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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
INTIMATE BRANDS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
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<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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I N T I M A T E
BRANDS
THREE LIMITED PARKWAY
COLUMBUS, OHIO 43230
(614) 415-8000
April 14, 2000
Dear Stockholder:
You are cordially invited to attend our 2000 annual meeting of stockholders
to be held at 10:30 a.m., Eastern Daylight Time, on May 15, 2000, at the offices
of Victoria's Secret Stores, Inc., Four Limited Parkway, Reynoldsburg, Ohio.
Should you require assistance in finding the location of the meeting, please
call (614) 415-6900. The formal Notice of Annual Meeting of Stockholders and
Proxy Statement are attached. I hope that you will be able to attend and
participate in the meeting, at which time I will have the opportunity to review
the business and operations of Intimate Brands.
The matters to be acted upon by our stockholders are discussed in the Notice
of Annual Meeting of Stockholders. It is important that your shares be
represented and voted at the meeting. Accordingly, after reading the attached
Proxy Statement, would you kindly sign, date and return the enclosed proxy card
or vote by telephone or by Internet as described on the enclosed proxy card.
Your vote is important regardless of the number of shares you own.
Sincerely yours,
/s/ Leslie H. Wexner
Leslie H. Wexner
CHAIRMAN OF THE BOARD
<PAGE>
I N T I M A T E
BRANDS
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 2000
April 14, 2000
TO OUR STOCKHOLDERS:
We are pleased to invite you to attend our 2000 annual meeting of
stockholders to:
- Elect two directors to serve for terms of three years.
- Transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 24, 2000 may vote
at the meeting.
Your vote is important. Stockholders of record can give proxies by calling a
toll-free telephone number, by using the Internet or by mailing their signed
proxy cards. Whether or not you plan to attend the meeting, please vote by
telephone or Internet or sign, date and return the enclosed proxy card in the
envelope provided. Instructions are included on your proxy card. You may change
your vote by submitting a later dated proxy (including a proxy via telephone or
the Internet) or by attending the meeting and voting in person.
By Order of the Board of Directors
/s/ Leslie H. Wexner
Leslie H. Wexner
CHAIRMAN OF THE BOARD
<PAGE>
PROXY STATEMENT TABLE OF CONTENTS
<TABLE>
<S> <C>
Information About the Annual Meeting and Voting............. 2
Election of Directors....................................... 5
Nominees and directors...................................... 5
Information concerning the Board of Directors............... 7
Committees of the Board of Directors........................ 7
Security ownership of directors and management.............. 8
Executive Compensation...................................... 10
Summary compensation table.................................. 10
Long-term incentive plan awards............................. 12
Stock options............................................... 12
Compensation of directors................................... 13
Employment agreements with certain executive officers....... 14
Section 16(a) beneficial ownership reporting compliance..... 14
Report of the Compensation Committee........................ 15
Compensation philosophy..................................... 15
Principal compensation elements............................. 16
CEO compensation............................................ 17
Stockholder Return Graph.................................... 18
Share Ownership of Principal Stockholders................... 19
Relationship and Transactions with The Limited.............. 19
Independent Public Accountants.............................. 22
Other Matters............................................... 23
Stockholder Proposals....................................... 23
Solicitation Expenses....................................... 23
</TABLE>
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INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
The Board of Directors of Intimate Brands, Inc. is soliciting your proxy to
vote at our 2000 annual meeting of stockholders (or at any adjournment of the
meeting). This proxy statement summarizes the information you need to know to
vote at the meeting. "We", "our", "Intimate Brands", and the "Company" refer to
Intimate Brands, Inc.
We began mailing this proxy statement and the enclosed proxy card on or
about April 14, 2000 to all stockholders entitled to vote. Intimate Brands' 1999
Annual Report, which includes our financial statements, is being sent with this
proxy statement.
DATE, TIME AND PLACE OF MEETING
<TABLE>
<CAPTION>
<S> <C>
Date: May 15, 2000
Time: 10:30 a.m., Eastern Daylight Time
Place: Victoria's Secret Stores, Inc.
Four Limited Parkway
Reynoldsburg, Ohio
</TABLE>
SHARES ENTITLED TO VOTE
Stockholders entitled to vote are those who owned Intimate Brands Class A
Common Stock and Class B Common Stock (which we refer to together throughout
this proxy statement as "Common Stock") at the close of business on the record
date, March 24, 2000. Each share of Class A Common Stock that you own entitles
you to one vote, and each share of Class B Common Stock that you own entitles
you to three votes.
As of the record date, there were 39,505,622 shares of Class A Common Stock
outstanding and 209,799,538 shares of Class B Common Stock outstanding. The
Class B Common Stock represents approximately 94% of the voting power of
Intimate Brands, and all of it is held by The Limited, Inc. (which we refer to
throughout this proxy statement as "The Limited"). The Class A Common Stock and
the Class B Common Stock will vote together as a single class on all matters
submitted to stockholders for approval at the annual meeting.
VOTING YOUR PROXY
Whether or not you plan to attend the annual meeting, we urge you to vote.
Stockholders of record can give proxies by calling a toll-free telephone number,
by using the Internet or by mailing their signed proxy cards. The telephone and
Internet voting procedures are designed to authenticate stockholders'
identities, to allow stockholders to give their voting instructions and to
confirm that stockholders' instructions have been recorded properly. If you are
voting by mail, please complete, sign and date the enclosed proxy card and
return it promptly in the envelope provided. If you are voting by telephone or
the Internet, please use the telephone or Internet voting procedures set forth
on the enclosed proxy card. Returning the proxy card or voting via telephone or
the Internet will not affect your right to attend the meeting and vote.
The enclosed proxy card indicates the number of shares that you own.
2
<PAGE>
Voting instructions are included on your proxy card. If you properly fill in
your proxy card and send it to us or vote via telephone or the Internet in time
to vote, one of the individuals named on your proxy card (your "proxy") will
vote your shares as you have directed. If you sign the proxy card or vote via
telephone or the Internet but do not make specific choices, your proxy will
follow the Board's recommendations and vote your shares:
- "FOR" the election of two nominees for director (as described on page 5).
If any other matter is presented at the meeting, your proxy will vote in
accordance with his or her best judgment. At the time this proxy statement went
to press, we knew of no other matters to be acted on at the meeting.
REVOKING YOUR PROXY
You may revoke your proxy by:
- submitting a later dated proxy (including a proxy via telephone or the
Internet),
- notifying our Secretary in writing before the meeting that you have
revoked your proxy, or
- voting in person at the meeting.
VOTING IN PERSON
If you plan to attend the meeting and vote in person, a ballot will be
available when you arrive. However, if your shares are held in the name of your
broker, bank or other nominee, you must bring an account statement or letter
from the nominee indicating that you were the beneficial owner of the shares on
March 24, 2000, the record date for voting.
APPOINTING YOUR OWN PROXY
If you want to give your proxy to someone other than the individuals named
as proxies on the proxy card, you may cross out the names of those individuals
and insert the name of the individual you are authorizing to vote. Either you or
that authorized individual must present the proxy card at the meeting.
QUORUM REQUIREMENT
A quorum of stockholders is necessary to hold a valid meeting. The presence
in person or by proxy at the meeting of holders of shares representing one-third
of the votes of the Common Stock entitled to vote constitutes a quorum.
Abstentions and broker "non-votes" are counted as present for establishing a
quorum. A broker non-vote occurs on an item when a broker is not permitted to
vote on that item absent instruction from the beneficial owner of the shares and
no instruction is given.
3
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VOTE NECESSARY TO ELECT DIRECTORS
<TABLE>
<CAPTION>
ITEM(*) VOTE NECESSARY(*)
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<S> <C>
Election of
directors............ Directors are elected by a plurality of the votes
represented by the shares of Common Stock present at the
meeting in person or by proxy. This means that the director
nominee with the most affirmative votes for a particular
slot is elected for that slot.
</TABLE>
- --------------------------
* Under New York Stock Exchange rules, if your broker holds your shares in its
name, your broker is permitted to vote your shares on this item even if it
does not receive voting instructions from you.
4
<PAGE>
ELECTION OF DIRECTORS
Our Board of Directors has nominated two directors for election at the
annual meeting. Each nominee is currently serving as one of our directors. If
you re-elect them, they will hold office for a three-year term expiring at the
2003 annual meeting or until their successors have been elected. Alex Shumate,
an Intimate Brands director since 1996, will not be standing for re-election.
Instead, he has been nominated for election as a director of The Limited.
Your proxy will vote for each of the nominees unless you specifically
withhold authority to vote for a particular nominee. If any nominee is unable to
serve, your proxy may vote for another nominee proposed by the Board. We do not
know of any nominee of the Board who would be unable to serve as a director if
elected.
Stockholders wishing to nominate directors for election may do so by
delivering to the Secretary of the Company, no later than fourteen days before
the annual meeting, a notice stating (a) the name, age, business address and, if
known, residence address of each nominee proposed in the notice, (b) the
principal occupation or employment of each nominee and (c) the number of shares
of Common Stock of the Company beneficially owned by each nominee. No person may
be elected as a director unless he or she has been nominated by a stockholder in
this manner or by the Board of Directors.
The Board of Directors recommends the ELECTION of all of the following
nominees of the Board of Directors:
NOMINEES AND DIRECTORS
NOMINEES OF THE BOARD OF DIRECTORS FOR ELECTION AT THE 2000 ANNUAL MEETING.
<TABLE>
<CAPTION>
<S> <C> <C>
Cynthia A. Fields DIRECTOR SINCE 1995 AGE 50
</TABLE>
Ms. Fields joined Intimate Brands in 1984 and has been President and Chief
Executive Officer of Victoria's Secret Catalogue since August 1988, and assumed
such position with Intimate Brands in 1995. Ms. Fields is also a director of
Pathfinder International.
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<CAPTION>
<S> <C> <C>
E. Gordon Gee DIRECTOR SINCE 1995 AGE 56
</TABLE>
Dr. Gee will become Chancellor of Vanderbilt University effective August 1,
2000. Dr. Gee was the President of Brown University from 1998 to 2000. Dr. Gee
was also President of The Ohio State University from 1990 to 1997. Dr. Gee is a
director of Allmerica Financial, ASARCO, Inc., Glimcher Realty Trust and The
Limited.
DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2001 ANNUAL MEETING.
<TABLE>
<CAPTION>
<S> <C> <C>
Kenneth B. Gilman DIRECTOR SINCE 1995 AGE 53
</TABLE>
Mr. Gilman has been Vice Chairman of Intimate Brands since 1995. Mr. Gilman
has been Vice Chairman and Chief Administrative Officer of The Limited since
1997 and was Vice Chairman and Chief Financial Officer
5
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of The Limited from 1993 to 1997 and Executive Vice President and Chief
Financial Officer of The Limited for five years prior thereto.
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<CAPTION>
<S> <C> <C>
William E. Kirwan DIRECTOR SINCE 1998 AGE 61
</TABLE>
Dr. Kirwan has been president of The Ohio State University since 1998.
Dr. Kirwan has also been a director of Columbia Gas since September 1998 and a
director of Bank One Advisory Board since 1998.
<TABLE>
<CAPTION>
<S> <C> <C>
Beth M. Pritchard DIRECTOR SINCE 1995 AGE 53
</TABLE>
Ms. Pritchard has been President and Chief Executive Officer of Bath & Body
Works, Inc. ("Bath & Body Works") since November 1993, and assumed such position
with Intimate Brands in 1995. Ms. Pritchard also has served as Chief Executive
Officer of Victoria's Secret Bath and Fragrance from June 1996 to March 1998.
For approximately one and one-half years prior to assuming her position with
Bath & Body Works, Ms. Pritchard held the position of Executive Vice President
and General Manager at Bath & Body Works. From 1991 until 1993, she was
Executive Vice President at Express, a business operated by The Limited.
Ms. Pritchard is also a director of Borders Group, Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
Leslie H. Wexner DIRECTOR SINCE 1995 AGE 62
</TABLE>
Mr. Wexner has been Chairman of the Board and Chief Executive Officer of
Intimate Brands since 1995. Mr. Wexner has been Chief Executive Officer of The
Limited since he founded The Limited in 1963 and has been Chairman of the Board
of Directors of The Limited for more than five years. Mr. Wexner is also a
director of Hollinger International, Inc. and Hollinger International
Publishing, Inc.
DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2002 ANNUAL MEETING.
<TABLE>
<CAPTION>
<S> <C> <C>
Roger D. Blackwell DIRECTOR SINCE 1995 AGE 59
</TABLE>
Dr. Blackwell has been a Professor of Marketing at The Ohio State University
for more than five years and is also President and Chief Executive Officer of
Roger D. Blackwell Associates, Inc., a marketing consulting firm in Columbus,
Ohio. Dr. Blackwell is also a director of Airnet Systems, Inc., Anthony & Sylvan
Pools Corporation, Applied Industrial Technologies, Inc., The Banc Stock Group,
Checkpoint Systems, Inc., The Flex-Funds and Max & Erma's Restaurants, Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
Grace A. Nichols DIRECTOR SINCE 1995 AGE 53
</TABLE>
Ms. Nichols has been President and Chief Executive Officer of Victoria's
Secret Stores, Inc. ("Victoria's Secret Stores") since January 1991, and assumed
such position with Intimate Brands in 1995. Prior to her position as President,
Ms. Nichols held the position of Executive Vice President, General Merchandise
Manager from 1988 to 1991 and Vice President, General Merchandise Manager from
1986 to 1988 at Victoria's Secret Stores.
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Donald B. Shackelford DIRECTOR SINCE 1995 AGE 67
</TABLE>
Mr. Shackelford has been Chairman of the Board of Fifth Third Bank, Central
Ohio, a banking business, since 1998. Mr. Shackelford was Chairman of the Board
and Chief Executive Officer of State Savings Bank from 1972 to 1998. He was
Chairman of the Board and Chief Executive Officer of State Savings Co. for five
years ending in 1997. Mr. Shackelford is also a director of Fifth Third
Bancorp., The Limited and Progressive Corporation.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Our Board of Directors held three meetings in fiscal year 1999. During
fiscal year 1999, all of the directors attended 75% or more of the total number
of meetings of the Board and of committees of the Board on which they served.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE.
The Audit Committee of the Board recommends the firm to be employed as our
independent public accountants and reviews the scope of the audit and audit
fees. In addition, the Audit Committee consults with the independent auditors
about the plan of audit, the resulting audit report and the accompanying
management letter. The Audit Committee also confers with the independent
auditors about the adequacy of internal accounting controls, as appropriate,
outside of the presence of management. The members of the Audit Committee during
fiscal year 1999 were Mr. Alex Shumate (Chair) and Dr. Blackwell. The Audit
Committee held three meetings in fiscal year 1999.
COMPENSATION COMMITTEE.
The Compensation Committee of the Board reviews executive compensation and
administers our stock option and performance incentive plans. Its members are
Mr. Shackelford (Chair) and Dr. Gee. Members of the Compensation Committee held
six meetings in fiscal year 1999 and took action in writing without a meeting on
fourteen occasions.
EXECUTIVE COMMITTEE.
The Executive Committee of the Board may exercise, to the fullest extent
permitted by law, all of the powers and authority granted to the Board. The
Executive Committee may also declare dividends, authorize the issuance of stock
and authorize the seal of Intimate Brands to be affixed to papers that require
it. Its members during fiscal year 1999 were Messrs. Wexner (Chair) and Shumate.
The Executive Committee took action in writing without a meeting on three
occasions in fiscal year 1999.
7
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SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table shows certain information about the securities ownership
of all directors of Intimate Brands, the executive officers of Intimate Brands
named in the Summary Compensation Table below and all directors and executive
officers of Intimate Brands as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF CLASS NUMBER OF SHARES OF PERCENT OF
A COMMON STOCK THE LIMITED COMMON THE LIMITED
BENEFICIALLY PERCENT OF STOCK BENEFICIALLY COMMON
NAME OWNED(A)(B)(C) CLASS OWNED(A)(B) STOCK
- ---- ------------------------- ------------ ------------------- -----------
<S> <C> <C> <C> <C>
Roger D. Blackwell............ 10,402 * 6,800 *
Cynthia A. Fields............. 208,190 * 26,708(d) *
E. Gordon Gee................. 5,867 * 4,876(d) *
Kenneth B. Gilman............. 51,006(e) * 514,533(d)(f)(g) *
William E. Kirwan............. 724 * 0 **
Philip E. Mallott............. 60,526 * 22,115(g) *
Grace A. Nichols.............. 261,192 * 74,073(d)(f) *
Beth M. Pritchard............. 270,623(h) * 14,218(f) *
Donald B. Shackelford......... 9,347 * 74,418(d)(f) *
Leslie H. Wexner.............. 144,079 * 47,206,488(d)(g)(i) 22.0%
All directors and executive
officers as a group......... 1,021,956(j) 2.6% 47,944,229(d)(g)(k) 22.3%
</TABLE>
- --------------------------
* Less than 1%.
** Not applicable.
(a) Unless otherwise indicated, each named person has voting and investment
power over the listed shares and such voting and investment power is
exercised solely by the named person or shared with a spouse.
(b) Reflects ownership as of February 29, 2000.
(c) Includes the following number of shares issuable within 60 days upon the
exercise of outstanding stock options: Dr. Blackwell, 3,673; Ms. Fields,
176,626; Dr. Gee, 3,673; Mr. Gilman, 39,375; Mr. Kirwan, 262; Mr. Mallott,
25,247; Ms. Nichols, 160,128; Ms. Pritchard, 186,377; Mr. Shackelford,
3,673; Mr. Wexner, 78,750; and all directors and executive officers as a
group, 677,784.
(d) Includes the following number of shares issuable within 60 days upon the
exercise of outstanding stock options: Ms. Fields, 26,708; Dr. Gee, 2,409;
Mr. Gilman, 308,748; Ms. Nichols, 63,092; Mr. Shackelford, 2,409;
Mr. Wexner, 708,777; and all directors and executive officers as a group,
1,112,143.
(e) Includes 1,050 shares owned by family members, as to which Mr. Gilman
disclaims beneficial ownership.
(f) Includes the following number of shares owned by family members, as to which
beneficial ownership is disclaimed: Mr. Gilman, 1,117; Ms. Nichols, 360;
Ms. Pritchard, 200; and Mr. Shackelford, 19,168.
(g) Includes the following number of shares held in an employee benefit plan,
over which the participant has the power to dispose or withdraw shares:
Mr. Gilman, 34,160; Mr. Mallott, 3,141; Mr. Wexner, 537,726; and all
directors and executive officers as a group, 575,027.
8
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(h) Includes 1,575 shares, as to which Ms. Pritchard disclaims beneficial
ownership.
(i) Includes 350,000 shares held by Health and Science Interests II, 708,317
shares held by The Wexner Foundation, 18,750,000 shares held by The Wexner
Children's Trust and 3,639,697 shares held by the Harry, Hannah, David &
Sarah Wexner Trust. Mr. Wexner disclaims beneficial ownership of the shares
held by Health and Science Interests II and The Wexner Foundation.
Mr. Wexner shares investment and voting power with others with respect to
shares held by The Wexner Foundation. Excludes 201,801 shares owned by
Mr. Wexner's wife as to which Mr. Wexner disclaims beneficial ownership.
(j) Includes 2,625 shares as to which beneficial ownership is disclaimed.
(k) Includes 1,079,162 shares as to which beneficial ownership is disclaimed.
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table (the "Summary Compensation Table") shows the
compensation paid by Intimate Brands (except, as noted below, for executive
officers Wexner and Gilman, whose compensation was paid by The Limited) to each
of the named executive officers of Intimate Brands for each of our last three
fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- --------------------------------------------
SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARDS AWARDS COMPENSATION
PRINCIPAL POSITION(1) YEAR ($) ($)(2) ($)(3) ($)(4) (#) ($)(5)
- --------------------- -------- ---------- ---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner............ 1999 $1,185,577 $3,331,968 -- $2,353,431(6) -- $262,914
Chairman of the Board, 1998 1,046,154 1,519,392 -- 29,316(6) 214,782(6) 154,706
Chief Executive Officer 1997 1,000,000 1,861,560 -- -- 1,718,257(6) 135,296
Kenneth B. Gilman........... 1999 958,077 1,999,181 $14,762 2,353,431(6) -- 337,363
Vice Chairman 1998 936,923 935,150 14,955 158,304(6) -- 277,290
536,955(6) 195,094
1997 900,000 1,228,630 -- 6,220,313(6)
Beth M. Pritchard .......... 1999 770,673 947,980 9,996 --
President and Chief 1998 727,692 932,356 9,996 -- -- 235,535
Executive Officer--Bath & 1997 690,385 861,280 -- 6,161,563(7) -- 197,690
Body Works 525,000(7) 166,275
Grace A. Nichols ........... 1999 770,673 1,449,250 14,847 --
President and Chief 1998 727,692 653,058 14,847 -- -- 270,754
Executive Officer-- 1997 700,000 1,400,000 -- 6,171,375(7) -- 246,642
Victoria's Secret Stores 525,000(7) 193,441
Cynthia A. Fields .......... 1999 668,558 443,674 24,659 --
President and Chief 1998 652,692 334,378 23,786 --
Executive Officer-- 1997 621,154 875,000 -- 5,093,750(7) -- 171,489
Victoria's Secret -- 202,496
Catalogue 525,000(7) 153,442
</TABLE>
- --------------------------
(1) Executive officers Wexner and Gilman are also employed by The Limited and
received no direct compensation from Intimate Brands. The annual base salary
and annual bonus opportunity for executive officers Wexner and Gilman in
respect of their service with The Limited and its affiliates was determined
by The Limited's Compensation Committee and was paid by The Limited.
(2) Represents for each fiscal year, the aggregate of the performance-based
incentive compensation for the Spring and Fall selling seasons.
(3) Represents for the 1999 fiscal year reimbursement of taxes on term life
insurance premiums paid on behalf of executive officers Gilman, Pritchard,
Nichols and Fields.
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<PAGE>
(4) Represents for each executive officer, the restricted stock awards for the
specified fiscal year under Intimate Brands' 1995 Stock Option and
Performance Incentive Plan for awards of Intimate Brands' Class A Common
Stock and under The Limited, Inc. 1993 Stock Option and Performance
Incentive Plan for awards of The Limited's Common Stock. Information set
forth above is based on the closing price of the applicable common stock on
the date on which the awards were made.
On May 18, 1999, 50,885 restricted shares of The Limited's Common Stock were
granted to each of executive officers Wexner and Gilman. The per share value
of The Limited's Common Stock on such date was $46.25. This award was earned
in accordance with pre-established financial performance measures and vested
100% at the end of the 1999 fiscal year.
On June 1, 1998, 885 and 4,779 restricted shares of The Limited's Common
Stock were granted to executive officers Wexner and Gilman, respectively.
The per share value of The Limited's Common Stock on such date was $33.125.
These awards were made in connection with the distribution in 1998 of
Abercrombie & Fitch shares to The Limited's stockholders. The vesting of
these awards is the same as the vesting of the previously granted restricted
stock awards to which these adjustment grants relate.
On May 20, 1997, 300,000, 300,000 and 250,000 restricted shares of Intimate
Brands' Class A Common Stock were granted to executive officers Pritchard,
Nichols and Fields, respectively, and 300,000 restricted shares of The
Limited's Common Stock were granted to Mr. Gilman. The per share value of
Intimate Brands' Class A Common Stock on such date was $20.375 and the per
share value of The Limited's Common Stock on such date was $19.50. These
awards are earned subject to pre-established financial performance measures
and, once earned, vest 10%, 10%, 10%, 15%, 20% and 35% on the first through
sixth anniversaries of the grant date, respectively, in each case subject to
the holder's continued employment with the executive's employer.
On March 25, 1997, 2,500 and 3,000 restricted shares of Intimate Brands'
Class A Common Stock were granted to executive officers Pritchard and
Nichols, respectively, and 19,750 restricted shares of The Limited's Common
Stock were granted to Mr. Gilman. The per share value of Intimate Brands'
Class A Common Stock on such date was $19.625 and the per share value of The
Limited's Common Stock on such date was $18.750. These awards vested 100%
one year from the grant date.
Restricted shares of The Limited's Common Stock granted prior to August 23,
1999 were subsequently adjusted to reflect the spin-off of Limited Too.
Restricted shares of Intimate Brands' Class A Common Stock granted prior to
July 2, 1999 were subsequently adjusted to reflect a 5% stock dividend
declared on June 22, 1999.
Dividends will not be paid or accrue with respect to shares of restricted
stock until such shares vest.
As of January 29, 2000, the aggregate holdings of restricted shares of
Intimate Brands' Class A Common Stock and the market value of such holdings
for such named executive officers were: Ms. Pritchard, 255,254 shares,
$7,865,014; Ms. Nichols, 255,043 shares, $7,858,512 and Ms. Fields, 210,000,
$6,470,625 (based on the $30.8125 fair market value of Intimate Brands'
Class A Common Stock as of Friday, January 28, 2000).
As of January 29, 2000, the aggregate holdings of the restricted shares of
The Limited's Common Stock and the market value of such holdings for each of
the named executive officers was: Mr. Gilman, 257,739 shares,
11
<PAGE>
$7,861,040 (based on the $30.50 fair market value of a share of The
Limited's Common Stock as of Friday, January 28, 2000).
(5) Includes employer matching and supplemental contributions allocated to each
executive officer's account under certain of The Limited's qualified and
non-qualified defined contribution plans during the year in the amount of
$262,914, $321,238, $224,510, $254,379 and $146,064 for executive officers
Wexner, Gilman, Pritchard, Nichols and Fields, respectively.
Includes term life insurance premiums in the amount of $16,125, $11,025,
$16,375 and $25,425 paid on behalf of executive officers Gilman, Pritchard,
Nichols and Fields, respectively.
(6) Denominated in shares of The Limited's Common Stock. Options have been
adjusted to reflect the spin-off of Limited Too in August 1999.
(7) Denominated in shares of Intimate Brands' Class A Common Stock. Options have
been adjusted to reflect a 5% stock dividend declared on June 22, 1999.
LONG-TERM INCENTIVE PLAN AWARDS
Intimate Brands did not grant any awards during our 1999 fiscal year to the
executive officers named in the Summary Compensation Table.
STOCK OPTIONS
Intimate Brands did not grant any stock options during our 1999 fiscal year
to the executive officers named in the Summary Compensation Table.
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<PAGE>
The following table shows certain information about stock options exercised
by the executive officers named in the Summary Compensation Table during
Intimate Brands' 1999 fiscal year and the year-end values of unexercised options
held by those executive officers.
AGGREGATED OPTION EXERCISES IN 1999 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
SHARES UNDERLYING UNEXERCISED OPTIONS UNEXERCISED IN-THE-MONEY
ACQUIRED AT FISCAL YEAR-END(#) OPTIONS AT FISCAL YEAR-END($)
ON VALUE REALIZED ------------------------------- -----------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- ------------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner.......... -- -- 78,750(2) 26,250(2) $ 807,424(2) $ 269,141(2)
-- -- 687,299(3) 1,621,609(3) 7,629,449(3) 14,734,755(3)
Kenneth B. Gilman......... -- -- 26,250(2) 26,250(2) 455,703(2) 455,703(2)
25,000(3) $ 601,756 295,325(3) 456,410(3) 3,404,292(3) 5,704,887(3)
Beth M. Pritchard......... -- -- 175,877(2) 443,624(2) 2,320,422(2) 5,165,414(2)
44,335(3) 822,452 -- -- -- --
Grace A. Nichols.......... -- -- 156,190(2) 437,060(2) 1,978,645(2) 5,051,474(2)
101,770(3) 1,729,143 63,092(3) -- 738,059(3) --
Cynthia A. Fields......... 36,000(2) 1,082,526 159,563(2) 450,187(2) 2,037,212(2) 5,279,349(2)
12,854(3) 205,351 26,708(3) -- 282,060(3) --
</TABLE>
- --------------------------
(1) Calculated on the basis of the number of shares exercised, multiplied by the
excess of the fair market value of a share of the underlying Common Stock on
the date of exercise over the exercise price of such option.
(2) Denominated in shares of the Intimate Brands' Class A Common Stock. Value is
calculated on the basis of the number of shares subject to such option,
multiplied by the excess of the fair market value of a share of the Intimate
Brands' Class A Common Stock on the last trading day prior to fiscal
year-end ($30.8125) over the exercise price of such option.
Options have been adjusted to reflect the stock dividend declared on
June 22, 1999.
(3) Denominated in shares of The Limited's Common Stock. Value is calculated on
the basis of the number of shares subject to each such option, multiplied by
the excess of the fair market value of a share of The Limited's Common Stock
on the last trading day prior to fiscal year-end ($30.50) over the exercise
price of such option.
Options have been adjusted to reflect the spin-off of Limited Too in
August 1999.
COMPENSATION OF DIRECTORS
Associates and officers who are directors receive no additional compensation
for their service as directors. We provide the following compensation to our
directors who are not associates of Intimate Brands for their services as
directors:
- an annual retainer of $20,000 per year (increased by $2,000 for each
committee chair held), plus
- a fee of $1,000 for each Board meeting attended ($500 for a telephonic
meeting) and, as committee members, a fee of $750 per committee meeting
attended ($200 for a telephonic meeting), and
13
<PAGE>
- a fee of $200 for each action in writing taken by the Board or any
committee.
Under Intimate Brands' 1995 Non-Associate Director Stock Plan, each director
who is not an associate of Intimate Brands receives (i) annual grants of options
to purchase 1,000 shares of Intimate Brands' Class A Common Stock at a price
equal to the fair market value of such shares at the date of grant and (ii) 50%
of the annual retainer in shares of Intimate Brands' Class A Common Stock.
EMPLOYMENT AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
In 1997, the Company entered into individual employment agreements with
Executive Officers Pritchard, Nichols and Fields. Pursuant to these agreements,
Ms. Pritchard serves as President and Chief Executive Officer--Bath and Body
Works, Ms. Nichols serves as President and Chief Executive Officer--Victoria's
Secret Stores and Ms. Fields serves as President and Chief Executive
Officer--Victoria's Secret Catalogue. The initial term of each agreement is six
years, with automatic one-year extensions thereafter unless either party gives
written notice to the contrary. Ms. Pritchard's and Ms. Nichols' agreements
provide for an initial base salary of $700,000 and Ms. Fields' agreement
provides for an initial base salary of $625,000. Option grants and the value of
performance-based stock awards made in 1997 pursuant to the agreements are
disclosed in the Summary Compensation Table. Each agreement also provides for
incentive plan participation as determined by the Board and life insurance
coverage of $5 million. Each agreement provides that, if the Company fails to
extend the agreement or terminates the executive's employment without cause or
if the executive terminates the employment for good reason, the executive will
continue to receive her base salary for one year after the termination date.
Under the agreements, each executive agrees not to compete with the Company or
solicit its employees or customers during the employment term and for one year
thereafter. Each executive's agreement provides for disability benefits in
addition to the benefits available under the Company's disability plans. In the
event any "parachute" excise tax is imposed on an executive, she will be
entitled to tax reimbursement payments.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Intimate Brands' officers and directors, and persons who own more than ten
percent of a registered class of Intimate Brands' equity securities, must file
reports of ownership and changes in ownership of Intimate Brands' equity
securities with the Securities and Exchange Commission (the "Commission") and
the New York Stock Exchange. Copies of those reports must also be furnished to
Intimate Brands.
Based solely on a review of the copies of reports furnished to Intimate
Brands and written representations that no other reports were required, we
believe that during fiscal 1999 our officers, directors and greater than
ten-percent beneficial owners complied with these filing requirements.
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") reviews and approves Intimate
Brands' executive compensation philosophy and policies and the application of
such policies to the compensation of executive officers. Messrs. Wexner and
Gilman were compensated by The Limited and did not participate in our
compensation and stock programs. Intimate Brands' compensation programs and
compensation philosophy are generally consistent with those of The Limited. The
Committee also meets independently with outside compensation consultants to
periodically assess the effectiveness and reasonableness of Intimate Brands'
executive officer compensation program.
COMPENSATION PHILOSOPHY
Intimate Brands attempts to apply a consistent philosophy to compensation
for all leadership associates, including senior executives. The compensation
program goal is to link executive compensation to business performance that
enhances stockholder value. Accordingly, Intimate Brands has structured total
compensation for leadership individuals so that a lower proportion is fixed
compensation and a much higher variable proportion is keyed to business unit and
stock performance.
Intimate Brands' philosophy is based on the following basic principles:
TO PAY FOR OUTSTANDING PERFORMANCE.
Intimate Brands believes in paying for results. Individuals in leadership
roles are compensated based on a combination of total company, business unit and
individual performance factors. Total company and business unit performance are
evaluated primarily on the degree by which financial targets are met. Individual
performance is evaluated based upon several leadership factors, including
building brand identity, attainment of specific merchandise and financial
objectives, building and developing a strong leadership team, developing an
infrastructure to support future business growth and controlling expenses. In
addition, a significant portion of total compensation is in the form of
equity-based award opportunities to directly tie any increased compensation to
increased stockholder value.
TO PAY COMPETITIVELY.
Intimate Brands is committed to providing a total compensation program
designed to attract the best senior leaders to the business and to retain the
best, consistently highest performers. To achieve this goal, Intimate Brands
annually compares its pay practices and overall pay levels with other leading
retail and, where appropriate, non-retail companies and sets pay guidelines
based on this review.
TO PAY EQUITABLY.
Intimate Brands believes that it is important to apply generally consistent
guidelines for all leadership compensation programs across business units,
considering the size, complexity, stage of development and performance of the
business, and the performance of each individual executive.
15
<PAGE>
PRINCIPAL COMPENSATION ELEMENTS
The principal elements of executive compensation at Intimate Brands are base
salary, short-term performance-based cash incentive compensation and long term
equity-based incentive programs. In determining guidelines for each compensation
element, Intimate Brands participates in compensation surveys, which include
approximately 75 national and regional specialty and department store retail
businesses, chosen because of their general similarity to Intimate Brands in
business and merchandise focus. In addition, Intimate Brands participates in
special surveys focusing on specific segments of the business, such as
merchandise design and the personal care products business. With the help of
Intimate Brands' compensation consultants, Intimate Brands analyzes executive
compensation levels and practices relative to the performance of these
competitor companies and, from this information, develops pay guidelines that
generally target Intimate Brands' executive pay well above the industry survey
median for those executives with exceptional performance. The competitor group
that is surveyed is subject to periodic review and is modified from time to time
to reflect new businesses, mergers, acquisitions and changes in business focus.
The competitor group that Intimate Brands uses for this purpose contains
approximately 50% of the companies in the S&P Retail Stores Composite Index
represented in the Stockholders Return Graph below. Subject to Intimate Brands'
needs, Intimate Brands generally attempts to design all incentive and
equity-based compensation programs to meet the requirements of deductibility
under the Internal Revenue Code of 1986 as amended.
BASE SALARY.
The Committee annually reviews and approves the base salary of each
executive officer and business president. In determining salary adjustments, the
Committee considers the size and responsibility of the individual's position,
the business unit's overall performance, the individual's overall performance
and future potential and the base salaries paid by competitors to employees in
comparable positions. Individual performance is measured against the following
factors: seasonal and annual business goals, brand strategy execution, business
growth and brand execution goals, and the recruitment and development of
leadership talent. These factors are considered subjectively in the aggregate,
and none of these factors is accorded a formula weight.
PERFORMANCE-BASED CASH INCENTIVE COMPENSATION.
Intimate Brands has implemented a short-term performance-based cash
incentive compensation program for specified key leadership positions that
provides for incentive payments for each six-month operating season. These
incentive payments are based on the attainment of pre-established objective
financial goals.
For most businesses, the goals under this plan are based on operating
income. However, goals also may be based on other objectives or criteria,
depending on the business unit and its strategy. Intimate Brands sets these
goals at the beginning of each six-month season, and bases them on an analysis
of historical performance, growth, and income improvement expectations for that
business, financial results of other comparable businesses both inside and
outside Intimate Brands, and progress toward achieving the strategic plan for
that business. Annually, Intimate Brands establishes target cash incentive
compensation opportunities for eligible executives stated as a specific percent
of base salary. The amount of performance-based incentive compensation earned by
participating executives can range from zero to double their incentive target,
based upon the extent to which the pre-established financial goals are achieved.
16
<PAGE>
EQUITY-BASED INCENTIVE PROGRAMS.
The Committee believes that continued emphasis on equity-based compensation
opportunities encourages performance that enhances stockholder value, thereby
further linking leadership and shareholder objectives. In 1999, the Committee
awarded equity-based incentive compensation under the Company's stock program to
leaders other than those listed in the Summary Compensation Table above. The
Committee believes that stock awards, the vesting of which is subject to
continued employment, help us to retain key high performing executives.
Award opportunities for each eligible participant are based on guidelines,
which include size of the executive's business unit, the individual's
responsibility level within that business, competitive practice and the market
price of Intimate Brands' Common Stock. In determining the awards for an
executive officer, the Committee evaluates competitive practice and the
executive officer's performance and importance to the business.
STOCK OPTIONS.
In 1999, no additional stock options were awarded to the executives named in
the Summary Compensation Table above. The option program utilizes vesting
periods to encourage retention of key executives.
PERFORMANCE-BASED RESTRICTED STOCK.
In 1999, no restricted shares of The Company's Common Stock were awarded to
the executives named in the Summary Compensation Table above.
CEO COMPENSATION
In the last completed fiscal year, Mr. Wexner's compensation was determined
by the Compensation Committee of The Limited and was therefore based on the
performance of, and paid by, The Limited.
Compensation Committee
Donald B. Shackelford, Chair
E. Gordon Gee
17
<PAGE>
STOCKHOLDER RETURN GRAPH
The following graph shows the changes, during fiscal years 1999, 1998, 1997
and 1996 and the three-month period in fiscal year 1995 beginning after the
initial public offering of the Class A Common Stock of Intimate Brands (the
"Initial Public Offering"), in the value of $100 invested in the Class A Common
Stock of Intimate Brands, the Standard & Poor's 500 Composite Stock Price Index
and the Standard & Poor's Retail Stores Composite Index. The plotted points
represent the closing price on the last day of the fiscal year indicated.
COMPARISON OF 51 MONTH CUMULATIVE TOTAL RETURN*
AMONG INTIMATE BRANDS, INC., THE S&P 500 INDEX
AND THE S&P RETAIL COMPOSITE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
IBI S&P 500 S&P RETAIL COMPOSITE
<S> <C> <C> <C>
10/24/95 100 100 100
1/31/96 87 108 103
1/31/97 108 134 119
1/30/98 158 167 178
1/29/99 254 218 283
1/28/00 206 238 304
</TABLE>
* $100 INVESTED IN STOCK OR IN INDEX AT THE CLOSING PRICE ON 10/24/95--
INCLUDING REINVESTMENT OF DIVIDENDS.
18
<PAGE>
SHARE OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table shows all persons who, on February 29, 2000, were known
by Intimate Brands to be the beneficial owners (as defined in the rules of the
Commission) of more than 5% of the shares of Common Stock of Intimate Brands:
<TABLE>
<CAPTION>
AMOUNT
CLASS OF BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON OWNED OF CLASS
- ------------------------------------ -------- ------------ --------
<S> <C> <C> <C>
The Limited, Inc............................................ Class B 209,799,538 100%
Three Limited Parkway
P.O. Box 16000
Columbus, Ohio 43216
Friess Associates, Inc...................................... Class A 2,179,000 5%
115 E. Snow King
Jackson, WV 83001
Harbor Capital Management Company Inc....................... Class A 2,078,858 5%
125 High Street
Boston, MA 02110
</TABLE>
RELATIONSHIP AND TRANSACTIONS WITH THE LIMITED
The Limited owns 100% of the outstanding Class B Common Stock of Intimate
Brands, which represents approximately 94% of the combined voting power of all
of Intimate Brands' outstanding Common Stock. The Limited has advised Intimate
Brands that it currently intends to continue to hold all of the Class B Common
Stock beneficially owned by it. The Limited has no agreement with Intimate
Brands not to sell or distribute such shares and there can be no assurance
concerning the period of time during which The Limited will maintain its
beneficial ownership of Common Stock. Beneficial ownership of at least 80% of
the total voting power and value of the outstanding Common Stock is required in
order for The Limited to continue to include Intimate Brands in its consolidated
group for federal income tax purposes and ownership of at least 80% of the total
voting power and 80% of each class of nonvoting capital stock is required in
order for The Limited to be able to effect a tax-free spin-off of Intimate
Brands in the future.
INTERCOMPANY ARRANGEMENTS
Intimate Brands' relationship with The Limited is governed, in part, by
agreements entered into in connection with the Initial Public Offering,
including a services agreement, a corporate agreement, several lease agreements,
several shared facilities agreements and a tax-sharing agreement, the material
terms of which are summarized below.
Because the following description of the material terms of the agreements is
only a summary, it is not necessarily complete and is qualified in its entirety
by reference to the relevant agreements. Copies of the forms of agreements were
filed with the Commission as exhibits to Intimate Brands' Registration Statement
filed in connection with the Initial Public Offering, and are available for
inspection at the Commission.
19
<PAGE>
SERVICES AGREEMENT. Intimate Brands and The Limited are parties to an
intercompany services and operating agreement (the "Services Agreement") with
respect to services provided by The Limited (or subsidiaries of The Limited) to
Intimate Brands. The services provided by The Limited to Intimate Brands
include, among other things, certain accounting, aircraft, associate benefit
plan administration, audit, cash management, corporate development, corporate
secretary, governmental affairs, human resources and compensation, investor and
public relations, international expansion, import and shipping, legal, real
estate, risk management, store design/planning, tax and treasury services. The
Services Agreement provides that such services are to be provided in exchange
for fees which (based on current costs for such services) management believes do
not exceed fees that would be paid if such services were provided by independent
third parties. Under the Services Agreement, the fees for services provided by
The Limited to Intimate Brands during 1999 were approximately $90,992,000.
In addition to the identified services, during fiscal 1999, The Limited
continued coverage of Intimate Brands under The Limited's umbrella liability,
property, casualty and fiduciary insurance policies. Intimate Brands reimburses
The Limited for the portion of The Limited's premium cost with respect to such
insurance that is attributable to coverage of Intimate Brands. Either The
Limited or Intimate Brands may terminate this coverage under The Limited's
policies at any time upon prior written notice during the 90 days prior to the
anniversary date of the policy, provided that termination of coverage by
Intimate Brands may only be for nonpayment and only if a replacement policy,
acceptable to The Limited, is entered into by Intimate Brands.
The Services Agreement further provides for eligible associates of Intimate
Brands to participate in The Limited's associate benefit plans. In addition to a
monthly services fee, Intimate Brands reimburses The Limited for The Limited's
costs (including any contributions and premium costs and including certain
third-party expenses and allocations of certain personnel expenses of The
Limited) relating to participation by Intimate Brands' associates in any of The
Limited's benefit plans.
The Services Agreement has an initial term of five years and will be renewed
automatically thereafter for successive one-year terms, unless either Intimate
Brands or The Limited elects not to renew the Services Agreement. After the
initial five-year term, the Services Agreement may be terminated at any time by
either party upon six months' written notice. Furthermore, the Services
Agreement is subject to early termination by either Intimate Brands or The
Limited upon six months' written notice if The Limited ceases to own shares of
Common Stock representing more than 50% of the combined voting power of the
Common Stock of Intimate Brands, whether as a result of a tax-free spin-off of
Intimate Brands or otherwise.
LEASE AGREEMENT. The businesses operated by Intimate Brands entered into
lease agreements with The Limited or one or more subsidiaries of The Limited
(collectively, the "Lease Agreement"). Under the Lease Agreement, The Limited,
directly or indirectly, leased to the relevant businesses of Intimate Brands a
distribution center and headquarters office space. The Lease Agreement provides
for the lessee to lease space at an average annual rental rate equal to $16.15
per square foot, in the case of office space, and $4.35 per square foot, in the
case of the distribution centers, subject to adjustment based on the consumer
price index every year. Intimate Brands paid The Limited (or subsidiaries of The
Limited) approximately $13,448,000 in lease payments during 1999.
The Lease Agreement has an initial term of fifteen years and will be renewed
automatically thereafter for successive five-year terms unless either the lessor
or lessee (or sublessor or sublessee) elects not to renew the Lease Agreement
upon at least one year's notice.
20
<PAGE>
SHARED FACILITIES AGREEMENT. Certain businesses operated by Intimate Brands
and certain businesses operated by The Limited entered into shared facilities
agreements (collectively, the "Shared Facilities Agreement") pursuant to which
the relevant businesses operated by Intimate Brands sub-leased facilities from
the relevant businesses operated by The Limited. Under the Shared Facilities
Agreement, the sublessee is responsible for its pro rata share (based on square
feet occupied) of all costs and expenses (principally fixed rent) under the
relevant lease, plus the portion of any performance-based rent attributable to
the sublessee. In 1999, Intimate Brands paid The Limited approximately
$30,322,000 for the portion of the cost and expenses attributable to it under
the relevant leases.
TAX-SHARING AGREEMENT. Intimate Brands is included in The Limited's federal
consolidated income tax group and Intimate Brands' federal income tax liability
is included in the consolidated federal income tax liability of The Limited and
its subsidiaries. In certain circumstances, certain subsidiaries of Intimate
Brands are also included with certain subsidiaries of The Limited (other than
subsidiaries of Intimate Brands) in combined, consolidated or unitary income tax
groups for state and local tax purposes. Intimate Brands and The Limited entered
into a tax-sharing agreement (the "Tax-Sharing Agreement") pursuant to which
Intimate Brands and The Limited make payments between them such that, with
respect to any period, the amount of taxes to be paid by Intimate Brands,
subject to certain adjustments, will be determined as though Intimate Brands
were to file separate federal, state and local income tax returns (including,
except as provided below, any amounts determined to be due as a result of a
redetermination of the tax liability of The Limited arising from an audit or
otherwise) as the common parent of an affiliated group of corporations filing
combined, consolidated or unitary (as applicable) federal, state and local
returns rather than a consolidated subsidiary of The Limited with respect to
federal, state and local income taxes. Intimate Brands will be reimbursed,
however, for tax attributes that it generates, such as net operating losses, if
and when they are used on a consolidated basis.
In determining the amount of tax-sharing payments under the Tax-Sharing
Agreement, The Limited prepares for Intimate Brands pro forma returns with
respect to federal and applicable state and local income taxes that reflect the
same positions and elections used by The Limited in preparing the returns for
The Limited's consolidated group and other applicable groups. The Limited
continues to have all the rights of a parent of a consolidated group (and
similar rights provided for by applicable state and local law with respect to a
parent of a combined, consolidated or unitary group), is the sole and exclusive
agent for Intimate Brands in any and all matters relating to the income,
franchise and similar tax liabilities of Intimate Brands, is solely and
exclusively responsible for the preparation and filing of consolidated federal
and consolidated or combined state income tax returns (or amended returns), and
has the power, in its sole discretion, to contest or compromise any asserted tax
adjustment or deficiency and to file, litigate or compromise any claim for
refund on behalf of Intimate Brands. In addition, The Limited provides the
aforementioned services with respect to Intimate Brands' separate state and
local returns and Intimate Brands' foreign returns. Under the Tax-Sharing
Agreement, Intimate Brands must pay The Limited a fee intended to reimburse The
Limited for all direct and indirect costs and expenses incurred with respect to
Intimate Brands' share of the overall costs and expenses incurred by The Limited
with respect to tax-related services.
In general, Intimate Brands will be included in The Limited's consolidated
group for federal income tax purposes for so long as The Limited beneficially
owns at least 80% of the total voting power and value of the outstanding Common
Stock. Each member of a consolidated group is jointly and severally liable for
the federal income tax liability of each other member of the consolidated group.
Accordingly, although the Tax-Sharing Agreement allocates tax liabilities
between Intimate Brands and The Limited, during the period in which
21
<PAGE>
Intimate Brands is included in The Limited's consolidated group, Intimate Brands
could be liable in the event that any federal tax liability is incurred, but not
discharged, by any other member of The Limited's consolidated group.
CORPORATE AGREEMENT. Intimate Brands and The Limited are parties to a
corporate agreement (the "Corporate Agreement") under which Intimate Brands
granted to The Limited a continuing option, transferable to any of its
subsidiaries, to purchase, under certain circumstances, additional shares of
Class B Common Stock or shares of nonvoting capital stock of Intimate Brands
(the "Stock Option"). The Corporate Agreement further provides that, upon the
request of The Limited, Intimate Brands will use its best efforts to register
under the applicable federal and state securities laws any of the shares of
Class B Common Stock and nonvoting capital stock (and any other securities
issued in respect of or in exchange for either) held by The Limited for sale in
accordance with The Limited's intended method of disposition thereof, and will
take such other actions as may be necessary to permit the sale thereof in other
jurisdictions, subject to certain limitations specified in the Corporate
Agreement. Intimate Brands will pay all out-of-pocket costs and expenses
relating to each such registration that The Limited requests or in which The
Limited participates. The Corporate Agreement also restricts Intimate Brands
from taking certain actions for so long as The Limited maintains beneficial
ownership of a majority of the number of outstanding shares of Intimate Brands'
Common Stock.
INTERCOMPANY OBLIGATIONS
Intimate Brands has intercompany obligations to The Limited in an aggregate
amount of $250 million (the "Mirror Notes"), which mature as follows:
$150 million on February 1, 2001 (the "2001 Notes") and $100 million on
March 15, 2023 (the "2023 Notes"). The 2001 Notes and the 2023 Notes represent
Intimate Brands' proportionate share of certain long-term debt of The Limited,
and the interest rates and maturities of the Mirror Notes parallel those of the
corresponding debt of The Limited.
The 2001 Notes bear interest (payable on February 1 and August 1 of each
year) at a rate of 9 1/8% per annum and the 2023 Notes bear interest (payable on
March 15 and September 15 of each year) at a rate of 7 1/2% per annum. Each of
the 2001 Notes and the 2023 Notes are to be automatically prepaid concurrently
with any prepayment of the corresponding debt of The Limited. The debt of The
Limited corresponding to the 2023 Notes is subject to early redemption by The
Limited at its option beginning in 2013 at specified declining premiums. The
2001 Notes are not subject to early redemption by The Limited.
INDEPENDENT PUBLIC ACCOUNTANTS
During our 1999 fiscal year, PricewaterhouseCoopers LLP served as our
independent public accountants and in that capacity rendered an opinion on our
consolidated financial statements as of and for the fiscal year ended
January 29, 2000. We annually review the selection of our independent public
accountants, but we have not yet selected independent public accountants for the
current fiscal year.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the annual meeting. They will be available to respond to appropriate questions
and may make a statement if they so desire.
22
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
annual meeting. However, if other matters should come before the meeting, each
of the persons named in the proxy intends to vote in accordance with his
judgment on such matters.
STOCKHOLDER PROPOSALS
We may omit from the Proxy Statement and form of proxy relating to the next
annual meeting of stockholders any proposals of stockholders which are intended
to be presented at that meeting which are not received by the Intimate Brands'
Secretary at our principal executive offices on or before December 15, 2000.
SOLICITATION EXPENSES
We will pay the expense of preparing, assembling, printing and mailing the
proxy form and the form of material used in solicitation of proxies. Our
employees may solicit proxies by telephone, mailgram, facsimile, telegraph,
cable and personal interview, in addition to the use of the mails. We have
retained Georgeson Shareholder Communications Inc., New York, New York, to aid
in the solicitation of proxies relating to shares held by brokerage houses,
custodians, fiduciaries and other nominees for a fee of approximately $5,000,
plus expenses. We do not expect to pay any other compensation for the
solicitation of proxies.
By Order of the Board of Directors
/s/ Leslie H. Wexner
Leslie H. Wexner
CHAIRMAN OF THE BOARD
23
<PAGE>
PROXY
INTIMATE BRANDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 2000
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NAMED NOMINEES.
IF NO SPECIFICATION IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED AS RECOMMENDED BY THE BOARD.
Election of Directors, Nominees:
Cynthia A. Fields, E. Gordon Gee
<TABLE>
<S> <C> <C> <C>
1. Election of Directors / / FOR / / WITHHELD
</TABLE>
For, except vote withheld from following nominee(s):
- --------------------------------------------------------------------------------
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
The undersigned hereby appoints Leslie H. Wexner and Kenneth B. Gilman, and
each of them, proxies, with full power of substitution, to vote for the
undersigned all shares of Class A Common Stock of Intimate Brands, Inc. which
the undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders to be held on May 15, 2000 at 10:30 a.m., Eastern
Daylight Time, and at any adjournments thereof, upon the matters described in
the accompanying Proxy Statement and upon any other business that may properly
come before the meeting or any adjournments thereof.
The undersigned acknowledges receipt with this Proxy of a copy of the Notice
of Annual Meeting of Stockholders and Proxy Statement dated April 14, 2000.
Dated: _____________________, 2000
__________________________________
Signature
__________________________________
Signature (if jointly held)
IMPORTANT: PLEASE DATE THIS PROXY
AND SIGN EXACTLY AS YOUR NAME OR
NAMES APPEAR HEREON. IF STOCK IS
HELD JOINTLY, SIGNATURE SHOULD
INCLUDE BOTH NAMES. EXECUTORS,
ADMINISTRATORS, TRUSTEES,
GUARDIANS AND OTHERS SIGNING IN A
REPRESENTATIVE CAPACITY SHOULD
INDICATE FULL TITLES.
<PAGE>
PROXY
INTIMATE BRANDS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 2000
The undersigned hereby appoints Leslie H. Wexner and Kenneth B. Gilman, and
each of them, proxies, with full power of substitution, to vote for the
undersigned all shares of Class A Common Stock of Intimate Brands, Inc. which
the undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders to be held on May 15, 2000 at 10:30 a.m., Eastern
Daylight Time, and at any adjournments thereof, upon the matters described in
the accompanying Proxy Statement and upon any other business that may
properly come before the meeting or any adjournments thereof.
ELECTION OF DIRECTORS, NOMINEES:
01. Cynthia A. Fields, 02. E. Gordon Gee
SAID PROXIES ARE DIRECTED TO VOTE AS MARKED ON THE REVERSE SIDE AND IN THEIR
DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENTS THEREOF.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- ------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
<PAGE>
6395
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NAMED NOMINEES.
IF NO SPECIFICATION IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED AS RECOMMENDED BY THE BOARD.
FOR WITHHOLD
1. Election of / / / /
Directors
(SEE REVERSE)
(For, except vote withheld from the following nominee(s):
- -----------------------------------------------------------
THE UNDERSIGNED ACKNOWLEDGES RECEIPT WITH THIS PROXY OF A COPY OF THE NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT DATED APRIL 14, 2000.
IMPORTANT: PLEASE DATE THIS PROXY AND SIGN EXACTLY AS YOUR NAME OR NAMES
APPEAR HEREON. IF STOCK IS HELD JOINTLY, SIGNATURE SHOULD INCLUDE BOTH NAMES.
EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS AND OTHERS SIGNING IN A
REPRESENTATIVE CAPACITY SHOULD INDICATE FULL TITLES.
SIGNATURE(S) DATE
------------------------------------------- ------------------
- ------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
<PAGE>
INTIMATE BRANDS, INC.
Dear Stockholder:
Intimate Brands, Inc. encourages you to take advantage of new and convenient
ways by which you can vote your shares. You can vote your shares
electronically through the Internet or by telephone. This eliminates the need
to return your proxy card.
To vote your shares electronically, you must use the control number printed
in the box above, just below the perforation. The series of numbers that
appear in the box above must be used to access the system.
1. To vote over the Internet:
- Log on to the Internet and go to the web site http://www.eproxyvote.com/ibi
2. To vote by telephone:
- On a touch-tone telephone, call 1-877-779-8683 24 hours a day, 7 days a
week.
Your electronic vote authorizes the named proxies in the same manner as if
you marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need to mail
back your proxy card.
Your vote is important. Thank you for voting.
