THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT
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Tandy Corporation's 1998 Annual Meeting of Stockholders will be held at the
Worthington Hotel, 200 West Second Street, Fort Worth, Texas 76102, on Thursday,
May 21, 1998, at 10:00 a.m. To ensure that your shares are voted at the meeting,
please compete the proxy card, detach at the perforation and return to the
tabulating agent in the enclosed envelope.
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DETACH HERE
PROXY
TANDY CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON MAY 21, 1998
The undersigned hereby appoints John V. Roach, Jack L. Messman, Thomas
G. Plaskett and John A. Wilson, and each or any of them, attorneys and proxies
of the undersigned, with full power of substitution, to vote all the shares of
common stock of the Corporation held by the undersigned at the Annual Meeting of
Stockholders of Tandy Corporation at Fort Worth, Texas on May 21, 1998, or any
resumption of the Annual Meeting after any adjournment thereof, as indicated on
this proxy, and in their discretion on any other matters which may properly come
before the meeting. If no directions are given, the Proxy will be voted "FOR "
Item 1.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS,
JUST SIGN ON THE REVERSE SIDE - NO BOXES NEED TO BE CHECKED.
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SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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<PAGE>
DETACH HERE
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X Please mark
votes as in
this example
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
1. Election of Directors
Nominees: James I Cash, Jr., Ronald E. Elmquist,
Lewis F. Kornfeld, Jr., Jack L. Messman, William G. Morton, Jr.,
Thomas G. Plaskett, John V. Roach, Leonard Roberts,
Alfred J. Stein, William E. Tucker, John A. Wilson
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FOR WITHHELD
ALL NOMINEES FROM ALL
NOMINEES
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For all nominees except as noted above
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MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
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Please Sign Exactly as Your Name Appears on This Proxy. Date
And Promptly Return This Proxy In The Enclosed Envelope.
Signature: _________________Date: _____ Signature: _________________ Date: ____
<PAGE>
TANDY CORPORATION
100 Throckmorton Street, Suite 1800
Fort Worth, Texas 76102
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 21, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Tandy
Corporation will be held at the Worthington Hotel, 200 West Second Street, Fort
Worth, Texas 76102, on Thursday, May 21, 1998, at 10:00 a.m. for the following
purposes:
(1) To elect directors to serve for the ensuing year and until their
respective successors are elected; and
(2) To transact such other business as may properly come before the meeting
and at any resumption of the meeting after adjournment or postponement
thereof.
The transfer books will not be closed. The date fixed by the Board of
Directors as the record date for the determination of the stockholders entitled
to notice of, and to vote at, said Annual Meeting and at any resumption of the
meeting after adjournment or postponement thereof is the close of business on
March 24, 1998.
By Order of the Board of Directors
Mark C. Hill
Vice President, Corporate
Fort Worth, Texas Secretary and General Counsel
April 7, 1998
YOU MAY VOTE ON PROPOSALS IN PERSON OR BY PROXY. IF YOU ARE UNABLE TO ATTEND THE
MEETING IN PERSON, WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT
AT ONCE IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. A PROXY IS REVOCABLE AT ANY TIME PRIOR TO BEING VOTED AT THE
MEETING BY (A) FILING WITH THE COMPANY, AT OR BEFORE THE ANNUAL MEETING, A
WRITTEN NOTICE OF REVOCATION BEARING A LATER DATE THAN THE PROXY, (B) EXECUTING
A SUBSEQUENT PROXY RELATING TO THE SAME VOTING SECURITIES AND DELIVERING IT TO
THE COMPANY AT OR BEFORE THE ANNUAL MEETING OR (C) ATTENDING THE ANNUAL MEETING,
FILING A WRITTEN REVOCATION OF PROXY AND VOTING IN PERSON (ATTENDANCE AT THE
ANNUAL MEETING AND VOTING WILL NOT IN AND OF ITSELF CONSTITUTE A REVOCATION OF A
PROXY).
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
PROXY STATEMENT
TANDY CORPORATION
100 Throckmorton Street, Suite 1800
Fort Worth, Texas 76102
ANNUAL MEETING OF STOCKHOLDERS OF TANDY CORPORATION
TO BE HELD ON THURSDAY, MAY 21, 1998
This Proxy Statement is being furnished to stockholders of Tandy
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board")
from holders of record of the Company's voting securities as of the close of
business on March 24, 1998 (the "Annual Meeting Record Date"), for use at the
Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be held
on Thursday, May 21, 1998, at 10:00 a.m. (Central Daylight Savings Time) at the
Worthington Hotel, 200 West Second Street, Fort Worth, Texas 76102, and at any
resumption of the meeting after adjournment or postponement thereof. This Proxy
Statement is first being mailed to the holders of the Company's voting
securities on or about April 7, 1998.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, holders of shares of Company securities entitled to
vote at the Annual Meeting will be asked to consider and to vote upon the
following matters:
(i) the election of 11 directors of the Company to serve until the next
annual meeting of stockholders or until their successors are elected;
and
(ii) such other business as may properly come before the meeting.
The Board unanimously recommends a vote FOR the election of the Board's
nominees for election as directors of the Company. As of the date of this Proxy
Statement, the Board knows of no other business to come before the Annual
Meeting.
VOTING RIGHTS AND PROXY INFORMATION
Only holders of record of shares of the Company's Common Stock and the
Company's Series B TESOP Convertible Preferred Stock (the "TESOP Stock") as of
the Annual Meeting Record Date will be entitled to notice of, and to vote at,
the Annual Meeting and at any resumption of the Annual Meeting after adjournment
or postponement thereof. The holders of shares of Company Common Stock are
entitled to one vote per share (a "Common Stock Vote") on any matter which may
properly come before the Annual Meeting. The holders of TESOP Stock are entitled
to 43.536 Common Stock Votes per share.
<PAGE>
As of the Annual Meeting Record Date, the total number of Common Stock Votes
represented by the voting securities of the Company entitled to vote were
106,629,620. Specifically, there were 103,167,986 shares of Company Common Stock
outstanding, representing 103,167,986 Common Stock Votes; and 79,512 shares of
TESOP Stock outstanding, representing 3,461,634 Common Stock Votes. On August
21, 1997, the Company's Board of Directors declared a two-for-one split of
Company Common Stock for stockholders of record at the close of business on
August 29, 1997. Unless otherwise specifically stated in this Proxy Statement,
all references related to Company Common Stock, previously awarded stock
options, restricted stock awards, and any other agreements payable in Company
Common Stock reflect the split.
As of the Annual Meeting Record Date, a total of 79,512 shares of TESOP
Stock were held in the Tandy Fund. Each participant in the Tandy Fund is
entitled to direct the Tandy Fund Trustee with respect to the voting of the
TESOP Stock allocated to his or her account. If a participant does not direct
the Tandy Fund Trustee with respect to the voting of the TESOP Stock, the
Trustee will vote such securities in the same proportion as other participants
who have directed the Trustee with respect to allocated shares. The Trustee will
also vote all unallocated TESOP Stock held by the Tandy Fund in such proportion.
Also, as of the Annual Meeting Record Date a total of 1,838,552 shares of
Restricted Company Common Stock were held by Executive Officers of the Company
and RadioShack and Computer City Store Managers. Each holder is entitled to vote
each share of Restricted Company Common Stock.
The presence, either in person or by properly executed proxy, of the holders
of a majority of the Common Stock Votes as of the Annual Meeting Record Date is
necessary to constitute a quorum at the Annual Meeting. Shares held by holders
who are either present in person or represented by proxy who abstain will be
treated as present for quorum purposes on all matters.
<PAGE>
The affirmative vote of a plurality of the Common Stock Votes entitled to
vote and represented in person or by properly executed proxy at the Annual
Meeting is required to approve the election of each of the Company's nominees
for election as a director. With respect to the election of directors, shares
that abstain will be included in the vote total as withholds (i.e., votes
against the Company's nominees for election).
The affirmative vote of a majority of the Common Stock Votes entitled to
vote and represented in person or by properly executed proxy at the Annual
Meeting is required to approve all matters other than the election of directors.
For purposes of determining whether a proposal has received a majority vote,
abstentions will be included in the vote total, with the result that an
abstention will have the same effect as a negative vote. For purposes of
determining whether a proposal has received a majority vote, in instances where
brokers are prohibited from exercising discretionary authority for beneficial
holders of Company Common Stock who have not returned a proxy (so-called "broker
non-votes"), those shares will not be included in the vote totals and,
therefore, will have no effect on the outcome of the vote.
All voting securities that are represented at the Annual Meeting by properly
executed proxies received by the Corporate Secretary prior to or at the Annual
Meeting and not revoked will be voted at the Annual Meeting in accordance with
the instructions indicated in such proxies. If no instructions are indicated,
such proxies will be voted FOR the election of the Board's nominees for election
as directors of the Company.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Company, at or before the Annual Meeting, a written notice of
revocation bearing a later date than the proxy; (ii) duly executing a subsequent
proxy relating to the same voting securities and delivering it to the Company at
or before the Annual Meeting; or (iii) attending the Annual Meeting, filing a
written revocation of proxy and voting in person (attendance at the Annual
Meeting and voting will not in and of itself constitute a revocation of a
proxy). Any written notice revoking a proxy or subsequent proxies should be
received by mail or other method of delivery or hand delivered to Tandy
Corporation, Attention: Ms. Jana Freundlich, Assistant Secretary, 100
Throckmorton Street, Suite 1700, Fort Worth, Texas 76102-2818.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of Company Common Stock, Restricted Company Common Stock and TESOP Stock,
and will reimburse them for their expenses in so doing. In addition, the Company
may engage D.F. King & Co., Inc., for a fee anticipated not to exceed $3,000
plus out-of-pocket expenses, to provide proxy services. Certain directors,
officers and other employees of the Company may solicit proxies, without
additional remuneration therefor, by personal interview, mail, telephone,
facsimile or other electronic means.
NO APPRAISAL RIGHTS
Stockholders of the Company will not be entitled to appraisal rights under
Delaware corporation law in connection with the vote on the nominees for
directors.
<PAGE>
NOMINEES FOR ELECTION OF COMPANY DIRECTORS
Eleven persons have been nominated for election as directors of the Company
at the Annual Meeting. All nominees are now serving on the Board and all were
previously elected by the stockholders except Mr. Elmquist, who was elected by
the Board of Directors at its meeting on July 25, 1997. It is the intention of
the persons named in the accompanying form of proxy card to vote for the
nominees listed below for election as directors of the Company unless authority
to so vote is withheld. All nominees have indicated their willingness to serve
for the ensuing term. If any nominee is unable or should decline to serve as a
director at the date of the Annual Meeting, it is the intention of the persons
named in the proxy card to vote for such other person or persons as they in
their discretion shall determine.
The nominees for directors of the Company are listed below:
A Director
Name, Age, and Business Experience Continuously
During the Last Five Years Since
James I. Cash, Jr. (50) 1989
Professor, Harvard University Graduate School
of Business Administration.
Ronald E. Elmquist (51) 1997
President, Global Food Service - Campbell Soup
Company and Corporate Vice President, Campbell
Soup Company since January, 1994 and Chairman and
Chief Executive Officer, White Swan, Inc.
(food service company)from 1989 to January, 1994.
Lewis F. Kornfeld, Jr. (81) 1975
Retired Vice Chairman, Tandy Corporation
and Retired President, RadioShack Division.
Jack L. Messman (58) 1993
Chairman and Chief Executive Officer,
Union Pacific Resources Group Inc.
(independent oil and gas producer),
since October, 1996; President and Chief
Executive Officer of Union Pacific Resources
Group Inc. (independent oil and gas producer)
from May, 1995 to October, 1996 and President
and Chief Executive Officer, Union Pacific Resources
Company from 1991 through May, 1995.
<PAGE>
A Director
Name, Age, and Business Experience Continuously
During the Last Five Years Since
William G. Morton, Jr. (61) 1987
Chairman and Chief Executive Officer,
Boston Stock Exchange, Inc.
Thomas G. Plaskett (54) 1986
Chairman, Greyhound Lines, Inc. (transportation
company), since March 1995; Managing Director,
Fox Run Capital Associates since November, 1991;
Business Consultant, since November 1991 and
Interim President and Chief Executive
Officer, Greyhound Lines, Inc., August 1994 to November 1994.
John V. Roach (59) 1980
Chairman and Chief Executive Officer,
Tandy Corporation; President, Tandy Corporation
until January, 1996.
Leonard H. Roberts (49) 1997
President, Tandy Corporation since January, 1996;
President, RadioShack Division since July, 1993 and
Chairman and Chief Executive Officer, Shoney's , Inc.
(restaurant company) from 1990 to July, 1993.
Alfred J. Stein (65) 1981
Chairman and Chief Executive Officer,
VLSI Technology, Inc. (manufacturer
of semiconductors).
William E. Tucker (65) 1985
Chancellor, Texas Christian University.
John A. Wilson (76) 1974
Retired Chairman, President and
Chief Executive Officer, Color Tile, Inc.
(home improvement company).
<PAGE>
INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
The Board held eight meetings during 1997.
The current Audit and Compliance Committee members are Messrs. Cash,
Elmquist, Plaskett (Chairman), Tucker and Wilson. The functions of this
Committee include: reviewing the engagement of the independent accountants; the
scope and timing of the audit and certain non-audit services to be rendered by
the independent accountants; reviewing with the independent accountants and
management the Company's policies and procedures with respect to internal
auditing, accounting and financial controls; and reviewing the report of the
independent accountants upon completion of its audit. This Committee met three
times during 1997.
The current Executive Committee members are Messrs. Kornfeld, Messman, Roach,
Roberts, Stein and Wilson (Chairman). This Committee has the authority to
exercise all of the powers of the full Board with certain exceptions relating to
major corporate matters. This Committee is available to review with members of
management certain areas of the Company's operations and to act in an emergency
or on routine matters when it is impractical to assemble the entire Board for a
meeting. This Committee met four times during 1997.
The current Organization and Compensation Committee members are Messrs.
Cash, Messman (Chairman), Morton and Plaskett. The principal functions of this
Committee are to review and make recommendations to the Board concerning
compensation plans, appointments and promotions to official positions, and
corporate structure. This Committee also makes grants of stock options and
restricted stock to Executive Officers and other employees.
This Committee met eight times during 1997.
<PAGE>
The current Corporate Governance Committee (formerly the Nominating
Committee) members are Messrs. Elmquist, Kornfeld, Morton, Tucker and Stein
(Chairman). This Committee reviews and makes recommendations to the Board with
respect to candidates for directors of the Company, compensation of Board
members and assignment of directors to committees of the Board. The Committee
administers formal corporate governance policies as promulgated and practiced by
the Board. It also reviews and approves or denies requests by corporate officers
to serve on the boards of outside companies. This Committee met four times
during 1997. Stockholders who wish to nominate persons for election as directors
at the 1999 Annual Meeting, which is now scheduled to be held on May 20, 1999,
must give notice of their intention to make a nomination in writing to the
Corporate Secretary of the Company on or before February 20, 1999. Each notice
shall set forth: (a) the name and address of the stockholder who intends to make
the nomination and the name and address of the person or persons to be
nominated; (b) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (d) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission as then in effect; and (e) the consent of each nominee to serve as
director of the Company if so elected.
All nominees for director, after being elected to office in 1997, attended
more than 75% of the meetings of the Board and committees, collectively, of
which they were a member.
Certain of the Company's directors serve on the boards of directors of other
publicly held companies as follows: Mr. Cash serves on the boards of Cambridge
Technology Partners, Inc.; General Electric Company; Knight Ridder, Inc.; State
Street Boston Corporation; Chubb Corporation and WinStar Communications, Inc.;
Mr. Messman serves on the boards of Novell, Inc.; Safeguard Scientifics, Inc.;
Union Pacific Resources Group Inc.; US Data Corporation and Cambridge Technology
Partners, Inc.; Mr. Morton serves on the boards of 12 funds managed by Morgan
Stanley Asset Management, Inc.; Mr. Plaskett serves on the boards of Greyhound
Lines, Inc.; and Smart & Final Inc.; Messrs. Roach and Tucker serve on the board
of Justin Industries, Inc.; and Mr. Stein serves on the boards of VLSI
Technology, Inc. and Applied Materials, Inc.
STATEMENT ON CORPORATE GOVERNANCE
The Board of Directors has for many years followed specific policies
regarding corporate governance. Consistent with its practice, these policies
have been reviewed and revised and updates and amendments have been made to
Board policies and procedures when desirable. The Board of Directors has
recently determined it to be in the best interest of the Company to incorporate
these concepts, policies and procedures into its Statement on Corporate
Governance. The material provisions of this Statement on Corporate Governance
are included below. To obtain a complete Statement on Corporate Governance,
please contact Ms. Jana Freundlich, Assistant Secretary, 100 Throckmorton
Street, Suite 1700, Fort Worth, Texas 76102-2818, Telephone (817) 415-3022.
Board Structure and Independence
The Board of Directors presently consists of eleven members, of whom nine are
independent directors. Each of the independent directors, in the opinion of the
Board, is independent of management and free from any relationship that would
interfere with the exercise of independent judgment, and is eligible to serve as
a member of the Audit and Compliance Committee, the Organization and
Compensation Committee, and the Corporate Governance Committee under the
applicable rules and regulations of the Securities & Exchange Commission, the
New York Stock Exchange and the Internal Revenue Service. Only independent
directors may serve on these three committees.
<PAGE>
The Company's corporate governance process is the subject of regular review
by the Board. Current policies cover a broad range of governance issues.
The Board conducts an annual evaluation of its structure and performance,
including an assessment of the appropriateness and effectiveness of its
governance practices.
Executive sessions are held at the beginning of each Board meeting to
permit frank and unstructured discussions concerning governance procedures
and items for the Board's agenda between the directors and the Chief
Executive Officer.
The independent directors meet twice annually to evaluate and assess the
performance of the Company and its management, including an evaluation of
the Chief Executive Officer.
The Board has established specific selection criteria for membership on the
Board and has determined prospective board members should not have a
material: conflict of interest, commercial relationship, nor professional
services relationship, or potential for any such relationship with the
Company.
The Board, in conjunction with the Corporate Governance Committee, conducts
an annual self-assessment of its performance focusing on those areas that
the Board and the executive management of the Company believe would improve
the Board's effectiveness.
Board Oversight of Management
The principal functions of the Board include evaluating the performance of
the Chief Executive Officer and other Executive Officers. This evaluation
process occurs regularly throughout the year in formal and informal ways.
Additionally, the Board is charged with the responsibility of reviewing and
approving the broad strategic and financial objectives of the Company through a
collaborative process with executive management. As part of this undertaking,
the Board meets annually with executive and operational personnel in an extended
meeting to review the long-term strategic goals and plans of the Company.
All compensation plans of any employee of the Company who is paid in excess
of $100,000 per year are reviewed and approved by the Board. The Board believes
that compensation plans should be incentive-based and tied directly to the
Company's performance. By implementing such incentive-based pay plans, the Board
believes that the best interest of all stockholders is being advanced.
<PAGE>
The Board further requires management to annually present formal succession
plans so that continuity in the operation of the Company can be maintained in
the event of untimely displacement of key management members.
In fulfilling its role of overseeing management, the Board considers the
potential impact of all decisions, first on the Company's stockholders, and then
on the Company's employees, customers, suppliers, lenders, and the communities
in which the Company operates.
DIRECTORS' COMPENSATION
Directors of the Company who are not full-time employees of the Company or
its subsidiaries are paid an annual retainer of $24,000, payable quarterly.
Under the Tandy Corporation 1993 Incentive Stock Plan (the "1993 ISP"), each
non-employee director also has the right to file prior to May 1 of any year an
election to have 50% or 100% of this annual retainer fee paid in shares of
Company Common Stock. Each committee chairman receives an additional $2,500 per
year. Expenses of attendance at meetings are paid by the Company. Non-employee
directors receive an additional $1,000 for each Board meeting attended in person
and $500 for each committee meeting attended in person if held more than 24
hours before or after a board meeting. When attendance is by telephone, these
meeting fees are reduced to $250.
Also under the 1993 ISP, which commenced in September 1993 and was amended
May 18, 1995, and February 24, 1998, each director automatically is granted
non-qualified stock options to purchase 8,000 shares of Company Common Stock on
the first business day in September of each year that he or she serves as a
director. Each new director also receives a one time grant of an option to
purchase 10,000 shares of Company Common Stock on the date they attend their
first Board meeting. On September 1, 1997, each non-employee director received
an option grant of 8,000 shares under the 1993 ISP. The option exercise price of
all options granted directors is set at the fair market value (as defined in the
1993 ISP) of a share of Company Common Stock on the first trading day
immediately preceding the date of grant. The options vest in three equal
increments on the first, second and third annual anniversaries of the date of
grant.
<PAGE>
Under the Tandy Corporation 1997 Incentive Stock Plan (the "1997 ISP"), each
director will receive options to purchase 8,000 shares of Company Common Stock
during every year that he or she serves as director. Each new director will also
receive a one-time grant of an option to purchase 10,000 shares of Company
Common Stock on the date he or she attends his or her first Board meeting. No
annual grant of 8,000 shares or one time grant of 10,000 shares will be made to
directors under both the 1993 ISP and 1997 ISP in the same year, but the
Committee may elect from which of the plans (1993 ISP or 1997 ISP) to issue
options. The option exercise price will be set at the fair market value (as
defined in the 1997 ISP) of a share of Company Common Stock on the first trading
day immediately preceding the date of grant. The options will vest in three
equal increments on the first, second and third annual anniversaries of the date
of grant. All options granted to directors to purchase Company Common Stock
under the 1993 ISP and 1997 ISP will be non-qualified stock options.
Directors' Special Compensation Plan. The Company had previously established
a special compensation plan for non-employee directors providing for the payment
of benefits following retirement, death or total disability while serving as a
director (the "Directors' Plan"). As discussed below, the Directors' Plan was
terminated by the Company on December 31, 1997. To qualify for benefits, the
Directors' Plan provided that the director must have attained 60 years of age
and served as a non-employee director for 60 consecutive months immediately
preceding retirement, death or total disability. A retired director agreed to
perform consulting services to the Board, its committees and the Company without
additional compensation during the period in which benefits are received.
The Directors' Plan was terminated by the Company on December 31, 1997.
Non-employee directors serving as of December 31, 1997, who have attained age 72
years but less than 75 years of age or participants who may otherwise retire
under the terms of the Directors' Plan may now elect to receive benefits
otherwise payable to them under the terms of the Directors' Plan or receive a
lump sum payment in the form of stock units. Participants in the Directors' Plan
who are currently receiving benefits will continue to do so subject to the terms
of the Directors' Plan. Excluding two current non-employee directors, a
memorandum stock account was established for bookkeeping purposes only for each
director/participant serving on the Board on December 31, 1997. This account was
thereafter credited with a number of stock units based upon a formula utilizing
years of service, 66 2/3% of each of the directors retainer fee, a discount
factor and the average calendar year 1997 closing price of Company Common stock.
These stock accounts were contributed in each director/participant's name to the
existing Tandy Corporation Unfunded Deferred Compensation Plan for Directors.
<PAGE>
Unfunded Deferred Compensation Plan for Directors. The Company has
established the Tandy Corporation Unfunded Deferred Compensation Plan for
Directors (the "Deferred Compensation Plan") for non-employee directors whereby
such directors may elect to defer payment of all or a specified part of the fees
payable for services rendered to or on behalf of the Company. Annual retainer
fees paid in cash or Company Common Stock and meeting fees may be deferred. In
addition, the memorandum pension plan stock account established upon the
termination of the Directors' Plan shall constitute a separate account under the
Deferred Compensation Plan. Under the plan, all deferred fees in cash and
interest thereon are held in the general funds of the Company and are credited
to such director's account. Interest is credited at the end of each quarter
based on the balance in the cash account at the end of the quarter at the rate
of 1% below the prime rate as published by The Chase Manhattan Bank in effect
from time to time during the quarter. If a director elects to defer payment of
retainer fees payable in Company Common Stock in excess of 3 years, the Company
will make an additional contribution of 25% in Company Common Stock of the
amount deferred. With respect to deferrals and the 25% additional Company
contribution, the director may elect to receive deferred fees either in a lump
sum on a date specified by him or her, in substantially equal annual
installments not exceeding ten payments or if no election is made by the
director, then in a lump sum payment 60 days after he or she ceases to be a
director. Upon a change in control of the Company, a director will receive any
deferred fees and the additional Company contribution in a lump sum.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OF COMPANY VOTING SECURITIES
The following table sets forth, as of February 28, 1998, certain information
with respect to the beneficial ownership of the Company's voting securities by
(i) each current director of the Company, (ii) the Chief Executive Officer and
each of the four most highly compensated current Executive Officers of the
Company for the year ended December 31, 1997, (iii) one former Executive Officer
of the Company who was classified as a highly compensated Executive Officer at
the time of his retirement, (iv) the Company's current directors and officers as
a group and (v) persons known to the Company to own beneficially more than 5% of
any class of the Company's voting securities, except for the Tandy Fund Trustee,
which holds 100% of the outstanding TESOP Stock for the benefit of Tandy Fund
participants:
<TABLE>
<CAPTION>
Amount
Beneficially Percent
Title of Class Name and Title Owned of Class (8)
- ------------------ ------ -------------------------------------- ---------- ------------------- --- ----------------
<S> <C> <C> <C>
Common Stock James I. Cash, Jr., Director 35,667(1) 0.0334
Common Stock Ronald E. Elmquist, Director 505(1)(2) 0.0005
Common Stock Lewis F. Kornfeld, Jr., Director 36,665(1)(4) 0.0344
Common Stock Jack L. Messman, Director 32,271(1) 0.0303
Common Stock William G. Morton, Jr., Director 34,367(1) 0.0322
Common Stock Thomas G. Plaskett, Director 6,155(1) 0.0058
Common Stock John V. Roach, Chairman and 960,314(3) 0.8068
Chief Executive Officer
Common Stock Leonard H. Roberts, President and 268,394(3) 0.2517
President, RadioShack Division
Common Stock Alfred J. Stein, Director 34,667(1) 0.0325
Common Stock William E. Tucker, Director 46,667(1) 0.0438
Common Stock John A. Wilson, Director 281,665(1)(4) 0.2642
Common Stock Dwain H. Hughes, Senior Vice 112,702(3) 0.1057
President and Chief Financial
Officer
<PAGE>
Amount
Beneficially Percent
Title of Class Name and Title Owned of Class (8)
- ------------------ ------ -------------------------------------- ---------- ------------------- --- ----------------
Common Stock Robert M. McClure, Senior Vice 128,404(3) 0.1204
President - Tandy Retail Services
Common Stock Mark C. Hill, Vice President, 5,659(3) 0.0053
Corporate
Secretary and General Counsel
Common Stock Herschel C. Winn, Senior Vice 247,427(3) 0.2320
President
and Secretary
Common Stock Directors and Executive 2,486,471(4)(5) 2.3319
Officers as a group (21 people)
Common Stock Mellon Bank Corporation 5,638,000(6) 5.2875(6)
Common Stock FMR Corp. 8,196,675(7) 7.6871(7)
Common Stock The Prudential Insurance Company of 6,494,007(8) 6.0902(8)
America
<FN>
<F1>
(1) Included in the shares beneficially owned for each of the non-employee
directors indicated are 26,665 shares of Company Common Stock held by Messrs.
Cash, Messman, Stein, and Tucker, 24,665 shares of Company Common Stock held by
Messrs. Morton and Wilson, 14,665 shares of Company Common Stock held by Mr.
Kornfeld and one share of Company Common Stock held by Mr. Plaskett, subject to
currently exercisable options under the Tandy Corporation 1993 Incentive Stock
Plan. Each director disclaims beneficial ownership of the shares of Company
Common Stock subject to currently exercisable options. Also included in the
shares beneficially owned by Messrs. Cash, Elmquist, Messman, Morton, Plaskett,
Stein and Tucker are 3,702, 505, 5,802, 3,702, 2,154, 3,702 and 3,702,
respectively, of stock units representing shares of Company Common Stock
deferred under the terms of the Company's Unfunded Deferred Compensation Plan
for Directors. Each of these directors also disclaims beneficial ownership of
the shares of Company Common Stock represented by such stock units.
<F2>
(2) Mr. Elmquist, appointed to the Board of Directors on July 25, 1997, and
Messrs. Cash, Messman and Stein, have elected to receive (on a deferred basis)
their director retainer fees in Company Common Stock.
<F3>
(3) The amount beneficially owned includes the following shares and the listed
individuals have sole voting and investment power over the shares shown except
as follows: (a) Mr. Roach disclaims beneficial ownership of 45.9280 shares of
TESOP Stock held by the Tandy Fund Trustee, 35,003 shares of Company Common
Stock held in the Tandy Employees Supplemental Stock Program ("SUP"), 83,880
shares of Company Common Stock held by the Tandy Fund Trustee, 8,616 stock units
representing shares of Company Common Stock under deferred compensation
agreements, and 612,500 shares of Company Common Stock subject to currently
exercisable options; (b) Mr. Roberts disclaims beneficial ownership of 11.7510
shares of TESOP Stock held by the Tandy Fund Trustee, 10,128 shares of Company
Common Stock held in the SUP, 492 shares of Company Common Stock held by the
Tandy Fund Trustee, 5,348 stock units representing shares of Company Common
Stock under deferred compensation agreements, and 202,040 shares of Company
Common Stock subject to currently exercisable options; (c) Mr. Hughes disclaims
beneficial ownership of 8.8400 shares of TESOP Stock held by the Tandy Fund
Trustee, 1,905 shares of Company Common Stock held in the SUP, 890 shares of
Company Common Stock held by the Tandy Fund Trustee, 3,264 stock units
representing shares of Company Common Stock under deferred compensation
agreements, and 72,850 shares of Company Common Stock subject to currently
exercisable options, (d) Mr. McClure disclaims beneficial ownership of 36.4810
shares of TESOP Stock held by the Tandy Fund Trustee, 9,353 shares of Company
Common Stock held in the SUP, 7,085 shares of Company Common Stock held by the
Tandy Fund Trustee, 1,518 stock units representing shares of Company Common
Stock under deferred compensation agreements, and 95,160 shares of Company
Common Stock subject to currently exercisable options, (e) Mr. Hill disclaims
beneficial ownership of 2,000 shares of restricted Company Common Stock, which
are forfeitable, granted under the 1993 ISP and 659 stock units representing
shares of Company Common Stock under a deferred compensation agreement, and (f)
Mr. Winn, who retired as an executive officer effective July 1, 1997, disclaims
beneficial ownership of 36.7990 shares of TESOP Stock held by the Tandy Fund
Trustee, 70,343 shares of Company Common Stock held by the Tandy Fund Trustee,
and 87,474 shares of Company Common Stock subject to currently exercisable
options. All shares held in the SUP are held for the benefit of the participants
and such shares are voted by the SUP trustee pursuant to the New York Stock
Exchange ("NYSE") rules.
<PAGE>
<F4>
(4) All non employee directors have sole voting and investment power over the
shares shown except for Messrs. Kornfeld and Wilson. Mr. Kornfeld disclaims
beneficial ownership of 11,800 shares of Company Common Stock owned by a trust
of which he is the sole beneficiary. Mr. Wilson disclaims beneficial ownership
of 255,000 shares of Company Common Stock held in a trust of which he is the
trustee.
<F5>
(5) Includes shares beneficially owned by the 12 Executive Officers of the
Company as of February 28, 1998; 1,405,988 shares of Company Common Stock
subject to currently exercisable options; 3,637 shares of Company Common Stock
held in the Tandy Stock Plan (formerly the Tandy Corporation Stock Purchase
Program ("SPP")); 216.759 shares of TESOP Stock held in the Tandy Fund; 174,124
shares of Company Common Stock held in the Tandy Fund; and 70,439 shares of
Common Stock held in the SUP which shares are voted by the SUP trustee pursuant
to NYSE rules. The aggregate share numbers contained in this footnote include
the numbers identified in Footnote (1) above. This number also includes shares
of Company Common Stock subject to currently exercisable options held by the
Directors indicated in footnote (1) and the shares indicated in Footnote (3)
above.
<F6>
(6) According to Amendment No. 2 to Form 13G dated January 18, 1996, Mellon Bank
Corporation, a holding corporation organized under the laws of the United
States, located at One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, holds
sole voting power over 2,193,000 shares, shared voting power over 89,000 shares,
sole dispositive power over 2,505,000 shares and shared dispositive power over
295,000 shares of Company Common Stock.
<F7>
(7) According to Amendment No. 3 to Form 13G dated February 14, 1998, FMR Corp.,
an investment management corporation organized under the laws of the
Commonwealth of Massachusetts, located at 82 Devonshire Street, Boston,
Massachusetts 02109, holds sole voting power over 382,075 shares and sole
dispositive power over 8,196,675 shares of Company Common Stock.
<F8>
(8) According to Form 13G dated February 10, 1998, The Prudential Insurance
Company of America, a mutual insurance company organized under the laws of the
state of New Jersey, located at Prudential Plaza, 751 Broad Street, Newark, New
Jersey 07102-3777, holds sole voting power over 107,066 shares, shared voting
power over 6,360,307 shares, sole dispositive power over 107,066 and shared
dispositive power over 6,494,007 shares.
<F9>
(9) No director or Executive Officer beneficially owns Company Common Stock or
TESOP Stock in excess of 1% of all of such class of securities issued and
outstanding.
</FN>
</TABLE>
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
Executive Officers and all persons holding 10% or more of Company Common Stock
are required to report their ownership of the Company's securities and any
changes in that ownership to the Securities and Exchange Commission and the
NYSE. Specific due dates for these reports have been established and the Company
is required to report in this Proxy Statement any failure to file by these dates
during the year ended December 31, 1997. All of these filing requirements were
satisfied by the Company's present directors and Executive Officers except Mr.
Stein, who inadvertently failed to report the automatic reinvestment of
dividends paid on Company Common Stock by his broker into 105 shares of Company
Common Stock. A report reflecting this reinvestment has been filed with the
Securities and Exchange Commission and the NYSE and he is now current with his
reporting obligations.
EXECUTIVE COMPENSATION
The following table reflects the cash and non-cash compensation attributable
to the Chief Executive Officer of the Company, the four other most highly
compensated Executive Officers of the Company for the year ending December 31,
1997, and one former Executive Officer of the Company who was classified as a
highly compensated Executive Officer at the time of his retirement.
<TABLE>
<CAPTION>
Annual Compensation (1) Long-Term Compensation
(a) (b) (c) (d) (f) (g) (i)
Name and Restricted Stock All Other
Principal Fiscal Salary Bonus Stock Award Options Compensation
Position Year ($) ($) ($)(2)(3) (#)(4) ($)(5)
----------------------- --------- ---------- ----------- -------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John V. Roach 1997 $ 770,000 $ 770,000 0 135,000 $64,381
CEO and 1996 770,000 0 150,000 115,919
0
Chairman 1995 735,000 183,339 498,000 170,000 132,603
Leonard H. Roberts 1997 577,500 306,520 771,250 90,000 57,606
President, and 1996 550,000 0 120,000 69,135
0
President, RadioShack 1995 500,000 197,693 332,000 100,000 63,309
Dwain H. Hughes 1997 280,000 222,252 231,375 33,000 30,462
Senior Vice 1996 240,000 0 31,900 33,616
0
President and CFO 1995 200,000 49,888 145,250 29,000 28,250
Robert M. McClure 1997 318,300 188,758 0 30,000 35,311
Senior Vice 1996 309,000 0 26,400 31,141
0
President 1995 300,000 43,200 62,250 24,000 42,602
Herschel C. Winn 1997 191,649 84,275 0 191,814
0
Senior Vice President 1996 321,000 0 40,000 52,998
0
and Secretary (6) 1995 300,500 131,249 62,250 38,000 50,001
Mark C. Hill 1997 94,492 76,935 77,125 25,000 0
Vice President,
Corporate Secretary
and General Counsel
(7)
<PAGE>
<FN>
<F1>
(1) Other than restricted stock awards (see #2 below) for the years shown, the
named Executive Officers did not receive any annual compensation not properly
categorized as salary or bonus, except for certain perquisites and other
personal benefits. The amounts for perquisites and other personal benefits for
the named Executive Officers are not shown because the aggregate amount of such
compensation, if any, for each of the named Executive Officers during the fiscal
year shown does not exceed the lesser of $50,000 or 10% of total salary and
bonus reported for such officer.
<F2>
(2) Messrs. Roach, Roberts, Hughes, McClure and Winn were granted awards of
restricted stock on January 2, 1996 attributable to their calendar year 1995
performance. Therefore the awards were reported as compensation in 1995. The
closing price of a share of Company Common Stock at the end of the last
completed fiscal year (1995) prior to the date of grant was $41.50 per share.
The awards, granted under the 1993 ISP, were 12,000 shares to Mr. Roach, 8,000
shares to Mr. Roberts, 3,500 shares to Mr. Hughes, and 1,500 shares each to
Messrs. McClure and Winn. These shares do not reflect the August 21, 1997,
two-for-one split of Company Common Stock. On January 2, 1998, Messrs. Roach,
Roberts, Hughes and McClure relinquished the shares of restricted stock that
would have vested under this award on January 2, 1998, in exchange for the grant
of stock units under separate Deferred Compensation Agreements with the Company.
<F3>
(3) Messrs. Roberts and Hughes were granted awards of restricted stock on May
15, 1997 attributable to their performance. The awards were 20,000 shares to Mr.
Roberts and 6,000 shares to Mr. Hughes. Upon employment with the Company, Mr.
Hill was granted an award of 2,000 shares of restricted stock on July 25, 1997.
The awards of restricted stock vest in equal increments annually on the date of
grant over a three year period, provided the named Executive Officer is still
employed by the Company. The closing price of a share of Company Common Stock at
the end of 1997 was $38.5625
<F4>
(4) Includes all options granted during the year under the 1993 ISP, regardless
of whether the options are incentive stock options ("ISOs") or non-statutory
stock options ("NSOs"). No stock appreciation rights were granted with these
options in 1997.
<F5>
(5) Includes the Company's contributions allocated to the accounts of the
Executive Officers participating in the following employee benefit plans: the
Tandy Stock Plan; Tandy Fund and the SUP. The applicable amounts allocated in
1997 to the named Executive Officers in the Tandy Stock Plan, Tandy Fund and
SUP, respectively, are: $32,313, $2,760, $29,308 for Mr. Roach; $24,644, $3,025,
$29,936 for Mr. Roberts; $16,189, $3,377, $10,896 for Mr. Hughes; $18,341,
$3,622, $13,347 for Mr. McClure; and $15,445, $3,270, $9,964 for Mr. Winn. No
Company contributions were allocated to the account of Mr. Hill. Amounts do not
include amounts payable in the event of a change in control of the Company. See
"Change in Control Protections." In the case of Mr. Winn, the amount also
includes for 1997 $108,669 paid under the "Plans" as hereafter defined, $50,026
paid for consulting fees and $4,440 for individual and group life insurance
policies and for health and accident benefits.
<F6>
(6) Mr. Winn retired on July 1, 1997, and received salary and pro-rated bonus
payment through that date.
<F7>
(7) Mr. Hill was appointed by the Board on July 25, 1997, as Vice President,
Corporate Secretary and General Counsel of the Company. Prior to his
appointment, Mr. Hill was a partner at the law firm of Haynes and Boone, LLP,
which has and will represent the Company in certain matters in the normal course
of business.
</FN>
</TABLE>
OPTION GRANTS IN THE LAST YEAR
During the year ended December 31, 1997, options were granted on
October 17, 1997, to the following Executive Officers named in the Executive
Compensation table. The potential value of such options at the specified rates
of appreciation is shown in the table below. The 1993 ISP provides for the grant
of restricted stock awards and stock appreciation rights; however, no stock
appreciation rights were granted in 1997. Restricted stock awards were
authorized in 1997 and granted on May 15, 1997, to two named Executive Officers
and July 25, 1997, to one named Executive Officer.
<PAGE>
<TABLE>
<CAPTION>
Potential realizable
Value at Assumed Annual Rates (2)
(a) (b) (c) (d) (e) (f) (g)
% of Total Exercise
Name and Options Options Granted or Base
Type of Granted(#) to Employees Price Expiration 5% 10%
Option (1) During the Year ($/Share) Date ($) ($)
- -------------------- -- --------- ------------------ ------------ -- ------------- -- ------------ --- -------------
<S> <C> <C> <C> <C> <C> <C>
John V. Roach 135,000 13.89 $ 35.1250 10/17/2007 $2,982,141 $7,557,325
Leonard H. Roberts 90,000 9.26 35.1250 10/17/2007 1,988,094 5,038,217
Dwain H. Hughes 33,000 3.39 35.1250 10/17/2007 728,968 1,847,346
Robert M. McClure 30,000 3.09 35.1250 10/17/2007 662,698 1,679,406
Herschel C. Winn 0 0 0 0 0 0
Mark C. Hill 20,000 2.06 28.3906 07/25/2007 357,094 904,946
5,000 0.51 35.1250 10/17/2007 110,450 279,901
<FN>
<F1>
(1) All options shown were granted under the 1993 ISP. Generally, no options can
be exercised during the 12-month period following the date of grant. ISOs become
exercisable as to one-third of the amount of shares on each of the next two
annual anniversaries after the date of grant with full vesting on the third
annual anniversary date. NSOs become exercisable as to one-fifth of the amount
of shares subject to the options on each of the next four annual anniversaries
after the date of grant with full vesting on the fifth annual anniversary date.
For persons who continue to serve as employees of the Company, ISOs and NSOs
expire 10 years from the date of grant under the 1993 ISP. All options were
granted at fair market value on the date of grant. The exercise price and any
tax withholding may be paid by cash or delivery of already owned shares and
cash.
<F2>
(2) The potential gains reported above are net of the option exercise price, but
before taxes associated with the exercise. If these gains are achieved, the
value of the Company's Common Stock would likewise be increased 5% or 10%,
respectively. These gains are calculated based on the stated assumed rates of
appreciation each year over the life of the option. Actual gains, if any, on
stock option exercises are dependent on the future performance of Company Common
Stock, overall market conditions, as well as the option-holder's continued
employment through the option expiration date. The amounts reflected in the
table may not necessarily be achieved.
</FN>
</TABLE>
OPTION EXERCISES IN THE LAST YEAR AND YEAR-END OPTION VALUES
The following table summarizes individual option exercises during the year
ended December 31, 1997, by each of the named Executive Officers and the
year-end value of the unexercised options. These options were periodically
granted between 1985 and 1997.
<PAGE>
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of
Unexercised Unexercised
Shares Options at In-The-Money
Acquired on Year End Options at Year-End
Exercise Value (#) ($)(1)
Name (#) Realized Exercisable Exercisable
($) Unexercisable Unexercisable
- -------------------- -- ------------ -- -------------- --- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
John V. Roach 251,020 $ 3,713,626 612,500 415,480 $ 11,986,755 $ 4,673,974
Leonard H. Roberts 0 0 202,040 279,960 3,466,868 3,280,694
Dwain H. Hughes 8,000 94,719 72,850 71,050 1,337,669 680,581
Robert M. McClure 32,584 347,218 143,160 67,200 2,419,573 674,018
Mark C. Hill 0 0 0 25,000 0 212,031
Herschel C. Winn 169,162 2,932,301 152,864 0 2,412,822 0
<FN>
<F1>
(1) For purposes of calculating whether an option was "In-The-Money", this chart
uses the December 31, 1997 average of the high and low trading price (fair
market value) for Company Common Stock of $38.22.
</FN>
</TABLE>
RETIREMENT COMPENSATION
The Plans. Under the Salary Continuation Plan for Executive Employees of
Tandy Corporation and Subsidiaries ("SCP") established in 1979 and the Officers
Deferred Compensation Plan ("DCP") established in 1986 (hereinafter collectively
the "Plans"), the Insurance Committee of the Board may select full-time
executive employees for participation therein. As of December 31, 1997, a total
of 37 executive employees of the Company were participants in one or both of the
Plans. The Plans generally provide for the payment of reduced benefits following
a participant's early retirement between the ages of 55 and 65, full benefits
between the ages of 65 and 70, reduced benefits between the ages of 70 and 75,
and for payment of a death benefit to the participant's designated beneficiary
in the event of death prior to age 75 during employment. One Executive Officer
was a participant under a plan called the Special Compensation Plan No. 1
("SCP1") which is similar to the DCP except that the SPC1 provides for vesting
at 100% at age 65. Another executive employee was a participant under a plan
called the Special Compensation Plan No. 2 ("SCP2") which is similar to the DCP
except that the SPC2 provides for vesting at the 75% level at age 60 and early
retirement commencing at age 60 instead of age 55 as provided in the DCP. Two
executive employees participating under the SCP1 and SCP2 retired from the
Company during calendar year 1997 and are no longer employed by the Company. All
sums due under the Plans are payable in 120 equal monthly installments to the
participant or, in the event of death, to his or her beneficiary. The payments
are general obligations of the Company that are funded in part by life insurance
policies owned by the Company which name the Company as beneficiary.
<PAGE>
Under the Plans, the Insurance Committee determines an amount designated
herein as the "Retirement Compensation Amount" for each participant. The amount
established by the Insurance Committee does not necessarily bear any
relationship to the participant's present compensation, final compensation or
years of service. As of December 31, 1997, the benefit payable to participants
upon retirement or death during employment is a function of the "Retirement
Compensation Amount" and the age of the participant at death or retirement, as
set out in the following table:
<TABLE>
<CAPTION>
Retirement Compensation Annual Benefit
Amount Age at Date of Retirement or Death
- ----------------------------- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
55 (1) 65 to 70 71 (2) 75 (2)
------ -------- - ------ ------
$ 100,000 $ 50,000 $ 100,000 $ 80,000 $ 0
212,500 106,250 212,500 170,000 0
225,000 112,500 225,000 180,000 0
487,500 243,750 487,500 390,000 0
650,000 325,000 650,000 520,000 0
<FN>
<F1>
(1) Proportionately increases from 50% to 100% between age 55 and age 65. (2)
Proportionately decreases from 100% to 0% between age 70 and age 75.
</FN>
</TABLE>
The Retirement Compensation Amount at death during employment or retirement
at age 65 for the Executive Officers listed in the Executive Compensation table
at December 31, 1997, would have been as follows:
<TABLE>
<CAPTION>
SCP DCP Total
---------------- -------------------- ---------------------
<S> <C> <C> <C>
John V. Roach $ 300,000 $ 350,000 $ 650,000
Leonard H. Roberts 0 487,500 487,500
Dwain H. Hughes 0 212,500 212,500
Robert M. McClure 75,000 150,000 225,000
Mark C. Hill 0 100,000 100,000
Herschel C. Winn(1)
<FN>
<F1>
(1) No amounts are furnished for Mr. Winn who retired from the Company on July
1, 1997.
</FN>
</TABLE>
Special Provisions of the SCP. The SCP provides for payments to be made
to certain executive employees in the event of their voluntary or involuntary
termination of employment following a Change in Control, as defined in a 1984
letter of amendment to the SCP. In the event that the Company experiences a
Change in Control, each executive employee who is subject to such letter
amendment becomes immediately vested at the age 65 benefit level for a period of
three years and if his or her employment with the Company ceases, whether
voluntarily or involuntarily, during this three year period, he or she will
receive payments equal to the annual retirement benefit at age 65. Payment is
made in 120 equal monthly installments to the participant or to his or her
beneficiary.
<PAGE>
Special Provisions of the DCP. The DCP provides that for one year following
the occurrence of a Change in Control, as defined in the DCP, it shall not be
terminated or amended in any way, nor shall the manner in which the DCP is
administered be changed in any way which adversely affects the rights of
participants or beneficiaries in the DCP. Upon a Change in Control the
provisions of the DCP provide that any benefit due under the DCP shall be (1)
offset by any outstanding loan of the participant, and (2) forfeited if the
participant engages in any activity that is in competition with the Company.
Additionally, in the event of a Change in Control, each participant in the DCP
becomes immediately vested at the age 65 benefit level and if the participant's
employment is terminated for any reason following a Change in Control, the
Company must make a lump-sum payment equal to the present value of the age 65
benefit level discounted for interest only at the Pension Benefit Guaranty
Company's Immediate Annuity Rate used to value benefits for single-employer
plans terminating on the date that the participant's employment was terminated.
Retirement Arrangements with Mr. Winn. Mr. Winn retired as an Executive
Officer and employee of the Company on July 1, 1997. In connection with his
retirement, the Company paid Mr. Winn salary in the amount of $191,641
attributed to the period January 1, 1997, through July 1, 1997, and a bonus of
$84,275. In addition, the Company agreed to pay Mr. Winn a total of $200,000 for
the two year period commencing July 2, 1997 and ending July 1,1999 in return for
his agreement to provide consulting services to the Company. The Company has
increased the annual payments due to Mr. Winn under the DCP by $25,000. Under
the DCP and SCP Mr. Winn will be entitled to receive $262,500 annually for 10
years of which $108,669 was paid under these plans in 1997. In addition, the
Company will continue paying premiums under individual and group life insurance
policies until December 14, 2001 in exchange for Mr. Winn's waiving payment that
may be otherwise due under the Post Retirement Death Benefit Plan prior to
December 15, 2001. The Company will continue to include him and his family in
the Company's health and accident insurance plans until July 1, 1999. As is
permitted under the 1985 SOP and 1993 ISP, the Company decided to accelerate the
exercisability of 48,050 options to acquire Company Common Stock that were not
exercisable at the time of his retirement and provide 1,000 shares of previously
awarded Company Common Stock free of restrictions.
CHANGE IN CONTROL PROTECTIONS
In addition to the change in control protections contained in the DCP and
SCP, as described above in "Retirement Compensation," the Company has
implemented the following additional change in control protections.
<PAGE>
Bonus Guarantee Letter Agreements. The Company currently has letter
agreements (the "Bonus Guarantee Letter Agreements") with all of the currently
serving Executive Officers named in the Executive Compensation table, which
provide that, if they are employed by the Company on the date of a "Change in
Control" (as defined in the Bonus Guarantee Letter Agreements), then for the
fiscal year during which a Change in Control occurs (the "Change in Control
Year") they will receive an annual bonus following a Change in Control at least
equal to the highest annual bonus paid or payable to them in respect of any of
the three full fiscal years ended prior to a Change in Control (i) for the
Change in Control Year, provided the Executive Officer remains in the employment
of the Company on the last day of the Change in Control Year, and (ii) for the
fiscal year ended prior to a Change in Control if the amount of their annual
bonus for such year has not yet been determined at the time of the Change in
Control. The Bonus Guarantee Letter Agreements have an initial term of 24
months, subject to automatic successive one-year extensions unless written
notice not to extend is given by the Company at least 90 days prior to any
extension. At December 31, 1997, the Company had issued similar bonus guarantee
letters to approximately 38 other officers and employees of the Company
providing that in the event of a Change in Control, each such employee would
receive a minimum annual bonus following a Change in Control as provided for in
such bonus guarantee letters. Assuming a Change in Control occurred on the date
of this Proxy Statement; that all of the currently serving named Executive
Officers were still employed on that date; and that the currently serving named
Executive Officers' employment had terminated on that date, it is estimated that
the minimum bonuses payable under the Bonus Guarantee Letter Agreements would be
$770,000 for Mr. Roach, $306,500 for Mr. Roberts, $222,252 for Mr. Hughes,
$188,758 for Mr. McClure, and $76,935 for Mr. Hill.
Benefit Protections. The Board has included change in control protections in
the Tandy Fund, SUP, Tandy Stock Plan, DCP, Post Retirement Death Benefit Plan
("DBP"), 1985 Stock Option Plan, 1993 ISP, 1997 ISP and several other plans. The
DCP and SCP change in control provisions are described above. The Tandy Fund
provides that for a period of one year following a "Change in Control," as
defined in such plan, the plan may not be terminated or amended in any way that
would adversely affect the computation or amount of, or entitlement to, the
benefits under the plan. The SUP and Tandy Stock Plan contain similar
protections, and also provide that in the event of a "Change in Control," as
defined in such plans, the Company may not reduce the level of its contributions
to the SUP and Tandy Stock Plan in effect immediately prior to the Change in
Control. The Tandy Stock Plan additionally provides that in the event of a
Change in Control or a tender offer, other than an issuer tender offer, the
Company shall distribute to each participant in the Tandy Stock Plan all Company
Common Stock held by the Company which was credited to the participant's account
under the Tandy Stock Plan. The change in control provisions of the 1985 SOP,
1993 ISP and 1997 ISP provide that all outstanding options become immediately
vested and exercisable in the event of a "Change in Control", as defined in such
plans. All of the foregoing are referred to herein as the "Benefit Protections."
<PAGE>
Termination Protection Agreements. As of December 31, 1997, the Company has
entered into Termination Protection Agreements ("Agreements") with all of the
currently serving Executive Officers named in the Executive Compensation table
and four other employees (collectively, the "Executives"). The Agreements (all
of which are substantially similar) have an initial term of two years which is
automatically extended for successive one-year periods unless terminated by
either party. If the employment of any of the Executives is terminated (with
certain exceptions) within 24 months following a "Change in Control", as defined
in the Agreements, or in certain other instances in connection with a Change in
Control, the Executives will be entitled to receive certain cash payments
(amounts equal to two times current annual salary and the amount of the bonus
guarantee under the Bonus Guarantee Letter Agreement and an amount equal to the
contributions that the Company would have made to the Tandy Stock Plan, Tandy
Fund and SUP over a 24-month period assuming the foregoing salary and bonus
guarantee were used to calculate the Company's contributions), as well as the
continuation of fringe benefits (including life insurance, disability, medical,
dental and hospitalization benefits) for a period of up to 24 months.
Additionally, all restrictions on any outstanding incentive awards, including
restricted stock will lapse and such awards will become fully vested, all
outstanding stock options will become fully vested and immediately exercisable,
and the Company will be required to purchase for cash, on demand, any shares of
unrestricted stock and shares purchased upon the exercise of options at the then
per-share fair market value.
The Agreements also provide that the Company shall make an additional
"Gross-Up Payment" (as defined in the Agreements) to the Executives to offset
fully the effect of any excise tax imposed under Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), on any payment made to any of the
Executives arising out of or in connection with the employment of any of the
Executives. In addition, the Company will pay all legal fees and related
expenses incurred by any of the Executives arising out of employment of any of
the Executives or termination of employment under certain circumstances.
Payments Upon A Change In Control. Assuming a Change in Control occurred on
the date of this Proxy Statement; that all of the currently serving named
Executive Officers were still employed on that date; and that all of the
currently serving named Executive Officers' employment had terminated on that
date, the approximate cash payment that would have been made by virtue of all
change in control protections implemented by the Company (not including the
Gross-Up Payments) to Messrs. Roach, Roberts, Hughes, McClure and Hill would
have been approximately $3,557,850; $2,071,655; $1,233,294; $1,189,628; and
$750,984 respectively. The amount of the Gross-Up Payment, if any, to be paid
may be substantial and will depend upon numerous factors, including the price
per share of Company Common Stock and the extent, if any, that payments or
benefits made to the Executives constitute "excess parachute payments" within
the meaning of Section 280G of the Code.
Rabbi Trust. In connection with the Benefit Protections, Bonus Guarantee
Letter Agreements, the Termination Protection Agreements, and several other
plans and agreements, the Company is authorized to enter into a Rabbi Trust,
which is intended to be a grantor trust under Section 671 of the Code. The Rabbi
Trust may be funded by the Company at any time but is required to be funded upon
a "Threatened Change in Control" or upon a "Change in Control" (as such terms
are defined in the Rabbi Trust) in an amount sufficient to provide for the
payment of all benefits provided under the Agreements, the Bonus Guarantee
Letter Agreements, the DCP and the DBP. The Rabbi Trust will also provide funds
for litigation on behalf of the participants in such plans to the extent
necessary to ensure their rights thereunder. The Rabbi Trust will be a trust of
which the Company, for tax purposes, is the beneficiary and the trust assets, as
assets of the Company, will be subject to the claims of the Company's creditors
in the event of the Company's bankruptcy or insolvency.
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Organization and Compensation Committee (hereafter the
"Committee") at December 31, 1997, were James I. Cash, Jr., Jack L. Messman
(Chairman), William G. Morton and Thomas G. Plaskett. No member of the Committee
was an officer or employee of the Company or its subsidiaries during the year
ended December 31, 1997, and none was formerly an officer of the Company or any
of its subsidiaries. In addition, no Executive Officer of the Company serves on
the board of directors or the compensation committee of another entity where a
Committee member is employed.
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
Company Common Stock against the cumulative total return on the S&P
Corporate-500 Stock Index and the S&P Retail Composite Stock Index (assuming
$100 was invested on December 31, 1992, in Company Common Stock and in the
stocks comprising the S&P Corporate-500 Stock Index and the S&P Retail Composite
Stock Index and also assuming the reinvestment of all dividends). The S&P Retail
Composite Stock Index, as well as the S&P Corporate-500 Stock Index, includes
the Company.
The historical stock price performance of Company Common Stock shown on the
graph below is not necessarily indicative of future price performance.
Any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or the Securities Exchange Act of
1934 shall not be deemed to incorporate by reference this graph and this graph
shall not otherwise be deemed filed under such Acts. The Company may, however,
specifically incorporate this graph by reference in filings under such Acts.
<PAGE>
Proxy Graph Coordiantes - EDGAR Filer
Dec. 92 Dec. 93 Dec. 94 Dec. 95 Dec. 96 Dec. 97
Tandy Corp. 100.00 169.353 173.662 146.330 157.943 280.500
S&P 500 Index 100.000 110.092 111.545 153.470 188.711 251.676
S&P Retail Stores
Composite Index 100.000 96.261 87.866 98.164 115.865 167.749
ORGANIZATION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Organization and Compensation Committee (the "Committee") is appointed
by the Board of Directors and is composed entirely of independent directors. The
Committee is responsible for reviewing and recommending compensation policies
and programs to the Company's Board of Directors, as well as recommending
compensation awards for the Company's senior executives, including the Chief
Executive Officer. It makes decisions with respect to grants and awards under
the Company's 1993 ISP and 1997 ISP. The following report outlines the
Committee's recent action, its philosophy and policies relative to executive
compensation, and the basis for specific compensation awards to the Chief
Executive Officer attributable to 1997.
<PAGE>
Changes in Compensation Policies. In 1996 and again in 1997, the Committee
reviewed compensation practices at similar companies to determine what would
constitute competitive levels of compensation for officers and key employees. It
took into account the relative size of the other companies as well as the nature
of their businesses. The Committee in 1996 also undertook a three year plan to
adjust the base salaries of officers and key employees to competitive market
levels. The list of similar retailing and electronics companies that were
surveyed by the Committee was reviewed by the Company in conjunction with the
Committee. The basis of the selection continues to be a subjective determination
of the public companies that are similar to the Company (the "Peer Group").
Some, but not all, of the companies in this Peer Group are included in the S&P
Retail Composite Index that is charted in the Performance Graph included in this
Proxy Statement.
Compensation Philosophy and Overall Objectives. The overall objective of the
executive compensation program of the Committee is to encourage and reward
enhancement of stockholder value, which is best accomplished by linking the
financial interests of the Company's key executives closely to the financial
interests of the Company's stockholders. Further, the Committee believes that
the Company's overall executive compensation program should continue to be a
balanced plan that will: (i) motivate executives toward effective long-term
management of the Company through prudent use of stock programs that focus
management attention on increasing stockholder value; (ii) reward effective
ongoing management of Company operations through annual performance incentives
tied to increased levels of Company and business unit performance; and (iii)
attract and retain key executives through competitive salary and incentive
plans.
Base Salary. The Company's executive compensation program is designed to
include a competitive base salary and an annual bonus tied to appropriate
performance goals and objectives. The amounts of base salary increases in
January 1997 and 1998, were based on a review of pay practices of similar
companies, as well as the Executive Officers' past performance and an assessment
of his or her ability to contribute to the Company's progress. In addition, the
base salary increases continue the Committee's three year plan to adjust
officers and key employees salaries to competitive market levels. The Committee
expects that increases in future years will be based on these same factors.
Annual Incentive Bonus. In general, the Company's 1997 bonus program for the
Chief Executive Officer ("CEO") and all other named Executive Officers was based
on a formula that relied on the following objective performance measures: the
increase in the Company's operating income (before income taxes) over the
previous year; the increase in the Company's earnings per share over the
previous year; the increase in the Company's share price during 1997 over 1996's
share price; and the Company's stock price performance in relation to a similar
group of other companies. Under the formula, improvements in operating income
(before income taxes) receive the most weight and earnings per share receives
more weight than stock price performance. This similar group of other companies
selected by the Committee includes all companies in the S&P Retail Composite
Index that is charted in this Proxy Statement. (See "Performance Graph"). Two
named Executive Officers (other than the CEO) had an additional performance
measure related to the income for the division for which each was responsible.
<PAGE>
The bonus formulas for five of the named Executive Officers including the
CEO are subject to a maximum equal to 100% of the Officer's base salary, while
the bonus formula for a sixth named Executive Officer is subject to a maximum of
80% of his base salary. Under this formula program, there are no guaranteed
bonuses. In the case of all of the named Executive Officers, the objective
measures in the formula bonus program were required to exceed specified
thresholds before any formula bonus was payable. Since this did occur, bonuses
for 1997 were awarded and paid in 1998 to the named Executive Officers.
Long Term Incentives. In 1997, the Committee granted an aggregate of 962,200
stock options to 280 employees under the 1993 ISP, including all of the
currently serving named Executive Officers. The amount of options granted to
particular officers was determined by the Committee based on its evaluation of
the individual's performance following consultation with the Chief Executive
Officer. Two named Executive Officers received 26,000 shares of restricted stock
under the 1993 ISP, such awards being related to performance, and 2,000 shares
were granted to one named Executive Officer relating to his initial employment
by the Company. These restricted stock awards vest as to one-third of the shares
on each of the first three annual anniversary dates following the May 15, 1997
grant date for the two named Executive Officers and the July 25, 1997 grant date
for one named Executive Officer who is a new employee. In an effort to increase
retail store manager compensation and to retain well trained store management,
the Company granted as of February 1, 1997, under the 1993 ISP, an aggregate of
approximately 2,041,200 restricted stock awards of 400 shares each to RadioShack
store managers and restricted stock awards of 800 shares each to Computer City
store managers. In order to complete the February 1, 1997 award of restricted
stock to RadioShack store managers, an additional 324,750 shares of restricted
stock were granted as of February 1, 1998, under the 1997 ISP, to approximately
1,299 RadioShack store managers who did not receive in 1997 restricted stock
awards under the 1993 ISP.
The 1993 ISP also permits the Company to grant other stock-based awards,
such as performance shares and stock appreciation rights, in amounts determined
by the Committee, subject to the restrictions under the 1993 ISP. Under the 1997
ISP plan approved by stockholders in 1997, which is similar to the 1993 ISP, the
Company may also grant various types of other stock-based awards, including
options, performance shares and performance units, to eligible participants in
amounts to be determined by the Committee, subject to the restrictions set forth
in the plan.
The Committee believes that stock options and other awards, such as
restricted stock grants, are very
important in motivating and rewarding creation of long-term shareholder value.
The Committee periodically has awarded in the past, and plans to award now and
in the future, stock options and restricted stock awards based on continuing
progress of the Company and improvements in individual performance.
<PAGE>
Compensation of the Chief Executive Officer. For the year ending December
31, 1997, the compensation of the Chief Executive Officer was determined under
the compensation plan approved by the Board of Directors in December 1996 and by
the stockholders on May 18, 1995. The bonus factors utilized were increases in
the Company's operating income (before income taxes) over the previous year;
increases in the Company's earning per share over the previous year; increases
in the Company's share price during 1997 over 1996's share price and the
Company's stock price performance in relation to a similar group of other
companies. Mr. Roach was paid bonus attributable to 1997 based on these factors;
however he was not awarded any additional restricted stock in 1997. Mr. Roach
was paid a base salary of $770,000 for the years 1996 and 1997 and will be paid
a base salary of $810,000 in 1998. Mr. Roach was paid a bonus of $770,000 based
on the objective measures in his formula bonus program for 1997. The Committee
awarded a total of 135,000 stock options to Mr. Roach in October 1997 at the
same time other executives received stock options. The award was based on the
Committee's subjective assessment of the Company's performance and after
reviewing competitive data.
Compliance with Section 162(m). In general, it is the Committee's policy to
structure the compensation paid to the Chairman and CEO so that it will qualify
for deductibility under Section 162(m) of the Internal Revenue Code. Also, the
Committee designated a maximum number of options and awards that may be awarded
to any one individual under the 1997 ISP, in order to qualify for deductibility
under Section 162(m). In appropriate circumstances, however, when necessary to
achieve its overall objective of rewarding effective management, the Committee
may approve compensation packages which include payments that may not be
deductible under Section 162(m).
Organization and Compensation Committee
Jack L. Messman, Chairman James I. Cash, Jr.
William G. Morton Thomas G. Plaskett
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
During the year ended December 31, 1997, the Company paid approximately
$363,064 to Texas Christian University ("TCU"), of which Dr. Tucker is the
Chancellor, for administering the Tandy Technology Scholars Program and for
various TCU scholarship funds, the English Language Learning Center,
advertisements, tickets, seminars, contributions through the Company's matching
gift program and amounts paid for TCU promotional items sold though the "Fort
Worth Store" in the Fort Worth Outlet Mall, which is operated by the Company.
INDEPENDENT ACCOUNTANTS
The Board has selected Price Waterhouse, which has audited the Company's
books annually since 1899, as independent accountants for 1998. Representatives
of Price Waterhouse are expected to be present at the Annual Meeting with an
opportunity to make a statement and/or respond to appropriate questions.
<PAGE>
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
In order for proposals of stockholders to be considered for inclusion in the
proxy statement for the 1999 Annual Meeting of Stockholders of the Company,
which is now scheduled to be held on May 20, 1999, such proposals must be
received by the Corporate Secretary of the Company by December 8, 1998.
ANNUAL REPORT
A copy of the Company's Annual Report for the year ended December 31, 1997,
is being mailed to stockholders with this Proxy Statement. Stockholders who do
not receive a copy of such Annual Report may obtain a copy without charge by
writing or calling Shareholder Services, Tandy Corporation, 100 Throckmorton
Street, Suite 1700, Fort Worth, Texas 76102-2818, telephone number 817-415-3022.
OTHER MATTERS
As of the date of this Proxy Statement, management of the Company has no
knowledge of any other business to be presented to the meeting. If other
business is properly brought before the meeting, the persons named in the Proxy
will vote according to their discretion.
TANDY CORPORATION
Fort Worth, Texas
April 7, 1998
