Vice President, Chief Financial Officer in April
1998. Disclosure of compensation for years prior to becoming a Named
Executive Officer is not required.
(6) Mr. Sasser was hired as Chief Operating Officer in April 1999.
</FN>
</TABLE>
Options Granted in 1999
Of the Named Executive Officers, only Messrs. Perry, Coble and Sasser
received options under the company's stock compensation plans. The following
table provides information as to options granted to Messrs. Perry, Coble and
Sasser during 1999:
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
-------------------------------------------------- ----------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Per Share Grant Date
Options Employees in Exercise Expiration Present
Name Granted(1) Fiscal Year Price Date Value(2)
- ---- ---------- ----------- ----- ---- --------
<S> <C> <C> <C> <C> <C>
J. Douglas Perry(3) 13,000 1.3% $34.31 06/02/2009 $294,129
1Frederick C. Coble 17,500 1.8% $29.25 04/01/2009 $337,526
Bob Sasser(4) 30,000 3.1% $29.25 04/01/2009 $578,616
20,000 2.0% 29.25 04/01/2009 385,744
- ---------------
<FN>
(1) Options to acquire shares of Dollar Tree common stock are granted under the
company's Stock Incentive Plan. The exercise price equals the closing price
of Dollar Tree stock on the day preceding the date of grant, which reflects
fair market value at the date of grant. The options are generally
exercisable in three approximately equal annual installments beginning one
year after grant. They expire ten years after grant.
(2) The fair value of these options at the date of grant was estimated using a
Black-Scholes option pricing model. The following weighted-average
assumptions were used to estimate the value of options: an 8 year expected
life of the options; expected volatility for Dollar Tree common stock of
52.7%; and a risk-free rate of return of 6.6%. The company does not pay
dividends.
8
<PAGE>
(3) Mr. Perry received these options in his capacity as Chairman of the Board.
The options vest immediately and expire ten years after grant.
(4) Option grant for 20,000 shares is exercisable in five equal annual
installments beginning one year after grant.
</FN>
</TABLE>
Option Exercises in 1999 and Year End Option Values
The following table provides information regarding options exercised by Mr.
Coble during the calendar year ended December 31, 1999, and the number and value
of options held by Messrs. Perry, Coble and Sasser at the end of the year:
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Year End Option Values
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money
on Value Options at Year End Options at Year End(2)
--------------------------- ----------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Douglas Perry --- --- 13,000 --- $ 183,632 ---
Frederick C. Coble 40,863 $1,531,261 51,638 39,550 $1,690,950 $784,323
Bob Sasser --- --- --- 50,000 --- $959,400
- ---------------
<FN>
(1) The value realized equals the difference between the option exercise price
and the closing price of Dollar Tree common stock on the day prior to
exercise, multiplied by the number of shares to which the exercise relates.
(2) The value of unexercised "in-the-money" options equals the difference
between the option exercise price and the closing price of Dollar Tree
common stock at December 31, 1999, multiplied by the number of shares
underlying the options. The closing price of Dollar Tree common stock on
Friday, December 31, 1999, as reported by Nasdaq, was $48.4375.
</FN>
</TABLE>
Director Compensation
Each Director who is not a founder or an employee of the company or an
affiliate of The SK Equity Fund, L.P., is paid a fee of $15,000 per year and
$1,000 plus expenses for each meeting of the Board of Directors or of any
committee thereof the Director attends. Such Directors also receive options for
shares of common stock under the company's Stock Incentive Plan. Effective March
1, 1999, as disclosed above, Mr. Perry receives $75,000 per year to serve as
Chairman of the Board, but he receives no per meeting fee. In 1999, he also
received options for shares of common stock under the company's Stock Incentive
Plan comparable to those granted to the outside Directors, as disclosed above.
On October 1, 1999, the company entered into a consulting agreement with
Mr. Perry, which provides for annual compensation of $30,000 over the term of
the agreement. At the request of Mr. Perry on each anniversary date, the company
will review his annual compensation, and in its discretion, shall determine
whether or not to increase such compensation. The agreement automatically renews
each year and is cancelable at the option of Mr. Perry.
Employment Agreements
There are currently no employment or non-competition agreements in force
between the company and Messrs. Brock, Compton, or Coble. Under a severance
arrangement, Mr. Sasser is prohibited from competing with the company following
termination, and, if he is terminated without cause before April 2004, we will
be obligated to pay him an amount equal to one year's salary.
Compensation Committee Interlocks and Insider Participation
Members of the Compensation Committee during 1999 were Messrs. Megrue,
Wurtzel, Doczi and Lesser. No executive officer of the company currently serves
or has served on the Compensation Committee. Mr. Megrue is an affiliate of
Saunders Karp & Megrue, L.P., which has entered into an advisory agreement with
the company, as disclosed above.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Compensation Policy
Our management compensation policy, in general, is to offer a package
including a competitive salary, an incentive cash bonus based upon performance
goals, competitive benefits, and an efficient workplace environment. We also
encourage broad-based employee ownership of Dollar Tree stock through the
Employee Stock Purchase Plan and by granting stock options to employees at
virtually all levels within the company.
The Compensation Committee of the Board of Directors (comprised entirely of
non-employee directors) reviews and approves individual officer salaries, bonus
plan and financial performance goals, and stock option grants. This committee
also reviews guidelines for compensation, bonus, and stock option grants for
non-officer employees. It employs compensation consultants to assist the
committee in evaluating compensation plans in comparable companies.
9
<PAGE>
Key personnel of our company are paid salaries in line with their
responsibilities. These salaries are structured to be competitive with salaries
paid by a peer group consisting of similar companies in the discount retail
industry. In the performance graph which immediately follows this report, our
performance is compared to that of these same peers. Management employees, up to
and including the level of Senior Vice President, participate in our Management
Compensation Program, which includes cash and long-term incentives based on
performance. However, the President/CEO and Executive Vice President routinely
receive only base salaries and certain customary benefits; together with their
spouses, they currently own or otherwise control 8.7% of our outstanding common
stock. Our company's performance and return on equity are of vital importance to
these officers due to their substantial equity holdings. As a result, these
officers do not regularly participate in the Stock Incentive Plan or any
structured bonus plan. Benefits extended to these officers vary by recipient and
may include disability, split-dollar life insurance, and participation in our
401(k) and Profit Sharing plans. In addition, the Compensation Committee may,
from time to time, approve a discretionary bonus or grant of stock options to be
paid to the executive officers in recognition of their contributions.
Compensation of Chief Executive Officer
The Compensation Committee reviews and approves the compensation of Macon
F. Brock, Jr., Dollar Tree's Chief Executive Officer. For the year ended
December 31, 1999, Mr. Brock received a base salary of $518,750, an increase of
15.3% from the prior year. The Committee believes Mr. Brock is paid a reasonable
salary. In recognition of his performance in 1999 and 1998, Mr. Brock received
discretionary bonuses of $302,439 and $285,000, respectively. In 2000, the
Committee granted him the option to purchase 40,000 shares of common stock as
incentive compensation.
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code imposes a limitation on the
deductibility of nonperformance-based compensation in excess of $1 million paid
to executive officers. Given the relatively modest salaries of our executive
officers, the Committee believes that we will be able to continue to manage our
executive compensation program to preserve federal income tax deductions.
SUBMITTED BY THE COMPENSATION COMMITTEE
JOHN F. MEGRUE ALAN L. WURTZEL FRANK DOCZI RICHARD G. LESSER
COMPARISON OF SHAREHOLDER RETURNS
The following is a line-graph comparing cumulative total shareholder return
on our common stock against a cumulative total return of the S&P Retail
Composite and the Nasdaq U.S. Index. We have replaced our Peer Group, consisting
of the following publicly-traded retail corporations: Family Dollar Stores,
Dollar General Corp., Consolidated Stores Corp. and 99(cent) Only Stores, with
the S&P Retail Composite in order to show a more relevant comparison. The
performance of the Peer Group is displayed here for comparative purposes as
required by SEC Reg. S-K Item 402(l)(4), and will not be provided in the future.
The following graph outlines returns for the period beginning March 7,
1995, when our common stock began publicly trading, through December 31, 1999.
[GRAPH]
10
<PAGE>
<TABLE>
<CAPTION>
Data Points:
3/7/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Dollar Tree 100 139.43 323.24 524.47 830.69 921.00
S&P Retail Composite 100 107.79 127.01 183.72 296.39 359.13
Nasdaq U.S. Index 100 133.98 164.85 201.99 284.63 514.22
Peer Group 100 95.15 171.78 317.44 317.41 301.34
</TABLE>
III. APPROVAL OF AN AMENDMENT TO THE STOCK INCENTIVE PLAN
The Board has adopted, subject to shareholder approval, an amendment to the
Dollar Tree Stores, Inc. Stock Incentive Plan. The summary below is qualified in
its entirety by reference to the full text of the plan amendment, which has been
filed as an appendix to our definitive proxy statement with the SEC. The plan
itself, as well as prior amendments, are also on file with the SEC as exhibit
10.16 to Form 10-Q for the quarter ended June 30, 1995, exhibit 10.3 to our Form
10-K for the year ended December 31, 1996, and exhibit 10.1 to our Form S-3
filed on June 6, 1997.
Description of the Proposed Amendment
As initially approved, the plan permitted us to grant options for up to
600,000 shares of common stock. Two later amendments to the plan, as well as
adjustments by the Board to account for share dividends, increased this maximum
amount to approximately 5,400,000 shares.
As of March 31, 2000, options for 4,911,098 shares are outstanding, and
less than 500,000 shares remain available for issuance under the plan. The Board
believes that this number of shares will be insufficient to achieve the purpose
of the plan unless additional shares are authorized. Therefore, the plan
amendment increases the number of shares that may be issued under the plan by an
additional 3,000,000 shares, to a maximum of 8,400,000 shares. The number of
shares authorized under the plan will be adjusted for future stock splits, share
dividends and certain other transactions.
The plan amendment also increases the maximum annual grant per individual
to 60,000 option shares, provides for gifts and certain other transfers of
non-qualified options and provides that stock splits or share dividends will not
increase the number of option shares granted to Outside Directors. We explain
the principle features of the plan, as if it had already been amended, below.
Principal Features of the Plan
The plan permits us to grant stock options. Its purpose is to promote our
interests and the interests of our shareholders by motivating key employees to
work towards achieving our long-range goals and by attracting and retaining
exceptional employees. By motivating key employees to share in our long-term
growth and financial success, employee interests are more closely aligned with
those of our shareholders.
Administration. The plan is administered by the Compensation Committee of
the Board (the "Committee"). The Committee is authorized to, among other things:
o determine which employees will be granted options;
o determine whether awards will be for non-qualified stock options or
incentive stock options (which qualify for special treatment under
Section 422 of the Internal Revenue Code);
o determine the terms and conditions of each participant's individual
stock option agreement, including vesting schedules, lapsing
conditions, and transfer restrictions for each stock option; and
o make all other determinations necessary or advisable to administer the
plan.
Stock Options. A stock option award grants to the optionee the right to buy
a specified number of shares of our common stock at a fixed price, subject to
such terms and conditions as the Committee may determine.
Exercise Price. The exercise price of all options is determined by the
Committee at the time of the grant but the exercise price of any stock option
may not be less than 100% of the fair market value of the underlying stock on
the date of the grant. The market price of our common stock on April 12, 2000
was $52.50 per share.
Payment. Each option may be exercised in whole, at any time, or in part,
from time to time, within the period for exercise set forth in the related
option agreement. Optionees are not required to pay cash in return for the grant
of an option (except as may be required by law). However, consideration equal to
the exercise price must be paid to exercise an option. At the discretion of the
Committee, options may be exercised by payment of the exercise price either in
cash or by the tendering of shares of our common stock having a fair market
value equal to the
11
<PAGE>
exercise price, or a combination thereof. The plan is also designed to
accommodate a "cashless exercise" program.
Transferability. No option may be transferred except upon death or
disability, except that non-qualified stock options may be transferred through a
gift or a qualified domestic relations order to an employee's "family member" as
defined in the plan. Options may not be transferred for value.
Limitations. Under the plan, the maximum number of shares that may be
granted in any one year to an individual employee is 60,000 shares. There is no
limit on the number of individuals who may receive grants in any year.
Vesting and Expiration. The Committee has the authority to determine the
vesting and expiration of the stock option grants. However, all unexercised
options fully vest in the event of a participant's death, disability or
retirement. In the event of a termination of employment for any reason other
than cause, all exercisable options remain exercisable for a period of three
months (one year in the event of death or disability) following such termination
but in no event beyond the expiration date of such options. In the event of a
termination for cause, all options terminate immediately.
Eligibility. All directors, employees, consultants and independent
contractors of our company and its subsidiaries are eligible to receive options
under the plan. As of April 1, 2000, we employed approximately 21,000 persons.
Outside Directors. Under the stock incentive plan, certain directors
("Outside Directors") automatically receive non-qualified stock options in
accordance with a formula stated in the plan. Outside Directors are all members
of the Board who meet the following criteria:
o they are not employees of the company, Saunders, Karp & Megrue, or
their affiliates;
o they qualify as "non-employee directors" under the SEC's Rule 16b-3;
and
o they qualify as "outside directors" under Section 162(m) of the
Internal Revenue Code.
Effective January 1, 2000, each Outside Director will be granted an option
for 7,500 shares upon initial election to the Board and an option for an
additional 7,500 shares at each annual meeting of shareholders thereafter.
Anyone elected as Outside Director between annual meetings will be granted an
option for a prorated amount. The options granted to Outside Directors will be
immediately exercisable in full at a price equal to the fair market value of the
underlying stock on the date of grant. The options will expire ten years after
the date of grant or one year after the Outside Director is no longer a
director, whichever is earlier.
Shares To Be Issued Under the Plan. A maximum of 8,400,000 shares of our
common stock may be granted as options under the plan. The Board may, however,
adjust this maximum amount to account for any future stock split, reverse stock
split, stock dividend, combination, or reclassification of common stock or any
similar transaction effected for which we do not receive any payment. Our Board
also has the right to substitute or assume options in connection with mergers,
reorganizations, or other transactions. When an award is forfeited or lapses,
the shares subject to that award become available for future awards under the
plan. Also, shares tendered in payment for the exercise price or the related
withholding obligation will increase the number of shares available for awards
under the plan. No options may be granted after January 1, 2005, the tenth
anniversary of the effective date of the plan.
Change of Control. In the event of a change in control of the company, the
Committee has discretion to accelerate the exercisability of any unexercisable
options and to cash-out any and all outstanding options, subject in either case
to limitations imposed by the Internal Revenue Code. This discretion does not
apply to options held by Outside Directors. In the event of certain corporate
transactions or events affecting our common stock or the structure of our
company, the Committee may make certain adjustments set forth in the plan.
Amendment. The Board may amend, alter or terminate the stock incentive plan
at any time. We must obtain shareholder approval for any change that would
require such approval under any regulatory or tax requirement with which the
Board desires to comply. However, no rights under an outstanding option may be
impaired by such action without the consent of the holder thereof.
United States Federal Income Tax Consequences of Grants under the Plan
The federal income tax consequences of an employee's participation in the
stock incentive plan are complex and subject to change. The following
discussion, which has been prepared by the law firm of Hofheimer Nusbaum, P.C.,
counsel to the company, is only a summary of the general rules applicable to the
plan. The summary is based on current provisions of the Internal Revenue Code
and does not cover any state or local tax consequences of participation in the
plan. Employees should consult their own tax advisors since a taxpayer's
particular situation may be such that some variation of the rules described
below will apply.
12
<PAGE>
When an optionee exercises a non-qualified option, the excess of the fair
market value of the shares on the date of exercise over the option price will be
treated as ordinary income to the optionee and will be allowed as a deduction
for Federal income tax purposes to the company.
When an optionee exercises an incentive stock option while employed by our
company or its subsidiaries or within three months (one year for disability)
after termination of employment, no ordinary income will be recognized by the
optionee at that time, but the excess (if any) of the fair market value of the
shares acquired over the option price will be an adjustment to taxable income
for purposes of the Federal alternative minimum tax. If the shares acquired upon
exercise are not disposed of prior to the expiration of one year after the date
of transfer and two years after the date of grant of the option, the excess (if
any) of the sales proceeds over the aggregate option price of such shares will
be long-term capital gain, but we will not be entitled to any tax deduction with
respect to such gain. If the shares are disposed of prior to the expiration of
such periods, the excess of the fair market value of such shares at the time of
exercise over the aggregate option price (but not more than the gain on the
disposition if the disposition is a transaction on which a loss, if such had
been realized, would have been recognized) will be ordinary income at the time
of such disposition and we will be entitled to a Federal tax deduction in a like
amount. If an incentive stock option is exercised by the optionee more than
three months (one year for disability) after termination of employment, the tax
consequences are the same as described for the non-qualified stock options.
Special rules may apply if an optionee pays the exercise price for an
option in shares previously owned by the optionee rather than in cash. The
company's deductions described above may also be subject to the limitations of
Section 162(m) of the Internal Revenue Code. We do not currently expect to be
subject to such limitations.
Benefits to Named Executive Officers
Awards under the plan are made at the Committee's discretion and are based
on our company's performance. Accordingly, future awards under the plan are not
determinable at this time. See Part II, "Compensation of Executive Officers,"
for detailed information on awards to certain executive officers under the plan
during the most recent fiscal year.
Vote Required
The Board has carefully considered the proposed plan amendment and believes
that its approval is in the best interest of the company and its shareholders.
Adoption will require that the number of votes cast in favor exceeds the number
of votes cast against approving the plan amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PLAN AMENDMENT.
IV. OTHER MATTERS
Our Independent Certified Public Accountants
KPMG LLP has audited our accounts and our subsidiaries' accounts since 1986
and will continue in that capacity during 2000. A representative of KPMG LLP
will be present at the 2000 Annual Meeting of Shareholders. The representative
will have the opportunity to make a statement and will be available to respond
to appropriate questions.
Costs of the Proxy Solicitations
The cost of the solicitation of proxies will be borne by us. Proxies may be
solicited by officers, directors and regular employees of our company, or our
affiliates, none of whom will receive any additional compensation for their
services. Such solicitations may be made personally, or by mail, facsimile,
telephone, telegram or messenger. We will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy material and annual reports to the beneficial owners of stock in
accordance with the schedule of charges approved by the National Association of
Securities Dealers, Inc.
Shareholder Nominations for Election of Directors
Our Bylaws provide that any shareholder of record entitled to vote
generally in the election of directors may nominate persons for election as
directors at a meeting if written notice of such shareholder's intent to make
such nomination has been given, either by personal delivery or by United States
certified mail, postage prepaid, to the Secretary of our company. We must
receive the notice not less than 120 days nor more than 150 days before the
first anniversary of the date of our proxy statement in connection with the last
annual meeting of stockholders, or if no annual meeting was held in the previous
year or the date of the applicable annual meeting has been changed by more than
30 days from the date contemplated at the time of the previous year's proxy
statement, not less than 90 days before the date of the applicable annual
meeting.
13
<PAGE>
Each such shareholder's notice to the Secretary of his or her intent to
nominate must set forth:
o the name and address of record of the shareholder who intends to make
the nomination;
o a representation that the shareholder is a shareholder of record of
our company's capital stock and intends to appear in person or by
proxy at such meeting to nominate the person or persons specified in
the notice;
o the class and number of shares of our capital stock beneficially owned
by the shareholder; and
o a description of all arrangements or understandings between such
shareholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or
nominations are to be made by such shareholder.
For each person nominated, each such shareholder's notice to the Secretary
must also set forth:
o the name, age, business address and, if known, residence address, of
such person,
o his or her principal occupation or employment,
o the class and number of shares of our capital stock beneficially owned
by such person,
o any other information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors or is
otherwise required by the rules and regulations of the Securities and
Exchange Commission promulgated under the Securities Exchange Act of
1934, as amended, and
o the written consent of such person to be named in the proxy statement
as a nominee and to serve as a director if elected.
Shareholder Proposals
Shareholder proposals for the Annual Meeting of Shareholders to be held in
2001 will not be included in our Proxy Statement for that meeting unless
received by us at our executive office in Chesapeake, Virginia, on or prior to
December 31, 2000. Such proposals must also meet the other requirements of the
rules of the Securities and Exchange Commission relating to shareholder
proposals.
By order of the Board of Directors,
/s/ Frederick C. Coble
----------------------
Frederick C. Coble
Senior Vice President,
Chief Financial Officer and Secretary
Chesapeake, Virginia
April 19, 2000
14
<PAGE>
Our 1999 Annual Report to Shareholders is mailed to our shareholders. It
includes audited financial statements for the years ended December 31, 1999,
1998 and 1997 reported on by KPMG LLP, together with the related Management's
Discussion and Analysis of Financial Condition and Results of Operations.
A copy of Dollar Tree Stores, Inc. 1999 Form 10-K will be supplied without
charge upon request. Requests for such annual reports, interim reports, or other
information should be directed to:
Shareholder Services
Dollar Tree Stores, Inc.
P.O. Box 2500
Norfolk, Virginia 23501-2500
(757) 321-5000
1386-PS-00
15
<PAGE>
DOLLAR TREE STORES, INC.
2000
THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual Meeting of Shareholders, you
can be sure your shares are represented at the meeting by promptly returning
your proxy in the enclosed envelope.
To assist us in planning, please indicate in the appropriate block on your proxy
whether you plan to attend the Annual Meeting of Shareholders. We look forward
to seeing you there.
HIGHLIGHTS
** During 1999, the Company added 204 stores, ending the year with 1,383
stores in 33 states.
** In January 1999, the Company began operations of its new 425,000 square
foot, fully-automated distribution center located in Olive Branch,
Mississippi.
** In June 1999, the Company acquired 24 Only $One stores in central New York.
** In December 1999, the Company surpassed $1 billion in annual net sales for
the first time.
DOLLAR TREE STORES, INC.
500 Volvo Parkway
Chesapeake, Virginia 23320
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For Annual Meeting, May 25, 2000
The undersigned hereby appoints J. Douglas Perry, Macon F. Brock, Jr. and H. Ray
Compton, jointly and severally, each with full power of substitution, as proxies
to represent the undersigned at the Annual Meeting of Shareholders of DOLLAR
TREE STORES, INC. to be held at the Norfolk Waterside Marriott, Norfolk,
Virginia, on Thursday, May 25, 2000 at 10:00 a.m. local time, and at any
adjournment thereof, on any matters coming before the Meeting.
Please specify your choice by marking the appropriate box for each matter on the
reverse side. Any boxes not marked will be voted in accordance with the
recommendations of the Board of Directors. The Proxies cannot vote your shares
unless you sign and return this card.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
1386-PS-00
<PAGE>
This proxy, when properly executed, will be voted in the manner directed herein
and authorizes the Proxies to take action in their discretion upon other matters
that may properly come before the Meeting. If no direction is made, this proxy
will be voted FOR the election of the directors listed in proposal 1 and FOR the
proposal to amend the Stock Incentive Plan listed in proposal 2.
1. Election of Directors.
Nominees: Class II - J. Douglas Perry, Thomas A. Saunders, III
and Frank Doczi
[ ] FOR [ ] WITHHELD
[ ] FOR, except withheld from the following nominees:
------------------------------------------------------
2. Proposal to amend the Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. If you will be attending the Annual Meeting, please mark [ ] YES
CHANGE OF ADDRESS:
NAME OF SHAREHOLDER ___________________________________________
STREET ADDRESS ___________________________________________
CITY, STATE AND ZIP CODE ___________________________________________
Signature(s): _________________________________________ Date: __________________
Signature(s): _________________________________________ Date: __________________
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.
<PAGE>
APPENDIX
THIRD AMENDMENT
TO
DOLLAR TREE STORES, INC.
STOCK INCENTIVE PLAN
THIS THIRD AMENDMENT ("Amendment") to the Dollar Tree Stores, Inc. Stock
Incentive Plan ("Plan") made as of the 29th day of February, 2000 by Dollar Tree
Stores, Inc. ("Company"). All capitalized terms in this Amendment not otherwise
defined shall have their respective meanings under the Plan.
WHEREAS, the Company wishes to amend the Plan to authorize the issuance of
options for up to 8,400,000 shares and to make other amendments as provided
below.
NOW THEREFORE, the Board of Directors hereby adopts this Amendment upon the
following terms and conditions effective immediately upon approval of the
shareholders of the Company:
1. The first sentence of Section 4.1 of the Plan shall be amended and restated
as follows:
Subject to adjustment as provided in Section 4.3 below, the maximum number
of shares of Common Stock that shall be authorized and reserved for
issuance under the Plan shall be 8,400,000 shares of Common Stock.
2. The second sentence of Section 4.1 of the Plan shall be amended and
restated as follows:
No Options for more than 60,000 shares may be granted to any one
Participant in any calendar year.
3. Section 4.3.1 of the Plan shall be amended and restated in its entirety as
follows:
All shares reserved or held for issuance under the Plan, as well as shares
of Common Stock covered by each outstanding Option, shall be
proportionately adjusted for any increase or decrease in the Company's
outstanding shares of Common Stock resulting from any stock split, reverse
stock split, stock dividend, combination, or reclassification of Common
Stock or any similar transaction effected without the receipt of
consideration by the Company. Such adjustment shall be made by the Board,
whose determination shall be final, binding, and conclusive. The Board
shall also have the right to substitute or assume options in connection
with mergers, reorganizations, or other transactions to which Section
424(a) of the Internal Revenue Code applies.
<PAGE>
4. Section 7.1.1 of the Plan shall be amended and restated in its entirety as
follows:
An Outside Director shall be granted a Non-Statutory Stock Option for 7,500
shares of Common Stock upon his initial election to the Board.
5. Section 7.1.2.1 of the Plan shall be amended and restated in its entirety
as follows:
Each Outside Director who was initially elected to the Board
after the Annual Meeting immediately preceding the Applicable Annual
Meeting shall be granted a Non-Statutory Stock Option. The number of
shares of Common Stock covered by each such Option shall be 7,500
multiplied by a fraction, the numerator of which shall be the number of
calendar days that have elapsed between the date of initial election of
such Outside Director and the Applicable Annual Meeting but not to
exceed 365, and the denominator of which shall be 365; or
6. Section 7.1.2.2 of the Plan shall be amended and restated in its entirety
as follows:
Each Outside Director who was initially elected to the Board
on or before the Annual Meeting immediately preceding the Applicable
Annual Meeting shall be granted a Non-Statutory Stock Option. The
number of shares of Common Stock covered by each such Option, shall be
7,500.
7. A new Section 7.1.5 of the Plan shall be added as follows:
When Non-Statutory Stock Options are granted to Outside
Directors pursuant to this Section 7.1, the number of shares of Common
Stock initially covered by such Options, which is stated in Section
7.1.1 and Section 7.1.2 above, shall not be subject to adjustment on
account of any stock split, reverse stock split, stock dividend,
combination, or reclassification of Common Stock or any similar
transaction effected without the receipt of consideration by the
Company.
8. Section 11.2 of the Plan shall be amended and restated in its entirety as
follows:
Restrictions on Transfer. Other than as explicitly permitted
in this Section 11.2, no right or interest of any Participant in an
Option prior to the exercise of such Options shall be assignable or
transferrable, or subjected to any lien, during the lifetime of the
Participant, either voluntarily or involuntarily, directly or
indirectly, by operation of law or otherwise, including execution,
levy, garnishment, attachment, pledge, divorce or bankruptcy.
11.2.1 In the event of a Participant's death, such
Participant's rights and interest in Options shall be transferrable by
testamentary will or the laws of descent and distribution, and payment
of any amounts due under the Plan shall be
<PAGE>
made to, and exercise of any Options (to the extent permitted pursuant
to Article 8 of the Plan) may be made by, the Participant's legal
representatives, heirs or legatees.
11.2.2 If in the opinion of the Committee a
Participant holding an Option is disabled from caring for his or her
affairs because of mental condition, physical condition or age, any
payments due the Participant may be made to, and any rights of the
Participant under the Plan shall be exercised by, such Participant's
guardian, conservator or other legal personal representative upon
furnishing the Committee with evidence satisfactory to the Committee of
such status.
11.2.3 Options may be transferred to a Participant's
family member who has acquired the options from the employee through a
gift or a qualified domestic relations order (as defined by the Code).
For purposes of this Section, "family member" includes any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, any person sharing the employee's
household (other than a tenant or employee), a trust in which these
persons have more than fifty percent of the beneficial interest, a
foundation in which these persons (or the employee) control the
management of assets, and any other entity in which these persons (or
the employee) own more than fifty percent of the voting interests.
Options may not be transferred for value, provided that the following
transactions are not prohibited transfers for value: (i) a transfer
under a domestic relations order in settlement of marital property
rights; and (ii) a transfer to an entity in which more than fifty
percent of the voting interests are owned by family members (or the
Participant) in exchange for an interest in that entity. This Section
11.2.3 shall not apply to Incentive Stock Options.
9. This Amendment shall be effective upon approval by the shareholders of the
Company; except in the case of Section 2 above, which shall be effective
January 1, 1999, and Sections 4, 5 & 6, which shall be effective January 1,
2000.
10. Except as modified hereby, the Plan shall continue in full force and
effect.
WITNESS the signature of the undersigned officer of Dollar Tree Stores,
Inc.
DOLLAR TREE STORES, INC.
By: /s/ Frederick C. Coble
--------------------------
Frederick C. Coble
Senior Vice President, CFO
