SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, For Use of the
Commission Only (as Permit-
ted by Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE BOMBAY COMPANY, INC.
------------------------
(Name of Registrant as Specified in Its Charter)
Michael J. Veitenheimer, Vice President, Secretary and General Counsel
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which tranactions applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------
(3) Filing Party:
----------------------------
(4) Date Filed:
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THE BOMBAY COMPANY, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 22, 1997
To the Shareholders:
The Annual Meeting of Shareholders of The Bombay Company,
Inc. will be held at the Dorothea Leonhardt Lecture Hall at the
Botanic Garden Center Complex, 3220 Botanic Garden Blvd., Fort
Worth, Texas, on May 22, 1997 at 9:00 a.m. (C.D.T.) for the
following purposes:
1. To elect two directors in Class C to serve for three-
year terms expiring in 2000, or until their successors
are elected and qualified; and
2. To transact such other business as may properly come
before the meeting or any adjournment(s) thereof.
By resolution of the Board of Directors, only shareholders
of record as of the close of business on March 24, 1997 are
entitled to notice of, and to vote at, the Annual Meeting. The
transfer books will not be closed. The Annual Report of the
Company, including financial statements for the fiscal year ended
February 1, 1997, has been mailed to all shareholders.
By Order of the Board of Directors
MICHAEL J. VEITENHEIMER
Vice President, Secretary
and General Counsel
Fort Worth, Texas
April 9, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS
MEETING. WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON, PLEASE
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
THE BOMBAY COMPANY, INC.
550 Bailey Avenue
Fort Worth, Texas 76107
(817) 347-8200
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 22, 1997
SOLICITATION AND REVOCABILITY OF PROXY
This Proxy Statement and the accompanying proxy, first
mailed to shareholders on April 9, 1997, is furnished in
connection with the solicitation of proxies by the Board of
Directors of The Bombay Company, Inc. (the "Company") for use at
the annual meeting of shareholders for the fiscal year ended
February 1, 1997, which meeting is to be held on May 22, 1997,
(the "Annual Meeting") or at any adjournment(s) thereof. Giving
the proxy will not in any way affect a shareholder's right to
attend the Annual Meeting and to vote in person. A proxy may be
revoked at any time before it is exercised by requesting its
return in writing to the Secretary at the office of the Company
prior to or at the Annual Meeting, by the attendance and voting
by a shareholder at the Annual Meeting or by the execution and
delivery to the Company of a proxy dated subsequent to a prior
proxy.
A proxy in the accompanying form which is properly signed,
dated, returned and not revoked will be voted in accordance with
the instructions contained therein. Unless authority to vote for
the election of directors (or for any one or more nominees) is
withheld, proxies will be voted for the slate of two directors
proposed by the Board, and, if no contrary instructions are
given, proxies will be voted for approval of any remaining item
on the proxy. Discretionary authority is provided in the proxy
as to any matters not specifically referred to therein.
Management is not aware of any other matters which are likely to
be brought before the Annual Meeting. However, if any such
matters are properly raised, it is understood that the proxy
holder or holders are fully authorized to vote thereon in
accordance with his or their judgment and discretion.
The cost of soliciting proxies in the accompanying form has
been, or will be, paid by the Company. In addition to the
solicitation of proxies by use of the mails, certain officers and
regular employees (who will receive no compensation therefore in
addition to their regular salaries) may be used to solicit
proxies personally and by telephone. In addition, banks, brokers
and other custodians, nominees and fiduciaries will be requested
to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company
will reimburse such persons for their expenses in so doing. To
the extent necessary in order to assure sufficient
representation, a commercial proxy solicitation firm may be
engaged to assist in the solicitation of proxies. Whether such a
measure will be necessary depends entirely upon how promptly
proxies are received. No outside proxy solicitation firm has
been selected or employed with respect to the Annual Meeting as
of the date of this Proxy Statement, and the costs of any such
services cannot be estimated at this time.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed the close of business on
March 24, 1997 as the record date for the determination of
shareholders entitled to notice of, and to vote at, the Annual
Meeting. As of the record date for the Annual Meeting, there
were outstanding 38,010,809 shares of Common Stock. Each holder
of Common Stock is entitled to one vote for each share held by
such person. All share numbers contained in this Proxy Statement
have been adjusted for all stock splits unless otherwise noted.
SECURITY OWNERSHIP
Principal Shareholders
The following table sets forth information based upon the
records of the Company and filings with the Securities and
Exchange Commission as of March 24, 1997, with respect to each
person known to be the beneficial owner of more than five percent
(5%) of any class of the Company's voting securities.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Ownership Beneficial Ownership(l) of Class
-------------- -------------------- ----------------------- --------
<S> <C> <C> <C>
Common Stock State of Wisconsin
Investment Board 3,694,300 shares (2) 9.72%
P.O. Box 7842
Madison, WI 53707
Common Stock The Crabbe Huson
Special Fund, Inc., 3,573,430 shares (3) 9.40%
The Crabbe Huson Small
Cap Fund, and The Crabbe
Huson Group, Inc.
121 SW Morrison,
Suite 1400
Portland, OR 97204
<FN>
(l)Shares are deemed to be "beneficially owned" by a person if
such person, directly or indirectly, has or shares (i) the
voting power thereof, including the power to vote or to
direct the voting of such shares, or (ii) the investment
power with respect thereto, including the power to dispose or
direct the disposition of such shares. In addition, a person
is deemed to beneficially own any shares of which such person
has the right to acquire beneficial ownership within 60 days.
(2)The State of Wisconsin Investment Board filed with the
Securities and Exchange Commission an Amended Schedule 13G
dated January 21, 1997, reporting ownership of 3,694,300
shares of Common Stock.
(3)The Crabbe Huson Special Fund, Inc., The Crabbe Huson Small
Cap Fund and The Crabbe Huson Group, Inc. filed with the
Securities and Exchange Commission an Amended Schedule 13G
dated February 7, 1997, reporting ownership of 3,573,430
shares of Common Stock.
</TABLE>
Securities Owned by Management
The table below sets forth as of March 24, 1997 the numbers
of shares of Common Stock beneficially owned by each of the
directors of the Company, each executive officer or former
executive officer named in the Summary Compensation Table and all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Title of Name of Amount and Nature Percent
Class Beneficial Ownership of Beneficial Ownership (1) of Class
----- -------------------- --------------------------- --------
<S> <C> <C> <C>
Common Stock Barbara Bass 57,498(2) *
Common Stock Gerald A. Cook 13,065(3) *
Common Stock Edmund H. Damon 58,186(4) *
Common Stock James E. Herlihy 312,716(5) *
Common Stock Robert S. Jackson 31,462(6) *
Common Stock Brent A. Magnuson 19,929(7) *
Common Stock A. Roy Megarry 11,850(8) *
Common Stock Clayton E. Niles 81,624(9) *
Common Stock Alexandra M.T. Nourse 873,976(10) 2.3
Common Stock Robert E. M. Nourse 873,976(10) 2.3
Common Stock Robert E. Runice 29,312(11) *
Common Stock Carson R. Thompson 960,954(12) 2.5
Common Stock Michael J. Veitenheimer 114,443(13) *
Common Stock Shirley Young 29,850(14) *
Common Stock All present executive 1,866,385(15) 4.9
officers and directors
as a group
(15 persons)
<FN>
==========
*Less than one percent (1%)
(1)Directors and executive officers have sole voting and
investment powers of the shares shown unless otherwise
indicated below. Includes shares which may be acquired by
the exercise of options within sixty days after March 24,
1997. Does not include units under Director Stock Deferral
Plan which may not be acquired within 60 days.
(2)Includes 30,998 shares which may be acquired upon exercise of
options. Ms. Bass disclaims beneficial ownership of 20,000
shares listed above which are owned by her spouse.
(3)Includes 11,000 shares which may be acquired upon exercise of
options.
(4)Includes 41,124 shares which may be acquired upon exercise of
options. Mr. Damon disclaims beneficial ownership of 6,157
shares listed above which are owned by his spouse and a trust
for the benefit of his children.
(5)Includes 264,171 shares which may be acquired upon exercise
of options. Mr. Herlihy disclaims beneficial ownership of
1,405 shares listed above which are owned by his spouse.
(6)Includes 30,999 shares which may be acquired upon exercise of
options. Mr. Jackson was appointed acting President and
Chief Executive Officer of the Company effective March 29,
1997.
(7)Includes 13,400 shares which may be acquired upon exercise of
options.
(8)Includes 7,150 shares which may be acquired upon exercise of
options. Mr. Megarry disclaims beneficial ownership of 4,700
shares listed above which are owned by his spouse.
(9)Includes 10,750 shares which may be acquired upon exercise of
options.
(10)Alexandra M.T. Nourse and Robert E. M. Nourse were
formerly the Executive Vice President-Merchandising, and
President and Chief Executive Officer of the Company,
respectively until their departure from the Company on
September 5, 1996. In the table above, the 873,976 shares
beneficially owned by Alexandra M.T. Nourse and Robert E. M.
Nourse are reflected as being beneficially owned by each of
them; therefore, the number of shares and percentage of the
class reflected for each should not be added in determining
the actual number of shares or percentage owned by both of
them. Although included in the total number of shares above,
each disclaims beneficial ownership of shares owned and
options exercisable by the other. Ms. Nourse owns directly
230,439 shares and has beneficial ownership in options
covering 50,000 shares. Mr. Nourse owns directly 353,537
shares and has beneficial ownership in options covering
75,000 shares. The Nourses also hold beneficial ownership of
165,000 shares held by a family limited partnership. These
ownership numbers are as of October 1996, which is the most
current information available to the Company.
(11)Includes 15,812 shares which may be acquired upon exercise
of options.
(12)Includes 510,750 shares which may be acquired upon exercise
of options. Mr. Thompson resigned as President and Chief
Executive Officer on March 29, 1997.
(13)Includes 36,788 shares which may be acquired upon exercise
of options.
(14)Includes 9,850 shares which may be acquired upon exercise of
options.
(15)Includes 1,085,738 shares which may be acquired upon
exercise of options held by executive officers and directors.
Does not include shares or vested options owned by Mr. Robert
E. M. Nourse and Ms. Alexandra M.T. Nourse, who ceased being
executive officers on September 5, 1996.
</TABLE>
ELECTION OF DIRECTORS
(Item 1)
The Certificate of Incorporation of the Company provides that
the members of The Bombay Company, Inc. Board of Directors shall
be divided into three classes, as nearly equal in number as
possible, each of which is to serve for three years, with one
class being elected each year. The terms of office of the
directors in Class C expire with this Annual Meeting. Mr. Robert
E. M. Nourse resigned from the Board on September 5, 1996.
To be elected as a director, each nominee must receive the
favorable vote of a plurality of the shares represented and
entitled to be voted at the Annual Meeting. The persons named in
the enclosed form of Proxy, unless otherwise directed, intend to
vote such Proxy FOR the election of the nominees named below as
directors for the term specified. If any nominee becomes
unavailable for any reason, the persons named in the form of
Proxy are expected to consult with management in voting the
shares represented by them. Management has no reason to doubt
the availability of any of the nominees to serve and no reason to
believe that any of the nominees will be unavailable or unwilling
to serve if elected to office. Except as limited by the
Certificate of Incorporation or bylaws, to the knowledge of
management, the nominees intend to serve the term for which
election is sought. Cumulative voting is not permitted by the
Certificate of Incorporation.
The Board of Directors has nominated two persons for election
as directors in Class C at this Annual Meeting to serve for
three-year terms expiring in 2000, or until their successors are
elected and qualified. All nominees are currently serving as
directors and have consented to serve upon election.
<TABLE>
Present Directors Who Are Nominated For Re-Election
<CAPTION>
Director Term to
Director's Name Age Principal Occupation Since Expire
- --------------- --- -------------------- -------- ------
<S> <C> <C> <C> <C>
Edmund H. Damon 67 Private Investor and former 1984 2000
President and Chief
Executive Officer,
Pantasote, Inc.
Robert E. Runice 67 Private Investor and 1985 2000
retired Vice President and
President, Commercial
Development Division, US
West, Inc.
</TABLE>
<TABLE>
Continuing Directors Whose Terms Are Not Expiring
<CAPTION>
Director Term to
Director's Name Age Principal Occupation Since Expire
- --------------- --- -------------------- -------- -------
<S> <C> <C> <C> <C>
Barbara Bass 46 Private Investor 1993 1998
Robert S. Jackson 51 Acting President and Chief 1991 1998
Executive Officer of the
Company; Private Investor,
Business Consultant and
former President and Chief
Executive Officer, USPCI,
Inc.
A. Roy Megarry 60 Chairman, The Globe and 1994 1998
Mail and Consultant to
Thomson Newspapers
Clayton E. Niles 70 Chairman of the Board of 1982 1999
the Company
Carson R. Thompson 58 Former President and Chief 1978 1999
Executive Officer of the
Company, Chairman of the
Board and Chief Executive
Officer, PCI Capital
Corporation
Shirley Young 61 Vice President Consumer 1994 1999
Marketing Development,
General Motors Corporation
</TABLE>
Additional information regarding the two nominees for
election as directors and the continuing directors of the Company
is as follows:
Nominees
Edmund H. Damon joined the Board of Directors in 1984 and is
a private investor after having served as President and Chief
Executive Officer of Pantasote, Inc. from January 1, 1986 to
September 22, 1989, and as President and Chief Operating Officer
from May 1983 through December 1985. Mr. Damon served as Vice
President of Mainstream Access, Inc. from September 1982 to May
1983, and as Vice President and a member of the Management
Committee of The Singer Co. for more than three years prior to
September 1982. Mr. Damon also serves on the Board of Directors
of Newflo Corporation.
Robert E. Runice joined the Board of Directors in 1985 and is
a private investor and business consultant. He has been
associated with the telecommunication industry for over forty
years and from 1983 to 1991 was a Vice President of US West, Inc.
and President, Commercial Development Division of US West, Inc.
US West, Inc. is a telecommunications service corporation
headquartered in Englewood, Colorado. Mr. Runice also serves on
the Boards of Directors of Tandy Brands Accessories, Inc. and
Utilx, Inc.
Continuing Directors
Barbara Bass has been a director of the Company since
February 17, 1993. She previously served as President and Chief
Executive Officer of the Emporium Weinstock division of Carter
Hawley Hale Stores, Inc., a department store chain, from 1989 to
1992. During 1987 and 1988, Ms. Bass served as Chairman of the
Board and Chief Executive Officer of I. Magnum, a division of
Federated Department Stores. Prior thereto, from 1980 until
1987, Ms. Bass was employed by Bloomingdales, a division of
Federated Department Stores, serving as Executive Vice President
from 1985 until 1987, Senior Vice President from 1983 until 1985,
Merchandising Vice President from 1981 until 1983 and Operating
Vice President during 1980 and 1981. Prior to joining
Bloomingdales, Ms. Bass spent eight years in fashion retailing at
Macy's California and Burdine's. Ms. Bass also serves on the
Board of Directors of Starbucks Corporation.
Robert S. Jackson was appointed acting President and Chief
Executive Officer of the Company effective March 29, 1997. He
has been a member of the Board of Directors since 1991 and is a
private investor and business consultant after having served as
President and Chief Executive Officer of USPCI, Inc., a former
waste management subsidiary of Union Pacific Corporation from May
1991 until December 1994. From December 1981 until May 1991, Mr.
Jackson was employed by Union Pacific Resources, the oil and gas
and hard minerals subsidiary of Union Pacific Corporation,
serving as its Vice President of Finance and Administration from
1984 until 1988 and as its Executive Vice President and Chief
Financial Officer from 1988 until 1991.
A. Roy Megarry was elected to the Board on October 13, 1994.
Since 1993, he has served as Chairman of The Globe and Mail, a
major Canadian newspaper headquartered in Uxbridge, Ontario, and
as a consultant to Thomson Newspapers. Prior thereto, from 1978
to 1992, Mr. Megarry served as Publisher and Chief Executive
Officer of The Globe and Mail newspaper. Mr. Megarry also serves
on the Board of Directors of Hewlett-Packard (Canada) Ltd.
Clayton E. Niles has been a member of the Board of Directors
since 1982 and was elected Chairman of the Board on September 5,
1996. Mr. Niles has become a private investor since his
retirement on May 1, 1986, as Chairman of the Board of
Communications Industries, Inc., a position held since January 1,
1980. Communications Industries, Inc., acquired by Pacific
Telesis Group, is a supplier of mobile telephone services.
Mr. Niles served as Chief Executive Officer of Communications
Industries, Inc. from January 1, 1976 until July 1, 1982, and
thereafter re-assumed the office of President and Chief Executive
Officer from July 1, 1983 until July 1, 1985. Mr. Niles also
serves as Chairman of the Board of Tandy Brands Accessories, Inc.
Carson R. Thompson served as Chairman of the Board of the
Company from November 1982 until September 5, 1996, when he
resigned the position in connection with being appointed
President and Chief Executive Officer of the Company. Mr.
Thompson resigned as President and Chief Executive Officer on
March 29, 1997 and now serves as Chairman of the Board and Chief
Executive Officer of PCI Capital Corporation. Mr. Thompson
previously retired from the Company on June 30, 1991 after having
served as Chief Executive Officer since July 1, 1982, and as
President from July 1, 1982 to June 20, 1990. Prior thereto,
Mr. Thompson served as President of Tex Tan Welhausen Co., a
division of the Company, from 1974 until elected Vice President
of the Company in May 1978 and thereafter elected Executive Vice
President in September 1980. Mr. Thompson served as President
and Chief Operating Officer of the Company from August 1981 to
July 1982.
Shirley Young was elected to the Board of Directors on May
11, 1994. Ms. Young has served as Vice President, Consumer
Market Development for General Motors Corporation since June 1,
1988, and for the previous five years was a Marketing Consultant
to General Motors. Prior thereto, Ms. Young spent over 25 years
at Grey Advertising holding various positions including Executive
Vice President, a member of the Agency Policy Council and, in
1983, became President of Grey Strategic Marketing. Ms. Young
also serves on the Boards of Directors of Promus Corporation and
Bell Atlantic Corporation and is a Consultant Director of the
Dayton Hudson Corporation.
Meetings and Committees of the Board
For the fiscal year ended February 1, 1997, the Board of
Directors met nine times. No director who served the entire
fiscal year attended less than seventy-five percent (75%) of the
meetings. The Board has three standing Committees, described
below. Committee appointments are reviewed by the Board at its
meeting following each annual meeting of shareholders.
The Board of Directors has an Audit and Finance Committee
currently composed of the following directors: A. Roy Megarry
(Chairman) and Robert E. Runice. The Audit and Finance Committee
is primarily concerned with the effectiveness of the Company's
accounting policies and practices, financial reporting, and
internal controls. Specifically, the Committee reviews and
approves the scope of the annual examination of the books and
records of the Company and reviews the findings and
recommendations of the outside auditors on completion of the
audit; considers the organization, scope and adequacy of the
Company's internal controls function; monitors the extent to
which the Company has implemented changes recommended by the
independent auditors to the Committee; and provides oversight
with respect to accounting principles employed in the Company's
financial reporting. The Committee, comprised entirely of non-
employee directors, met four times during the fiscal year.
The Board of Directors has a Compensation and Human Resources
Committee currently composed of the following directors: Barbara
Bass (Chair), Edmund H. Damon, Robert E. Runice and Shirley
Young. The Compensation and Human Resources Committee is
primarily concerned with the Company's organization, salary and
non-salary compensation and benefit programs, succession planning
and related human resources matters. The Committee also
recommends to the Board of Directors annual salaries, bonus
programs and administers certain retirement, stock option and
other plans covering executive officers. The Committee,
comprised entirely of non-employee directors, met five times
during the fiscal year.
The Board of Directors has an Executive Committee currently
composed of the following directors: Edmund H. Damon (Chairman),
Barbara Bass, Clayton E. Niles, A. Roy Megarry and Carson R.
Thompson. The Executive Committee is primarily concerned with
the Company's strategic planning and also has the responsibility
for director affairs, including the recommendation of nominees
for new or vacant Board positions. The Committee will consider
persons brought to its attention by shareholders. The names of
the proposed nominees should be sent to the President or
Secretary of the Company at the address shown on the cover of
this Proxy Statement. The Executive Committee has commenced a
search for a new President and Chief Executive Officer for the
Company following Mr. Thompson's resignation on March 29, 1997.
The Committee met four times during the fiscal year.
Compensation of Directors
A. Cash Compensation. A director who is an employee of the
Company is not compensated for service as a member of the Board
of Directors or any committee of the Board. For the fiscal year
ended February 1, 1997, non-employee directors received cash
compensation consisting of an annual retainer of $17,500, and an
$1,000 fee for each Board meeting and each committee meeting
attended. Committee chairmen received an additional annual
retainer of $3,500 for committee work. Carson R. Thompson was
paid a prorated annual retainer of $35,000 for serving as
Chairman of the Board through September 5, 1996. Mr. Clayton E.
Niles was paid at the same rate for the balance of the fiscal
year. These amounts reflect no change in director cash
compensation from that paid in the prior two fiscal years. The
Company also reimburses its directors for travel, lodging and
related expenses incurred in attending Board and committee
meetings, and provides each director with travel accident and
directors' and officers' liability insurance.
B. Director Stock Option Plan. The 1991 Director Stock
Option Plan (the "Director Plan") was adopted by the Board of
Directors on August 14, 1991 and approved by the Company's
shareholders on November 12, 1991. The Director Plan provides
for the granting of non-qualified stock options to members of the
Board of Directors who are not employees of the Company or any of
its subsidiaries (the "Non-Employee Directors"). The Director
Plan is designed to promote the interests of the Company by
providing an increased opportunity for existing and potential new
directors to acquire an investment in the Company, thereby
maintaining and strengthening their desire to remain with or join
the Company's Board of Directors and align their interests and
efforts with those of the shareholders.
The Director Plan, as amended, provides for an initial grant
of an option to purchase the lesser of 4,000 shares (increased
from 2,250 shares in fiscal 1995) or that number of shares equal
to $75,000 at face value to each Non-Employee Director upon the
date of his or her election or appointment (the "Initial
Option"); and an annual grant of an option to purchase the same
number of shares of Common Stock on the third business day after
the Company issues its press release summarizing the Company's
performance for the prior fiscal year (the "Annual Option").
The exercise price of the options under the Director Plan is
equal to the closing price of the Company's Common Stock on the
date of grant. The Initial Option becomes exercisable at the
rate of twenty percent (20%) per year commencing one year after
the date of grant. Each Annual Option grant is exercisable in
full six months following the date of grant. Payment for shares
upon exercise shall be in cash. Options become fully exercisable
upon the death or disability of an optionee or upon an optionee
ceasing to be a director of the Company, provided the director
has served at least five years on the Board and in the event of a
change in control of the Company, as defined in the Director
Plan. All options granted prior to 1994 expire three months from
the date an optionee terminates his or her performance of
services for the Company except in the cases of death or
disability. An amendment covering all options granted after 1994
extended the exercise period from three months to thirty-six
months upon death, disability or a director's retirement from the
Board, provided such departing director has at least ten years of
service or if such retirement is due to the Company's mandatory
retirement age for directors.
C. Director Stock Deferral Plan. The 1993 Stock Deferral
Plan for Non-Employee Directors (the "Director Deferral Plan")
was adopted by the Board of Directors on June 24, 1993 and
approved by shareholders on October 13, 1993. Under the Director
Deferral Plan, non-employee directors are given an election to
defer the receipt of annual and Committee chair retainers, which
are then credited in stock units equivalent to Common Stock and
held by the Company in an account for the benefit of each
participating director. The stock units, which at all times are
fully vested, become payable in the form of Common Stock upon
retirement from the Board or otherwise as specified in the
director's election notice. The stock units are adjusted for
stock dividends, stock splits, combinations, reclassifications,
recapitalizations or other capital adjustments. In the event of
a change in control, as defined in the Director Deferral Plan,
all units are immediately payable.
The Board of Directors may terminate, suspend or amend the
Director Deferral Plan, provided that certain material amendments
must be submitted for shareholder approval to the extent
necessary for the Director Deferral Plan to satisfy the
requirements of the exemption from the short-swing profits rules
under Section 16 of the Securities Exchange Act of 1934, as
amended.
D. Director Stock Ownership Guidelines. On June 24, 1993,
the Board of Directors approved stock ownership guidelines for
the Company's non-employee directors. The guidelines provide
that each outside director is expected to achieve a stock
ownership position equal to five times annual cash compensation
no later than the completion of such director's fifth year of
service on the Board. For purposes of the guidelines, annual
cash compensation is defined as the annual retainer plus meeting
fees, assuming attendance at four Board meetings and three
Committee meetings. Stock beneficially owned by the directors
and stock units held pursuant to the Director Deferral Plan count
toward the satisfaction of the guidelines, but stock options,
even if vested, are not considered owned for such purposes. The
Executive Committee reviews compliance and progress toward
satisfaction of the guidelines annually.
EXECUTIVE OFFICERS OF THE COMPANY
Current Executive Officers
The executive officers of the Company, their respective ages,
positions held and tenure as officers are as follows:
<TABLE>
<CAPTION>
Position(s) Held with Officer of
Name Age the Company the Company Since
---- --- --------------------- -----------------
<S> <C> <C> <C>
Robert S. Jackson 51 Acting President and Chief 1997
Executive Officer
James E. Herlihy 54 Executive Vice President and 1991
Chief Financial Officer
Gerald A. Cook 44 Senior Vice President, 1996
Stores
Brent A. Magnuson 34 Senior Vice President, 1996
Merchandising
and Marketing
Daniel L. Lawrence 48 Senior Vice President, 1996
Merchandise
Development and
International Sourcing
Elaine D. Crowley 38 Vice President, Finance and 1996
Treasurer
J. Michael Smith 42 Vice President, Human 1996
Resources
Michael J. 40 Vice President, Secretary 1985
Veitenheimer and General Counsel
</TABLE>
Business Experience
Information concerning the business experience of Mr. Jackson
is provided under the section entitled "Election of Directors."
Mr. James E. Herlihy has served as Exec utive Vice President
and Chief Financial Officer since March 16, 1995, as Executive
Vice President, Treasurer and Chief Financial Officer of the
Company since June 29, 1992 and as Vice President, Treasurer and
Chief Financial Officer since July 15, 1991. From October 1988
until April 1991, Mr. Herlihy was Senior Vice President and Chief
Financial Officer and a member of the Board of Directors of the
S.E. Nichols Company, Inc., a regional discount department store
chain which was converted into a deep discount drug and general
merchandise retail store chain. From June 1987 until September
1988, he was Executive Vice President of The Odd Lot Trading
Company,Inc., a chain of closeout retail stores. Prior thereto,
from 1981 until 1986, Mr. Herlihy served as Vice President and
Controller, and later as Senior Vice President, Chief Financial
Officer and a member of the Board of Directors of The Grand
Union Company, a food retail chain based in the Northeastern
United States.
Mr. Gerald A. Cook was named Senior Vice President, Stores
on July 31, 1995 and elected as a corporate officer on February
21, 1996. Prior to joining the Company, from 1989 to 1995 Mr.
Cook served as Vice President, General Merchandise Manager and as
Vice President, Store Operations of Woman's World, a division of
American Retail Group. From 1987 to 1989 he acted as Vice
President of Barnes & Noble Trade Stores, following several years
of store operations positions with B. Dalton Stores. From 1979
to 1984, Mr. Cook held retail and operation positions with The
Gap.
Mr. Brent A. Magnuson was named Senior Vice President,
Merchandising and has served as Interim Senior Vice President of
Marketing effective September, 1996 after serving as Vice
President, Merchandise Management since January, 1996. He was
elected a corporate officer on February 21, 1996. From
September, 1995 to December, 1995, Mr. Magnuson was Vice
President, Strategic Planning and from May, 1994 to August, 1995
was Director, Information Services of the Company. Mr. Magnuson
joined Bombay from Price Waterhouse where from 1991 to 1994 he
was a Manager in the Management Horizons Division and, from 1989
to 1991, served as Senior Consultant.
Mr. Daniel L. Lawrence has served as Senior Vice President,
Multinational Sourcing since 1992 and, in September 1996, was
named to the position of Senior Vice President, Merchandise
Development, assuming the additional responsibilities of product
development and quality assurance. He was elected a corporate
officer on February 21, 1996. From 1990 to 1992, he acted as
Vice President, Merchandising for the former Bombay division of
the Company. Mr. Lawrence joined Bombay after serving as Senior
Vice President, Merchandising for Michael's Stores, Inc. and
holding various positions at Pier 1 Imports from 1975 to 1988,
including Vice President, Divisional Merchandise Director from
1986 to 1988.
Ms. Elaine D. Crowley was named Vice President, Finance and
Treasurer effective January 25, 1996 after having served as
Corporate Controller since January 1995. Prior thereto, Ms.
Crowley acted as Executive Vice President, Operations of The
Bombay Company division from January 1994 to January 1995, Vice
President and Controller from January 1991 to December 1994 and
Controller from August 1990 to December 1990. Prior thereto, Ms.
Crowley was with Price Waterhouse from 1981 to 1990.
Mr. J. Michael Smith joined The Bombay Company, Inc. as Vice
President, Human Resources on December 9, 1996. Prior thereto,
from June 1992 to December 1996, Mr. Smith was Retail Vice
President of Pearle, Inc., the world's largest retail eye wear
supplier and a U.S. subsidiary of Grand Metropolitan, PLC. From
May 1989 to June 1992, Mr. Smith was employed by the Burger King
Corporation, as Vice President, Human Resources - USA Retail from
March 1991 to June 1992, as Human Resources Director -
Distribution Services from October 1990 to March 1991 and as
Human Resources Director, Southeast Operations from May 1989 to
October 1990. Previous work assignments included various human
resources positions at Grand Metropolitan, PLC Companies,
including an expatriate assignment at the company's Corporate
Center in London, as well as positions at Nissan Motor
Manufacturing Corporation USA in Tennessee and Texas Instruments,
Inc.
Mr. Michael J. Veitenheimer was named Vice President
effective August 4, 1994 and has served as Secretary of the
Company since July l, 1985, and General Counsel since December
1983. From 1983 to 1985, he was Assistant Secretary of the
Company. Prior thereto, Mr. Veitenheimer was in private practice
of law in Fort Worth, Texas.
Terms of Office: Relationships
The officers of the Company are elected annually by the Board
of Directors at a meeting held immediately following each Annual
Meeting of Shareholders, or as soon thereafter as necessary and
convenient in order to fill vacancies or newly created offices.
Each officer holds office until his or her successor is duly
elected and qualified or until his or her death, resignation or
removal, if earlier. Any officer or agent elected or appointed
by the Board of Directors may be removed by the Board of
Directors whenever in its judgment the best interests of the
Company will be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so
removed.
There are no family relationships among the executive
officers, and there are no arrangements or understandings between
any officer and any other person pursuant to which that officer
was selected.
EXECUTIVE COMPENSATION
Summary Compensation Table
The Summary Compensation Table includes individual
compensation information on the Chief Executive Officer, the four
other most highly paid executive officers as of February 1, 1997,
a former chief executive officer and a former executive officer
who would have been included in the table but for the fact that
the individual was not serving as an executive officer at the end
of the last completed fiscal year. For purposes of this table
only, 1994(a) represents the seven month fiscal period ended
January 29, 1995. The other two fiscal years shown are the full
fiscal years ended February 3, 1996 and July 3, 1994.
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term
Compensation
Other -------
Name and Principal Fiscal Annual Annual Stock All Other
Position Year Compensation Compen- Option Compen-
Salary Bonus sation(1) Awards sation(3)
($) ($) ($) (Shares)(2) ($)
- ------------------ ----- ------------ ------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Carson R. Thompson, 1996 181,077 0 - 500,000 8,995(3)
President and Chief
Executive Officer (4)
James E. Herlihy, 1996 219,928 0 - 221,959(2) 30,658(3)
Executive Vice 1995 194,135 0 - 46,896 26,656
President & Chief 1994(a) 89,423 0 - 0 12,487
Financial Officer 1994 147,000 353,445 - 0 64,814
Gerald A. Cook, 1996 193,750 0 - 135,000 6,060(3)
Senior Vice
President, Stores
Brent A. 1996 157,644 0 - 135,000 17,019(3)
Magnuson,
Senior Vice
President,
Merchandising &
Marketing
Michael J. 1996 149,880 0 - 22,489(2) 19,727(3)
Veitenheimer, 1995 131,481 0 - 15,374 18,402
Vice President, 1994(a) 65,192 0 - 0 9,212
General Counsel & 1994 104,471 149,185 - 4,500 33,982
Secretary
Robert E. M. 1996 262,308(5) 0 - 525,000(6) 1,206,976(7)
Nourse, 1995 392,308 0 - 75,000 51,484
former President 1994(a) 173,077 0 - 0 23,023
and Chief 1994 280,000 709,297 - 0 126,055
Executive Officer
Alexandra M.T. 1996 172,885(5) 0 - 180,000(6) 809,580(7)
Nourse, 1995 266,539 0 - 50,000 35,762
former Executive 1994(a) 124,039 0 - 0 16,883
Vice President 1994 205,000 493,006 - 0 89,643
<FN>
(1) "Other Annual Compensation" is intended to cover forms of
annual compensation not properly categorized as salary or
bonus, including perquisites. No named executive received
such compensation or perquisites which exceeded a threshold
level for disclosure purposes.
(2) The 1986 Stock Option Plan and 1996 Long Term Incentive Stock
Plan contain replacement option features providing for
additional options to restore the potential future
appreciation of any outstanding shares actually used to
exercise a previously granted option. Replacement options are
granted only in connection with stock-for-stock exchanges
where an optionee exercises vested stock options with already
owned stock of the Company. The replacement option which is
received by the optionee is equal to the number of shares used
to exercise the original options but excludes any shares
forfeited for tax withholding. Replacement options have terms
substantially similar to the original option, including the
same expiration date, except they have an exercise price per
share equal to the fair market value of a share of Common
Stock on the date the replacement option is granted.
Replacement options are exercisable 12 months from the date of
the grant. During fiscal 1996, Mr. Herlihy and Mr.
Veitenheimer obtained reload options covering 41,959 shares
and 2,489 shares respectively.
(3) The totals in this column reflect the aggregate value of the
Company contributions to each named executive under the Stock
Purchase Program, 401(k) Savings Plan, Supplemental Stock
Program, Executive Disability Plan and life insurance. For
fiscal period ended February 3, 1996, these amounts were as
follows: Carson R. Thompson: $4,527; $3,173; $0; $800 and
$475. James E. Herlihy: $10,996; $11,418; $5,077; $2,027 and
$1,140. Gerald A. Cook: $4,002; $0; $0; $1,201 and $857.
Brent A. Magnuson: $3,912; $11,721; $0; $631 and $755.
Michael J. Veitenheimer: $6,773; $11,241; $0; $958 and $755.
Robert E. M. Nourse: $13,115; $1,183; $18,490; $1,243 and
$1,140. Alexandra M. T. Nourse: $8,644; $2,697; $10,269;
$1,132 and $1,140.
(4) Mr. Thompson was appointed President and Chief Executive
Officer on September 5, 1996 and resigned on March 29, 1997.
(5) Mr. Robert E. M. Nourse and Ms. Alexandra M.T. Nourse
separated from the Company on September 5, 1996. Their
respective compensation for fiscal 1996 represents a partial
fiscal year.
(6) Options granted to Robert E. M. Nourse and Alexandra M.T.
Nourse during fiscal 1996 expired and were canceled upon their
separation from the Company on September 5, 1996.
(7) Includes, in addition to the amounts reflected in Note 3,
above, severance related compensation in the amount of
$1,191,805 for Mr. Nourse and $785,698 for Ms. Nourse. See
"Termination Arrangements" at page 17.
</TABLE>
Stock Option Grants
The following table provides information, with respect to
individual grants under the 1986 Stock Option Plan or the 1996
Long-Term Incentive Stock Plan to the individuals named in the
Summary Compensation Table, during the fiscal year ended February
1, 1997.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential
Realizable
Value at Assume
Percent of Annual Rates of
total options Stock Price
Options granted to Exercise Appreciation
Name Granted employees or base Exp- For the Option
(#)(1) in price iration Term ($)(3)
fiscal year ($ share)(2) Date 5% 10%
------- ------------ ----------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Carson R. 500,000 41.3% 7.00 *(4) N/A N/A
Thompson (4) 4,000(5) N/A 7.25 3/12/06 18,240 46,200
James E. 60,000 18.3% 6.75 3/6/06 255,000 645,600
Herlihy 60,000 7.63 3/6/06 202,200 592,800
60,000 8.93 3/6/06 124,200 514,800
7,901(6) 8.25 7/15/01 41,006 103,898
17,226(6) 10.81 8/14/01 117,137 296,804
16,832(6) 10.81 6/24/02 114,450 290,015
Gerald A. Cook 45,000 11.1% 6.75 3/6/06 191,250 484,200
45,000 7.63 3/6/06 151,650 444,600
45,000 8.93 3/6/06 93,150 386,100
Brent A. 45,000 11.1% 6.75 3/6/06 191,250 484,200
Magnuson 45,000 7.63 3/6/06 151,650 444,600
45,000 8.93 3/6/06 93,150 386,100
Michael J. 20,000 1.8% 6.75 3/6/06 85,000 215,200
Veitenheimer 1,390(6) 10.75 11/7/99 9,396 23,810
1,099(6) 10.75 2/27/01 7,430 18,826
Robert E. M. 175,000 N/A 6.75 9/5/96 N/A N/A
Nourse (7) 175,000 7.63 9/5/96 N/A N/A
175,000 8.93 9/5/96 N/A N/A
Alexandra M.T. 75,000 N/A 6.75 9/5/96 N/A N/A
Nourse (7) 75,000 7.63 9/5/96 N/A N/A
75,000 8.93 9/5/96 N/A N/A
<FN>
(1) Grants of options to purchase shares of Common Stock under
the 1986 Stock Option Plan and 1996 Long-Term Incentive
Stock Plan generally vest from the date of grant at a rate
of 20% per year for five years and expire on the tenth
anniversary of the date of grant. The Plan contains a
provision which provides that, in the event of a change in
control, as defined therein, all options granted under the
plan immediately vest and become exercisable for a period of
60 days after the effective date of such change in control.
(2) Exercise price is equal to the closing price of the Common
Stock on the New York Stock Exchange Composite Tape on the
date of the grant.
(3) These amounts represent assumed rates of stock price
appreciation of 5% and 10% which are specified in applicable
federal securities regulations. Actual gains, if any, on
stock option exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and
overall stock market conditions. There can be no assurances
that the amounts reflected in the table will be achieved or
maintained through the life of the option. The amounts
shown represent the assumed value of the stock options, less
the exercise price, at the end of the ten-year period,
beginning on the date of grant and ending on the option
expiration date. For example, based upon a ten-year period
beginning on the date of grant on March 6, 1996, with a
price of the Common Stock of $6.75, a share of Common Stock
would have a value on March 6, 2006 of approximately $11.00
at an assumed appreciation rate of 5% and approximately
$17.51 at an assumed appreciation rate of 10%. The closing
price of the Company's stock on March 24, 1997 was $4.3750
per share.
(4) Mr. Thompson resigned from the Company on March 29, 1997.
The options granted on September 5, 1996 will expire
pursuant to the terms of the 1996 Long-Term Incentive Stock
Plan.
(5) Represents options granted under the Company's 1991 Director
Stock Option Plan which were granted to Mr. Thompson prior
to his appointment as President and Chief Executive Officer.
(6) By amendment dated December 5, 1995, a replacement stock
option feature was added to the Plan whereby a new option is
granted upon exercise of a prior grant if the payment of the
exercise price is by tendering previously-owned shares. See
Note 2 to Summary Compensation Table.
(7) Mr. and Ms. Nourse departed the Company on September 5, 1996.
Options granted in fiscal 1996 are reflected in the table.
Since the grant date of the options was less than one year
from the departure date, the options were automatically
canceled. These canceled options are not included for
purposes of calculating the percent of total options granted
to employees during the fiscal year.
</TABLE>
Stock Option Exercises and Holdings
The following table provides information with respect to the
exercise of options by the individuals named in the Summary
Compensation Table during the last fiscal year and the value of
unexercised options held as of February 3, 1996.
<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR AND YEAR END OPTION VALUES
<CAPTION>
Number of Value of
Unexercised Unexercised
Shares Options In-the-Money
Acquired Value at 2/1/97 Options at 2/1/97
Name on Exercise Realized Exercisable/ ($)Exercisable/
(#) ($) Unexercisable Unexercisable(1)
- -------- ----------- -------- ------------- ----------------
<S> <C> <C> <C> <C>
Carson R. Thompson 0 0 10,750 / 500,000 0 / 0
James E. Herlihy 98,248 576,007 202,212 / 334,959 30,505 / 0
Gerald A. Cook 0 0 2,000 / 143,000 0 / 0
Brent A. Magnuson 0 0 3,000 / 143,000 0 / 0
Michael J. 6,838 46,733 27,099 / 37,764 0 / 0
Veitenheimer
Robert E. M. 113,197 301,204 75,000 / 0 0 / 0
Nourse(2)
Alexandra M.T. 95,174 249,714 50,000 / 0 0 / 0
Nourse(2)
<FN>
(1)The closing price of the Company's Common Stock on
January 31, 1997 was $4.6250 per share.
(2)Pursuant to Mr. Nourse's and Ms. Nourse's Executive Severance
and Non-Competition Agreements (described below), all options
previously granted to the Nourses at least one year prior to
termination vested as of the termination date of their
employment on September 5, 1996. The options remaining
outstanding have a Board approved three year exercise period
and an exercise price of $9.25 per share.
</TABLE>
Termination Arrangements
On December 8, 1992, the Company entered into Executive
Severance and Non-Competition Agreements (the "Agreements") with
the then President and Chief Executive Officer and Executive Vice
Presidents of the Company. The Agreements are intended to
provide non-competition protection to the Company for a two year
period following termination of employment and prohibit at any
time the unauthorized disclosure or use of trademarks, trade
secrets or other proprietary information or property of the
Company other than in the service of the Company. In exchange,
the officers are entitled to certain severance benefits in the
event of the termination of employment including the payment of
base salary and bonus prorated through the date of termination.
These Agreements have three year terms with automatic annual one
year extensions unless otherwise elected by the Company. In the
event the officer is terminated without cause or following an
involuntary reduction of his or her responsibilities, position or
compensation, such officer will be entitled to receive his or her
base salary, projected bonus and health benefits for up to a two
year period following termination. Further, the officer will be
entitled to immediate vesting of all or a part of any stock
options granted to the officer more than 12 months prior to the
termination date. To the extent certain of such stock options
are exercised during the three months following termination of
employment, the officer is also entitled to receive stock
appreciation rights that are exercisable for a 21 month period
thereafter for cash in an amount equal to the stock appreciation
experienced from the date of exercise of the underlying option to
the date of exercise of the stock appreciation right. The
exercise of such stock appreciation rights, or measures taken by
the Company to offset the costs of the rights should an exercise
occur, would likely constitute an expense to the Company and a
charge to earnings in the period exercised.
On September 5, 1996, Mr. Nourse's and Ms. Nourse's
employment with the Company terminated. Their severance
arrangements are governed by the agreements discussed above.
Total severance costs during the fiscal year were $1,191,805 for
Mr. Nourse and $785,698 for Ms. Nourse which included a cash
buyout of stock appreciation rights covering 501,424 shares. The
maximum potential severance cost for both equals, assuming full
two-year payout and no offsetting income from future employment
during the second year, approximately $4,200,000.
On November 1, 1996, the Company advised Mr. James E. Herlihy
that it did not intend to continue the automatic contract
extensions under his agreement. As a result, Mr. Herlihy's
agreement will expire December 8, 1998.
Compensation and Human Resources Committee Report
The Compensation and Human Resources Committee of the Board
of Directors (the "Committee") is responsible for reviewing and
approving the Company's compensation policies and the
compensation paid to executive officers. The Committee consists
of four independent, non-employee directors. All decisions by
the Committee relating to the compensation of the Company's
executive officers are reviewed by the full Board.
Compensation Philosophy. The Company's long-standing
compensation philosophy is one of emphasizing performance-based
compensation incentives which create a strong focus on growth in
earnings per share and the enhancement of shareholder value.
This focus is maintained through a program of competitive base
salaries, a bonus program based on successfully achieving
predetermined financial performance goals and a heavy emphasis on
executive equity ownership. These compensation elements address
both short-term and long-term performance goals and serve as the
primary vehicles to attract and retain executives with abilities
to further the growth and success of the Company. Total annual
compensation (base salary plus target bonus) is targeted at the
75th percentile of comparable positions in other retailing
companies of comparable size, i.e., the Comparative Group
referred to below.
The Company has elected to use the Standard & Poors Retail
Stores Composite Index to compare the performance of the Company
to that of a broad index of other retailers for purposes of the
Shareholders' Total Return Graph presented elsewhere in this
Proxy Statement. However, in reviewing compensation issues, the
Committee focused on a narrower, more analogous group of
retailers (the "Comparative Group"), along with national survey
data. The Comparative Group is reviewed by the Committee
annually, generally with the assistance of an outside
compensation consultant, and changes to the group are made as
necessary for comparability purposes. For fiscal year 1996, the
Company re-examined its list of peer group companies to ensure
that, on a current basis, the peer group reflected similarity to
the Company in key comparative areas. Companies were selected on
the following criteria: first, the company was in the business
of specialty retail, with revenues of at least $175 million, but
in no event more than $1 billion; and second, a preference was
given to home furnishings retailers (mall and non-mall) and to
mall-based retailers in other merchandise categories with
operating, growth and earnings characteristics similar to the
Company. Following this analysis, the Comparative Group was
revised to 14 companies (an increase from 13 in the prior year,
with eight new companies and six from the previously used group),
the majority of which were not in the Retail Stores Composite
Index: Ann Taylor, Bed Bath and Beyond, CML Group, Dress Barn,
Gymboree, Haverty Furniture, Lechter's, Pier 1 Imports, Rhodes,
Sports and Recreation, Sunglass Hut, Talbots, Tiffany & Co. and
Williams-Sonoma. In the opinion of the Committee, these
retailers were a more representative sampling of comparable
companies for purposes of comparing CEO and executive officer
compensation packages than the Standard & Poors Retail Stores
Composite Index, which is made up of substantially larger
companies.
Base Salaries. The Committee reviews and approves salaries
for the CEO and the other executive officers on an annual basis.
Recommended base salaries are reviewed and set based on
information derived from the Comparative Group and national
surveys of compensation data, as well as evaluations of the
individual executives' positions and expected future performance
and contribution. In making salary decisions, the Committee
exercises its discretion and judgment with no specific formula
being applied to determine salary levels. Historically, salaries
of Company executives were generally set at or below median
levels. The Committee determined, after a review of comparative
data for fiscal 1995, that the salary levels at some positions
were not at competitive levels, which placed the Company at risk
of losing executive management talent. As a result, the
Committee began a process aimed at gradually moving base salaries
upward to achieve median competitive base salary levels in
relation to the Comparative Group. This process continued for
fiscal 1996, although no base salary increases were given to the
CEO and one other executive position. In the executive officer
group, salaries for the fiscal year represented a range of 60% to
75% of projected total annual compensation with bonuses at target
level.
Annual Incentive Bonus. Annual incentive bonuses for
executive officers are designed to satisfy the Committee's belief
that a significant portion of the annual compensation of each
executive officer should be contingent upon Company performance.
To carry out this philosophy, the Company implemented the
Executive Management Incentive Compensation Plan (the "Incentive
Plan") effective July 4, 1994. The Incentive Plan, approved by
shareholders on October 13, 1994, is a pay-for-performance plan
intended to motivate and reward executive officers by directly
linking cash bonuses to specific corporate financial targets
relating to pre-tax profits, return on assets and growth in
earnings per share.
Under the Incentive Plan, bonus pools are created based upon
profitability and return on assets. The bonus pool based upon
profitability is derived by setting aside a fixed percentage of
pre-tax profits, with the percentage leveraged upward as the
level of profitability substantially exceeds the prior year.
This leverage is intended to encourage management to achieve
greater profitability. The plan contains a profit threshold that
must be met for the payment of any bonus based on profitability.
Recognizing that the base salary increases discussed above
lessened the percentage of at-risk incentive compensation as a
percentage of total target compensation, the Committee raised the
profit threshold for fiscal 1996 such that a higher level of
performance was required for the payment of any bonus based on
profitability. The bonus pool based upon return on assets is
derived by allocating a pre-set amount of bonus dollars for each
percentage increase in the calculated return on assets above an
established minimum. If the year-end return on assets is less
than the minimum, no bonus dollars for return on assets are
payable. The return on assets bonus is also leveraged such that
the higher the return on assets percentage achieved, the higher
the bonus dollars paid. The profit percentage and return on
assets schedule related to the Incentive Plan are established by
the Committee and approved annually by the Board of Directors.
Individual target bonuses are determined based upon pre-
established allocations of the aggregate bonus pool.
If the threshold levels for profits and return on assets are
met, the Incentive Plan permits bonus results to be adjusted
through the application of a "growth factor" based upon earnings
per share compared to the prior year. If applied, the growth
factor leverages the bonus program such that, with superior
financial performance, bonuses may be increased up to 50%, and if
the minimum established earnings threshold is not achieved,
bonuses are reduced to 50% of the earned amounts. In the opinion
of the Committee, the compensation plan for fiscal 1996 was
judged to have an adequate amount of upside and downside leverage
such that the growth factor was not included in the plan for
fiscal 1996.
Pursuant to the terms of the Incentive Plan, the financial
objectives and bonus results are based entirely on financial
measures and discretion is not used to modify bonus amounts.
Further, bonus payments that exceed certain target levels may, in
the discretion of the Committee, be paid in the form of Company
Common Stock.
Compensation Results. The Company's performance for the
period ended February 1, 1997 did not reach target levels of
profitability, return on assets and earnings per share as
established in March 1996. Since the minimum thresholds of these
three compensation criteria were not achieved, the executive
officers were not paid bonuses for the fiscal period, except as
noted in the Summary Compensation Table.
Stock Options/Equity Owner ship. The Company's compensation
program is also intended to create long-term incentives for
executives to act in ways that will create long-term growth in
shareholder value. In 1996, to further its long-term pay
practice, front-loaded and premium priced options were granted to
the Company's CEO, Executive Vice Presidents and two Senior Vice
Presidents with the expectation that no additional options would
be granted for the following two years. These grants are
reflected in the "Summary Compensation" and "Option Grants in
Last Fiscal Year" tables contained in this Proxy Statement.
The Company's 1986 Stock Option Plan was replaced and merged
upon shareholder approval of the 1996 Long-Term Incentive Stock
Plan at the annual meeting of shareholders in May 1996. This new
plan provides the Committee with a flexible vehicle to structure
future long-term incentive compensation arrangements tied
directly to the creation of shareholder value which are
responsive to the demands of the marketplace without unduly
diluting shareholder interests.
Pursuant to the 1996 Long-Term Incentive Stock Plan, awards
are granted at the discretion of the Committee, usually once per
year. The number of shares covered by such awards are determined
based upon assessment of the individuals' performance. The
Committee considers the recommendation of and relies on
information provided by the CEO in determining awards to be
granted to the non-CEO executive officers. To date the Company
has used only nonqualified stock options which, when awarded, are
granted with an exercise price equal to the fair market value of
the Company's Common Stock on the date of grant. Options
typically vest over a five-year period (20% per year) and are not
dependent on further performance criteria. The Committee
believes that the periodic grant of time-vested stock options
provide incentives that focus executives' attention on managing
the business from the perspective of owners with an equity stake
in the Company. It further motivates executives to maximize
long-term growth and profitability because value is created in
the options only as the Company's stock price increases after the
option is granted.
Consistent with the Committee's equity ownership philosophy,
in fiscal 1993 stock ownership guidelines were implemented. Over
a period of five years following adoption of the guidelines,
executive officers are expected to accumulate and hold Company
stock equal to the following values (excluding the value of any
unexercised stock options): Chief Executive Officer - five times
annual cash compensation (i.e., base salary and target annual
bonus); Executive Vice Presidents - four times annual cash
compensation; and other corporate officers - three times annual
cash compensation. Executives have the opportunity to acquire
stock through several Company sponsored stock plans, in some
cases with Company matching contributions. Additional stock
ownership may be achieved through the exercise of vested stock
options or open market purchases. The Committee reviews annually
the status of each officer's position with respect to the
guidelines and is satisfied with the progress being made toward
satisfaction of the ownership standards.
CEO Compensation. Mr. Robert E. M. Nourse served as CEO
until his separation from the Company on September 5, 1996. His
base salary for the fiscal year was set at $440,000, with
projected total annual compensation, based upon targeted levels
of Company profitability, return on assets and earnings per share
growth of $735,000, equal to approximately the 75th percentile of
comparable positions. On March 6, 1996, Mr. Nourse was granted
nonqualified stock options covering 525,000 shares in three
grants of 175,000 shares each, priced at $6.75, $7.63 and $8.93
per share with a seven year vesting schedule. Since none of
these options had vested at the time of Mr. Nourse's separation,
the options were canceled. On September 5, 1996, Mr. Carson R.
Thompson was appointed President and CEO. The Committee
determined that Mr. Thompson's base salary for the remainder of
the fiscal year should be at the rate of $440,000 per year, with
no bonus opportunity for fiscal 1996. Mr. Thompson was also
granted a nonqualified stock option covering 500,000 shares,
priced at $7.00 per share and vesting over a five year period,
subject to acceleration in the event of voluntary retirement or
relinquishment of the positions to effect a Board approved
succession plan.
Impact of Section 162(m) of the Internal Revenue Code. The
Committee has considered the potential impact of Section 162(m)
of the Internal Revenue Code, which imposes a $1 million limit
per year on the corporation tax deduction for compensation
(including stock-based compensation such as stock options) paid
with respect to the top five executive officers of publicly-held
corporations, unless, in general, such compensation is
performance-based and approved by shareholders. It is the
Company's present intention that all amounts paid to its
executives be fully deductible under the applicable tax laws. To
maintain this deductibility, the Committee adopted and the Board
of Directors and shareholders approved the Incentive Plan, along
with the 1986 Stock Option Plan and the 1996 Long-Term Incentive
Stock Plan.
The Committee believes that the quality and motivation of
management makes a significant difference in the performance of
the Company, and that a compensation program which is tied to
performance is in the best interests of shareholders. The
Committee is of the opinion that the Company's compensation plans
meet these important requirements.
Barbara Bass, Chair
Edmund H. Damon
Robert E. Runice
Shirley Young
1992 - 1997 Shareholders' Total Return Graph
The following graph compares the Company's cumulative
shareholder return to the returns for all the companies in the
S&P 500 Index and those companies comprising the S&P Retail Stock
Composite Index for the five year period ended January 1997. The
return values are based on an assumed investment of $100, as of
the close of business on the last day of January 1992, in the
Company's Common Stock and in each of the two comparator groups,
with all dividends treated as reinvested and each comparator
group weighted by each component company's market capitalization
on the last day of January for each subsequent year through
January 1997.
<TABLE>
BOMBAY COMPARISON OF
FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG BOMBAY,
S&P 500 AND S&P RETAIL COMPOSITE
<CAPTION>
Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97
<S> <C> <C> <C> <C> <C> <C>
BOMBAY $100.0 $239.3 $441.7 $143.2 $92.8 $74.6
S&P 500 $100.0 $110.6 $124.7 $125.4 $173.8 $219.5
S&P RETAIL COMPOSITE $100.0 $119.4 $115.2 $106.7 $115.0 $137.2
NOTE: Assumes an initial investment of $100 on 1/31, 1992.
Total return includes reinvestment of dividends.
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires executive officers and directors, and persons who
beneficially own more than ten percent (10%) of the Company's
stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission
and the applicable national stock exchange. Executive officers,
directors and beneficial owners in excess of ten percent (10%) of
the Company's Common Stock are required by Securities and
Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms
furnished to the Company and written representations from the
executive officers and directors, the Company believes that all
Section 16(a) filing requirements applicable to its executive
officers, directors and beneficial owners in excess of ten
percent (10%) were complied with during the fiscal year ended
February 1, 1997 except that Mr. Robert S. Jackson, a director,
failed to timely file on Form 4 reflecting the sale of 4,538
shares in November 1996. The transaction was reported on
Form 5, filed March 13, 1997.
CERTAIN TRANSACTIONS
On July 1, 1991, Mr. Carson R. Thompson retired from his
position as Chief Executive Officer of the Company. In
connection therewith, the Company entered into a five year non-
compete and consulting agreement with Mr. Thompson, commencing
July 1, 1991. Under the terms of the consulting agreement, Mr.
Thompson was paid $75,000 per year in consulting fees plus
reimbursement for travel and business expense related thereto
through June 30, 1996. He was also given continued eligibility
for health care coverage under the Company's group medical plan.
He continued in the position of Chairman of the Board, and an
additional $25,000 (increased to $35,000 in fiscal 1994) per year
was paid to Mr. Thompson as Chairman of the Board until his
resignation from that position on September 5, 1996.
On November 20, 1996 the Board of Directors approved a loan
of up to $75,000 to Mr. Michael J. Veitenheimer, a Vice President
of the Company, incident to the servicing of debt related to the
exercise of stock options resulting in the purchase of Company
stock in 1993. The loan bears interest at floating prime, and
$70,000 had been loaned as of March 24, 1997.
On December 9, 1996, the Company hired Mr. J. Michael Smith
as Vice President, Human Resources. Incident to this employment
and anticipated relocation, the Company agreed to provide Mr.
Smith a secured bridge loan arrangement of up to $350,000 for the
purchase of a residence in the Fort Worth, Texas area. The loan,
if taken, would bear interest at current market rates, be secured
by a first lien and be repayable upon the sale of Mr. Smith's
existing home. No loan is currently outstanding.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP as
independent accountants to audit the books, records and accounts
of the Company for fiscal year 1997. Price Waterhouse LLP has
served as the Company's independent accountants since 1975, and
is, therefore, familiar with the affairs and financial procedures
of the Company. To the knowledge of management, neither such
firm nor any of its members has any direct or material indirect
financial interest in the Company nor any connection with the
Company in any capacity otherwise than as independent
accountants.
Audit and audit related services performed by Price
Waterhouse LLP during the fiscal period ended February 1, 1997
included the audit of the financial statements of the Company.
A representative of Price Waterhouse LLP is expected to be
present at the Annual Meeting on May 22, 1997 to answer questions
and, if necessary, will be afforded an opportunity to make a
statement regarding the financial statements.
PROPOSALS OF SHAREHOLDERS
The Annual Meeting of Shareholders for the 1997 fiscal year
is expected to be held on or about May 21, 1998, with the mailing
of Proxy materials for such Meeting to be made on or about April
8, 1998. If a shareholder intends to submit a proper proposal
for presentation at such Annual Meeting, the proposal must be
received by the Company at its principal executive offices on or
before December 10, 1997, in order to be considered for inclusion
in the Proxy Statement and Proxy relating to such Meeting.
GENERAL
The Company will furnish without charge to each person whose
Proxy is being solicited, upon request of any such person, a copy
of the Annual Report of the Company on Form 10-K for the fiscal
year ended February 1, 1997, as filed with the Securities and
Exchange Commission, including the financial statements and
schedules. Such report will be filed with the Securities and
Exchange Commission on or before May 2, 1997. Requests for
copies of such report should be directed to Michael J.
Veitenheimer, Vice President, Secretary and General Counsel, The
Bombay Company, Inc., 550 Bailey Avenue, Suite 700, Fort Worth,
Texas 76107.
Report to Shareholders
The Report to Shareholders of the Company for the fiscal year
ended February 1, 1997 has been forwarded to all shareholders.
The Report, which includes audited financial statements, does not
form any part of the material for the solicitation of Proxies.
Please date, sign and return the enclosed Proxy at your
earliest convenience in the enclosed envelope. No postage is
required for mailing in the United States. A prompt return of
your Proxy will be appreciated as it will save the expense of
further mailings.
By Order of the Board of Directors
MICHAEL J. VEITENHEIMER
Vice President, Secretary
and General Counsel
THE BOMBAY COMPANY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned security holder of The Bombay Company, Inc., a Delaware
Corporation, hereby appoints James E. Herlihy and Gerald A. Cook, and
each of them, with the full power of substitution, to represent and to
vote on behalf of the undersigned all securities which the undersigned is
entitled to cast at the Annual Meeting of Shareholders scheduled to be held
on Thursday, May 22, 1997, at 9:00 A.M., local time, at the Botanic Garden
Center Complex, 3220 Botanic Garden Boulevard, Fort Worth, Texas 76107, and
at any adjournment or adjournments thereof, hereby revoking all proxies
heretofore given with respect to such securities upon the matters described
in the Notice of Annual Meeting and Proxy Statement (receipt of which is
hereby acknowledged), and upon any other business that may properly come
before such Annual Meeting.
THE SECURITIES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ON THE
REVERSE SIDE, BUT IF NO SPECIFICATION IS MADE, THE PROXIES NAMED ABOVE INTEND
TO VOTE THE SECURITIES AT THEIR DISCRETION FOR THE ELECTION OF THE NOMINEES
LISTED IN PROPOSAL 1 AND OTHERWISE AT THE DISCRETION OF THE PROXIES.
(Continued and to be dated and signed on the reverse side)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
LISTED BELOW AS DIRECTORS.
1. To elect Class C Directors:
Nominees: Edmund H. Damon and Robert E. Runice
For Withheld
/ / / /
/ /--------------------------------------------
For all nominees except as noted above
2. In their discretion upon such other matters as may properly come
before the meeting.
/ / Mark here for address change and note at left
/ / Mark here if you plan to attend the meeting
IF YOU RECIEVE MORE THAN ONE PROXY CARD, PLEASE DATE, SIGN AND RETURN ALL
CARDS IN THE ACCOMPANYING ENVELOPE.
Please sign exactly as name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in partnership
name by authorized person. (Only one signature is required in the case of
securities registered in the name of two or more persons.)
Signature:---------------------------- Date:----------------------------
Signature:---------------------------- Date:----------------------------
